# UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C.

# FORM 10-K

[X]              ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF           1934

For the Fiscal Year Ended
December 31, 2005

or

[  ] TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number
0-14412

Farmers Capital Bank
Corporation (Exact name of registrant as specified in its charter)

|                                                               | 
|-------------------------------------------------------------- | 
|Kentucky                                                       | 
|                                                               | 
|(State or other jurisdiction of incorporation or organization) | 

|                                                     | 
|---------------------------------------------------- | 
|P.O. Box 309, 202 West Main St., Frankfort, Kentucky | 
|                                                     | 
|(Address of principal executive offices)             | 

Registrants
telephone number, including area code: (502) 227-1600

Securities
registered pursuant to Section 12(b) of the Act:

|                      | 
|--------------------- | 
|None                  | 
|                      | 
|(Title of each class) | 

Securities registered
pursuant to Section 12(g) of the Act:

Common Stock  $
..125 per share Par Value(Title of Class)

Indicate by check mark if the
registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes [ ]  No
[X]

Indicate by check mark if the
registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
Act.

Yes [ ]  No
[X]

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 [X]  
                                            No [ ]

Indicate by check mark if disclosure
of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and
will not be contained, to the best of registrants knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]

Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.
See definition of accelerated filer and large accelerated filer in Rule 12b-2
of the Exchange Act. (Check one):

Large accelerated
filer [ ]     Accelerated filer [X]     Non-accelerated filer [ ]

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

Yes [ ]  No [X]

The aggregate market value of the
registrants outstanding voting stock held by non-affiliates on June 30, 2005 (the
last business day of the registrants most recently completed second fiscal quarter)
was $234,830,726.

As of March 9, 2006 there were
7,380,730 shares outstanding.

Documents incorporated by reference:

| | Portions
of the Registrants Proxy Statement relating to the Registrants 2006 Annual
Meeting of Shareholders are incorporated by reference into Part III.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------

An index of exhibits filed with this
Form 10-K can be found on page 68.

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FARMERS CAPITAL BANK
CORPORATIONFORM 10-KINDEX





|                  |  | Page                                                                                                        
|----------------- |  | ------------------------------------------------------------------------------------------------------------
|Part I            |  |                                                                                                             
|                  |  |                                                                                                             
|Item 1            |  | Business                                                                                                    
|Item 1A           |  | Risk Factors                                                                                                
|Item 1B           |  | Unresolved Staff Comments                                                                                   
|Item 2            |  | Properties                                                                                                  
|Item 3            |  | Legal Proceedings                                                                                           
|Item 4            |  | Submission of Matters to a Vote of Security Holders                                                         
|                  |  |                                                                                                             
|Part II           | 
|                  |  |                                                                                                             
|Item 5            |  | Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|Item 6            |  | Selected Financial Data                                                                                     
|Item 7            |  | Management's Discussion and Analysis of Financial Condition and Results of Operations                       
|Item 7A           |  | Quantitative and Qualitative Disclosures About Market Risk                                                  
|Item 8            |  | Financial Statements and Supplementary Data                                                                 
|Item 9            |  | Changes in and Disagreements With Accountants on Accounting and Financial Disclosure                        
|Item 9A           |  | Controls and Procedures                                                                                     
|Item 9B           |  | Other Information                                                                                           
|                  |  |                                                                                                             
|Part III          | 
|                  |  |                                                                                                             
|Item 10           |  | Directors and Executive Officers of the Registrant                                                          
|Item 11           |  | Executive Compensation                                                                                      
|Item 12           |  | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters              
|Item 13           |  | Certain Relationships and Related Transactions                                                              
|Item 14           |  | Principal Accounting Fees and Services                                                                      
|                  |  |                                                                                                             
|Part IV           | 
|                  |  |                                                                                                             
|Item 15           |  | Exhibits, Financial Statement Schedules                                                                     
|Signatures        |  |                                                                                                             
|Index of Exhibits |  |                                                                                                             
|                  | 

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PART I

Item 1. Business

# Organization

Farmers Capital Bank Corporation
(the Registrant or the Company) is a financial holding company.
The Registrant was originally formed as a bank holding company under the Bank Holding
Company Act of 1956, as amended, on October 28, 1982 under the laws of the Commonwealth
of Kentucky. During 2000, the Registrant elected to change from a bank holding company to
a financial holding company (see discussion in Supervision and Regulation section of this
report). The Registrants subsidiaries provide a wide range of banking and
bank-related services to customers throughout Central and Northern Kentucky. The bank
subsidiaries owned by the Registrant include Farmers Bank & Capital Trust Co. (Farmers
Bank), Frankfort, Kentucky; United Bank & Trust Co. (United Bank),
Versailles, Kentucky; Lawrenceburg National Bank (Lawrenceburg Bank),
Harrodsburg, Kentucky; First Citizens Bank, Elizabethtown, Kentucky; Farmers Bank and
Trust Company (Farmers Georgetown), Georgetown, Kentucky; Kentucky Banking
Centers, Inc. (Ky. Banking Centers), Glasgow, Kentucky; and Citizens Bank of
Northern Kentucky, Inc. (Citizens Northern), Newport, Kentucky.

The Registrant also owns FCB
Services, Inc., (FCB Services), a nonbank data processing subsidiary located
in Frankfort, Kentucky; Kentucky General Life Insurance Company, Inc., (Kentucky
General Life), an inactive nonbank insurance agency subsidiary located in Frankfort,
Kentucky; Kentucky General Holdings, LLC, (Kentucky General), in Frankfort,
Kentucky, which holds a 50% voting interest in KHL Holdings, LLC. KHL Holdings acquired a
100% interest in Kentucky Home Life Insurance Company effective January 1, 2005; Citizens
Acquisition Subsidiary Corporation (Citizens Acquisition), the one-bank
holding Company of Citizens Northern and Citizens Financial Services (Citizens
Financial); and Farmers Capital Bank Trust I and Farmers Capital Bank Trust II,
which are unconsolidated trusts established during 2005 to complete the private offering
of trust preferred securities.

The Registrant provides a broad range
of financial services to individuals, corporations, and others through its 33 banking
locations in 22 communities throughout Central and Northern Kentucky. These services
primarily include the activities of lending and leasing, receiving deposits, providing
cash management services, safe deposit box rental, and trust activities. Operations are
managed and financial performance is evaluated at the subsidiary level. The
Registrants chief decision makers monitor the results of the various banking
products and services of its subsidiaries. The Registrants chief decision makers
monitor the results of the various banking products and services of its subsidiaries.
Accordingly, all of the Registrants operations are considered by management to be
aggregated in one reportable operating segment: commercial and retail banking. As of
December 31, 2005, the Registrant had $1.7 billion in consolidated assets.

# Organization Chart

Subsidiaries of Farmers Capital Bank
Corporation are indicated in the table that follows. Percentages reflect the ownership
interest held by the parent company of each of the subsidiaries. Tier 2 subsidiaries are
direct subsidiaries of Farmers Capital Bank Corporation. Tier 3 subsidiaries are direct
subsidiaries of the Tier 2 subsidiary listed immediately above them. Tier 4 subsidiaries
are direct subsidiaries of the Tier 3 subsidiary listed immediately above them.

|Tier | Entity
|---- | ------
|1    |       
|2    |       
|3    |       
|2    |       
|2    |       
|3    |       
|3    |       
|3    |       
|3    |       
|3    |       
|3    |       
|4    |       
|2    |       
|2    |       
|3    |       
|2    |       
|3    |       
|3    |       
|2    |       
|2    |       
|3    |       
|4    |       
|2    |       
|2    |       
|2    |       
|3    |       
|3    |       
|2    |       
|2    |       
|     |       

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Farmers Bank, originally organized in
1850, is a state chartered bank engaged in a wide range of commercial and personal banking
activities, which include accepting savings, time and demand deposits; making secured and
unsecured loans to corporations, individuals and others; providing cash management
services to corporate and individual customers; issuing letters of credit; renting safe
deposit boxes; and providing funds transfer services. The banks lending activities
include making commercial, construction, mortgage, and personal loans and lines of credit.
The bank serves as an agent in providing credit card loans. It acts as trustee of personal
trusts, as executor of estates, as trustee for employee benefit trusts and as registrar,
transfer agent and paying agent for bond issues. Farmers Bank is the general depository
for the Commonwealth of Kentucky and has been for more than 70 years.

Farmers Bank is the largest bank
chartered in Franklin County. It conducts business in its principal office and four
branches within Frankfort, the capital of Kentucky. Franklin County is a diverse
community, including government, commerce, finance, industry, medicine, education and
agriculture. The bank also serves many individuals and corporations throughout Central
Kentucky. On December 31, 2005, it had total consolidated assets of $516.6 million,
including loans net of unearned income of $284.4 million. On the same date, total deposits
were $383.9 million and shareholders equity totaled $37.6 million.

Farmers Bank had six active
subsidiaries during 2005: Farmers Bank Realty Co. (Farmers Realty), Leasing
One Corporation (Leasing One), Farmers Capital Insurance Corporation
(Farmers Insurance), EG Properties, Inc. (EG Properties), Austin
Park Apartments, LTD (Austin Park), and Frankfort Apartments II, LTD
(Frankfort Apartments).

Farmers Realty was incorporated in
1978 for the purpose of owning certain real estate used by the Registrant and Farmers Bank
in the ordinary course of business. Farmers Realty had total assets of $3.4 million on
December 31, 2005.

Leasing One was incorporated in
August 1993 to operate as a commercial equipment leasing company. It is located in
Frankfort and is currently licensed to conduct business in fourteen states. At year-end
2005 it had total assets of $18.1 million, including leases net of unearned income of
$20.1 million.

Farmers Insurance was organized in
1988 to engage in insurance activities permitted to the Registrant under federal and state
law. Farmers Bank capitalized this corporation in December 1998. Farmers Insurance acts as
an agent for Commonwealth Land Title Co. At year-end 2005 it had total assets of $1.1
million. Farmers Insurance holds a 50% interest in Farmers Fidelity Insurance Company, LLP
(Farmers Fidelity). The Creech & Stafford Insurance Agency, Inc., an
otherwise unrelated party to the Registrant, also holds a 50% interest in Farmers
Fidelity. Farmers Fidelity is a direct writer of property and casualty coverage, both
individual and commercial.

In November 2002 Farmers Bank
incorporated EG Properties. EG Properties is involved in real estate management and
liquidation for properties repossessed by Farmers Bank. It had total assets of $8.5
million at December 31, 2005.

Farmers Bank is a limited partner in
Austin Park and Frankfort Apartments, two low income housing tax credit partnerships
located in Frankfort, Kentucky. These investments provide for federal income tax credits
to the Company. Farmers Banks aggregate investment in these partnerships was $1.5
million at year-end 2005.

On February 15, 1985, the Registrant
acquired United Bank, a state chartered bank originally organized in 1880. It is engaged
in a general banking business providing full service banking to individuals, businesses
and governmental customers. It conducts business in its principal office and two branches
in Woodford County, Kentucky. During 2003 United Bank incorporated EV Properties, Inc. EV
Properties is involved in real estate management and liquidation for properties
repossessed by United Bank. EV Properties had total assets of $567 thousand at year-end
2005. Based on deposits, United Bank is the second largest bank chartered in Woodford
County with total assets of $189.8 million and total deposits of $165.9 million at
December 31, 2005.

On June 28, 1985, the Registrant
acquired Lawrenceburg Bank, a national chartered bank originally organized in 1885. It is
engaged in a general banking business providing full service banking to individuals,
businesses and governmental customers. During 1998, it moved its charter and main office
to Harrodsburg, Kentucky in Mercer County. Lawrenceburg Bank conducts business at its
Harrodsburg site and two branches in Anderson County, Kentucky. Based on deposits, the
Anderson County branches rank number one in size compared to all banks chartered in
Anderson County. Total assets were $171.9 million and total deposits were $157.8 million
at December 31, 2005.

On March 31, 1986, the Registrant
acquired First Citizens Bank, a state chartered bank originally organized in 1964. It is
engaged in a general banking business providing full service banking to individuals,
businesses and governmental customers. During 1997, it moved its charter and main office
to Shepherdsville, Kentucky in Bullitt County. First Citizens Bank completed construction
of the site and began operations there in April 1998. In August 2004, First Citizens Bank
moved its charter and main office designation back to Elizabethtown, Kentucky. It now
conducts business at its main office and its three branches in Hardin County, Kentucky
along with its branch office in Shepherdsville. During 2003 First Citizens Bank
incorporated EH Properties, Inc. This company, which had total assets of $108 thousand at
December 31, 2005, is involved in real estate management and liquidation for properties
repossessed by First Citizens Bank.

On October 8, 2004, First Citizens
Bank acquired Financial National Electronic Transfer, Inc. (FiNET), a data
processing company that specializes in the processing of federal benefit payments and
military allotments and is headquartered in Radcliff, Kentucky. Effective January 1, 2005
FiNET was merged into First Citizens Bank. These services are now operated using the name
of FirstNet.

Based on deposits, First Citizens
Bank ranks third in size compared to all banks chartered in Hardin County. Total assets
were $198.8 million and total deposits were $160.8 million at December 31, 2005.

On June 30, 1986, the Registrant
acquired Farmers Georgetown, a state chartered bank originally organized in 1850. It is
engaged in a general banking business providing full service banking to individuals,
businesses and governmental customers. During the fourth quarter of 2004 the Company
merged its recently acquired Citizens Bank (Kentucky), Inc. (Citizens
Georgetown) into Farmers Georgetown. Farmers Georgetown conducts business at its
principal office and three branches in Scott County, Kentucky, two branches in Bath
County, Kentucky, and two branches in Fayette County, Kentucky.

On July 16, 2002, Farmers Georgetown
incorporated Community Development of Kentucky, Inc. (CDK, Inc.) in order to
apply to be certified as a Community Development Entity for participation in the New
Markets Tax Credit Program (Program) as provided by the Community Renewal Tax
Relief Act of 2000. The Program is designed to promote economic development in qualified
low-income communities as defined by the tax regulations. The Program is still evolving
and the extent of the Companys participation, if any, will be determined at a future
date. In May 2004, Farmers Georgetown incorporated Pro Mortgage Partners, LLC (Pro
Mortgage), a mortgage brokerage company established to offer a variety of fixed rate
loan products. Pro Mortgage has an office in both Georgetown and Lexington. At December
31, 2005 Pro Mortgage had total assets of $1.0 million.

Based on deposits, Farmers Georgetown
is the largest bank chartered in Scott County with total assets of $298.3 million and
total deposits of $207.9 million at December 31, 2005.

On June 15, 1987, the Registrant
acquired Horse Cave State Bank, a state chartered bank originally organized in 1926.
During 1997, it moved its charter to Glasgow, Kentucky. Subsequent to that approval, Horse
Cave State Bank changed its name to Kentucky Banking Centers, Inc. Ky. Banking Centers is
engaged in a general banking business providing full service banking to individuals,
businesses, and governmental customers. It conducts business in its principal office in
Glasgow and two branches in Hart County, Kentucky. Based on deposits, Ky. Banking
Centers Hart County branches rank first in size compared to all banks chartered in
Hart County. Total assets were $127.2 million and total deposits were $115.3 million at
December 31, 2005.

On December 6, 2005, the Company
acquired Citizens Bancorp, Inc. (Citizens Bancorp) in Newport, Kentucky.
Citizens Bancorp was subsequently merged into Citizens Acquisition. Citizens Acquisition
is the parent company of both Citizens Northern and Citizens Financial. Citizens Northern
is a state chartered bank organized in 1993 and is engaged in a general banking business
providing full service banking to individuals, businesses, and governmental customers. It
conducts business in its principal office in Newport and four branches in Campbell County,
Kentucky and one branch in Boone County, Kentucky. Based on deposits, Citizens Northern
ranks second in size compared to all banks chartered in Campbell County. Total assets were
$222.3 million and total deposits were $175.2 million at December 31, 2005. Citizens
Financial is an investment brokerage company headquartered in Newport and had total assets
of $18 thousand at December 31, 2005.

FCB Services, organized in 1992,
provides data processing services and support for the Registrant and its subsidiaries. It
is located in Frankfort, Kentucky. During 1994, FCB Services began performing data
processing services for nonaffiliated banks. FCB Services had total assets of $3.2 million
at December 31, 2005.

Kentucky General Life was
incorporated on June 22, 2000 to engage in insurance activities permitted by federal and
state law. This corporation was inactive as of December 31, 2005.

Farmers Capital Bank Trust I and
Farmers Capital Bank Trust II are two separate Delaware statutory business trusts
sponsored by the Company during 2005. The Company completed two private offerings of trust
preferred securities through the Trusts totaling $25.0 million. The Company owns all of
the common securities of each of the Trusts. The Company does not consolidate the Trusts
into its financial statements.

FFKT Insurance was incorporated
during 2005. It is a captive property and casualty insurance company insuring primarily
deductible exposures and uncovered liability related to properties of the Company. It had
total assets of $1.2 million at December 31, 2005.

# Lending

A significant part of the
Companys operating activities include originating loans, approximately 73% of which
are secured by real estate at December 31, 2005. Real estate lending primarily includes
loans secured by owner-occupied one-to-four family residential properties as well as
commercial real estate mortgage loans to developers and owners of other commercial real
estate. Real estate lending primarily includes both variable and adjustable rate products.
Loan rates on variable rate loans generally adjust upward or downward immediately based on
changes in the loans index, normally prime rate as published in the Wall Street
Journal. Rates on adjustable rate loans move upward or downward after an initial fixed
term of normally one, three, or five years. However, rate adjustments on adjustable rate
loans are made annually after the initial fixed term expires and are indexed primarily to
shorter-term Treasury indexes. Generally, variable and adjustable rate loans contain
provisions that cap annual increases at a maximum of 100 basis points with lifetime caps
of up to 600 basis points and lifetime floors of 100 basis points. The Registrant also
makes fixed rate commercial real estate loans to a lesser extent with repayment terms
generally not exceeding 12 months. The Registrants subsidiary banks make first and
second residential mortgage loans secured by real estate not to exceed 90% loan to value
without seeking third party guarantees. Commercial real estate loans are made primarily to
small and mid-sized businesses, secured by real estate not exceeding 80% loan to value.
Other commercial loans are asset based loans secured by equipment and lines of credit
secured by receivables and include lending across a diverse range of business types.
Commercial lending and real estate construction lending, including commercial leasing,
generally includes a higher degree of credit risk than other loans, such as residential
mortgage loans. Commercial loans, like other loans, are evaluated at the time of approval
to determine the adequacy of repayment sources and collateral requirements. Collateral
requirements vary to some degree among borrowers and depend on the borrowers
financial strength, the terms and amount of the loan, and collateral available to secure
the loan. Credit risk results from the decreased ability or willingness to pay by a
borrower. Credit risk also results when a liquidation of collateral occurs and there is a
shortfall in collateral value as compared to a loans outstanding balance. For construction
loans, inaccurate initial estimates of a propertys value could lead to a property
having a value that is insufficient to satisfy full payment of the amount of funds
advanced for the property. Secured and unsecured consumer loans generally are made for
automobiles, boats, and other motor vehicles. In most cases loans are restricted to the
subsidiaries general market area.

# Supervision and
Regulation

The Registrant and its subsidiaries
are subject to extensive regulation under federal and state laws. These laws and
regulations are primarily intended to protect depositors and borrowers, and to a lesser
extent, stockholders. Changes in applicable laws or regulations or in the policies of
banking and other government regulators may have a material effect on our current or
future business. The following is a brief description of the significant laws and
regulations that govern our activities.

The Registrant is a legal entity that
is separate and distinct from its bank and nonbank subsidiaries. The Registrant originally
registered as a bank holding company and was restricted to those activities permissible
under the Bank Holding Company Act of 1956, as amended (BHC Act). The BHC Act
provides for regulation, supervision, and examination by the Board of Governors of the
Federal Reserve System (FRB). As such, the Registrant must file reports with
the FRB and provide it with additional information as it may require and undergo periodic
examines conducted by the FRB.

Among other requirements, the
Registrant must obtain prior approval from the FRB before it can: acquire direct or
indirect ownership or control of any voting shares of any bank that results in total
ownership or control, directly or indirectly, of more than 5% of the voting shares of such
bank; merge or consolidate with another holding company; or acquire substantially all of
the assets of another bank or holding company.

Holding companies must also act as a
source of financial and managerial strength to subsidiary banks. This requires the
Registrant to provide, as necessary, resources to support its subsidiary banks. The FRB
may, under certain conditions, conclude that certain actions of a financial holding
company, such as the payment of cash dividends, constitute an unsafe and unsound banking
practice.

The Sarbanes-Oxley Act of 2002
(Sarbanes-Oxley) became law in July 2002. Sarbanes-Oxley addresses, among
other issues, corporate governance, auditing and accounting oversight, executive
compensation, and enhanced and timely disclosure of corporate information. The Nasdaq
Stock Market has also proposed and adopted corporate governance rules related to
Sarbanes-Oxley. These changes are intended to allow shareholders to more easily and
efficiently monitor the performance of companies and their directors.

Effective August 29, 2002, as
directed by Section 302(a) of Sarbanes-Oxley, the Companys chief executive officer
and chief financial officer are each required to certify that the Companys Quarterly
and Annual Reports do not contain any untrue statement of a material fact. The rules have
several requirements, including having these officers certify that: they are responsible
for establishing, maintaining and regularly evaluating the effectiveness of the
Companys internal controls; they have made certain disclosures to the Companys
auditors and the audit committee of the Board of Directors about the Companys
internal controls; and they have included information in the Companys Quarterly and
Annual Reports about their evaluation and whether there have been significant changes in
the Companys internal controls or in other factors that could significantly affect
internal controls subsequent to the evaluation.

The Gramm-Leach-Bliley Act of 1999
(GLB Act) signed into law in 1999 had a significant effect on Federal banking
laws applicable to the Registrant and its subsidiary banks. The GLB Act permitted the
Registrant to elect to become a financial holding company. The Registrant elected this
option during 2000. In order to be granted status as a financial holding company, a bank
holding company and each of its subsidiary depository institutions must be well
capitalized, well managed, and have achieved at least a satisfactory record of meeting
community credit needs at its most recent Community Reinvestment Act (CRA)
examination. Depository institutions are periodically examined for compliance with CRA and
are assigned a rating. Each insured depository institution subsidiary of a financial
holding company must have a satisfactory rating in order for a financial
holding company to commence a new activity or acquire a company engaged in a new activity
permitted by the BHC Act. In addition, banking regulators consider CRA ratings when
determining whether to approve a proposed transaction. A financial holding company is
subject to corrective action by the FRB if any depository institution controlled by the
company fails to maintain both well capitalized and well managed status.

The GLB Act amended the BHC Act to
allow a bank holding company that has elected financial holding company status to engage
in an expanded list of permissible activities, including insurance and securities
underwriting, among others. The GLB Act includes a system of functional regulation in
which the FRB serves as the umbrella regulator of the holding company. The FRB regulates
the Registrants business activities in a variety of ways including, but not limited
to, requirements on acquiring control of other banks and bank holding companies,
limitations on activities and investments, and regulatory capital requirements. State and
other federal financial regulators, such as the Kentucky Department of Financial
Institutions (KDFI), the Office of the Comptroller of the Currency
(OCC), the Federal Deposit Insurance Corporation (FDIC), the
Kentucky Office of Insurance, and the Securities and Exchange Commission (SEC)
also regulate either affiliates of the Registrant or the Registrant itself.

The Registrants state bank
subsidiaries are subject to state banking law and regulation and periodic examinations by
the KDFI. Lawrenceburg Bank, a national bank, is subject to similar regulation and
supervision by the OCC under the National Bank Act and the Federal Reserve System under
the Federal Reserve Act. Other regulations that apply to the Registrants bank
subsidiaries include, but are not limited to, insurance of deposit accounts, capital
ratios, payment of dividends, liquidity requirements, the nature and amount of investments
that can be made, transactions with affiliates, community and consumer lending, and
internal policies and control.

The operations of the Registrant and
its subsidiary banks are also affected by other banking legislation and policies and
practices of various regulatory authorities. Such legislation and policies include
statutory maximum rates on loans, reserve requirements, domestic monetary and fiscal
policy, and limitations on the kinds of services that may be offered. During 2000, the
State Wide Branching Bill became effective, which allows banks to open a branch anywhere
in the Commonwealth of Kentucky. Previously, banks could only branch within the county
where the main office was located.

The BHC Act formerly prohibited the
Federal Reserve Board from approving an application from a bank holding company to acquire
shares of another bank across its own state lines. However, effective September 1995, new
legislation abolished those restrictions and now allows bank holding companies to acquire
shares of out of state banks, subject to certain conditions. Currently, the Company has no
plans to purchase an out of state bank.

The GLB Act includes various
extensive customer privacy protection provisions. The GLB Act requires a financial
institution to clearly disclose its privacy policy to its customers regarding the sharing
of non-public personal information with affiliates and third parties. The financial
institutions privacy policy must be disclosed at the time a customer relationship is
established and not less than annually thereafter.

The Financial Reform, Recovery and
Enforcement Act of 1989 provides that a holding companys controlled insured
depository institutions are liable for any loss incurred by the FDIC in connection with
the default of, or any FDIC assisted transaction involving, an affiliated insured bank.

Deposits of the Registrants
subsidiary banks are insured by the FDICs Bank Insurance Fund, which subjects the
banks to regulation and examination under the provisions of the Federal Deposit Insurance
Act. During periodic exams, FDIC examiners review bank policies and evaluate lending and
investment portfolios, as well as being watchful for possible violations of banking
regulations and statutes.

Under the Federal Deposit Insurance
Corporation Improvement Act (FDICIA), the FDIC established a risk-based
assessment system for insured depository institutions, which became effective January 1,
1994. The FDIC has adopted a risk-based deposit insurance assessment system under which
the assessment rate for an insured depository institution depends on the assessment risk
classification assigned to the institution by the FDIC which is determined by the
institutions capital level.

Under FDICIA, the federal banking
regulators are required to take prompt corrective action if an institution fails to
satisfy certain minimum capital requirements, including a leverage limit, a risk-based
capital requirement, and any other measure deemed appropriate by the federal banking
regulators for measuring the capital adequacy of an insured depository institution. All
institutions, regardless of their capital levels, are restricted from making any capital
distribution or paying any management fees that would cause the institution to become
undercapitalized.

The purpose of the CRA is to
encourage banks to respond to the credit needs of the communities they serve, including
low and moderate-income neighborhoods. CRA states that banks should accomplish this while
still preserving the flexibility needed for safe and sound operations. It is designed to
increase the banks sensitivity to investment opportunities that will benefit the
community.

The USA Patriot Act (Patriot
Act) was signed into law on October 26, 2001.  The Patriot Act gives the
federal government new powers to address terrorist threats through enhanced domestic
security measures, expanded surveillance powers, increased information sharing, and
broadened anti-money laundering requirements.  The Patriot Act is intended to
encourage information sharing among bank regulatory agencies and law enforcement
bodies.  Among other requirements, the Patriot Act requires banks to establish
anti-money laundering programs, to adopt procedures and controls to detect and report
money laundering, and to comply with certain enhanced recordkeeping obligations with
respect to correspondent accounts of foreign banks.

References under the caption
Supervision and Regulation to applicable statutes and regulations are brief
summaries of portions thereof which do not purport to be complete and which are qualified
in their entirety by reference thereto.

# Competition

The Registrant and its subsidiaries
compete for banking business with various types of businesses other than commercial banks
and savings and loan associations. These include, but are not limited to, credit unions,
mortgage lenders, finance companies, insurance companies, stock and bond brokers,
financial planning firms, and department stores which compete for one or more lines of
banking business. The banks also compete for commercial and retail business not only with
banks in Central and Northern Kentucky, but with banking organizations from Ohio, Indiana,
Tennessee, Pennsylvania, and North Carolina which have banking subsidiaries located in
Kentucky. These competing businesses may possess greater resources and offer a greater
number of branch locations, higher lending limits, and may offer other services not
provided by the Registrant. The Registrant has attempted to offset some of the advantages
of its competitors by arranging participations with other banks for loans above its legal
lending limits, expanding into additional markets and product lines, and entering into
third party arrangements to better compete for its targeted customer base.

The Registrant competes primarily on
the basis of quality of services, interest rates and fees charged on loans, and the rates
of interest paid on deposit funds.

The business of the Registrant is not
dependent upon any one customer or on a few customers, and the loss of any one or a few
customers would not have a material adverse effect on the Registrant.

No material portion of the business
of the Registrant is seasonal. No material portion of the business of the Registrant is
subject to renegotiation of profits or termination of contracts or subcontracts at the
election of the government, though certain contracts are subject to such renegotiation or
termination.

The Registrant is not engaged in
operations in foreign countries.

# Employees

As of December 31, 2005, the
Registrant and its subsidiaries had 570 full-time equivalent employees. Employees are
provided with a variety of employee benefits. A retirement plan, a profit-sharing (401K)
plan, group life insurance, hospitalization, dental, and major medical insurance along
with postretirement health insurance benefits are available to eligible personnel.
Employees are not represented by a union. Management and employee relations are good.

During 1997, the Registrants
Board of Directors approved its Stock Option Plan (Plan), which grants certain
eligible employees the option to purchase a limited number of the Registrants common
stock. The Plan specifies the conditions and terms that the grantee must meet in order to
exercise the options. The Registrants shareholders at its annual meeting held on May
12, 1998 subsequently ratified the Plan.

In January 2004, the
Registrants Board of Directors adopted an Employee Stock Purchase Plan
(ESPP). The ESPP was subsequently approved by the Registrants
shareholders in May 2004, and became effective July 1, 2004. Under this ESPP, in the
discretion of the Board of Directors, employees of the Registrant and its subsidiaries can
purchase Registrant common stock at a discounted price and without payment of brokerage
costs or other fees and in the process benefit from the favorable tax treatment afforded
such plans pursuant to Section 423 of the Internal Revenue Code.

# Available Information

The Registrant makes available, free
of charge through its website (www.farmerscapital.com), its Code of Ethics, its annual
reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and
amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the
Exchange Act as soon as reasonably practicable after electronically filing such material
with the SEC.

---

Item 1A. Risk Factors

Risks associated with
unpredictable economic and political conditions may be amplified as a result of limited
market area

Commercial banks and other financial
institutions are affected by economic and political conditions, both domestic and
international, and by governmental monetary policies. Conditions such as inflation, value
of the dollar, recession, unemployment, high interest rates, short money supply, scarce
natural resources, international disorders, terrorism and other factors beyond our control
may adversely affect profitability. In addition, almost all of the Registrants
primary business area is located in Central and Northern Kentucky. A significant downturn
in this regional economy may result in, among other things, deterioration in Farmers
Capitals credit quality or a reduced demand for credit and may harm the financial
stability of the Registrants customers. Due to the Registrants regional market
area, these negative conditions may have a more noticeable effect on the Registrant than
would be experienced by an institution with a larger, more diverse market area.

The Registrants status as a
holding company makes it dependent on dividends from its subsidiaries to meet its
obligations

The Registrant is a financial holding
company and conducts almost all of its operations through its subsidiaries. The Registrant
does not have any significant assets other than cash, company-owned life insurance and the
stock of its subsidiaries. Accordingly, the Registrant depends on dividends from its
subsidiaries to meet its obligations and obtain revenue. The Registrants right to
participate in any distribution of earnings or assets of its subsidiaries is subject to
the prior claims of creditors of such subsidiaries. Under federal and state law, the
Registrants bank subsidiaries are limited in the amount of dividends they may pay to
the Registrant without prior regulatory approval. Also, bank regulators have the authority
to prohibit the subsidiary banks from paying dividends if the bank regulators determine
the payment would be an unsafe and unsound banking practice.

# Interest rate volatility
could significantly harm the Registrants business

The Registrants results of
operations are affected by the monetary and fiscal policies of the federal government and
the regulatory policies of governmental authorities. A significant component of the
Registrants earnings is its net interest income, which is the difference between the
income from interest-earning assets, such as loans, and the expense of interest-bearing
liabilities, such as deposits. A change in market interest rates could adversely affect
the Registrants earnings if market interest rates change such that the interest the
Registrants subsidiaries pay on deposits and borrowings increases faster than the
interest they collect on loans and investments. Consequently, the Registrant, along with
other financial institutions generally, is sensitive to interest rate fluctuations.

The Registrants results of
operations are significantly affected by the ability of its borrowers to repay their loans

Lending money is an essential part of
the banking business. However, borrowers do not always repay their loans. The risk of
non-payment is affected by:

| | o
       credit risks of a particular borrower;
| | -----------------------------------------------

| | o
       changes in economic and industry conditions;
| | -----------------------------------------------------

| | o
       the duration of the loan; and
| | --------------------------------------

| | o
       in the case of a collateralized loan, uncertainties as to the future value of the
collateral.
| | ------------------------------------------------------------------------------------------------------

Due to the fact that the outstanding
principal balances can be larger for commercial loans than other types of loans, such
loans present a greater risk to the Registrant than other types of loans when non-payment
by a borrower occurs.

In addition, consumer loans typically
have shorter terms and lower balances with higher yields compared to real estate mortgage
loans, but generally carry higher risks of frequency of default than real estate mortgage
and commercial loans. Consumer loan collections are dependent on the borrowers
continuing financial stability, and thus are more likely to be affected by adverse
personal circumstances. Furthermore, the application of various federal and state laws,
including bankruptcy and insolvency laws, may limit the amount that can be recovered on
these loans.

The Registrants financial
condition and results of operations would be adversely affected if its allowance for loan
losses were not sufficient to absorb actual losses

There is no precise method of
predicting loan losses. The Registrant can give no assurance that the allowance for loan
losses of its subsidiaries is or will be sufficient to absorb actual loan losses. Excess
loan losses could have a material adverse effect on the Registrants financial
condition and results of operations. Each of the Registrants subsidiary banks
attempts to maintain an appropriate allowance for loan losses to provide for estimated
losses in its loan portfolio, but there are no guaranties actual future loan losses will
not exceed these estimates and allowances. Each subsidiary bank of the Registrant
periodically determines the amount of its allowance for loan losses based upon
consideration of several factors, including:

| | o
       a regular review of the quality, mix and size of the overall loan portfolio;
| | -------------------------------------------------------------------------------------

| | o
       historical loan loss experience;
| | -----------------------------------------

| | o
       evaluation of non-performing loans;
| | --------------------------------------------

| | o
       assessment of economic conditions and their effects on the bank's existing
portfolio; and
| | --------------------------------------------------------------------------------------------------

| | o
       the amount and quality of collateral, including guarantees, securing loans.
| | ------------------------------------------------------------------------------------

Combining Citizens Northern with
the Registrants network of banks may be more difficult, costly or time-consuming
than we expect

Citizens Northern will continue to
operate as an independent bank, albeit within the network of the Registrants
existing banking subsidiaries. Bringing Citizens Northern within this network will involve
converting its data processing function from its current third-party provider (and
terminating the contract of Citizens Northern with such third-party provider) to the
Registrants subsidiary, FCB Services, changing some of the policies and procedures
in place at Citizens Northern and other integration issues. It is possible that the
integration process could result in the loss of key employees or disruption of each
companys ongoing business or inconsistencies in standards, procedures and policies
that would adversely affect our ability to maintain relationships with clients and
employees or to achieve the anticipated benefits of the merger. If we have difficulties
with the integration process, we might not achieve the economic benefits we expect to
result from the acquisition. As with any merger of banking institutions, there also may be
business disruptions that cause Citizens Northern to lose customers or cause customers to
take their deposits out of the bank and move their business to other financial
institutions.

Inability to hire or retain
certain key professionals, management and staff could adversely affect our revenues and
net income

The Registrant relies on key personnel to manage and operate its business,
including major revenue generating functions such as its loan and deposit portfolios. The
loss of key staff may adversely affect the Registrants ability to maintain and
manage these portfolios effectively, which could negatively affect our revenues. In
addition, loss of key personnel could result in increased recruiting and hiring expenses,
which could cause a decrease in our net income.

Item 1B. Unresolved Staff
Comments

None.

---

Item 2. Properties

The Registrant, through its
subsidiaries, owns or leases buildings that are used in the normal course of business. The
corporate headquarters is located at 202 W. Main Street, Frankfort, Kentucky, in a
building owned by the Registrant. The Registrants subsidiaries own or lease various
other offices in the counties and cities in which they operate. See the Notes to
Consolidated Financial Statements contained in Item 8, Financial Statement and
Supplementary Data, of this Form 10-K for information with respect to the amounts at which
bank premises and equipment are carried and commitments under long-term leases.

Unless otherwise indicated, the
properties listed below are owned by the Registrant and its subsidiaries as of December
31, 2005.

Corporate Headquarters
202 W. Main Street, Frankfort, KY

Banking Offices125 W.
Main Street, Frankfort, KY555 Versailles Road, Frankfort, KY 
835 Louisville Road, Frankfort, KY
(leased) 154 Versailles Road, Frankfort, KY 1301 US 127 South, Frankfort, KY (leased) 204
E. Main Street, Horse Cave, KY 1530 S. Green Street, Glasgow, KY 656 N. Main Street,
Munfordville, KY (leased) 200 E. Main Street, Georgetown, KY 100 Farmers Bank Drive,
Georgetown, KY (leased) 100 N. Bradford Lane, Georgetown, KY 3285 Main Street, Stamping
Ground, KY 333 W. Vine Street, Suite 102, Lexington, KY (leased) 3098 Harrodsburg Road,
Lexington, KY (leased) 648 Main Street, Sharpsburg, KY 118 Miller Scenic View Drive,
Owingsville, KY 100 United Bank Drive, Versailles, KY Locust & Green Streets,
Versailles, KY 206 N. Gratz, Midway, KY 128 S. Main Street, Lawrenceburg, KY West Park
Shopping Center, Lawrenceburg, KY 838 N. College Street, Harrodsburg, KY 425 W. Dixie
Avenue, Elizabethtown, KY 935 N. Mullberry Street, Elizabethtown, KY 111 Towne Drive
(Kroger Store) Elizabethtown, KY (leased) 232 Redmar Plaza, Radcliff, KY (leased) 4810 N.
Preston, Shepherdsville, KY 103 Churchill Drive, Newport, KY 7300 Alexandria Pike,
Alexandria, KY 164 Fairfield Avenue, Bellevue, KY 8730 US Highway 42, Florence, KY34 N.
Ft. Thomas Avenue, Ft. Thomas, KY (leased) 2911 Alexandria Pike, Highland Heights, KY
(leased)

Data Processing Center102 Byplass Plaza,
Frankfort, KY

Leasing One Corporation
& Farmers Capital Insurance Corporation201 W. Main Street, Frankfort, KY

The Registrant considers its
properties to be suitable and adequate based on its present needs.

Item 3. Legal Proceedings

As of December 31, 2005, there were
various pending legal actions and proceedings against the Company arising from the normal
course of business and in which claims for damages are asserted. Management, after
discussion with legal counsel, believes that these actions are without merit and that the
ultimate liability resulting from these legal actions and proceedings, if any, will not
have a material adverse effect upon the consolidated financial statements of the Company.

Item 4. Submission of
Matters to a Vote of Security Holders

No matters were submitted during the
fourth quarter of the fiscal year covered by this report to a vote of security holders,
through the solicitation of proxies or otherwise.

---

PART II

Item 5. Market for
Registrants Common Equity, Related Stockholder Matters, and Issuer Purchases of
Equity Securities

The following table provides
information with respect to shares of common stock repurchased by the Company during the
quarter ended December 31, 2005.

|                    |  |  |  |      
|------------------- |  |  |  | -----
|
|
|
|
|October 1, 2005 to  |  |  |  |      
|October 31, 2005    |  |  |  | 100  
|November 1, 2005 to |  | 
|November 30, 2005   |  |  |  |      
|December 1, 2005 to |  | 
|December 31, 2005   |  |  |  | 1,270
|                   
|Total               |  |  |  | 1,370
|                   
|                    |  | 

On January 27, 2003, the Companys Board of Directors authorized the purchase of up to 300,000 shares of the Companys outstanding common stock. No stated expiration date was established under
this plan.

Corporate AddressThe headquarters of Farmers Capital
Bank Corporation is located at:   202 West Main Street
   Frankfort, Kentucky 40601

Direct correspondence to:
             Farmers Capital Bank Corporation    P.O. Box 309    Frankfort, Kentucky 40602-0309    Phone: (502) 227-1668
             www.farmerscapital.com

Annual MeetingThe annual meeting of shareholders
of Farmers Capital Bank Corporation will be held Tuesday, May 9, 2006 at 11:00 a.m. at
the main office of Farmers Bank & Capital Trust Co., Frankfort, Kentucky.

Form 10-KFor a free copy of Farmers Capital
Bank Corporations Annual Report on Form 10-K filed with the Securities and Exchange
Commission, please write:

Douglas Carpenter, Senior Vice
President, Secretary, &Chief Financial Officer   Farmers Capital Bank
Corporation   P.O. Box 309   Frankfort, Kentucky 40602-0309   Phone: (502) 227-1668

Web Site Access to
FilingsAll reports filed electronically by the
Company to the United States Securities and Exchange Commission, including annual reports
on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all
amendments to those reports, are available at no cost on the Companys Web site at
www.farmerscapital.com.

# 

|NASDAQ Market Makers              | 
|--------------------------------- | 
|                                 
|J.J.B. Hilliard, W.L. Lyons, Inc. | 
|(502) 588-8400                    | 
|(800) 444-1854                    | 
|                                  | 
|UBS Securities, LLC               | 
|859-269-6900                      | 
|502-589-4000                      | 
|                                  | 

The Transfer Agent and Registrar for
Farmers Capital Bank Corporation is American Stock Transfer & Trust Company.

American Stock Transfer & Trust
Company Shareholder Relations 59 Maiden Lane - Plaza Level New York, NY 10038 PH:
800-937-5449 Fax: 718-236-2641 Email: Info@amstock.com Website: www.amstock.com

Additional  information is set forth
under the captions  "Shareholder  Information"  and "Stock Prices" on page 35 under Part
II, Item 7 and Note 16 in the notes to the  Registrant's  2005 audited  consolidated
 financial  statements on pages 58 through 60 of this Form 10-K and is hereby
incorporated by reference.

---

Item 6. Selected Financial Data

Selected Financial Highlights

|                                               |  |  |   |           |  
|---------------------------------------------- |  |  | - | --------- | -
|
|Results of Operations                          |  |  |   |           |  
|Interest income                                |  |  | $ | 73,925    |  
|Interest expense                               |  |  |   | 27,610    |  
|Net interest income                            |  |  |   | 46,315    |  
|Provision for loan losses                      |  |  |   | 718       |  
|Net income                                     |  |  |   | 15,772    |  
|                                              
|Per Share Data                                 |  | 
|Net income -                                   |  | 
|Basic                                          |  |  | $ | 2.31      |  
|Diluted                                        |  |  |   | 2.30      |  
|Cash dividends declared                        |  |  |   | 1.32      |  
|Book value                                     |  |  |   | 20.87     |  
|                                              
|Selected Ratios                                |  | 
|Percentage of net income to:                   |  | 
|Average shareholders' equity (ROE)             |  |  |   | 11.74     | %
|Average total assets (ROA)                     |  |  |   | 1.08      |  
|Percentage of dividends declared to net income |  |  |   | 56.82     |  
|Percentage of average shareholders' equity to  |  | 
|average total assets                           |  |  |   | 9.19      |  
|                                              
|Total shareholders' equity                     |  |  | $ | 154,236   |  
|Total assets                                   |  |  |   | 1,672,576 |  
|Long-term debt                                 |  |  |   | 76,881    |  
|Weighted Average Shares Outstanding            |  | 
|Basic                                          |  |  |   | 6,831     |  
|Diluted                                        |  |  |   | 6,864     |  
|                                              

---

Item 7. Managements
Discussion and Analysis of Financial Condition and Results of Operations

# Glossary of Financial
Terms

Allowance for loan lossesA valuation allowance to offset
credit losses specifically identified in the loan portfolio, as well as managements
best estimate of probable losses in the remainder of the portfolio at the balance sheet
date. Management estimates the allowance balance required using past loan loss experience,
an assessment of the financial condition of individual borrowers, a determination of the
value and adequacy of underlying collateral, the condition of the local economy, an
analysis of the levels and trends of the loan portfolio, and a review of delinquent and
classified loans. Actual losses could differ significantly from the amounts estimated by
management.

Dividend payoutCash dividends paid on common shares,
divided by net income.

Basis pointsEach basis point
is equal to one hundredth of one percent. Basis points are calculated by multiplying
percentage points times 100. For example: 3.7 percentage points equals 370 basis points.

Interest rate sensitivityThe relationship between interest
sensitive earning assets and interest bearing liabilities.

Net charge-offs The amount of total loans charged off
net of recoveries of loans that have been previously charged off.

Net interest incomeTotal interest income less total
interest expense.

Net interest margin Taxable equivalent net interest
income expressed as a percentage of average earning assets.

Net interest spread The difference between the taxable
equivalent yield on earning assets and the rate paid on interest bearing funds.

Other real estate owned Real estate not used for banking
purposes. For example, real estate acquired through foreclosure.

Provision for loan losses The charge against current income
needed to maintain an adequate allowance for loan losses.

Return on average assets (ROA) Net income divided by average total
assets. Measures the relative profitability of the resources utilized by the Company.

Return on average equity (ROE) Net income divided by average
shareholders equity. Measures the relative profitability of the shareholders
investment in the Company.

Tax equivalent basis (TE)Income from tax-exempt loans and
investment securities have been increased by an amount equivalent to the taxes that would
have been paid if this income were taxable at statutory rates. In order to provide
comparisons of yields and margins for all earning assets, the interest income earned on
tax-exempt assets is increased to make them fully equivalent to other taxable interest
income investments.

Weighted average number of common
shares outstandingThe number of shares determined by relating (a) the portion of time
within a reporting period that common shares have been outstanding to (b) the total time
in that period.

---

# Managements
Discussion and Analysis of Financial Condition and Results of Operations

The following pages present
managements discussion and analysis of the consolidated financial condition and
results of operations of Farmers Capital Bank Corporation (the Company), a
financial holding company, and its bank and nonbank subsidiaries. Bank subsidiaries
include Farmers Bank & Capital Trust Co. (Farmers Bank) in Frankfort, KY
and its wholly-owned subsidiaries Leasing One Corporation (Leasing One) and
Farmers Capital Insurance Corporation (Farmers Insurance). Leasing One is a
commercial leasing company in Frankfort, KY and Farmers Insurance is an insurance agency
in Frankfort, KY; Farmers Bank and Trust Company in Georgetown, KY (Farmers
Georgetown) and its wholly-owned subsidiary Pro Mortgage Partners, LLC (Pro
Mortgage), a mortgage brokerage company established in May 2004 offering a variety
of fixed rate loan products; First Citizens Bank in Elizabethtown, KY; United Bank &
Trust Co. in Versailles, KY; Lawrenceburg National Bank in Harrodsburg, KY; Kentucky
Banking Centers, Inc. in Glasgow, KY; and Citizens Bank of Northern Kentucky, Inc. in
Newport, KY (Citizens Northern). The Company has three active nonbank
subsidiaries, FCB Services, Inc. (FCB Services), Kentucky General Holdings,
LLC (Kentucky General), and FFKT Insurance Services, Inc. (FFKT
Insurance). FCB Services is a data processing subsidiary located in Frankfort, KY,
which provides services to the Companys banks as well as unaffiliated banks.
Kentucky General holds a 50% voting interest in KHL Holdings, LLC, which is the parent
company of Kentucky Home Life Insurance Company. FFKT Insurance is a captive property and
casualty insurance company insuring primarily deductible exposures and uncovered liability
related to properties of the Company. The following discussion should be read in
conjunction with the audited consolidated financial statements and related Notes that
follow.

Forward-Looking
StatementsThis report contains forward-looking
statements under the Private Securities Litigation Reform Act of 1995 that involve risks
and uncertainties. In general, forward-looking statements relate to a discussion of future
financial results or projections, future economic performance, future operational plans
and objectives, and statements regarding the underlying assumptions of such statements.
Although the Company believes that the assumptions underlying the forward-looking
statements contained herein are reasonable, any of the assumptions could be inaccurate,
and therefore, there can be no assurance that the forward-looking statements included
herein will prove to be accurate. Factors that could cause actual results to differ from
the results discussed in the forward-looking statements include, but are not limited to:
economic conditions (both generally and more specifically in the markets in which the
Company and its subsidiaries operate) and lower interest margins; competition for the
Companys customers from other providers of financial services; deposit outflows or
reduced demand for financial services and loan products; government legislation,
regulation, and changes in monetary and fiscal policies (which changes from time to time
and over which the Company has no control); changes in interest rates; material unforeseen
changes in the liquidity, results of operations, or financial condition of the
Companys customers; the capability of the Company to successfully enter into a
definitive agreement for and close anticipated transactions; the possibility that acquired
entities may not perform as well as expected; unexpected claims or litigation against the
Company; technological or operational difficulties; and other risks or uncertainties
detailed in the Companys filings with the Securities and Exchange Commission, all of
which are difficult to predict and many of which are beyond the control of the Company.
The Company expressly disclaims any intent or obligation to update any forward-looking
statements after the date hereof to conform such statements to actual results or to
changes in our opinions or expectations.

Application of Critical
Accounting PoliciesThe Companys audited
consolidated financial statements are prepared in accordance with accounting principles
generally accepted in the United States of America and follow general practices applicable
to the banking industry. Application of these principles requires management to make
estimates, assumptions, and judgments that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during the reported
period. These estimates, assumptions, and judgments are based on information available as
of the date of the financial statements; accordingly, as this information changes, the
financial statements could reflect different estimates, assumptions, and judgments.
Certain policies inherently have a greater reliance on the use of estimates, assumptions,
and judgments and as such have a greater possibility of producing results that could be
materially different than originally reported. Estimates, assumptions, and judgments are
necessary when assets and liabilities are required to be recorded at fair value, when a
decline in the value of an asset warrants an impairment write-down or valuation reserve to
be established, or when an asset or liability needs to be recorded contingent upon a
future event. Carrying assets and liabilities at fair value inherently results in more
financial statement volatility. The fair values and the information used to record
valuation adjustments for certain assets and liabilities are based either on quoted market
prices or are provided by other third-party sources, when available. When third-party
information is not available, valuation adjustments are estimated in good faith by
management primarily through the use of internal cash flow modeling techniques.

The most significant accounting
policies followed by the Company are presented in Note 1 of the Companys 2005
audited consolidated financial statements. These policies, along with the disclosures
presented in the other financial statement notes and in this managements discussion
and analysis of financial condition and results of operations, provide information on how
significant assets and liabilities are valued in the financial statements and how those
values are determined. Based on the valuation techniques used and the sensitivity of
financial statement amounts to the methods, assumptions, and estimates underlying those
amounts, management has identified the determination of the allowance for loan losses to
be the accounting area that requires the most subjective or complex judgments, and as such
could be most subject to revision as new information becomes available.

The allowance for loan losses
represents credit losses specifically identified in the loan portfolio, as well as
managements estimate of probable credit losses in the loan portfolio at the balance
sheet date. Determining the amount of the allowance for loan losses and the related
provision for loan losses is considered a critical accounting estimate because it requires
significant judgment and the use of estimates related to the amount and timing of expected
future cash flows on impaired loans, estimated losses on pools of homogeneous loans based
on historical loss experience, and consideration of current economic trends and
conditions, all of which may be susceptible to significant change. The loan portfolio also
represents the largest asset group on the consolidated balance sheets. Additional
information related to the allowance for loan losses that describes the methodology and
risk factors can be found under the captions Asset Quality and
Nonperforming Assets in this managements discussion and analysis of
financial condition and results of operation, as well as Notes 1 and 4 of the
Companys 2005 audited consolidated financial statements.

EXECUTIVE LEVEL OVERVIEWThe Company offers a variety of
financial products and services at its 33 banking locations in 22 communities throughout
Central and Northern Kentucky. The most significant products and services include consumer
and commercial lending and leasing, receiving deposits, providing trust services, and
offering other traditional banking products and services. The primary goals of the Company
are to continually improve profitability and shareholder value, maintain a strong capital
position, provide excellent service to our customers through our community banking
structure, and to provide a challenging and rewarding work environment for our employees.

The Company generates a significant
amount of its revenue, cash flows, and net income from interest income and net interest
income, respectively. Interest income is generated by earnings on the Companys
earning assets, primarily loans and investment securities. Net interest income is the
excess of the interest income earned on earning assets over the interest expense paid on
amounts borrowed to support those earning assets. Interest expense is paid primarily on
deposits accounts and other short and long-term borrowing arrangements. The ability to
properly manage net interest income under changing market environments is crucial to the
success of the Company.

In assessing the Companys
financial performance in this report, the following items of note should be considered:

| | o | The
general trend of the short-term interest rate environment for 2005 was upward primarily
as a result of short-term interest rate increases by the Federal Reserve Board (the Fed).
The Fed began to increase the short-term federal funds rate by increments of 25 basis
points during the last half of 2004 that continued into 2005. In all, the federal funds
rate was increased 125 basis points during 2004 and an additional 200 basis points during
2005 and stood at 5.25% at year-end 2005. Longer-term yields, such as for the 3, 5, 10,
and 20 year treasuries, were generally up at year-end 2005 compared to year-end 2004,
with the 3, 5, and 10 year notes up 112, 72, and 15 basis points, respectively, while the
20 year bond yield dipped 24 basis points. For the Company, this has had a tightening
effect on net interest margin and spread in the twelve-month comparisons. Net interest
margin for 2005 decreased 2 basis points to 3.72% from 3.74% led by a 10 basis point
decline in net interest spread to 3.38% from 3.48%.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | On
December 6, 2005, the Company acquired Citizens Bancorp for $40.6 million in a cash and
stock transaction. Citizens Bancorp is the parent company of Citizens Northern, which has
six banking locations in Campbell and Boone counties in Northern Kentucky. The impact of
this acquisition was an immediate boost in loans and deposits of $149.0 million and
$173.0 million, respectively, to the Companys consolidated balance sheet. The
application of purchase accounting to this acquisition resulted in $20.7 million in
goodwill and $4.4 million in a core deposit intangible. The core deposit intangible
attributed to this acquisition created $74 thousand in additional amortization expense
for the Company in 2005.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | In
July 2005, the Company completed two private offerings of trust preferred securities
through two separate Delaware statutory trusts sponsored by the Company. The trusts sold
a total of $25.0 million of preferred securities. The proceeds from the offering were
used in funding the cash portion of the acquisition of Citizens Bancorp. The Company owns
all of the common securities of each of the two trusts.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | In
early 2005 the Companys Farmers Georgetown subsidiary opened an additional branch
office in South Lexington to complement its downtown Lexington location. In addition,
many of the Companys other bank subsidiaries have or are in the process of
upgrading or replacing existing branch locations. The Companys expansion into the
Danville market is planned to occur in early 2006.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | The
Company sold its $3.2 million credit card portfolio during the first quarter of 2005 for
a gain of $700 thousand. Under the sale agreement, the Company continues to offer its
customers credit cards via an agency arrangement with the purchaser. All existing credit
card accounts on the purchase date remained active.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | The
Company completed two acquisitions during 2004 that affect the year to year comparisons.
Citizens Georgetown was acquired on July 1, 2004 and Financial National Electronic
Transfer, Inc. (FiNET) was acquired on October 8, 2004. The timing of these
acquisitions generally increased reported income and expense line items in 2005 compared
to 2004. Line item increases attributed to these recent acquisitions are expected to
level off once there are comparable periods in the future.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# RESULTS OF OPERATIONS

Consolidated net income for 2005 was
$15.8 million, an increase of $2.4 million or 17.8% compared to $13.4 million for 2004.
Basic and diluted net income per share were $2.31 and $2.30, respectively, for the current
twelve month period. This represents an increase of $.32 or 16.1% and 16.2% on a basic and
diluted basis, respectively. The increase in net income for the twelve months ended
December 31, 2005 is attributed to an increase in net interest income and a lower
provision for loan losses partially offset by higher net noninterest expenses (noninterest
expenses in excess of noninterest income). Net interest income for the current
twelve-month period was $46.3 million, an increase of $3.6 million or 8.4% compared to
$42.7 million for the same twelve months in 2004. The increase in net interest income can
be attributed to higher interest income, primarily as a result of both loan growth and
higher average interest rates earned on loans, which offset the increase in interest
expense, primarily attributed to higher rates paid on deposits.

The return on assets
(ROA) was 1.08% in 2005, an increase of 9 basis points from the prior
year-end. The return on equity (ROE) increased 128 basis points to 11.74%
compared to 10.46% in the prior year. The increase in ROE is a result of the $2.4 million
increase in net income and a 35 basis point increase in financial leverage from 10.5% to
10.9% as of December 31, 2005. Financial leverage represents the degree in which borrowed
funds, as opposed to equity, are used in the funding of assets.

# Interest Income

Interest income results from interest
earned on earning assets, which primarily include loans and investment securities.
Interest income is affected by volume (average balance), composition of earning assets,
and the related rates earned on those assets. Total interest income for 2005 was $73.9
million, an increase of $12.0 million or 19.4% from the previous year. Interest income on
loans increased as a result of higher outstanding loan balances coupled with a higher
average rate earned. The increase in average balances outstanding resulted from both the
Citizens Georgetown and Citizens Northern acquisitions along with internally generated
loan growth. Interest income on securities grew as a result of a higher average rate
earned on the investments. The Companys tax equivalent yield on earning assets for
the current year was 5.8%, an increase of 50 basis points compared to the same period a
year ago.

Interest and fees on loans was $59.4
million, an increase of $10.0 million or 20.2% compared to a year earlier. Average loans
increased $83.7 million or 10.2% to $902.6 million in the comparison due to higher loan
demand in what remains a low rate environment and, to a lesser extent, the loans acquired
in the Citizens Georgetown and Citizens Northern acquisitions. On July 1, 2004, the
Company purchased $50.1 million in loans related to the Citizens Georgetown acquisition
and on December 6, 2005 the Company purchased $149.0 million in loans related to the
Citizens Northern acquisition. In addition, a higher average rate earned on loans
contributed nearly equally to the rise in interest income. New loans and variable rate
loans repricing during the current year have generally repriced higher as market interest
rates have edged upward. The tax equivalent yield on loans increased 58 basis points to
6.6% from 6.1% in the annual comparison. Interest on taxable securities was $8.4 million,
an increase of $420 thousand or 5.3% due to an increase in the average rate earned. The
average rate earned on taxable securities increased 28 basis points to 3.5% from 3.2%
while the average balance declined $7.5 million or 3.1% to $238.0 million. Taxable
equivalent interest on nontaxable securities decreased $300 thousand or 5.0% due to a 30
basis point lower average rate earned of 6.0% from 6.3%. Interest on short-term
investments, including time deposits in other banks, federal funds sold, and securities
purchased under agreements to resell, increased $1.6 million due to an increase in both
the average rate and balances outstanding of 172 basis points and $27.4 million,
respectively.

# Interest Expense

Interest expense results from
incurring interest on interest bearing liabilities, which primarily include interest
bearing deposits, federal funds purchased and securities sold under agreements to
repurchase, and other borrowed funds. Interest expense is affected by volume, composition
of interest bearing liabilities, and the related rates paid on those liabilities. Total
interest expense was $27.6 million for 2005, an increase of $8.4 million or 44.0% from the
prior year. Interest expense increased as a result of higher average rates paid and higher
average interest bearing liabilities outstanding. The increase in average interest bearing
liabilities was impacted by the Citizens Georgetown and Citizens Northern acquisitions.
The Company purchased $59.4 million and $159.3 million in interest bearing liabilities,
primarily deposits, from Citizens Georgetown and Citizens Northern, respectively. The
Companys cost of funds was 2.5% for 2005, an increase of 60 basis points from 1.9%
for the prior year. The higher cost of funds was led by a 170 basis point increase in the
average rate paid on federal funds purchased and securities sold under agreements to
repurchase, which are reflective of the increase in short term market interest rates by
the Fed during 2005. The average rate paid for other interest bearing liabilities also
moved upward as a result of the overall economic environment.

Interest expense on time deposits,
the largest component of total interest expense, increased $4.6 million or 36.2% to $17.3
million. The increase in interest expense on time deposits was equally attributed to a
$77.8 million increase in the average outstanding balance to $537.1 million and a 46 basis
point increase in average rates paid to 3.2%. Interest expense on savings deposits and
interest bearing demand deposits increased $924 thousand or 52.3% and $1.1 million 77.0%,
respectively. These increases were due primarily to an increase in the average rate paid
on savings and interest bearing demand deposits of 42 basis points and 43 basis points,
respectively. Average savings deposits and interest bearing demand deposits increased $7.8
million or 4.1% and $1.4 million or .6%, respectively.

Interest expense on federal funds
purchased and securities sold under agreements to repurchase increased $1.2 million or
102.9% due to an increase in the average rate paid of 170 basis points to 3.2%. The
increase in rate is mainly due to the increase in short term market interest rates by the
Fed during 2005. Interest expense on subordinated notes payable to unconsolidated trusts
was $623 thousand during 2005 and is related to the private offerings of preferred
securities through Company sponsored trusts totaling $25.0 million during July 2005.
Interest expense on other borrowed funds consists primarily of Federal Home Loan Bank
(FHLB) borrowings. Interest expense on other borrowed funds was relatively
unchanged at $2.1 million in 2005 compared to 2004.

# Net Interest Income

Net interest income is the most
significant component of the Companys earnings. Net interest income is the excess of
the interest income earned on earning assets over the interest paid for funds to support
those assets. The two most common metrics used to analyze net interest income are net
interest spread and net interest margin. Net interest spread represents the difference
between the yields on earning assets and the rates paid on interest bearing liabilities.
Net interest margin represents the percentage of net interest income to average earning
assets. Net interest margin will exceed net interest spread because of the existence of
noninterest bearing sources of funds, principally demand deposits and shareholders
equity, which are also available to fund earning assets. Changes in net interest income
and margin result from the interaction between the volume and the composition of earning
assets, their related yields, and the associated cost and composition of the interest
bearing liabilities. Accordingly, portfolio size, composition, and the related yields
earned and the average rates paid can have a significant impact on net interest spread and
margin. The table on the following page represents the major components of interest
earning assets and interest bearing liabilities on a tax equivalent basis. To compare the
tax-exempt asset yields to taxable yields, amounts are adjusted to pretax equivalents
based on the marginal corporate Federal tax rate of 35%.

Tax equivalent net interest income
was $48.5 million for 2005, an increase of $3.6 million or 7.9% compared to $44.9 million
in 2004. The net interest margin was 3.72%, a decline of 2 basis points from 3.74% in the
prior year. A decrease in the net interest spread accounts for 10 basis points of the
lower margin while the impact of noninterest bearing sources of funds offset the lower
spread by 8 basis points. The effect of noninterest bearing sources of funds on net
interest margin is reflective of an increasing overall interest rate environment. The
effect of noninterest bearing sources of funds on net interest margin typically increases
in a rising rate environment.

During 2005, the tax equivalent yield
on total earning assets increased 50 basis points to 5.8% and the cost of funds increased
by 60 basis points to 2.5%, resulting in the 10 basis point decline in spread noted above.
Although the cost of funds rose faster than the rate earned on earning assets, net
interest income increased because earning assets are greater than interest bearing
liabilities. The tax equivalent spread between rates earned on earning assets and rates
paid on interest bearing liabilities totaled 3.4% for 2005 compared to 3.5% a year
earlier.

The Company remains proactive in
management of the rate sensitive components of both its assets and liabilities. This task
continues to be challenging due to competitive market factors and the effects of a dynamic
interest rate environment, that is, however, still relatively low in a historical context.
Beginning in 2004, the Fed increased the short-term federal funds rate five times totaling
125 basis points. This trend continued throughout 2005, with eight additional rate
increases totaling 200 basis points. Predicting the movement of future interest rates is
uncertain. During the past year, the average rates on the two most significant components
of net interest income for the Company, loans and time deposits, both increased. Should
interest rates continue to increase, the Companys cost of funds may also increase
and could continue to increase faster than the yields on earning assets, resulting in even
smaller net interest margins. Should interest rates on the Companys earning assets
and interest paying liabilities begin to decline, the Companys yield on earning
assets could potentially decrease faster than its cost of funds.

|Distribution of Assets, Liabilities and Shareholders' Equity: Interest Rates and Interest Differential
|------------------------------------------------------------------------------------------------------
|
|
|Earning Assets                                                                                        
|Investment securities                                                                                 
|Taxable                                                                                               
|Nontaxable(1)                                                                                         
|Time deposits with banks,                                                                             
|federal funds sold and                                                                                
|securities purchased under                                                                            
|agreements to resell                                                                                  
|Loans (1,2,3)                                                                                         
|                                                                                                      
|Total earning assets                                                                                  
|                                                                                                      
|Allowance for loan losses                                                                             
|                                                                                                      
|Total earning assets, net of                                                                          
|allowance for loan  losses                                                                            
|                                                                                                      
|Nonearning Assets                                                                                     
|Cash and due from banks                                                                               
|Premises and equipment, net                                                                           
|Other assets                                                                                          
|                                                                                                      
|Total assets                                                                                          
|                                                                                                      
|Interest Bearing Liabilities                                                                          
|Deposits                                                                                              
|Interest bearing demand                                                                               
|Savings                                                                                               
|Time                                                                                                  
|Federal funds purchased and                                                                           
|securities sold under                                                                                 
|agreements to repurchase                                                                              
|Other borrowed funds                                                                                  
|                                                                                                      
|Total interest                                                                                        
|bearing  Liabilities                                                                                  
|                                                                                                      
|Noninterest Bearing Liabilities                                                                       
|Commonwealth of Kentucky                                                                              
|deposits                                                                                              
|Other demand deposits                                                                                 
|Other liabilities                                                                                     
|                                                                                                      
|Total liabilities                                                                                     
|                                                                                                      
|Shareholders' equity                                                                                  
|                                                                                                      
|Total liabilities and                                                                                 
|shareholders' equity                                                                                  
|                                                                                                      
|Net interest income                                                                                   
|TE basis adjustment                                                                                   
|                                                                                                      
|Net interest income                                                                                   
|                                                                                                      
|Net interest spread                                                                                   
|Effect of noninterest                                                                                 
|bearing sources of funds                                                                              
|                                                                                                      
|Net interest margin                                                                                   
|                                                                                                      
|                                                                                                      

(1) Income and yield stated at a fully tax equivalent basis using the marginal
          corporate Federal tax rate of 35%. (2) Loan balances include
          principal balances on nonaccrual loans. (3) Loan fees included in
          interest income amounted to $2.4 million, $2.2 million, and $2.1 million for
          2005, 2004, and 2003, respectively.

The following table is an analysis of
the change in net interest income.

|Analysis of Changes in Net Interest Income (tax equivalent basis)
|-----------------------------------------------------------------
|
|
|Interest Income                                                  
|Taxable investment securities                                    
|Nontaxable investment securities(2)                              
|Time deposits with banks, federal funds                          
|sold and securities purchased under                              
|agreements to resell                                             
|Loans(2)                                                         
|                                                                 
|Total interest income                                            
|                                                                 
|Interest Expense                                                 
|Interest bearing demand deposits                                 
|Savings deposits                                                 
|Time deposits                                                    
|Federal funds purchased and securities sold                      
|under agreements to repurchase                                   
|Other borrowed funds                                             
|                                                                 
|Total interest expense                                           
|                                                                 
|Net interest income                                              
|                                                                 
|Percentage change                                                
|                                                                 
|                                                                 

(1) The changes which are not solely due to rate or volume are allocated on a percentage basis using the absolute values of rate and volume variances as a
          basis for allocation.(2) Income stated at fully tax equivalent basis using the marginal corporate Federal tax rate of 35%.

# Noninterest Income

Noninterest income totaled $20.5
million for 2005, an increase of $2.8 million or 15.7% compared to $17.8 million in the
prior year. Noninterest income represented 21.7% of total revenue at year-end 2005, a
decline of 54 basis points from 22.3% for 2004. The increase in noninterest income is due
primarily to higher allotment processing fees of $1.5 million or 136.3% attributed to the
FiNET acquisition. Other significant increases in noninterest income include service
charges and fees on deposits of $1.0 million or 12.2%, gains on the sale of mortgage loans
of $396 thousand or 107.0%, and a one-time $700 thousand gain on the sale of the
Companys credit card portfolio in the first quarter of 2005. Service charges and
fees on deposits were led by a $917 thousand increase in account fees related to the FiNET
acquisition attributed in part due to the timing of the acquisition. The increased gains
on the sale of mortgage loans are reflective of a $16.9 million or 88.8% increase in loans
sold in the comparison and is attributed mainly to the establishment of Pro Mortgage
during 2004. Notable declines in noninterest income in the comparison include securities
gains of $394 thousand resulting from lower selling activity, lower non-deposit related
service charges, commissions, and fees of $353 thousand or 12.9% occurring over a broad
range of categories, and income from bank owned life insurance of $235 thousand or 15.9%
due to lower crediting rates on the underlying investments.

# Noninterest Expense

Total noninterest expense was $46.1
million for 2005, an increase of $4.2 million or 9.9% compared to 2004. The increase in
noninterest expense occurred across a broad range of line items and is generally
attributed to the Companys business expansion efforts that began during the last
half of 2004. The most significant increases were salaries and employee benefits, which
increased $1.7 million or 7.4%, net occupancy and equipment expenses of $725 thousand or
13.7%, and amortization of intangibles of $672 thousand.

The increase in salaries and employee
benefits was driven by a 7.9% increase in the average number of full time equivalent
employees to 521 from 484 due to business expansion activity. Salaries and related payroll
taxes increased $1.7 million or 9.7% to $19.7 million due to increased personnel and
normal salary increases. Employee benefit expenses increased $217 thousand or 4.8%
primarily due to increased health care costs. Noncash compensation expense related to the
Companys nonqualified stock option plan declined $273 thousand or 100% due to the
structure of the vesting schedule. All options for which the Company had previously
recorded noncash compensation expense became fully vested during the fourth quarter of
2004. Therefore, there was no compensation expense recorded for these stock options during
2005. The number of full time equivalent employees increased to 570 from 514 reported at
the prior year-end. This increase includes 58 additional employees at Citizens Northern.

Occupancy expense, net of rental
income, increased $384 thousand or 13.7% and totaled $3.2 million. The increase was driven
by the Companys business acquisitions and expansion along with normal increases,
primarily in utilities costs. Equipment expenses were $2.8 million, an increase of $341
thousand or 13.8% that was driven by business expansion. Data processing and
communications expense rose $241 thousand or 5.8% to $4.4 million. The increase is
attributed to larger processing volumes. All other noninterest expenses increased $1.5
million or 15.4% to $11.2 million from $9.7 million. Included in this increase is $310
thousand of amortization expense of core deposit intangibles and $362 thousand of customer
relationship intangibles related to the timing of the Companys acquisition activity
during 2004 and 2005. Additionally, there was an increase in auditing expenses of $315
thousand in the current twelve-month period compared to the same period in 2004 driven by
Sarbanes-Oxley compliance and business expansion, a $272 thousand increase in net expenses
attributed to the Companys foreclosed real estate properties, and increases in other
general expenses relating to the Companys acquisitions and business expansion
activity that began during 2004. The increase in net expenses attributed to the
Companys foreclosed real estate properties is unusually high since there was $123
thousand in net gains reported in the comparable period a year earlier.

# Income Tax

Income tax expense for 2005 was $4.3
million, an increase of $1.3 million or 41.4% from the previous year. The effective tax
rate was 21.3% for the current year, an increase of 290 basis points from 18.4% in 2004.
The increase in the effective tax rate is due to increased revenues from taxable sources
and a decrease in revenue from nontaxable investment securities.

# FINANCIAL CONDITION

Total assets were $1.7 billion on
December 31, 2005, an increase of $275.4 million or 19.7% from the prior year-end. The
growth in assets was driven by a $181.6 million or 21.0% increase in net loans, followed
by a $54.2 million or 68.4% increase in cash and cash equivalents, and $20.9 million of
additional goodwill. These increases were boosted by the acquisition of Citizens Northern
in December 2005. At year-end 2005, Citizens Northern had $152.7 million of net loans,
$9.5 million of cash and cash equivalents, and $20.7 million of goodwill. The increase in
cash and cash equivalents was also fueled by the $25.0 million proceeds from the
Companys trust preferred securities offering during the third quarter of 2005. The
proceeds from the trust preferred securities offering were used to fund the cash portion
of the Citizens Northern acquisition, with substantially all of the payments occurring
subsequent to December 31, 2005. Total deposits were $1.3 billion at December 31, 2005, an
increase of $193.3 million or 17.0% due mainly to the Citizens Northern acquisition.
Citizens Northern had outstanding deposits of $175.0 million at year-end 2005.
Subordinated notes payable to unconsolidated trusts grew $25.8 million as a result of the
previously mentioned trust preferred securities offering used to fund the cash portion of
the Citizens Northern acquisition. Other liabilities increased $24.6 million mainly due to
the Companys accrual of $21.8 million for the outstanding cash portion of the
purchase price of Citizens Northern that was subsequently paid during January 2006.
Shareholders equity increased $22.8 million or 17.3% due mainly to $18.2 million in
stock issued in connection with the Citizens Northern acquisition. Retained earnings grew
$6.8 million or 4.5% due to $15.8 million in net income offset by $9.0 million in
dividends declared. Accumulated other comprehensive income declined $2.6 million as a
result of unrealized losses (net of tax) from the Companys available for sale
investment securities portfolio.

Management of the Company considers
it noteworthy to understand the relationship between the Companys principal
subsidiary, Farmers Bank & Capital Trust Co., and the Commonwealth of Kentucky.
Farmers Bank provides various services to state agencies of the Commonwealth. As the
depository for the Commonwealth, checks are drawn on Farmers Bank by these agencies, which
include paychecks and state income tax refunds. Farmers Bank also processes vouchers of
the WIC (Women, Infants and Children) program for the Cabinet for Human Resources. The
Banks investment department also provides services to the Teachers Retirement
systems. As the depository for the Commonwealth, large fluctuations in deposits are likely
to occur on a daily basis. Therefore, reviewing average balances is important to
understanding the financial condition of the Company.

On an average basis, total assets
were $1.5 billion for 2005, an increase of $114.7 million or 8.5% from year-end 2004.
Average earning assets, primarily loans and securities, were $1.3 billion for 2005, an
increase of $103.4 million or 8.6% compared to 2004. Average earning assets represent
89.19% of total average assets on December 31, 2005, an increase 9 basis points compared
to 89.10% at year-end 2004.

# Loans

Loans, net of unearned income,
totaled $1.1 billion on December 31, 2005, an increase of $181.3 million or 20.7% from
$876.7 million at year-end 2004. Higher balances were recorded throughout much of the loan
portfolio, with the exception of consumer installment loans and lease financing. Real
estate lending increased $139.5 million or 22.2% in the comparison, led by $102.1 million
attributed to Citizens Northern. Real estate mortgage loans make up 64.0% of the total net
loans outstanding at December 31, 2005 and increased $112.5 million or 19.9% compared to a
year earlier. Real estate construction loans grew $27.1 million or 42.9% from year-end
2004 mainly through internal growth. Commercial, financial, and agricultural loans
increased $53.0 million or 39.6% to $187.0 million with Citizens Northern contributing
$47.9 million or 90.4% of the increase. Installment loans and lease financing were $65.4
million and $38.1 million, respectively, at year-end 2005. This represents a decrease of
$9.8 million or 13.1% and $1.4 million or 3.5%, respectively in the year-end comparisons.
On average, loans represented 69.2% of earning assets during 2005 compared to 68.2% for
2004. When loan demand declines, the available funds are redirected to lower earning
temporary investments or investment securities, which typically involve a decrease in
credit risk and lower yields.

The composition of the loan
portfolio, net of unearned income, is summarized in the table below.

|                      
|----------------------
|
|Commercial, financial,
|and agricultural      
|Real estate -         
|construction          
|Real estate mortgage -
|residential           
|Real estate mortgage -
|farmland and other    
|commercial enterprises
|Installment           
|Lease financing       
|                      
|Total                 
|                      

The following table presents
commercial, financial, and agricultural loans and real estate construction loans
outstanding at December 31, 2005 which, based on remaining scheduled repayments of
principal, are due in the periods indicated.

|Loan Maturities                        
|---------------------------------------
|
|Commercial, financial, and agricultural
|Real estate - construction             
|                                       
|Total                                  
|                                       

The table below  presents
 commercial,  financial,  and  agricultural  loans and real estate  construction  loans
 outstanding at December 31, 2005 that are due after one year, classified according to
sensitivity to changes in interest rates.

|Interest Sensitivity               
|-----------------------------------
|
|Due after one but within five years
|Due after five years               
|                                   
|Total                              
|                                   

# Asset Quality

The Companys loan portfolio is
subject to varying degrees of credit risk. Credit risk is mitigated by diversification
within the portfolio, limiting exposure to any single customer or industry, standard
lending policies and underwriting criteria, and collateral requirements. The Company
maintains policies and procedures to ensure that the granting of credit is done in a sound
and consistent manner. This includes policies on a company-wide basis that require certain
minimum standards to be maintained. However, the policies also permit the individual
subsidiary companies authority to adopt standards that are no less stringent than those
included in the company-wide policies. Credit decisions are made at the subsidiary bank
level under guidelines established by policy. The Companys internal audit department
performs loan reviews at each subsidiary bank during the year. This loan review evaluates
loan administration, credit quality, documentation, compliance with Company loan
standards, and the adequacy of the allowance for loan losses on a consolidated and
subsidiary basis.

The provision for loan losses
represents charges made to earnings to maintain an allowance for loan losses at an
adequate level based on credit losses specifically identified in the loan portfolio, as
well as managements best estimate of probable loan losses in the remainder of the
portfolio at the balance sheet date. The allowance for loan losses is a valuation
allowance increased by the provision for loan losses and decreased by net charge-offs.
Loan losses are charged against the allowance when management believes the
uncollectibility of a loan is confirmed. Subsequent recoveries, if any, are credited to
the allowance.

Management estimates the allowance
balance required using a risk-rated methodology. Many factors are considered when
estimating the allowance. These include, but are not limited to, past loan loss
experience, an assessment of the financial condition of individual borrowers, a
determination of the value and adequacy of underlying collateral, the condition of the
local economy, an analysis of the levels and trends of the loan portfolio, and a review of
delinquent and classified loans. The allowance for loan losses consists of specific and
general components. The specific component relates to loans that are individually
classified as impaired or loans otherwise classified as substandard or doubtful. The
general component covers non-classified loans and is based on historical loss experience
adjusted for current risk factors. Allocations of the allowance may be made for specific
loans, but the entire allowance is available for any loan that, in managements
judgment, should be charged off. Actual loan losses could differ significantly from the
amounts estimated by management.

The risk-rated methodology includes
segregating watch list and past due loans from the general portfolio and allocating
specific reserves to these loans depending on their status. For example, watch list loans,
which may be identified by the internal loan review risk-rating system or by regulatory
examiner classification, are assigned a certain loss percentage while loans past due 30
days or more are assigned a different loss percentage. Each of these percentages consider
past experience as well as current factors. The remainder of the general loan portfolio is
segregated into three components having similar risk characteristics as follows:
commercial loans, consumer loans, and real estate loans. Each of these components is
assigned a loss percentage based on their respective three year historical loss
percentage. Additional allocations to the allowance may then be made for subjective
factors, such as those mentioned above, as determined by senior managers who are
knowledgeable about these matters.

While management considers the
allowance for loan losses to be adequate based on the information currently available,
additional adjustments to the allowance may be necessary due to changes in the factors
noted above. Borrowers may experience difficulty in periods of economic deterioration, and
the level of nonperforming loans, charge-offs, and delinquencies could rise and require
additional increases in the provision. Also, regulatory agencies, as an integral part of
their examinations, periodically review the allowance for loan losses. These reviews could
result in additional adjustments to the provision based upon their judgments about
relevant information available during their examination.

The provision for loan losses totaled
$718 thousand in 2005, a decrease of $1.4 million or 66.3% compared to $2.1 million for
2004. Total net charge-offs for the Company decreased $152 thousand or 5.8% for year-end
2005 compared to 2004 and were as follows for 2005: real estate lending $452 thousand,
installment loans $1.1 million, lease financing $558 thousand, and commercial, financial,
and agricultural loans $317 thousand. The change in net charge-offs for 2005 compared to
2004 were as follows: commercial, financial, and agriculture decreased $489 thousand or
60.7%; real estate lending decreased $112 thousand or 19.9%; installment loans decreased
$21 thousand or 1.8%; and lease financing increased $470 thousand or 534.1%. The decline
in commercial, financial, and agriculture loans and real estate loans charged off is
attributed in part to the unusually high charge-offs in the prior year related to the
Citizens Georgetown acquisition. The increase in charge-offs related to lease financing is
mainly attributed to a single credit in the manufacturing industry. Net charge-offs
equaled .27% of average loans for 2005, a decline of 5 basis points compared to the prior
year-end. The allowance for loan losses, which included an increase of $1.4 million on
December 6, 2005 as a result of the Citizens Northern acquisition, was $12.5 million at
year-end 2005 and represented 1.18% of loans net of unearned income at year-end 2005
compared to 1.46% at year-end 2004. The allowance for loan losses as a percentage of
nonperforming loans totaled 197.5% and 127.8% at year-end 2005 and 2004, respectively.
Management continues to emphasize collection efforts and evaluation of risks within the
portfolio. The composition of the Companys loan portfolio continues to be diverse
with no significant concentration to any individual or industry.

The table below summarizes the loan
loss experience for the past five years.

|                                             
|---------------------------------------------
|
|Balance of allowance for loan losses at      
|beginning of year                            
|Acquisition of Citizens Bank (Kentucky), Inc.
|Acquisition of Citizens Bancorp, Inc.        
|Loans charged off:                           
|Commercial, financial, and agricultural      
|Real estate                                  
|Installment loans to individuals             
|Lease financing                              
|                                             
|Total loans charged off                      
|                                             
|Recoveries of loans previously charged off:  
|Commercial, financial, and agricultural      
|Real estate                                  
|Installment loans to individuals             
|Lease financing                              
|                                             
|Total recoveries                             
|                                             
|Net loans charged off                        
|                                             
|Additions to allowance charged to expense    
|                                             
|Balance at end of year                       
|                                             
|Average loans net of unearned income         
|Ratio of net charge-offs  during year to     
|average loans, net of unearned income        
|                                             

The following table presents an
estimate of the allocation of the allowance for loan losses by type for the date
indicated. Although specific allocations exist, the entire allowance is available to
absorb losses in any particular category.

|Allowance For Loan Losses              
|---------------------------------------
|
|Commercial, financial, and agricultural
|Real estate                            
|Installment loans to individuals       
|Lease financing                        
|                                       
|Total                                  
|                                       

# Nonperforming Assets

Nonperforming assets for the Company
include nonperforming loans, other real estate owned, and other foreclosed assets.
Nonperforming loans consist of nonaccrual loans, loans past due 90 days on which interest
is still accruing, and restructured loans. Generally, the accrual of interest on loans is
discontinued when it is determined that the collection of interest or principal is
doubtful, or when a default of interest or principal has existed 90 days or more, unless
such loan is well secured and in the process of collection.

Nonperforming assets totaled $15.1
million at year-end 2005, an increase of $1.3 million or 9.6% compared to 2004. The
increase is primarily due to a $5.1 million or 135.3% increase in other real estate owned
partially offset by a $3.2 million decline in nonaccrual loans. The increase in other real
estate owned includes $6.3 million of the underlying real estate collateral on a pool of
loans to a financially troubled builder transferred to the Company through foreclosure.
The decline in nonperforming loans was driven primarily by two extensions of credit
secured by real estate. One involves a balance of $1.3 million to a financially trouble
builder secured by multifamily residential real estate, the other relates to $1.4 million
secured by commercial real estate. The underlying collateral securing the credit to the
financially troubled builder was transferred to the Company through foreclosure during the
first quarter of 2005. The $1.4 million commercial real estate credit was collected in the
first quarter of 2005. Nonperforming loans represent .6% of loans net of unearned income
at year-end 2005, a decrease of 54 basis points from 1.1% compared to year-end 2004.
Information pertaining to nonperforming loans and assets is presented in the table below.

|                                                 
|-------------------------------------------------
|
|Loans accounted for on nonaccrual basis          
|Loans past due 90 days or more and still accruing
|                                                 
|Total nonperforming loans                        
|Other real estate owned                          
|Other foreclosed assets                          
|                                                 
|Total nonperforming assets                       
|                                                 

# Temporary Investments

Temporary investments consist of
interest bearing deposits in other banks and federal funds sold and securities purchased
under agreements to resell. The Company uses these funds in the management of liquidity
and interest rate sensitivity. At December 31, 2005, temporary investments were $58.5
million, an increase of $21.6 million or 58.7% compared to $36.8 million at year-end 2004.
In 2005, temporary investments averaged $68.0 million, an increase of $27.4 million or
67.7% from year-end 2004. The increase is primarily a result of the Companys net
funding position, which was driven by an increase in average interest bearing deposits of
$87.0 million or 14.7% ($10.5 million attributed to Citizens Northern) and the impact of
the $25.0 million proceeds from the Companys trust preferred securities offering
during the third quarter of 2005. Temporary investments are reallocated as loan demand and
other investment alternatives present the opportunity.

# Investment Securities

The investment securities portfolio
is comprised primarily of U.S. Government agency securities, mortgage-backed securities,
and tax-exempt securities of states and political subdivisions. Total investment
securities were $364.7 million on December 31, 2005, a decrease of $4.4 million or 1.2%
from year-end 2004.

The funds made available from
maturing or called bonds have been redirected as necessary to fund higher yielding loan
growth, reinvested to purchase additional investment securities, or otherwise employed to
improve the composition of the balance sheet. The purchase of nontaxable obligations of
states and political subdivisions is one of the primary means of managing the
Companys tax position. The impact of the alternative minimum tax related to the
Companys ability to acquire tax-free obligations at an attractive yield is routinely
monitored.

Investment securities averaged $333.6
million in total for the current year, a decrease of $7.7 million or 2.3%. The decrease in
average investment securities occurred almost entirely in the taxable portfolio. The
decrease in average investment securities was driven by a $39.9 million net decline in
mortgage-backed securities, which was partially offset by net additional purchases of U.S.
Government agency securities averaging $33.8 million during the current year. The Company
had a net unrealized loss on available for sale investment securities of $2.9 million at
December 31, 2005 compared to a net unrealized gain of $1.1 million at year-end 2004. The
$4.0 million decrease in the current period is due primarily to the impact of changing
economic conditions, including an increase in market interest rates, particularly
short-term rates, which have generally lowered the value of the investment portfolio at
the end of the current period. As overall market interest rates have moved upward during
the current period, the portfolio has declined in value. Market values of fixed rate
investments are inversely related to changes in market interest rates.

On December 31, 2005, available for
sale securities made up 95.8% of the total investment securities, up from 94.6% from a
year earlier. U.S. Government agencies were $151.2 million and $146.1 million at year-end
2005 and 2004, respectively. This represents 43.3% of the total available for sale
securities and 41.5% of the total portfolio at year-end 2005. At year-end 2004, U.S.
Government agencies made up 41.8% of the total available for sale securities and 39.6% of
the total portfolio. Mortgage-backed securities in the available for sale portfolio were
$100.8 million at year-end 2005, a decrease of $11.8 million or 10.5% from year-end 2004.
Mortgage-backed securities accounted for 28.8% and 32.2% of the available for sale
securities portfolio at December 31, 2005 and 2004, respectively. Obligations of states
and political subdivisions in the available for sale and held to maturity portfolio were
$89.1 million and $15.1 million, respectively at December 31, 2005. This represents 25.5%
and 100% of the available for sale and held to maturity portfolio, respectively.

The Company realized $3 thousand in
net losses on the sale of available for sale investment securities during 2005, a decrease
of $394 thousand compared to net realized gains of $391 thousand during 2004. The decrease
in net gains on the sale of available for sale investment securities was due to lower
sales activity from normal asset/liability management.

The following table summarizes the
carrying values of investment securities on December 31, 2005, 2004, and 2003. The
investment securities are divided into available for sale and held to maturity securities.
Available for sale securities are carried at the estimated fair value and held to maturity
securities are carried at amortized cost.

|                                                
|------------------------------------------------
|
|
|Obligations of U.S. Government agencies         
|Obligations of states and political subdivisions
|Mortgage-backed securities                      
|U.S. Treasury securities                        
|Money market mutual funds                       
|Equity securities                               
|                                                
|Total                                           
|                                                

The following table presents an
analysis of the contractual maturity and tax equivalent weighted average interest rates of
investment securities at December 31, 2005. For purposes of this analysis, available for
sale securities are stated at fair value and held to maturity securities are stated at
amortized cost. Equity securities in the available for sale portfolio consist of
restricted FHLB and Federal Reserve Board stocks, which have no stated maturity and are
not included in the maturity schedule that follows.

|Available for Sale                              
|------------------------------------------------
|
|
|Obligations of U.S. Government agencies         
|Obligations of states and political subdivisions
|Mortgage-backed securities                      
|U.S. Treasury securities                        
|Money market mutual funds                       
|                                                
|Total                                           
|                                                

|Held to Maturity                                
|------------------------------------------------
|
|
|Obligations of states and political subdivisions
|                                                

The calculation of the weighted
average interest rates for each category is based on the weighted average costs of the
securities. The weighted average tax rates on exempt states and political subdivisions are
computed based on the marginal corporate Federal tax rate of 35%.

# Deposits

The Companys primary source of
funding for its lending and investment activities results from its customer deposits,
which consist of noninterest and interest bearing demand, savings, and time deposits. On
December 31, 2005, deposits totaled $1.3 billion, an increase of $193.3 million or 17.0%
from year-end 2004. The increase in deposits was due to a $168.3 million or 17.4% increase
in interest bearing deposits coupled with a $25.0 million or 14.4% increase in noninterest
bearing deposits. The increase in interest bearing deposits include higher time deposits
of $91.0 million or 17.6%, higher savings deposits of $25.5 million or 12.6%, and higher
interest bearing demand deposits of $51.8 million or 21.0%. The increase in each deposit
category was mainly attributed to the Citizens Northern acquisition, which added $156.2
million in interest bearing deposits at year-end 2005 as follows: time deposits $71.6
million; savings deposits $30.2 million; and interest bearing demand $54.4 million. End of
period noninterest bearing deposits grew mainly as a result of the Citizens Northern
acquisition, which added $18.8 million in noninterest bearing deposits in the year-to-year
comparison. Excluding the additional deposits related to the Citizens Northern
acquisition, noninterest bearing deposits increased $6.2 million or 3.6%, with activity
related to the Commonwealth of Kentucky deposits relatively unchanged. Average total
deposits were $1.2 billion for 2005, an increase of $101.4 million or 9.5% compared to
2004. Increases in average deposits were consistent throughout the entire deposit
portfolio as follows: noninterest bearing demand of $14.3 million or 8.0%; interest
bearing demand of $1.4 million or .6%; savings accounts of $7.8 million or 4.1%; and time
deposits of $77.8 million or 16.9%. The Citizens Northern acquisition boosted average
deposits by $11.6 million as follows: time deposits $4.8 million; savings deposits $2.0
million; interest bearing demand $3.6 million; and noninterest bearing demand $1.2
million.

During 2005, total average interest
bearing deposits were $979.5 million, an increase of $87.0 million or 9.8% from $892.5
million for 2004. Average noninterest bearing deposits were $194.3 million, an increase of
$14.3 million or 8.0% from $180.0 million in the prior year.

A summary of average balances and
rates paid on deposits follows.

|                          
|--------------------------
|
|
|Noninterest bearing demand
|Interest bearing demand   
|Savings                   
|Time                      
|                          
|Total                     
|                          

Maturities of time deposits of
$100,000 or more outstanding at December 31, 2005 are summarized as follows.

|                        
|------------------------
|
|3 months or less        
|Over 3 through 6 months 
|Over 6 through 12 months
|Over 12 months          
|                        
|Total                   
|                        

# Short-term Borrowings

Short-term borrowings primarily
consist of federal funds purchased and securities sold under agreements to repurchase with
year-end balances of $71.7 million, $59.8 million, and $56.7 million in 2005, 2004, and
2003, respectively. Such borrowings are generally on an overnight basis. Other short-term
borrowings consist of FHLB borrowings totaling $0, $1.0 million, and $0 at year-end 2005,
2004, and 2003, respectively, and demand notes issued to the U.S. Treasury under the
treasury tax and loan note option account totaling $779 thousand, $791 thousand, and $418
thousand in 2005, 2004, and 2003 respectively. A summary of short-term borrowings is as
follows.

|                                     
|-------------------------------------
|
|Amount outstanding at year-end       
|Maximum outstanding at any month-end 
|Average outstanding                  
|Weighted average rate during the year
|                                     

# Long-term Borrowings

Prior to 2005, substantially all of
the Companys long-term borrowings consisted of FHLB advances to the Companys
subsidiary banks. These advances are secured by restricted holdings of FHLB stock that the
banks are required to own as well as certain mortgage loans as required by the FHLB. Such
advances are made pursuant to several different credit programs, which have their own
interest rates and range of maturities. Interest rates on FHLB advances are generally
fixed and range between 2.91% and 7.10%, with a weighted average rate of 4.17%, and
maturities of up to 18 years. Approximately $29.0 million of the total long-term advances
from the FHLB are convertible to a floating interest rate. These advances may convert to a
floating interest rate indexed to three-month LIBOR only if LIBOR equals or exceeds 7%. At
year-end 2005, the three-month LIBOR was 4.54%. FHLB advances are generally used to
increase the Companys lending activities and to aid the efforts of asset and
liability management by utilizing various repayment options offered by the FHLB. Long-term
advances from the FHLB totaled $50.8 million at December 31, 2005, a decrease of $1.8
million or 3.4% from year-end 2004.

In July 2005, the Company completed
two private offerings of trust preferred securities through two separate Delaware
statutory trusts sponsored by the Company. Farmers Capital Bank Trust I (Trust
I) sold $10.0 million of preferred securities and Farmers Capital Bank Trust II
(Trust II) sold $15.0 million of preferred securities (Trust I and Trust II
are hereafter collectively referred to as the Trusts). The proceeds from the
offering were used to fund the cash portion of the Citizens Bancorp acquisition. The
Company owns all of the common securities of each of the Trusts.

The Trusts used the proceeds from the
sale of preferred securities, plus capital contributed to establish the trusts, to
purchase the Companys junior subordinated notes in amounts and bearing terms that
parallel the amounts and terms of the respective preferred securities. The subordinated
notes mature in 2035 and bear a floating interest rate (current three-month LIBOR plus 150
basis points in the case of the notes held by Trust I and current three-month LIBOR plus
165 basis points in the case of the notes held by Trust II). Interest on the notes is
payable quarterly.

The subordinated notes are redeemable
in whole or in part, without penalty, at the Companys option on or after September
30, 2010 and mature on September 30, 2035. The notes are junior in right of payment of all
present and future senior indebtedness. At December 31, 2005, the balance of the
subordinated notes payable to Trust I and Trust II was $10.3 million and $15.5 million
respectively. The interest rates in effect as of the last determination date in 2005 were
5.52% and 5.67% for Trust I and Trust II, respectively.

# Contractual Obligations

The Company is contractually
obligated to make payments as follows.

|                          
|--------------------------
|
|
|Long-term debt            
|Subordinated notes payable
|Operating leases          
|Capital lease obligations 
|                          
|Total                     
|                          

Long-term FHLB debt represents FHLB
advances pursuant to several different credit programs. Long-term FHLB debt and
subordinated notes payable are more fully described under the caption Long-Term
Borrowings above and in Note 7 of the Companys 2005 audited consolidated
financial statements. Capital lease obligations represent amounts relating to the
acquisition of various data processing hardware and software. Operating leases include
standard business equipment used in the Companys day-to-day business as well as the
lease of certain branch sites. Operating lease terms generally range from one to five
years, with the ability to extend certain branch site leases at the Companys option.

# Effects of Inflation

The majority of the Companys
assets and liabilities are monetary in nature. Therefore, the Company differs greatly from
most commercial and industrial companies that have significant investments 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 noninterest expense, which tends to
rise during periods of general inflation.

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

# Market Risk Management

Market risk is the risk of loss
arising from adverse changes in market prices and rates. The Companys market risk is
comprised primarily of interest rate risk created by its core banking activities of
extending loans and receiving deposits. The Companys success is largely dependent
upon its ability to manage this risk. Interest rate risk is defined as the exposure of the
Companys net interest income to adverse movements in interest rates. Although the
Company manages other risks, such as credit and liquidity risk, management considers
interest rate risk to be its most significant risk, which could potentially have the
largest and a material effect on the Companys financial condition and results of
operations. A sudden and substantial change in interest rates may adversely impact the
Companys earnings to the extent that the interest rates earned on assets and paid on
liabilities do not change at the same speed, to the same extent, or on the same basis.
Other events that could have an adverse impact on the Companys performance include
changes in general economic and financial conditions, general movements in market interest
rates, and changes in consumer preferences. The Companys primary purpose in managing
interest rate risk is to effectively invest the Companys capital and to manage and
preserve the value created by its core banking business.

The Company has a Corporate Asset and
Liability Management Committee (ALCO). ALCO monitors the composition of the
balance sheet to ensure comprehensive management of interest rate risk and liquidity. ALCO
also provides guidance and support to each ALCO of the Companys subsidiary banks and
is responsible for monitoring risks on a company-wide basis. ALCO has established minimum
standards in its asset and liability management policy that each subsidiary bank must
adopt. However, the subsidiary banks are permitted to deviate from these standards so long
as the deviation is no less stringent than that of the Corporate policy.

The Company uses a simulation model
as a tool to monitor and evaluate interest rate risk exposure. The model is designed to
measure the sensitivity of net interest income and net income to changing interest rates
during the next twelve months. Forecasting net interest income and its sensitivity to
changes in interest rates requires the Company to make assumptions about the volume and
characteristics of many attributes, including assumptions relating to the replacement of
maturing earning assets and liabilities. Other assumptions include, but are not limited
to, projected prepayments, projected new volume, and the predicted relationship between
changes in market interest rates and changes in customer account balances. These effects
are combined with the Companys estimate of the most likely rate environment to
produce a forecast for the next twelve months. The forecasted results are then compared to
the effect of a gradual 200 basis point increase and decrease in market interest rates on
the Companys net interest income and net income. Because assumptions are inherently
uncertain, the model cannot precisely estimate net interest income or net income or the
effect of interest rate changes on net interest income and net income. Actual results
could differ significantly from simulated results.

At December 31, 2005, the model
indicated that if rates were to gradually increase by 200 basis points over the next
twelve months, then net interest income (TE) and net income would increase 1.7% and 4.1%,
respectively, compared to forecasted results. The model indicated that if rates were to
gradually decrease by 200 basis points over the next twelve months, then net interest
income (TE) and net income would decrease 4.1% and 10.1%, respectively, compared to
forecasted results.

In the current low interest rate
environment, it is not practical or possible to reduce certain deposit rates by the same
magnitude as rates on earning assets. The average rate paid on some of the Companys
deposits remains below 2%. This situation magnifies the models predicted results
when modeling a decrease in interest rates, as earning assets with higher yields have more
of an opportunity to reprice at lower rates than lower-rate deposits.

# LIQUIDITY

The Company uses a liquidity ratio to
help measure its ability to meet its cash flow needs. This ratio is monitored by ALCO at
both the bank level and on a consolidated basis. The liquidity ratio is based on current
and projected levels of sources and uses of funds. This measure is useful in analyzing
cash needs and formulating strategies to achieve desired results. For example, a low
liquidity ratio could indicate that the Companys ability to fund loans might become
more difficult. A high liquidity ratio could indicate that the Company may have a
disproportionate amount of funds in low yielding assets, which is more likely to occur
during periods of sluggish loan demand. The Companys liquidity position at year-end
2005 is relatively unchanged from year-end 2004, is within ALCO guidelines, and considered
by management to be at an appropriate level.

At the Parent Company level,
liquidity is primarily affected by the receipt of dividends from its subsidiary banks (see
Note 16 of the Companys 2005 audited consolidated financial statements) and cash
balances maintained. The Parent Companys primary uses of cash include the payment of
dividends to shareholders, repurchasing its common stock, business acquisitions, interest
expense on borrowings, and paying for general operating expenses. The primary source of
funds for the Parent Company is the receipt of dividends from its subsidiary banks. As of
December 31, 2005, combined retained earnings of the subsidiary banks were $60.8 million,
of which $10.8 million was available for the payment of dividends to the Parent Company
without obtaining prior approval from bank regulatory agencies. As a practical matter,
payment of future dividends is also subject to the maintenance of other capital ratio
requirements. Management expects that in the aggregate, its subsidiary banks will continue
to have the ability to dividend adequate funds to the Parent Company. In addition, the
Parent Company has a $10.0 million unsecured line of credit with an unrelated financial
institution available for general corporate purposes. This line of credit has not been
drawn upon and will mature on August 31, 2006. The Parent Company had cash balances of
$32.1 million at year-end 2005, an increase of $21.3 million or 197.6% from the prior
year-end. The increase in cash at the Parent Company is due primarily to cash proceeds
from the trust preferred securities offering during 2005 which was used to fund the cash
portion of the Citizens Bancorp acquisition subsequent to December 31, 2005. Other
significant cash flows of the Parent Company include the receipt of $7.5 million in
dividends from its subsidiaries and the payment of $8.9 million in dividend to its
shareholders. This compares to $8.5 million in dividends received from subsidiaries and
$8.9 million in dividends paid to shareholders during 2004. Each of the Companys
subsidiary banks continued to maintain well capitalized status as defined by
the FDIC subsequent to their dividend payments.

The Companys objective as it
relates to liquidity is to ensure that its subsidiary banks have funds available to meet
deposit withdrawals and credit demands without unduly penalizing profitability. In order
to maintain a proper level of liquidity, the subsidiary banks have several sources of
funds available on a daily basis that can be used for liquidity purposes. Those sources of
funds include the subsidiary banks core deposits, consisting of both business and
nonbusiness deposits; cash flow generated by repayment of principal and interest on loans
and investment securities; FHLB borrowings; and federal funds purchased and securities
sold under agreements to repurchase. While maturities and scheduled amortization of loans
and investment securities are generally a predictable source of funds, deposit outflows
and mortgage prepayments are influenced significantly by general interest rates, economic
conditions, and competition in our local markets. As of December 31, 2005, the Company had
$214.6 million in additional borrowing capacity under various FHLB, federal funds, and
other borrowing agreements.

For the longer term, the liquidity
position is managed by balancing the maturity structure of the balance sheet. This process
allows for an orderly flow of funds over an extended period of time. The Companys
ALCOs, both at the bank subsidiary level and on a consolidated basis, meet
regularly and monitors the composition of the balance sheet to ensure comprehensive
management of interest rate risk and liquidity.

Liquid assets consist of cash, cash
equivalents, and available for sale investment securities. At December 31, 2005, liquid
assets totaled $483.0 million, a $54.4 million or 12.7% increase compared to the prior
year-end. Cash and equivalents increased $54.2 million or 68.4% coupled with a slight
increase in available for sale investment securities of $248 thousand or .1% in the
comparison. The increase in cash and cash equivalents is due mainly to the overall net
funding position of the Company, which changes as loan demand, deposit levels, and other
sources and uses of funds fluctuate.

Net cash provided by operating
activities was $14.6 million in 2005, a decrease of $3.3 million or 18.2% from $17.9
million in the prior year. Net cash used in investing activities was $2.8 million during
2005 compared to $62.5 million a year earlier. The $59.7 million difference in the
comparison is attributed mainly to a decrease in net loans originated for investment of
$37.3 million and the Companys acquisition activity of $22.8 million. During 2004,
the Company purchased Citizens Georgetown and FiNET with a net cash outflow of $5.8
million and $6.6 million, respectively. During 2005, the Company purchased Citizens
Bancorp in which a significant amount of the cash purchase price was paid during 2006.
This resulted in a net cash inflow during 2005 of $10.6 million. In addition, the Company
paid $205 thousand in additional costs related to its prior year acquisitions. Net cash
provided by financing activities totaled $42.4 million for the year 2005. This compares to
net cash used in financing activities during 2004 of $3.3 million. This represents an
increase in cash flows of $45.7 million in the comparison and is due primarily to the
trust preferred securities offering of $25.0 million during 2005, a net increase in
internally generated deposit activity of $12.1 million, and a $9.2 million net increase in
federal funds purchased and securities sold under agreements to repurchase activity during
the current year as compared to a year earlier.

Information relating to off-balance
sheet arrangements, which for the Company comprise of commitments to extend credit and
standby letters of credit, is disclosed in Note 13 of the Companys 2005 audited
consolidated financial statements. These transactions are entered into in the ordinary
course of providing traditional banking services and are considered in managing the
Companys liquidity position. The Company does not expect these commitments to
significantly affect the liquidity position in future periods. The Company has not entered
into any contracts for financial derivative instruments such as futures, swaps, options,
or similar instruments.

# CAPITAL RESOURCES

Shareholders equity was $154.2
million on December 31, 2005. This represents an increase of $22.8 million or 17.3% from
year-end 2004 due mainly to $18.2 million in stock issued in connection with the Citizens
Bancorp acquisition. Retained earnings grew $6.8 million or 4.5% due to $15.8 million in
net income offset by $9.0 million in dividends declared.

Accumulated other comprehensive loss,
consisting of net unrealized holding losses on available for sale securities (net of tax),
was $1.9 million at December 31, 2005, a decrease of $2.6 million from an unrealized gain
of $700 thousand at year-end 2004. The decrease in the current period is due primarily to
the impact of changing economic conditions, including an increase in market interest
rates, particularly short-term rates, which have generally lowered the value of the
investment portfolio at the end of the current period. As overall market interest rates
have moved upward during the current period, the portfolio has declined in value. Market
values of fixed rate investments are inversely related to changes in market interest
rates.

Consistent with the objective of
operating a sound financial organization, the Companys goal is to maintain capital
ratios well above the regulatory minimum requirements. The Companys capital ratios
as of December 31, 2005, the regulatory minimums, and the regulatory standard for a
well-capitalized institution are as follows.

|                 
|-----------------
|
|Tier 1 risk-based
|Total risk-based 
|Leverage         
|                 

The capital ratios of each subsidiary
bank were in excess of the applicable minimum regulatory capital ratio requirements at
December 31, 2005.

The table below is an analysis of
dividend payout ratios and equity to asset ratios for the previous five years.

|                                                                  
|------------------------------------------------------------------
|
|Percentage of dividends declared to net Income                    
|Percentage of average shareholders' equity to average total assets
|                                                                  

# Share Buy Back Program

In January 2003, the Company
announced that it intended to purchase up to 300,000 additional shares of its outstanding
common stock. This was in addition to the stock purchase plans announced in July 2000 and
November 1998 to purchase 500,000 and 400,000 shares, respectively. The Company has
purchased 123,000 shares pursuant to the January 2003 announcement. Purchases are
dependent on market conditions and there is no guarantee as to the number of shares to be
purchased by the Company. Shares would be used for general corporate purposes. Consistent
with the objective of maximizing shareholder value, the Company considers the purchase of
its outstanding shares in a given price range to be a good investment of the
Companys available funds. At the time of the most recent announcement, the Company
had purchased nearly all of the previously authorized shares.

# Shareholder Information

As of February 8, 2006, there were
1,233 shareholders of record. This figure does not include individual participants in
security position listings.

# Stock Prices

Farmers Capital Bank
Corporations stock is traded on the National Association of Security Dealers
Automated Quotation System (NASDAQ) Capital Market tier of The NASDAQ Stock Market, with
sales prices reported under the symbol: FFKT. The table below lists the stock prices and
dividends declared for 2005 and 2004.

|Stock Prices  
|--------------
|
|2005          
|Fourth Quarter
|Third Quarter 
|Second Quarter
|First Quarter 
|              
|2004          
|Fourth Quarter
|Third Quarter 
|Second Quarter
|First Quarter 
|              

Dividends declared per share were
$1.32 for 2005 and 2004.

# Recently Issued
Accounting Standards

Please refer to the caption
Recently Issued But Not Yet Effective Accounting Standards in Note 1 of the
Companys 2005 audited consolidated financial statements.

# 2004 Compared to 2003

Consolidated net income for 2004 was
$13.4 million, an increase of $429 thousand or 3.3% compared to $13.0 million for 2003.
Basic and diluted net income per share for 2004 was $1.99 and $1.98, respectively. This
represented an increase of $.06 or 3.1% on both a basic and diluted basis. The Company
reported a $4.2 million increase in net interest income attributed to a combination of
higher interest income on loans and securities and lower interest expense, primarily on
deposits. Noninterest income declined $142 thousand or .8% while noninterest expenses
grew $4.4 million or 11.8% mainly as a result of the Citizens Georgetown and FiNET
acquisitions and the expansion of banking operations into the Lexington, Kentucky market.
The provision for loan losses and income taxes decreased $463 thousand or 17.9% and $343
thousand or 10.2%, respectively.

The general trend of the interest
rate environment for 2003 was downward primarily as a result of short-term interest rate
reductions taken by the Fed. The effects of the downward trend in general interest rates
for 2003 positively affect the Companys net interest income during 2004. A
significant amount of time deposits, the largest component of interest bearing
liabilities, repriced to lower rates and contributed to an increase in net interest income
for the 2004. The repricing of time deposits for the Company have generally taken longer
to occur than for other interest paying liabilities and interest earning assets due to
their fixed nature and maturity characteristics. During the last half of 2004, the trend
in short-term interest rates began to move upward as the short-term federal funds rate was
increased 125 basis points in five increments of 25 basis points each by the Fed. These
rate increases did not significantly impact the Companys net interest income during
2004 since 75 basis points of the increase occurred between September and year-end 2004.

Item 7A. Quantitative and
Qualitative Disclosures About Market Risk

The information required by this item
is incorporated by reference to Part II, Item 7 under the caption Market Risk
Management on pages 32 and 33 of this Form 10-K.

---

Item 8. Financial
Statements and Supplementary Data

# MANAGEMENTS
RESPONSIBILITY FOR FINANCIAL REPORTING

The management of Farmers Capital
Bank Corporation has the responsibility for preparing the accompanying consolidated
financial statements and for their integrity and objectivity. The statements were prepared
in accordance with accounting principles generally accepted in the United States of
America. The consolidated financial statements include amounts that are based on
managements best estimates and judgments. Management also prepared other information
in the annual report and is responsible for its accuracy and consistency with the
financial statements.

The Companys 2005 consolidated
financial statements have been audited by Crowe Chizek and Company LLC independent
accountants. Management has made available to Crowe Chizek and Company LLC all financial
records and related data, as well as the minutes of Boards of Directors meetings.
Management believes that all representations made to Crowe Chizek and Company LLC during
the audit were valid and appropriate.

# MANAGEMENTS REPORT
ON INTERNAL CONTROL OVER FINANCIAL REPORTING

The management of Farmers Capital
Bank Corporation is responsible for establishing and maintaining adequate internal control
over financial reporting. The Companys internal control system is designed to
provide reasonable assurance to the Companys management and Board of Directors
regarding the reliability of financial reporting and the presentation of published
financial statements. However, all internal control systems, no matter how well designed,
have inherent limitations.

The Companys management
assessed the effectiveness of the Companys internal control over financial reporting
as of December 31, 2005. In making this assessment, it used the criteria for effective
internal control over financial reporting set forth by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO) in Internal Control-Integrated
Framework. This assessment excluded internal control over financial reporting for
Citizens Bank of Northern Kentucky, Inc. (Citizens Northern) as permitted by
the Securities and Exchange Commission for current year acquisitions. Citizens Bancorp,
Inc., the former parent company of Citizens Northern, was acquired on December 6, 2005.
Citizens Northern represented 13.2% of consolidated assets at December 31, 2005 and .4% of
consolidated net income for 2005. Based on our assessment management concludes that, as of
December 31, 2005, the Companys internal control over financial reporting is
effective based on those criteria.

Our assessment of the effectiveness
of the Companys internal control over financial reporting as of December 31, 2005
has been audited by Crowe Chizek and Company LLC as stated in their report which appears
herein.

|                       |                                          
|---------------------- | -----------------------------------------
|/s/ G. Anthony Busseni | /s/ C Douglas Carpenter                  
|President and CEO      | Senior Vice President, Secretary, and CFO
|                       |                                          
|March 10, 2006        
|                      

---

# REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Board of Directors and
ShareholdersFarmers Capital Bank CorporationFrankfort, Kentucky

We have audited managements
assessment, included in the accompanying Managements Report on Internal Control Over
Financial Reporting, that Farmers Capital Bank Corporation maintained effective internal
control over financial reporting as of December 31, 2005, based on criteria established in
Internal Control  Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). Farmers Capital Bank
Corporation (the Company) management is responsible for maintaining effective
internal control over financial reporting and for its assessment of the effectiveness of
internal control over financial reporting. Our responsibility is to express an opinion on
managements assessment and an opinion on the effectiveness of the companys
internal control over financial reporting based on our audit.

We conducted our audit in accordance
with the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain reasonable assurance about
whether effective internal control over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of internal control over financial
reporting, evaluating managements assessment, testing and evaluating the design and
operating effectiveness of internal control, and performing such other procedures as we
considered necessary in the circumstances. We believe that our audit provides a reasonable
basis for our opinion.

On December 6, 2005, the Company
acquired Citizens Bancorp, Inc., the former parent company of Citizens Bank of Northern
Kentucky, Inc. (Citizens Northern). Citizens Northerns assets
represented 13.2% of the Companys consolidated assets at December 31, 2005, and its
income represented .4% of the Companys consolidated net income for 2005. As
permitted by the Securities and Exchange Commission for the year of acquisition, the
Company excluded Citizens Northern from its assessment of internal controls over financial
reporting. Accordingly, our audit of internal control over financial reporting also
excluded Citizens Northern.

A companys internal control
over financial reporting is a process designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles. A
companys internal control over financial reporting includes those policies and
procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the
company; (2) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (3)
provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the companys assets that could have a material
effect on the financial statements.

Because of its inherent limitations,
internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk
that controls may become inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.

In our opinion, managements
assessment that Farmers Capital Bank Corporation maintained effective internal control
over financial reporting as of December 31, 2005 is fairly stated, in all material
respects, based on criteria established in Internal Control  Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO). Also, in our opinion, Farmers Capital Bank Corporation maintained, in
all material respects, effective internal control over financial reporting as of December
31, 2005 based on criteria established in Internal Control  Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO).

We have also audited, in accordance
with the standards of the Public Company Accounting Oversight Board (United States), the
consolidated balance sheets of Farmers Capital Bank Corporation as of December 31, 2005
and 2004 and the related consolidated statements of income, comprehensive income, changes
in shareholders equity, and cash flows for the years then ended and our report dated
March 10, 2006 expressed an unqualified opinion.

/s/ Crowe Chizek and Company LLC

Crowe Chizek and Company LLCLouisville, Kentucky March 10, 2006

---

# REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM ON FINANCIAL STATEMENTS

Board of Directors and
ShareholdersFarmers Capital Bank CorporationFrankfort, Kentucky

We have audited the accompanying
consolidated balance sheets of Farmers Capital Bank Corporation as of December 31, 2005
and 2004, and the related consolidated statements of income, comprehensive income, changes
in shareholders equity, and cash flows for each of the three years in the period
ended December 31, 2005. These financial statements are the responsibility of the
Companys management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance
with the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial
statements referred to above present fairly, in all material respects, the financial
position of the Company as of December 31, 2005 and 2004, and the results of its
operations and its cash flows for each of the three years in the period ended December 31,
2005, in conformity with U.S. generally accepted accounting principles.

We have also audited, in accordance
with the standards of the Public Company Accounting Oversight Board (United States), the
effectiveness of Farmers Capital Bank Corporations internal control over financial
reporting as of December 31, 2005, based on criteria established in Internal
Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission and our report dated March 10, 2006 expressed an unqualified opinion.

/s/ Crowe Chizek and Company LLC

Crowe Chizek and Company LLCLouisville, Kentucky March 10, 2006

---

# Consolidated Balance
Sheets

|                                                                          
|--------------------------------------------------------------------------
|
|Assets                                                                    
|Cash and cash equivalents:                                                
|Cash and due from banks                                                   
|Interest bearing deposits in other banks                                  
|Federal funds sold and securities purchased under agreements to resell    
|                                                                          
|Total cash and cash equivalents                                           
|                                                                          
|Investment securities:                                                    
|Available for sale, amortized cost of $352,514 (2005) and $348,240 (2004) 
|Held to maturity, fair value of $15,373 (2005) and $20,555 (2004)         
|                                                                          
|Total investment securities                                               
|                                                                          
|Loans, net of unearned income                                             
|Allowance for loan losses                                                 
|                                                                          
|Loans, net                                                                
|                                                                          
|Premises and equipment, net                                               
|Company-owned life insurance                                              
|Goodwill                                                                  
|Other intangible assets, net                                              
|Other assets                                                              
|                                                                          
|Total assets                                                              
|                                                                          
|Liabilities                                                               
|Deposits:                                                                 
|Noninterest bearing                                                       
|Interest bearing                                                          
|                                                                          
|Total deposits                                                            
|                                                                          
|Federal funds purchased and securities sold under agreements to repurchase
|Other short-term borrowings                                               
|Subordinated notes payable to unconsolidated trusts                       
|Other long-term debt                                                      
|Dividends payable                                                         
|Accrued purchase price-Citizens Bancorp, Inc.                             
|Other liabilities                                                         
|                                                                          
|Total liabilities                                                         
|                                                                          
|Commitments and contingencies                                             
|                                                                          
|Shareholders' Equity                                                      
|Common stock, par value $.125 per share; 9,608,000 shares authorized;     
|8,856,249 and 8,234,423 shares issued at                                  
|December 31, 2005 and 2004, respectively                                  
|Capital surplus                                                           
|Retained earnings                                                         
|Treasury stock, at cost, 1,467,351  and 1,450,055 shares at               
|December 31, 2005 and 2004, respectively                                  
|Accumulated other comprehensive (loss) income                             
|                                                                          
|Total shareholders' equity                                                
|                                                                          
|Total liabilities and shareholders' equity                                
|                                                                          

See accompanying notes to
consolidated financial statements.

---

# Consolidated Statements
of Income

|                                                                                      
|--------------------------------------------------------------------------------------
|
|Interest Income                                                                       
|Interest and fees on loans                                                            
|Interest on investment securities:                                                    
|Taxable                                                                               
|Nontaxable                                                                            
|Interest on deposits in other banks                                                   
|Interest on federal funds sold and securities  purchased under agreements to resell   
|                                                                                      
|Total interest income                                                                 
|                                                                                      
|Interest Expense                                                                      
|Interest on deposits                                                                  
|Interest on federal funds purchased and securities sold under agreements to repurchase
|Interest on subordinated notes payable to unconsolidated trusts                       
|Interest on other borrowed funds                                                      
|                                                                                      
|Total interest expense                                                                
|                                                                                      
|Net interest income                                                                   
|                                                                                      
|Provision for loan losses                                                             
|                                                                                      
|Net interest income after provision  for loan losses                                  
|                                                                                      
|Noninterest Income                                                                    
|Service charges and fees on deposits                                                  
|Allotment processing fees                                                             
|Other service charges, commissions, and fees                                          
|Data processing income                                                                
|Trust income                                                                          
|Investment securities (losses) gains, net                                             
|Gains on sale of mortgage loans, net                                                  
|Income from company-owned life insurance                                              
|Other                                                                                 
|                                                                                      
|Total noninterest income                                                              
|                                                                                      
|Noninterest Expense                                                                   
|Salaries and employee benefits                                                        
|Occupancy expenses, net                                                               
|Equipment expenses                                                                    
|Data processing and communications expenses                                           
|Bank franchise tax                                                                    
|Correspondent bank fees                                                               
|Amotization of intangibles                                                            
|Other                                                                                 
|                                                                                      
|Total noninterest expense                                                             
|                                                                                      
|Income before income taxes                                                            
|                                                                                      
|Income tax expense                                                                    
|                                                                                      
|Net income                                                                            
|                                                                                      
|Net Income Per Common Share                                                           
|Basic                                                                                 
|Diluted                                                                               
|                                                                                      
|Weighted Average Shares Outstanding                                                   
|Basic                                                                                 
|Diluted                                                                               
|                                                                                      

See accompanying notes to
consolidated financial statements.

---

# Consolidated Statements
of Comprehensive Income

|                                                      
|------------------------------------------------------
|
|Net income                                            
|Other comprehensive income:                           
|Unrealized holding loss on available for sale         
|securities arising during the period on securities    
|held at end of period, net of tax of $1,410, $547,    
|and $113, respectively                                
|Reclassification adjustment for prior period          
|unrealized loss (gain) previously reported in other   
|comprehensive income recognized during current        
|period, net of tax of $3, $219, and $662, respectively
|                                                      
|Other comprehensive loss                              
|                                                      
|Comprehensive income                                  
|                                                      

See accompanying notes to
consolidated financial statements.

---

# Consolidated Statements
of Changes in Shareholders Equity

|                                                              
|--------------------------------------------------------------
|
|
|
|Balance at January 1, 2003                                    
|                                                              
|Net income                                                    
|Other comprehensive income                                    
|Cash dividends declared, $1.29 per share                      
|Purchase of common stock                                      
|Stock options exercised, including related tax benefits       
|Noncash compensation expense attributed to stock option grants
|                                                              
|Balance at December 31, 2003                                  
|                                                              
|Net income                                                    
|Other comprehensive loss                                      
|Cash dividends declared, $1.32 per share                      
|Purchase of common stock                                      
|Stock options exercised, including related tax benefits       
|Shares issued pursuant to Employee Stock Purchase Plan        
|Noncash compensation expense attributed to stock option grants
|                                                              
|Balance at December 31, 2004                                  
|                                                              
|Net income                                                    
|Other comprehensive loss                                      
|Cash dividends declared, $1.32 per share                      
|Purchase of common stock                                      
|Stock options exercised, including related tax benefits       
|Shares issued pursuant to Employee Stock Purchase Plan        
|Shares issued in connection with                              
|the purchase of Citizens Bancorp, Inc.                        
|                                                              
|Balance at December 31, 2005                                  
|                                                              

See accompanying notes to
consolidated financial statements.

---

# Consolidated Statements
of Cash Flows

|                                                                                                     
|-----------------------------------------------------------------------------------------------------
|
|Cash Flows from Operating Activities                                                                 
|Net income                                                                                           
|Adjustments to reconcile net income to net cash provided by operating activities:                    
|Depreciation and amortization                                                                        
|Net amortization (accretion) of investment security premiums and discounts:                          
|Available for sale                                                                                   
|Held to maturity                                                                                     
|Provision for loan losses                                                                            
|Noncash compensation expense                                                                         
|Mortgage loans originated for sale                                                                   
|Proceeds from sale of mortgage loans                                                                 
|Deferred income tax (benefit) expense                                                                
|Gains on sale of mortgage loans, net                                                                 
|Gain on sale of credit card portfolio                                                                
|Loss on sale of premises and equipment                                                               
|Loss (gain) on sale of available for sale investment securities, net                                 
|(Increase) decrease in accrued interest receivable                                                   
|Income from company-owned life insurance                                                             
|(Increase) decrease in other assets                                                                  
|Increase (decrease) in accrued interest payable                                                      
|(Decrease) increase in other liabilities                                                             
|                                                                                                     
|Net cash provided by operating activities                                                            
|                                                                                                     
|Cash Flows from Investing Activities                                                                 
|Proceeds from maturities and calls of investment securities:                                         
|Available for sale                                                                                   
|Held to maturity                                                                                     
|Proceeds from sale of available for sale investment securities                                       
|Purchases of investment securities:                                                                  
|Available for sale                                                                                   
|Held to maturity                                                                                     
|Loans originated for investment, net of principal collected                                          
|Purchase of company-owned life insurance                                                             
|Net cash acquired in purchase of Citizens Bancorp, Inc.                                              
|Purchase of Citizens Bank (Kentucky), Inc., net of cash acquired                                     
|Purchase of FiNET, Inc.                                                                              
|Investment in unconsolidated trusts                                                                  
|Purchases of premises and equipment                                                                  
|Proceeds from sale of equipment                                                                      
|                                                                                                     
|Net cash (used in)  provided by investing activities                                                 
|                                                                                                     
|Cash Flows from Financing Activities                                                                 
|Net increase in deposits                                                                             
|Net increase (decrease) in federal funds purchased and securities sold under agreements to repurchase
|Proceeds from long-term debt                                                                         
|Repayments of long-term debt                                                                         
|Net (decrease) increase in other borrowed funds                                                      
|Dividends paid                                                                                       
|Purchase of common stock                                                                             
|Shares issued under Employee Stock Purchase Plan                                                     
|Stock options exercised                                                                              
|                                                                                                     
|Net cash provided by (used in) financing activities                                                  
|                                                                                                     
|Net increase (decrease) in cash and cash equivalents                                                 
|                                                                                                     
|Cash and cash equivalents at beginning of year                                                       
|                                                                                                     
|Cash and cash equivalents at end of year                                                             
|                                                                                                     
|Supplemental Disclosures                                                                             
|Cash paid during the year for:                                                                       
|Interest                                                                                             
|Income taxes                                                                                         
|Transfers from loans to repossessed assets                                                           
|Cash dividend declared and unpaid at year-end                                                        
|Acquisition purchase price payable at year-end                                                       
|Issuance of 584 shares of common stock to acquire Citizens Bancorp, Inc.                             
|                                                                                                     

See accompanying notes to
consolidated financial statements.

---

# NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

# 1. Summary of
Significant Accounting Policies

The accounting and reporting policies
of Farmers Capital Bank Corporation and subsidiaries conform to accounting principles
generally accepted in the United States of America and general practices applicable to the
banking industry. Significant accounting policies are summarized below.

Principles of
Consolidation and Nature of OperationsThe consolidated financial statements
include the accounts of Farmers Capital Bank Corporation (the Company), a
financial holding company, and its bank and nonbank subsidiaries. Bank subsidiaries
include Farmers Bank & Capital Trust Co. (Farmers Bank) in Frankfort, KY
and its wholly-owned subsidiaries Leasing One Corporation (Leasing One) and
Farmers Capital Insurance Corporation (Farmers Insurance). Leasing One is a
commercial leasing company in Frankfort, KY and Farmers Insurance is an insurance agency
in Frankfort, KY; Farmers Bank and Trust Company in Georgetown, KY (Farmers
Georgetown) and its wholly-owned subsidiary Pro Mortgage Partners, LLC (Pro
Mortgage), a mortgage brokerage company established in May 2004 offering a variety
of fixed rate loan products; First Citizens Bank in Elizabethtown, KY; United Bank &
Trust Co. in Versailles, KY; Lawrenceburg National Bank in Harrodsburg, KY; Kentucky
Banking Centers, Inc. in Glasgow, KY; and Citizens Bank of Northern Kentucky, Inc. in
Newport, KY (Citizens Northern). The Company has three active nonbank
subsidiaries, FCB Services, Inc. (FCB Services), Kentucky General Holdings,
LLC (Kentucky General), and FFKT Insurance Services, Inc. (FFKT
Insurance). FCB Services is a data processing subsidiary located in Frankfort, KY,
which provides services to the Companys banks as well as unaffiliated banks.
Kentucky General holds a 50% voting interest in KHL Holdings, LLC, which is the parent
company of Kentucky Home Life Insurance Company. FFKT Insurance is a captive property and
casualty insurance company insuring primarily deductible exposures and uncovered liability
related to properties of the Company. All significant intercompany transactions and
balances are eliminated in consolidation.

The Company provides financial
services at its 33 locations in 22 communities throughout Central and Northern Kentucky to
individual, business, agriculture, government, and educational customers. Its primary
deposit products are checking, savings, and term certificate accounts. Its primary lending
products are residential mortgage, commercial lending and leasing, and installment loans.
Substantially all loans and leases are secured by specific items of collateral including
business assets, consumer assets, and commercial and residential real estate. Commercial
loans and leases are expected to be repaid from cash flow from operations of businesses.
Farmers Bank has served as the general depository for the Commonwealth of Kentucky for
over 70 years and also provides investment and other services to the Commonwealth. Other
services include, but are not limited to, cash management services, issuing letters of
credit, safe deposit box rental, and providing funds transfer services. Other financial
instruments, which potentially represent concentrations of credit risk, include deposit
accounts in other financial institutions and federal funds sold.

Use of EstimatesThe preparation of financial
statements in conformity with accounting principles generally accepted in the United
States of America requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Estimates used in the preparation of the
financial statements are based on various factors including the current interest rate
environment and the general strength of the local economy. Changes in the overall interest
rate environment can significantly affect the Companys net interest income and the
value of its recorded assets and liabilities. Actual results could differ from those
estimates used in the preparation of the financial statements. The allowance for loan
losses and the fair values of financial instruments are estimates that are particularly
subject to change.

ReclassificationsCertain amounts in the accompanying
consolidated financial statements presented for prior years have been reclassified to
conform to the 2005 presentation. These reclassifications do not affect net income or
total shareholders equity as previously reported.

Segment InformationThe Company provides a broad range of
financial services to individuals, corporations, and others through its 33 banking
locations throughout Central and Northern Kentucky. These services primarily include the
activities of lending and leasing, receiving deposits, providing cash management services,
safe deposit box rental, and trust activities. Operations are managed and financial
performance is evaluated at the subsidiary level. The Companys chief decision makers
monitor the results of the various banking products and services of its subsidiaries.
Accordingly, all of the Companys operations are considered by management to be
aggregated in one reportable operating segment: commercial and retail banking.

Cash FlowsFor purposes of reporting cash flows,
cash and cash equivalents include the following: cash on hand, amounts due from banks,
interest bearing demand deposits in other banks, federal funds sold, and securities
purchased under agreements to resell. Generally, federal funds sold and securities
purchased under agreements to resell are purchased and sold for one-day periods. Net cash
flows are reported for loan and deposit transactions.

Investment SecuritiesInvestments in debt and equity
securities are classified into three categories. Securities that management has the
positive intent and ability to hold until maturity are classified as held to maturity.
Securities that are bought and held specifically for the purpose of selling them in the
near term are classified as trading securities. The Company had no securities classified
as trading during 2005, 2004, or 2003. All other securities are classified as available
for sale. Securities are designated as available for sale if they might be sold before
maturity. Securities classified as available for sale are carried at market value.
Unrealized holding gains and losses for available for sale securities are reported net of
deferred income taxes in other comprehensive income. Investments classified as held to
maturity are carried at amortized cost. Interest income includes amortization and
accretion of purchase premiums or discounts. Premiums and discounts on securities are
amortized using the interest method over the expected life of the securities. Realized
gains and losses on the sales of securities are recorded on the trade date and computed on
the basis of specific identification of the adjusted cost of each security and are
included in noninterest income. A decline in the market value of any available for sale or
held to maturity security below cost that is deemed other than temporary results in a
charge to earnings and the establishment of a new cost basis for the security. Federal
Home Loan Bank (FHLB) and Federal Reserve Board stock is carried at cost.

Loans and Interest IncomeLoans that management has the intent
and ability to hold for the foreseeable future or until maturity or pay-off are reported
at their unpaid principal amount outstanding adjusted for any charge-offs and any deferred
fees or costs on originated loans. Interest income on loans is recognized using the
interest method based on loan principal amounts outstanding during the period. Interest
income also includes amortization and accretion of any premiums or discounts over the
expected life of acquired loans at the time of purchase or business acquisition. Net fees
and incremental direct costs associated with loan origination are deferred and amortized
as yield adjustments over the contractual term of the loans. Generally, the accrual of
interest on loans is discontinued when it is determined that the collection of interest or
principal is doubtful, or when a default of interest or principal has existed for 90 days
or more, unless such loan is well secured and in the process of collection. Past due
status is based on the contractual terms of the loan. Cash payments received on nonaccrual
loans generally are applied to principal, and interest income is only recorded once
principal recovery is reasonably assured. Loans are returned to accrual status when all
the principal and interest amounts contractually due are brought current and future
payments are reasonably assured.

Loans Held for SaleThe Companys operations include
a limited amount of mortgage banking. Mortgage banking activities include the origination
of fixed-rate residential mortgage loans for sale to various investors. Mortgage loans
originated and intended for sale in the secondary market, principally under programs with
the Federal Home Loan Mortgage Corporation, the Federal National Mortgage Association, and
other commercial lending institutions are carried at the lower of cost or estimated market
value determined in the aggregate and are included in net loans on the balance sheet until
sold. Mortgage loans held for sale included in net loans totaled $929,000 and $1,615,000
at December 31, 2005 and December 31, 2004, respectively. Mortgage banking revenues,
including origination fees, servicing fees, net gains or losses on sales of mortgages, and
other fee income were .9%, .6%, and 1.2% of the Companys total revenue for the years
ended December 31, 2005, 2004, and 2003, respectively.

Provision and Allowance
for Loan LossesThe provision for loan losses
represents charges made to earnings to maintain an allowance for loan losses at an
adequate level based on credit losses specifically identified in the loan portfolio, as
well as managements best estimate of probable loan losses in the remainder of the
portfolio at the balance sheet date. The allowance for loan losses is a valuation
allowance increased by the provision for loan losses and decreased by net charge-offs.
Loan losses are charged against the allowance when management believes the
uncollectibility of a loan is confirmed. Subsequent recoveries, if any, are credited to
the allowance.

Management estimates the allowance
balance required using a risk-rated methodology. Many factors are considered when
estimating the allowance. These include, but are not limited to, past loan loss
experience, an assessment of the financial condition of individual borrowers, a
determination of the value and adequacy of underlying collateral, the condition of the
local economy, an analysis of the levels and trends of the loan portfolio, and a review of
delinquent and classified loans. The allowance for loan losses consists of specific and
general components. The specific component relates to loans that are individually
classified as impaired or loans otherwise classified as substandard or doubtful. The
general component covers non-classified loans and is based on historical loss experience
adjusted for current risk factors. Allocations of the allowance may be made for specific
loans, but the entire allowance is available for any loan that, in managements
judgment, should be charged off. Actual loan losses could differ significantly from the
amounts estimated by management.

The risk-rated methodology includes
segregating watch list and past due loans from the general portfolio and allocating
specific amounts to these loans depending on their status. For example, watch list loans,
which may be identified by the internal loan review risk-rating system or by regulatory
examiner classification, are assigned a certain loss percentage while loans past due 30
days or more are assigned a different loss percentage. Each of these percentages considers
past experience as well as current factors. The remainder of the general loan portfolio is
segregated into three components having similar risk characteristics as follows:
commercial loans, consumer loans, and real estate loans. Each of these components is
assigned a loss percentage based on their respective three year historical loss
percentage. Additional allocations to the allowance may then be made for subjective
factors, such as those mentioned above, as determined by senior managers who are
knowledgeable about these matters.

The Company accounts for impaired
loans in accordance with the Financial Accounting Standards Board (FASB)
Statement of Financial Accounting Standards (SFAS) No. 114, Accounting by
Creditors for Impairment of a Loan, as amended by SFAS No. 118, Accounting by
Creditors for Impairment of a Loan  Income Recognition. SFAS No. 114, as
amended, requires that impaired loans be measured at the present value of expected future
cash flows, discounted at the loans effective interest rate, at the loans
observable market price, or at the fair value of the collateral if the loan is collateral
dependent. A loan is impaired when full payment under the contractual terms is not
expected. Generally, impaired loans are also in nonaccrual status. In certain
circumstances, however, the Company may continue to accrue interest on an impaired loan.
Cash receipts on impaired loans are typically applied to the recorded investment in the
loan, including any accrued interest receivable. Loans that are part of a large group of
smaller-balance homogeneous loans, such as residential mortgage and consumer loans, are
collectively evaluated for impairment and, accordingly, they are not separately identified
for impairment disclosures.

Mortgage Servicing RightsMortgage servicing rights are
recognized as other intangible assets on the Companys consolidated balance sheet for
the allocated cost of retained servicing rights on loans sold. Mortgage servicing rights
are expensed in proportion to, and over the period of, estimated net servicing revenues.
Impairment is evaluated based on the fair value of the rights, using groupings of the
underlying loans as to interest rates. Any impairment of a grouping is reported as a
valuation allowance. The Company acquired $626,000 of capitalized mortgage servicing
rights from the purchase of Citizens Bancorp. Capitalized mortgage servicing rights were
$618,000 and $0 at December 31, 2005 and 2004. No impairment of the asset was determined
to exist.

Goodwill and Other
Intangible AssetsGoodwill results from business
acquisitions and represents the excess of the purchase price over the fair value of
acquired tangible assets and liabilities and identifiable intangible assets. Goodwill is
assessed at least annually for impairment and any such impairment is recognized in the
period identified.

Other intangible assets consist of
core deposit and acquired customer relationship intangible assets arising from business
acquisitions. They are initially measured at fair value and then are amortized on an
accelerated method over their estimated useful lives.

Other Real EstateOther real estate owned and held for
sale, included with other assets in the accompanying consolidated balance sheets, includes
properties acquired by the Company through actual loan foreclosures. Other real estate
owned is carried at the lower of cost or fair value less estimated costs to sell. Fair
value is the amount that the Company could reasonably expect to receive in a current sale
between a willing buyer and a willing seller, other than in a forced or liquidation sale.
Fair value of assets is measured by the market value based on comparable sales. If fair
value declines subsequent to foreclosure, a valuation allowance is recorded through
expense. Costs after acquisition are expensed. Other real estate owned included in the
consolidated balance sheets was $8,796,000 and $3,739,000 at December 31, 2005 and 2004,
respectively.

Income TaxesIncome tax expense is the total of
current year income tax due or refundable and the change in deferred tax assets and
liabilities, except for the deferred taxes related to fair market value adjustments on
available for sale investment securities.Deferred income tax assets and
liabilities result from temporary differences between the tax basis of assets and
liabilities and their reported amounts in the consolidated financial statements that will
result in taxable or deductible amounts in future years. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable income in
years in which those temporary differences are expected to be recovered or settled. As
changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted
through income tax expense.

Premises and EquipmentPremises, equipment, and leasehold
improvements are stated at cost less accumulated depreciation and amortization.
Depreciation is computed primarily on the straight-line method over the estimated useful
lives generally ranging from two to seven years for furniture and equipment and generally
ten to 50 years for buildings and related components. Leasehold improvements are amortized
over the shorter of the estimated useful lives or terms of the related leases on the
straight-line method. Maintenance, repairs, and minor improvements are charged to
operating expenses as incurred and major improvements are capitalized. The cost of assets
sold or retired and the related accumulated depreciation are removed from the accounts and
any resulting gain or loss is included in noninterest income. Land is carried at cost.

Company-owned Life InsuranceThe Company has purchased life
insurance policies on certain key employees with their knowledge and consent.
Company-owned life insurance is recorded at its cash surrender value, i.e. the amount that
can be realized, on the consolidated balance sheet. The related change in cash surrender
value and proceeds received under the policies are reported on the consolidated statement
of income under the caption Income from company-owned life insurance.

Net Income Per Common
ShareBasic net income per common share is
determined by dividing net income by the weighted average total number of shares of common
stock outstanding. Diluted net income per common share is determined by dividing net
income by the total weighted average number of shares of common stock outstanding, plus
the total weighted average number of shares that would be issued upon exercise of dilutive
stock options assuming proceeds are used to repurchase shares pursuant to the treasury
stock method. Net income per common share computations were as follows at December 31,
2005, 2004, and 2003:

|                                  
|----------------------------------
|
|Net income, basic and diluted     
|                                  
|Average shares outstanding        
|Effect of dilutive stock options  
|                                  
|Average diluted shares outstanding
|                                  
|Net income per share, basic       
|Net income per share, diluted     
|                                  

Stock options for 38,049, 40,049, and 0
shares of common stock were not included in the determination of dilutive earnings per
share for 2005, 2004, and 2003 because they were antidilutive.

Comprehensive IncomeSFAS No. 130, Reporting
Comprehensive Income, establishes standards for reporting and display of comprehensive
income and its components. Comprehensive income is defined as the change in equity (net
assets) of a business enterprise during a period from transactions and other events and
circumstances from nonowner sources. For the Company, this includes net income and net
unrealized gains and losses on available for sale investment securities.

Treasury StockThe purchase of the Companys
common stock is recorded at cost.

Stock-Based CompensationIn 1997, the Companys Board of
Directors approved a nonqualified stock option plan (the Plan) that provides
for granting of stock options to key employees and officers of the Company. The Plan was
subsequently ratified by the Companys shareholders at its annual shareholders
meeting held on May 12, 1998, the measurement date of the Plan. All stock options are
awarded at a price equal to the fair market value of the Companys common stock at
the date the options are granted. The Company applies Accounting Principles Board
(APB) Opinion No. 25 and related interpretations in accounting for its Plan.
Accordingly, since options were granted during 1997 at the fair market value of the
Companys stock on the grant date, and the measurement date occurred during 1998, the
Company recognized noncash compensation expense for the 1997 grant based on the intrinsic
value of the stock options measured on the date of shareholder ratification of the Plan.
All of the options related to the 1997 grant were fully vested as of December 31, 2004;
therefore there was no option-related compensation expense recorded during 2005.

The Company granted 40,049 and 54,000
additional options under the Plan during 2004 and 2000 in which there is no compensation
expense being recognized pursuant to APB No. 25. In addition, the Company issued shares
pursuant to its Employee Stock Purchase Plan (ESPP) during 2005 and 2004 in
which there is no related compensation expense. Had compensation expense been determined
under the fair value method described in SFAS No. 123, Accounting for Stock-Based
Compensation, as amended by SFAS No. 148, Accounting for Stock-Based
Compensation-Transition and Disclosure, the Companys net income and income per
common share would have been as shown in the table below.

|                                                         
|---------------------------------------------------------
|
|Net Income                                               
|As reported                                              
|Add:   Stock-based employee compensation expense included
|in reported net income, net of related tax effects       
|Less:  Stock-based compensation expense determined under 
|fair value based method for all awards, net of related   
|tax effects                                              
|                                                         
|Proforma                                                 
|                                                         
|Net Income Per Common Share                              
|Basic, as reported                                       
|Basic, proforma                                          
|                                                         
|Diluted, as reported                                     
|Diluted, proforma                                        
|                                                         

On March 16, 2005, the Compensation
Committee of the Companys Board of Directors acted to approve an immediate and full
acceleration of the vesting on options granted during 2004. As a result, options to
purchase 40,049 unvested and out-of-the-money shares of the Companys
common stock became immediately exercisable as of March 16, 2005. The exercise price of
these options remains unchanged at $34.80 per share. The closing price of the
Companys shares was $34.50 on March 15, 2005. None of the accelerated options are
granted to directors or executive officers of the Company. The purpose of the accelerated
vesting is to allow the Company to reduce anticipated future compensation expense
attributed to its stock option grants pursuant to SFAS No. 123 (revised),
Share-Based Payment. Since the options granted during 2004 now have an
exercise price in excess of the market price on the date of modification and there is no
future vesting requirement, there will be no compensation expense recorded for these
options in the current or future periods. The Company anticipates that it will record
compensation expense pursuant to SFAS No. 123 (revised) for unvested options from its 2000
grant and shares issued under its ESPP in the amount of $110,000 and $41,000, net of tax,
for 2006 and 2007, respectively.

The fair value of the options granted
are estimated as of the measurement date using the Black-Scholes option pricing model with
the following weighted average assumptions used and estimated fair market value for each
of the grants indicated.

|                        
|------------------------
|
|
|Dividend yield          
|Expected volatility     
|Risk-free interest rate 
|Expected life (in years)
|Fair value              
|                        

The Plan  provides for the granting
of options to purchase up to 450,000  shares of the  Company's  common stock at a price
equal to the fair market value of the Company's  common stock on the date the option is
granted.  The term of the options expires after ten years from the date on which the
options are granted.  Options  granted under the Plan vest ratably over various time
periods ranging  from three to seven  years.  All options  granted  must be held for a
minimum of one year before they can be  exercised. Forfeited  options are  available  for
the granting of  additional  stock options under the Plan. At December 31, 2005, there
were 6,544 options available for future grants under the Plan.

The Company's ESPP was approved by
its  shareholders at the Company's 2004 annual meeting.  The purpose of the ESPP is to
provide a means by which  eligible  employees  may  purchase,  at a  discount,  shares of
common  stock of the  Company  through  payroll withholding.  The purchase  price of the
shares is equal to 85% of their fair market  value on specified  dates as defined in the
plan.  The ESPP was  effective  beginning  July 1, 2004.  There were 6,883 and 3,190
shares issued under the plan during 2005 and 2004,  respectively.  Compensation cost
related to the ESPP included in the proforma net income disclosure in the table above was
$26,000 and $12,000 for 2005 and 2004, respectively.

Recently Issued But Not
Yet Effective Accounting StandardsIn December 2004, the FASB issued
SFAS No. 123 (revised). This Statement requires all public companies to record
compensation cost for stock options provided to employees in return for employee service.
The Company's ESPP is considered an option plan under the Statement and will be subject
to cost recognition. Compensation cost is measured at the fair value of the options when
granted, and this cost is expensed over the employee service period, which is normally
the vesting period of the options. This Statement will apply to awards granted or
modified beginning in 2006. Compensation cost will also be recorded for prior option
grants that vest after the date of adoption. The effect on results of operations will
depend on the level of future option grants and the calculation of the fair value of the
options granted at such future date, as well as the vesting periods provided, which
cannot currently be predicted. Existing options, including the Company's ESPP, that will
vest after the adoption date are expected to result in additional compensation expense
(net of tax) of $110,000 and $41,000 in 2006 and 2007.

# 2. Investment Securities

The following  summarizes  the
amortized  cost and estimated  fair values of the  securities  portfolio at December 31,
2005. The summary is divided into available for sale and held to maturity securities.

|                                                
|------------------------------------------------
|
|Available For Sale                              
|Obligations of U.S. Government agencies         
|Obligations of states and political subdivisions
|Mortgage-backed securities                      
|U.S. Treasury securities                        
|Money market mutual funds                       
|Equity securities                               
|                                                
|Total securities - available for sale           
|                                                
|Held To Maturity                                
|Obligations of states and political subdivisions
|                                                

The following summarizes the
amortized cost and estimated fair values of the securities portfolio at December 31, 2004.

|                                                
|------------------------------------------------
|
|Available For Sale                              
|Obligations of U.S. Government agencies         
|Obligations of states and political subdivisions
|Mortgage-backed securities                      
|Equity securities                               
|                                                
|Total securities - available for sale           
|                                                
|Held To Maturity                                
|Obligations of states and political subdivisions
|                                                

The amortized cost and estimated fair
value of the securities portfolio at December 31, 2005, by contractual maturity, are
detailed below. The summary is divided into available for sale and held to maturity
securities. Expected maturities may differ from contractual maturities because borrowers
may have the right to call or prepay obligations with or without call or prepayment
penalties. Equity securities in the available for sale portfolio consist of restricted
FHLB and Federal Reserve Board stocks, which have no stated maturity and are not included
in the maturity schedule that follows. Mortgage-backed securities are stated separately
due to the nature of payment and prepayment characteristics of these securities, as
principal is not due at a single date

|                                      
|--------------------------------------
|
|
|Due in one year or less               
|Due after one year through five years 
|Due after five years through ten years
|Due after ten years                   
|Mortgage-backed securities            
|                                      
|Total                                 
|                                      

Gross gains of $5,000, $527,000, and
$965,000 in 2005, 2004, and 2003, respectively, were realized on the sale of investment
securities. Gross losses of $8,000, $136,000, and $0 were realized during 2005, 2004, and
2003, respectively.

Investment securities with a carrying
value of $258,512,000 and $234,922,000 at December 31, 2005 and 2004 were pledged to
secure public and trust deposits, repurchase agreements, and for other purposes.

Investment securities with unrealized
losses at year-end 2005 and 2004 not recognized in income are presented in the table
below. The table segregates investment securities that have been in a continuous
unrealized loss position for less than twelve months from those that have been in a
continuous unrealized loss position for twelve months or more. The table also includes the
fair value of the related securities.

|                                                
|------------------------------------------------
|
|
|Obligations of U.S. Government agencies         
|Obligations of states and political subdivisions
|Mortgage-backed securities                      
|                                                
|Total                                           
|                                                

|                                                
|------------------------------------------------
|
|
|Obligations of U.S. Government agencies         
|Obligations of states and political subdivisions
|Mortgage-backed securities                      
|                                                
|Total                                           
|                                                

Unrealized  losses  included in the
tables above have not been recognized in income since they have been identified as
temporary. The Company periodically evaluates securities for other-than-temporary
 impairment.  Consideration is given to the length of time and the extent to which the
fair value has been less than cost,  the financial  condition and near-term  prospects of
the issuer, and the intent and ability of the Company to retain its  investment  in the
issuer for a period of time  sufficient  to allow for any anticipated  recovery in fair
value. The Company  attributes the unrealized losses mainly to changes in market interest
rates and does not  expect to incur a loss  unless  the  securities  are sold.
 Management  has the  intent  and  ability to hold these securities  until the
 foreseeable  future.  As the securities  approach  their  maturity  date,  their fair
value is expected to recover. A decline in certain market interest rates could also
favorably impact fair values.

# 3. Loans

Major classifications of loans are
summarized as follows.

|                                                    
|----------------------------------------------------
|
|Commercial, financial, and agricultural             
|Real estate - construction                          
|Real estate mortgage - residential                  
|Real estate mortgage - farmland and other commercial
|enterprises                                         
|Installment loans                                   
|Lease financing                                     
|                                                    
|Total loans                                         
|                                                    
|Less unearned income                                
|                                                    
|Total loans, net of unearned income                 
|                                                    

Loans to directors, executive
officers, and principal shareholders (including loans to affiliated companies of which
they are principal owners) and loans to members of the immediate family of such persons
were $25,665,000 and $17,089,000 at December 31, 2005 and 2004, respectively. Such loans
were made in the normal course of business on substantially the same terms, including
interest rates and collateral, as those prevailing at the time for comparable
transactions with other customers and did not involve more than the normal risk of
collectibility. An analysis of the activity with respect to these loans is presented in
the table below. Approximately $8.7 million of the net increase in the following table is
attributed to the Citizens Bancorp acquisition.

|                                                   
|---------------------------------------------------
|
|Balance, December 31, 2004                         
|New loans                                          
|Repayments                                         
|Loans no longer meeting disclosure requirements and
|other adjustments                                  
|                                                   
|Balance, December 31, 2005                         
|                                                   

# 4. Allowance for Loan
Losses

The Companys recorded
investment in impaired loans, measured using the fair value of collateral method as
defined in SFAS No. 114, was $768,000 at December 31, 2005 and $3,158,000 at December 31,
2004. Those amounts also represent loans for which an allowance for loan losses totaling
$50,000 and $195,000 for 2005 and 2004, respectfully, has been established. There were no
impaired loans for which there is no related allowance. The recorded investment in
impaired loans averaged $768,000, $4,497,000, and $10,860,000, respectively, for the years
ended December 31, 2005, 2004, and 2003. Interest income recognized on impaired loans
totaled $0, $34,000, and $55,000 for the years 2005, 2004, and 2003, respectively.

The Companys charge-off policy
for impaired loans does not differ from the charge-off policy for loans outside the
definition of SFAS No. 114. Loans that are delinquent in excess of 120 days are charged
off unless the borrower continues to maintain a satisfactory financial standing and/or the
collateral securing the debt is of such value that any loss appears to be unlikely.

An analysis of the allowance for loan
losses follows.

|                                             
|---------------------------------------------
|
|Balance, beginning of year                   
|Acquisition of Citizens Bank (Kentucky), Inc.
|Acquisition of Citizens Bancorp, Inc.        
|Provision for loan losses                    
|Recoveries                                   
|Loans charged off                            
|                                             
|Balance, end of year                         
|                                             

Nonperforming loans were as follows.

|                                                 
|-------------------------------------------------
|
|Nonaccrual loans                                 
|Loans past due 90 days or more and still accruing
|                                                 
|Total nonperforming loans                        
|                                                 

# 5. Premises and Equipment

Premises and equipment consist of the following.

|                                              
|----------------------------------------------
|
|Land, buildings, and leasehold improvements   
|Furniture and equipment                       
|                                              
|Total premises and equipment                  
|                                              
|Less accumulated depreciation and amortization
|                                              
|Premises and equipment, net                   
|                                              

Depreciation  and  amortization of
premises and equipment was $3,468,000,  $3,139,000,  and $2,984,000,  in 2005, 2004, and
2003, respectively.

# 6. Deposit Liabilities

Time  deposits of $100,000 or more
at December  31, 2005 and 2004 were  $157,554,000  and  $140,080,000,  respectively.
 Interest expense on time deposits of $100,000 or more was $4,405,000, $3,138,000, and
$3,554,000 for 2005, 2004, and 2003, respectively.

At December 31, 2005 the scheduled
maturities of time deposits were as follows.

|          
|----------
|
|2006      
|2007      
|2008      
|2009      
|2010      
|Thereafter
|          
|Total     
|          

Deposits from directors, executive
officers, and principal shareholders (including deposits from affiliated companies of
which they are principal owners) and deposits from members of the immediate family of such
persons were $30,312,000 and $27,769,000 at December 31, 2005 and 2004, respectively. Such
deposits were accepted in the normal course of business on substantially the same terms as
those prevailing at the time for comparable transactions with other customers.

# 7. Federal Funds
Purchased, Securities Sold Under Agreements to Repurchase, and Other Borrowed Funds

Federal funds purchased and
securities sold under agreements to repurchase represent borrowings by the Company that
generally mature one business day following the date of the transaction. Information
pertaining to such borrowings is as follows.

|                                         
|-----------------------------------------
|
|Average balance during the year          
|Average interest rate during the year    
|Maximum month-end balance during the year
|                                         

During 2005 the Company completed two
private offerings of trust preferred securities through two separate Delaware statutory
trusts sponsored by the Company. Farmers Capital Bank Trust I (Trust I) sold
$10.0 million of preferred securities and Farmers Capital Bank Trust II (Trust
II) sold $15.0 million of preferred securities (Trust I and Trust II are hereafter
collectively referred to as the Trusts). The proceeds from the offering were
used to fund the cash portion of the Citizens Bancorp acquisition. The Company owns all of
the common securities of each of the Trusts.

The Trusts used the proceeds from the
sale of preferred securities, plus capital contributed to establish the trusts, to
purchase the Companys junior subordinated notes in amounts and bearing terms that
parallel the amounts and terms of the respective preferred securities. The subordinated
notes mature in 2035 and bear a floating interest rate (current three-month LIBOR plus 150
basis points in the case of the notes held by Trust I and current three-month LIBOR plus
165 basis points in the case of the notes held by Trust II). Interest on the notes is
payable quarterly.

The subordinated notes are redeemable
in whole or in part, without penalty, at the Companys option on or after September
30, 2010 and mature on September 30, 2035. The notes are junior in right of payment of all
present and future senior indebtedness. At December 31, 2005 the balance of the
subordinated notes payable to Trust I and Trust II was $10.3 million and $15.5 million
respectively. The interest rates in effect as of the last determination date in 2005 were
5.52% and 5.67% for Trust I and Trust II, respectively.

Under FASB Interpretation No. 46
(revised), Consolidation of Variable Interest Entities, the Company
does not consolidate the Trusts into its financial statements. Accordingly, the Company
does not report the securities issued by the Trusts as liabilities, but instead reports as
liabilities the subordinated notes issued by the Company and held by the Trusts. The
Company accounts for its investment in each of the Trusts as assets. The Company records
interest expense on the corresponding notes issued to the Trusts on its statement of
income.

In March 2005, the Federal Reserve
Board adopted final rules that continue to allow the inclusion of trust preferred
securities in Tier 1 capital for regulatory capital adequacy purposes in an amount not to
exceed 25% of Tier 1 capital, net of goodwill and any related deferred tax liabilities.
The amount of trust preferred securities and certain other elements in excess of the limit
may be included in Tier 2 capital, subject to restrictions

The table below displays a summary of
the ending balance and average rate for borrowed funds on the dates indicated. For FHLB
advances, the subsidiary banks pledge FHLB stock and fully disbursed, otherwise
unencumbered, 1-4 family first mortgage loans as collateral for these advances as required
by the FHLB. Based on this collateral and the Companys holdings of FHLB stock, the
Company is eligible to borrow up to an additional $117,849,000 at year-end 2005.

|                                                 
|-------------------------------------------------
|
|Short-term                                       
|Federal funds purchased and securities sold under
|agreements to repurchase                         
|FHLB advances                                    
|Other                                            
|                                                 
|Total short-term                                 
|                                                 
|Long-term                                        
|FHLB advances                                    
|Subordinated notes payable                       
|Other                                            
|                                                 
|Total long-term                                  
|                                                 

FHLB  advances  are made  pursuant
 to several  different  credit  programs,  which have  their own  interest  rates and
range of maturities.  Interest  rates on FHLB advances are generally  fixed and range
between  2.91% and 7.10%,  averaging  4.17%,  over a remaining  maturity  period of up to
18 years as of  December  31,  2005.  Approximately  $29.0  million  of the total
 long-term advances from FHLB are  convertible to a floating  interest rate.  These
 advances may convert,  at FHLB's option,  to a floating interest rate indexed to LIBOR
only if LIBOR equals or exceeds 7%. At year-end 2005, three-month LIBOR was at 4.54%.

Maturities of long-term borrowings
at December 31, 2005 are as follows.

|          
|----------
|
|2006      
|2007      
|2008      
|2009      
|2010      
|Thereafter
|          
|Total     
|          

# 8. Income Taxes

The components of income tax expense
are as follows.

|                                                           
|-----------------------------------------------------------
|
|Currently payable                                          
|Deferred                                                   
|                                                           
|Total applicable to operations                             
|                                                           
|Deferred tax charged to components of shareholders' equity:
|Net unrealized securities losses                           
|                                                           
|Total income taxes                                         
|                                                           

An analysis of the difference between
the effective income tax rates and the statutory federal income tax rate follows.

|                                                      
|------------------------------------------------------
|
|Federal statutory rate                                
|Changes from statutory rates resulting from:          
|Tax-exempt interest                                   
|Nondeductible interest to carry tax-exempt obligations
|Tax credits                                           
|Company-owned life insurance                          
|Other, net                                            
|                                                      
|Effective tax rate on pretax income                   
|                                                      

The tax effects of the significant
 temporary  differences that comprise deferred tax assets and liabilities at December 31,
2005 and 2004 follows.

|                                                                  
|------------------------------------------------------------------
|
|Assets                                                            
|Allowance for loan losses                                         
|Unrealized losses on available for sale investment securities, net
|Deferred directors' fees                                          
|Postretirement benefit obligations                                
|Stock options                                                     
|Commission                                                        
|Self-funded insurance                                             
|Other                                                             
|                                                                  
|Total deferred tax assets                                         
|                                                                  
|Liabilities                                                       
|Depreciation                                                      
|Prepaid expenses                                                  
|Discount on investment securities                                 
|Deferred loan fees                                                
|Lease financing operations                                        
|Intangibles                                                       
|Unrealized gains on available for sale investment securities, net 
|                                                                  
|Total deferred tax liabilities                                    
|                                                                  
|Net deferred tax liability                                        
|                                                                  

In assessing the realizability of
deferred tax assets, management considers whether it is more likely than not that some
portion or all of the deferred tax assets will not be realized. The ultimate realization
of deferred tax assets is dependent upon the generation of future taxable income during
the periods in which those temporary differences become deductible. Management considers
the scheduled reversal of deferred tax liabilities, projected future taxable income, and
tax planning strategies in making this assessment. Based upon the level of historical
taxable income and projections for future taxable income over the periods in which the
deferred tax assets are deductible, management believes it is more likely than not the
Company will realize the benefits of these deductible differences at December 31, 2005.

# 9. Retirement Plans

The Company maintains an Employee
Stock Ownership Plan (ESOP) and a salary savings plan for its employees. The
Company may at its discretion contribute an amount (up to the maximum imposed by federal
law) to the ESOP which will be allocated to all participants in the ratio that each
participants compensation bears to all participants compensation. Such
discretionary contributions will be utilized to purchase shares of the Companys
common stock to be held in the participants accounts. There were no contributions to
the ESOP in any of the years in the three-year period ended December 31, 2005. The fair
market value of Company shares held by the ESOP was $2,218,000 and $2,953,000 at year-end
December 31, 2005 and 2004, respectively.

The Companys salary savings
plan covers substantially all employees. The Company matches all eligible voluntary tax
deferred employee contributions up to 4% of the participants compensation. The
Company may, at the discretion of the Board, contribute an additional amount based upon a
percentage of covered employees salaries. The Company made a 4% discretionary
contribution to the plan during each of the years in the three-year period ended December
31, 2005. Discretionary contributions are allocated among participants in the ratio that
each participants compensation bears to all participants compensation.
Eligible employees are presented with various investment alternatives related to the
salary savings plan. Those alternatives include various stock and bond mutual funds that
vary from traditional growth funds to more stable income funds. Company shares are not an
available investment alternative in the salary savings plan.

The total retirement plan expense for
2005, 2004, and 2003 was $1,109,000, $1,191,000, and 1,017,000, respectively.

# 10. Common Stock Options

As described in Note 1, prior to 2005 the
Company recognized compensation expense attributed to its stock option plan in accordance
with APB No. 25 and related interpretations. The amount of such expense recorded in 2004
and 2003, net of tax, was $141,000 and $276,000, respectively.

A summary of the status of the
Companys stock option plan as of December 31, 2005, 2004, and 2003 and changes
during the years ended on those dates is presented below.

|                               
|-------------------------------
|
|
|Outstanding at January 1       
|Granted                        
|Forfeited                      
|Exercised                      
|                               
|Outstanding at December 31     
|                               
|                               
|                               
|Options exercisable at year-end
|                               

Options outstanding at year-end 2005
were as follows.

|                       
|-----------------------
|
|
|$ 24.50                
|$ 29.75                
|$ 34.80                
|                       
|Outstanding at year-end
|                       

# 11. Postretirement
Benefits

Prior to 2003, the Company provided lifetime
medical and dental benefits upon retirement for certain retired employees meeting the
eligibility requirements as of December 31, 1989. During 2003, the Company implemented an
additional postretirement health insurance program. Under this postretirement health
insurance plan, any employee meeting the service requirements of 20 years of full time
service to the Company and is at least age 55 upon retirement will be eligible to continue
their health insurance coverage. The coverage offered to eligible retirees will be
identical to the coverage that is offered to active employees. The retiree will pay 50% of
the cost and the Company will pay 50%. The Company pays for the entire costs of the
benefits under the first plan. Both plans are unfunded.

The following schedules set forth a
reconciliation of the changes in the plans benefit obligation and funded status for the
years ended December 31, 2005 and 2004.

|                                                    
|----------------------------------------------------
|
|Change in Benefit Obligation                        
|Obligation at beginning of year                     
|Service cost                                        
|Interest cost                                       
|Prior service cost                                  
|Actuarial loss                                      
|Benefit payments                                    
|Actuarial gain due to Medicare drug subsidy         
|                                                    
|Obligation at end of year                           
|                                                    
|Funded Status (plan assets less benefit obligations)
|Accumulated postretirement benefit obligation       
|Unrecognized transition obligation                  
|Unamortized prior service cost                      
|Unrecognized net actuarial loss                     
|                                                    
|Accrued postretirement benefit costs                
|                                                    

The following table provides
disclosure of the net periodic benefit cost as of December 31.

|                                     
|-------------------------------------
|
|Service cost                         
|Interest cost                        
|Amortization of transition obligation
|Recognized prior service cost        
|Amortization of net loss             
|                                     
|Net periodic benefit cost            
|                                     
|Major assumptions:                   
|Discount rate                        
|                                     

Assumed health care cost trend rates
have a significant effect on the amounts reported for the health care plans. For
measurement purposes, the rate of increase in pre-Medicare medical care claims costs was
10% in 2006 grading down by 1% to 5% for 2011 and thereafter. For Medicare Supplement
claims costs, it was 8% in 2006 grading down by 1% to 5% for 2009 and thereafter. For
dental claims cost, it was 5% for 2006 and thereafter. A 1% change in the assumed health
care cost trend rates would have the following incremental effects:

|                                            
|--------------------------------------------
|
|Effect on total of service and interest cost
|components of net periodic postretirement   
|health care benefit cost                    
|Effect on postretirement benefit obligation 
|                                            

The following table presents
estimated future benefit payments in the period indicated.

|         
|---------
|
|2006     
|2007     
|2008     
|2009     
|2010     
|2011-2015
|         
|Total    
|         

# 12. Leases

The Company leases certain branch
sites and certain banking equipment under various operating leases. All of the branch site
leases have renewal options of varying lengths and terms. The following table presents
estimated future minimum rental commitments under these leases for the period indicated.

|          
|----------
|
|2006      
|2007      
|2008      
|2009      
|2010      
|Thereafter
|          
|Total     
|          

# 13. Financial
Instruments With Off-Balance Sheet Risk

The Company is a party to financial
instruments with off-balance sheet risk in the normal course of business to meet the
financing needs of its customers. The financial instruments include commitments to extend
credit and standby letters of credit.

These financial instruments involve
to varying degrees, elements of credit and interest rate risk in excess of the amount
recognized in the consolidated balance sheets. The contract amounts of these instruments
reflect the extent of involvement the Company has in particular classes of financial
instruments.

Commitments to extend credit are
agreements to lend to a customer as long as there is no violation of any condition
established in the contract. Commitments generally have fixed expiration dates or other
termination clauses and may require the payment of a fee. Since many of the commitments
are expected to expire without being drawn upon, the total commitment amount does not
necessarily represent future cash requirements. Total commitments to extend credit were
$170,701,000 and $154,042,000 at December 31, 2005 and 2004, respectively. The Company
evaluates each customers creditworthiness on a case-by-case basis. The amount of
collateral obtained upon extension of credit, if deemed necessary by the Company, is based
on managements credit evaluation of the counter party. Collateral held varies, but
may include accounts receivable, marketable securities, inventory, premises and equipment,
residential real estate, and income producing commercial properties.

Standby letters of credit are
conditional commitments issued by the Company to guarantee the performance of a customer
to a third party. Since many of the commitments are expected to expire without being drawn
upon, the total commitment amount does not necessarily represent future cash requirements.
The credit risk involved in issuing letters of credit is essentially the same as that
received when extending credit to customers. The fair value of these instruments is not
considered material for disclosure under FASB Interpretation No. 45. The Company had
$11,795,000 and $5,205,000 in irrevocable letters of credit outstanding at December 31,
2005 and 2004, respectively.

The contractual amount of financial
instruments with off-balance sheet risk was as follows at year-end.

|                            
|----------------------------
|
|
|Commitments to extend credit
|Standby letters of credit   
|                            
|Total                       
|                            

# 14. Concentration of
Credit Risk

The Companys bank subsidiaries
actively engage in lending, primarily in their home counties and adjacent areas.
Collateral is received to support these loans when deemed necessary. The more significant
categories of collateral include cash on deposit with the Companys banks, marketable
securities, income producing property, home mortgages, and consumer durables. Loans
outstanding, commitments to make loans, and letters of credit range across a large number
of industries and individuals. The obligations are significantly diverse and reflect no
material concentration in one or more areas.

# 15. Loss Contingencies

Loss contingencies, including claims
and legal actions arising in the ordinary course of business, are recorded as liabilities
when the likelihood of loss is probable and an amount or range of loss can be reasonably
estimated. As of December 31, 2005, there were various pending legal actions and
proceedings against the Company arising from the normal course of business and in which
claims for damages are asserted. Management, after discussion with legal counsel, believes
that these actions are without merit and that the ultimate liability resulting from these
legal actions and proceedings, if any, will not have a material effect upon the
consolidated financial statements of the Company.

# 16. Regulatory Matters

Payment of dividends by the
Companys subsidiary banks is subject to certain regulatory restrictions as set forth
in national and state banking laws and regulations. Generally, capital distributions are
limited to undistributed net income for the current and prior two years, subject to the
capital requirements described below. At December 31, 2005, combined retained earnings of
the subsidiary banks were $60,833,000 of which $10,831,000 was available for the payment
of dividends in 2006 without obtaining prior approval from bank regulatory agencies.

Included in cash and due from banks
is certain noninterest bearing deposits that are held at the Federal Reserve Bank and
correspondent banks in accordance with regulatory reserve requirements specified by the
Federal Reserve Board of Governors. The reserve requirement was $16,410,000 and
$14,708,000 at December 31, 2005 and 2004, respectively.

The Company and its subsidiary banks
are subject to various regulatory capital requirements administered by the federal banking
agencies. Failure to meet minimum capital requirements will initiate certain mandatory and
possibly additional discretionary actions by regulators that, if undertaken, could have a
direct material effect on the Companys financial statements. Under capital adequacy
guidelines and the regulatory framework for prompt corrective action, the banks must meet
specific capital guidelines that involve quantitative measures of the banks assets,
liabilities, and certain off-balance sheet items as calculated under regulatory accounting
practices. The Company and its subsidiary banks capital amounts and classification
are also subject to qualitative judgments by the regulators about components, risk
weightings, and other factors.

Quantitative measures established by
regulation to ensure capital adequacy require the Company and its subsidiary banks to
maintain minimum amounts and ratios (set forth in the tables below) of total and Tier I
capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier
I capital to average assets (as defined). The Company and each of the subsidiary banks
meet all capital adequacy requirements to which they are subject as of December 31, 2005.

As of December 31, 2005, the most
recent notification from the FDIC categorized the banks as well capitalized under the
regulatory framework for prompt corrective action. To be categorized as well capitalized,
the banks must maintain minimum total risk-based, Tier I risk-based, and Tier I leverage
ratios as set forth in the tables. There are no conditions or events since that
notification that management believes have changed the institutions category.

The capital amounts and ratios of the
consolidated Company and the banks are presented in the following tables.

|                                        
|----------------------------------------
|
|
|Tier 1 Capital (to Risk-Weighted Assets)
|Consolidated                            
|Farmers Bank & Capital Trust Co.        
|Farmers Bank and Trust Company          
|Lawrenceburg National Bank              
|First Citizens Bank                     
|United Bank & Trust Co.                 
|Kentucky Banking Centers, Inc.          
|Citizens Bank of Northern Kentucky      
|                                        
|Total Capital (to Risk-Weighted Assets) 
|Consolidated                            
|Farmers Bank & Capital Trust Co.        
|Farmers Bank and Trust Company          
|Lawrenceburg National Bank              
|First Citizens Bank                     
|United Bank & Trust Co.                 
|Kentucky Banking Centers, Inc.          
|Citizens Bank of Northern Kentucky      
|                                        
|Tier 1 Capital (to Average Assets)      
|Consolidated                            
|Farmers Bank & Capital Trust Co.        
|Farmers Bank and Trust Company          
|Lawrenceburg National Bank              
|First Citizens Bank                     
|United Bank & Trust Co.                 
|Kentucky Banking Centers, Inc.          
|Citizens Bank of Northern Kentucky      
|                                        

|                                        
|----------------------------------------
|
|
|Tier 1 Capital (to Risk-Weighted Assets)
|Consolidated                            
|Farmers Bank & Capital Trust Co.        
|Farmers Bank and Trust Company          
|Lawrenceburg National Bank              
|First Citizens Bank                     
|United Bank & Trust Co.                 
|Kentucky Banking Centers, Inc.          
|                                        
|Total Capital (to Risk-Weighted Assets) 
|Consolidated                            
|Farmers Bank & Capital Trust Co.        
|Farmers Bank and Trust Company          
|Lawrenceburg National Bank              
|First Citizens Bank                     
|United Bank & Trust Co.                 
|Kentucky Banking Centers, Inc.          
|                                        
|Tier 1 Capital (to Average Assets)      
|Consolidated                            
|Farmers Bank & Capital Trust Co.        
|Farmers Bank and Trust Company          
|Lawrenceburg National Bank              
|First Citizens Bank                     
|United Bank & Trust Co.                 
|Kentucky Banking Centers, Inc.          
|                                        

# 17. Fair Value of
Financial Instruments

The following table presents the
estimated fair values of the Companys financial instruments made in accordance with
the requirements of SFAS No. 107, Disclosures About Fair Value of Financial
Instruments. This Statement requires disclosure of fair value information about
financial instruments, whether or not recognized in the balance sheet for which it is
practicable to estimate that value. The estimated fair value amounts have been determined
by the Company using available market information and present value or other valuation
techniques. These derived fair values are subjective in nature, involve uncertainties and
matters of significant judgment and, therefore, cannot be determined with precision. SFAS
No. 107 excludes certain financial instruments and all nonfinancial instruments from the
disclosure requirements. Accordingly, the aggregate fair value amounts presented are not
intended to represent the underlying value of the Company.

The following methods and assumptions
were used to estimate the fair value of each class of financial instruments for which it
is practicable to estimate that value.

Cash and Cash Equivalents, Accrued
Interest Receivable, and Accrued Interest PayableThe carrying amount is a reasonable
estimate of fair value.

Investment Securities Fair value
equals quoted market price, if available. If a quoted market price is not available, fair
value is estimated using quoted market prices for similar securities.

Loans The fair value of loans is
estimated by discounting the future cash flows using current discount rates at which
similar loans would be made to borrowers with similar credit ratings and for the same
remaining maturities.

Deposit Liabilities The fair value
of demand deposits, savings accounts, and certain money market deposits is the amount
payable on demand at the reporting date. The fair value of fixed maturity certificates of
deposit is estimated by discounting the future cash flows using the rates currently
offered for certificates of deposit with similar remaining maturities.

Commitments to Extend Credit and
Standby Letters of Credit Pricing of these financial instruments is based on the credit
quality and relationship, fees, interest rates, probability of funding, compensating
balance, and other covenants or requirements. Loan commitments generally have fixed
expiration dates, variable interest rates and contain termination and other clauses that
provide for relief from funding in the event there is a significant deterioration in the
credit quality of the customer. Many loan commitments are expected to, and typically do,
expire without being drawn upon. The rates and terms of the Companys commitments to
lend and standby letters of credit are competitive with others in the various markets in
which the Company operates. There are no unamortized fees relating to these financial
instruments, as such the carrying value and fair value are both zero.

Federal Funds Purchased, Securities
Sold Under Agreements to Repurchase, and Other Borrowed Funds The fair value of federal
funds purchased, securities sold under agreements to repurchase, and other borrowed funds
is estimated using rates currently available for debt with similar terms and remaining
maturities.

The estimated fair values of the
Companys financial instruments are as follows.

|                                                                          
|--------------------------------------------------------------------------
|
|
|Assets                                                                    
|Cash and cash equivalents                                                 
|Investment securities:                                                    
|Available for sale                                                        
|Held to maturity                                                          
|Loans, net                                                                
|Accrued interest receivable                                               
|                                                                          
|Liabilities                                                               
|Deposits                                                                  
|Federal funds purchased and securities sold under agreements to repurchase
|FHLB and other borrowings                                                 
|Subordinated notes payable to unconsolidated trusts                       
|Accrued interest payable                                                  
|                                                                          

# 18. Parent Company
Financial Statements

# Condensed Balance Sheets

|                                                   
|---------------------------------------------------
|
|Assets                                             
|Cash on deposit with subsidiaries                  
|Investment in subsidiaries                         
|Other assets                                       
|                                                   
|Total assets                                       
|                                                   
|Liabilities                                        
|Dividends payable                                  
|Subordinated notes payable to unconsolidated trusts
|Accrued purchase price-Citizens Bancorp, Inc.      
|Other liabilities                                  
|                                                   
|Total liabilities                                  
|                                                   
|Shareholders Equity                               
|Common stock                                       
|Capital surplus                                    
|Retained earnings                                  
|Treasury stock                                     
|Accumulated other comprehensive (loss) income      
|                                                   
|Total shareholders' equity                         
|                                                   
|Total liabilities and shareholders' equity         
|                                                   

# Condensed Statements of
Income

|                                                                                   
|-----------------------------------------------------------------------------------
|
|Income                                                                             
|Dividends from subsidiaries                                                        
|Interest income                                                                    
|Other dividend income                                                              
|Investment securities gains, net                                                   
|Other noninterest income                                                           
|                                                                                   
|Total income                                                                       
|                                                                                   
|Expense                                                                            
|Interest expense-Subordinated notes payable to unconsolidated trusts               
|Noninterest expense                                                                
|                                                                                   
|Total expense                                                                      
|                                                                                   
|Income before income tax benefit and equity in undistributed income of subsidiaries
|Income tax benefit                                                                 
|                                                                                   
|Income before equity in undistributed income of subsidiaries                       
|                                                                                   
|Equity in undistributed income of subsidiaries                                     
|                                                                                   
|Net income                                                                         
|                                                                                   

# Condensed Statements of
Cash Flows

|                                                                                 
|---------------------------------------------------------------------------------
|
|Cash Flows From Operating Activities                                             
|Net income                                                                       
|Adjustments to reconcile net income to net cash provided by operating activities:
|Equity in undistributed income of subsidiaries                                   
|Noncash compensation expense                                                     
|Gain on sale of available for sale investment securities                         
|Change in other assets and liabilities, net                                      
|Deferred income tax expense (benefit)                                            
|                                                                                 
|Net cash provided by operating activities                                        
|                                                                                 
|Cash Flows From Investing Activities                                             
|Proceeds from sale of available for sale investment securities                   
|Investment in unconsolidated trusts                                              
|Investment in nonbank subsidiaries                                               
|Investment in bank subsidiary                                                    
|Purchase of Citizens Bank (Kentucky), Inc.                                       
|Purchase of company-owned life insurance                                         
|                                                                                 
|Net cash used in investing activities                                            
|                                                                                 
|Cash Flows From Financing Activities                                             
|Dividends paid                                                                   
|Purchase of common stock                                                         
|Shares issued under Employee Stock Purchase Plan                                 
|Stock options exercised                                                          
|Proceeds from long-term debt issued to unconsolidated trusts                     
|                                                                                 
|Net cash provided by (used in) financing activities                              
|                                                                                 
|Net increase (decrease) in cash and cash equivalents                             
|                                                                                 
|Cash and cash equivalents at beginning of year                                   
|                                                                                 
|Cash and cash equivalents at end of year                                         
|                                                                                 

# 19. Quarterly Financial
Data (Unaudited)

|                                                   
|---------------------------------------------------
|
|Interest income                                    
|Interest expense                                   
|                                                   
|Net interest income                                
|                                                   
|Provision for loan losses                          
|                                                   
|Net interest income after provision for loan losses
|                                                   
|Noninterest income                                 
|Noninterest expense                                
|                                                   
|Income before income taxes                         
|                                                   
|Income tax expense                                 
|                                                   
|Net income                                         
|                                                   
|Net income per common share, basic                 
|Net income per common share, diluted               
|                                                   
|Weighted average shares outstanding, basic         
|Weighted average shares outstanding, diluted       
|                                                   

|                                                   
|---------------------------------------------------
|
|Interest income                                    
|Interest expense                                   
|                                                   
|Net interest income                                
|                                                   
|Provision for loan losses                          
|                                                   
|Net interest income after provision for loan losses
|                                                   
|Noninterest income                                 
|Noninterest expense (1)                            
|                                                   
|Income before income taxes                         
|                                                   
|Income tax expense                                 
|                                                   
|Net income                                         
|                                                   
|Net income per common share, basic                 
|Net income per common share, diluted               
|                                                   
|Weighted average shares outstanding, basic         
|Weighted average shares outstanding, diluted       
|                                                   

|(1) | The
increase in noninterest expense during the third and fourth quarters of 2004 are mainly
attributed to the Citizens Bank (Kentucky), Inc and Financial National Electronic
Transfer, Inc. acquisitions on July 1, 2004 and October 8, 2004, respectively.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# 20. Business Combination
 Citizens Bank (Kentucky), Inc.

On July 1, 2004 the Company acquired
Citizens Bank (Kentucky), Inc. (Citizens Georgetown) in Georgetown, Kentucky.
The results presented in the consolidated financial statements herein include the results
of Citizens Georgetown since the date of acquisition. On October 22, 2004, the Company
merged Citizens Georgetown into Farmers Georgetown.

The total cost related to this
acquisition, which was paid entirely in cash, was $14.6 million. The core deposit
intangible asset of $2.2 million at acquisition is being amortized over a life of 7.5
years under a declining amortization schedule through year 2010 with the remaining 10% to
be amortized during year 2011. Goodwill is not subject to periodic amortization in the
consolidated financial statements, but will be deductible for federal income tax purposes
over a period of 15 years. The following table summarized the estimated fair value of
assets acquired and liabilities assumed at the date of acquisition.

|                                                           
|-----------------------------------------------------------
|
|Assets                                                     
|Cash and equivalents                                       
|Investment securities                                      
|Loans, net of unearned income and allowance for loan losses
|Goodwill                                                   
|Core deposit intangible                                    
|Other assets                                               
|                                                           
|Total assets                                               
|                                                           
|Liabilities                                                
|Deposits                                                   
|Short-term borrowings                                      
|Long-term borrowings                                       
|Other liabilities                                          
|                                                           
|Total liabilities                                          
|                                                           
|Net Assets Acquired                                        
|                                                           
|                                                           

# 21. Business Combination
 Financial National Electronic Transfer, Inc.

On October 8, 2004 the Company
acquired Financial National Electronic Transfer, Inc. (FiNET) in a cash
transaction. FINET is a data processing company that specializes in the processing of
federal benefit payments and military allotments and is headquartered in Radcliff,
Kentucky. The results presented in the consolidated financial statements herein include
the results related to FiNET since the date of acquisition. Effective January 1, 2005,
FiNET was merged into First Citizens Bank.

The total cost related to this
acquisition, which has been paid entirely in cash, was $6.8 million. The customer list
intangible of $2.4 million at acquisition is being amortized over a life of 10.5 years
under a declining amortization schedule through year 2013 with the remaining 11% to be
amortized during year 2014. Goodwill is not subject to periodic amortization in the
consolidated financial statements, but will be deductible for federal income tax purposes
over a period of 15 years. The following table summarized the estimated fair value of
assets acquired and liabilities assumed at the date of acquisition.

|                        
|------------------------
|
|Assets                  
|Goodwill                
|Customer list intangible
|Other assets            
|                        
|Total assets            
|                        
|Liabilities             
|                        
|Net Assets Acquired     
|                        

# 22. Business Combination
 Citizens Bancorp, Inc.

On December 6, 2005 the Company
acquired Citizens Bancorp, Inc. (Citizens Bancorp) in Newport, Kentucky.
Citizens Bancorp was then merged into Citizens Acquisition Subsidiary Corp.
(Citizens Acquisition). The results presented in the consolidated financial
statements herein include the results of Citizens Acquisition and its wholly owned
subsidiary, Citizens Northern since the date of acquisition. Northern Kentucky is a
significant and desirable growth market. An evaluation of the net worth of Citizens
Bancorp was performed. The agreed upon purchase price was determined to be appropriate
based on the long-term expectations of the entry into this growth market.

The aggregate purchase price was
$40.6 million, including $22.4 million (55.2% of purchase price) in cash and $18.2 million
(44.8% of purchase price) in common stock. The $31.174 value of the 584 thousand shares of
common stock issued was determined based on the average closing price of the
Companys common stock for the 45 trading days leading up to the 18th day
prior to the closing of the merger. The purchase price resulted in approximately $20.7
million in goodwill and $4.4 million in a core deposit intangible asset. The core deposit
intangible asset is being amortized over a life of 7.1 years under a declining
amortization schedule through year 2011 with the remaining 11% to be amortized during year
2012. Goodwill is not subject to periodic amortization in the consolidated financial
statements. As with prior acquisitions, minor adjustments to total purchase price
allocation, and thus goodwill, are possible as execution cost amounts are finalized. The
following table summarized the estimated fair value of assets acquired and liabilities
assumed at the date of acquisition.

|                                                           
|-----------------------------------------------------------
|
|Assets                                                     
|Cash and equivalents                                       
|Investment securities                                      
|Loans, net of unearned income and allowance for loan losses
|Premises and equipment, net                                
|Goodwill                                                   
|Core deposit intangible                                    
|Other assets                                               
|                                                           
|Total assets                                               
|                                                           
|Liabilities                                                
|Deposits                                                   
|Long-term borrowings                                       
|Other liabilities                                          
|                                                           
|Total liabilities                                          
|                                                           
|Net Assets Acquired                                        
|                                                           

# 23. Goodwill and
Intangible Assets

# Goodwill

The change in balance for goodwill is
as follows.

|                                                       
|-------------------------------------------------------
|
|Beginning of year                                      
|Purchase price refinements of prior years' acquisitions
|Acquired goodwill                                      
|Impairment                                             
|                                                       
|End of year                                            
|                                                       

# Acquired Intangible
Assets

Acquired core deposit and customer
relationship intangible assets were as follows as of December 31 of the year indicated.

|                                       
|---------------------------------------
|
|
|Core deposit intangibles               
|Other customer relationship intangibles
|                                       
|Total                                  
|                                       

Aggregate amortization expense of
core deposit and customer relationship intangible assets was $1,057,000 and $385,000 for
2005 and 2004, respectively. Estimated amortization expense for each of the next five
years is as follows.

|    
|----
|
|2006
|2007
|2008
|2009
|2010
|    

---

Item 9. Changes in and
Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

# Evaluation of Disclosure
Controls and Procedures

As of the end of the period covered
by this report, an evaluation was carried out under the supervision and with the
participation of the Registrants management, including our Chief Executive Officer
and Chief Financial Officer, of the effectiveness of our disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934). Based on their evaluation, our Chief Executive Officer
and Chief Financial Officer have concluded that the Companys disclosure controls and
procedures and internal control over financial reporting are, to the best of their
knowledge, effective to ensure that information required to be disclosed by the Registrant
in reports that it files or submits under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in SEC rules and forms.

Our Chief Executive Officer and Chief
Financial Officer have also concluded that there were no changes in the Registrants
internal control over financial reporting or in other factors that occurred during the
Registrants most recent fiscal quarter that have materially affected, or are
reasonably likely to materially affect, the Registrants internal control over
financial reporting or any corrective actions with regard to significant deficiencies and
material weaknesses in internal control over financial reporting.

# Managements Report
on Internal Control Over Financial Reporting

The information required by this item
is incorporated by reference from Part II, Item 8 on page 37 of this Form 10-K.

Item 9B. Other Information

None.

---

PART III

Item 10. Directors and Executive
Officers of the Registrant

|Executive Officer(1) | Age | Positions and
Offices With
the Registrant | Years of Service
With the
Registrant
|-------------------- | --- | ----------------------------------------- | ------------------------------------
|G. Anthony Busseni   |     |                                           |                                     
|                     |     |                                          
|Allison B. Gordon    |     |                                           |                                     

The Registrant has adopted a Code of
Ethics that applies to the Registrants directors, officers and employees, including
the Registrants chief executive officer and chief financial officer. The Registrant
makes available its Code of Ethics on its Internet website at www.farmerscapital.com.

Additional information required by
Item 10 is hereby incorporated by reference from the Registrants definitive proxy
statement in connection with its annual meeting of shareholders scheduled for May 9, 2006
which will be filed with the Commission on or about April 1, 2006, pursuant to Regulation
14A.

|* | Includes
years of service with the Registrant and its subsidiaries.
|- | -------------------------------------------------------------------

|(1) | For
Regulation O purposes, Frank W. Sower, Jr., Chairman of the                Registrants
board of directors, is considered an executive                officer in name only.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Also
a director of Farmers Bank, Ky. Banking Centers, Farmers Georgetown, United Bank,
Lawrenceburg Bank, First Citizens Bank, FCB Services, Farmers Insurance (Chairman),
Leasing One (Chairman), Kentucky General (Chairman), Pro Mortgage, FFKT Insurance,
Kentucky Home Life Insurance Company, Citizens Acquisition, and an administrative trustee
of Farmers Capital Bank Trust I and Farmers Capital Bank Trust II.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Also
a director of Farmers Bank, Farmers Georgetown, FCB Services, and an administrative
trustee of Farmers Capital Bank Trust I and Farmers Capital Bank Trust II.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------

Item 11. Executive Compensation

Item 12. Security Ownership of
Certain Beneficial Owners and Management and Related Stockholder Matters

Item 13. Certain Relationships and
Related Transactions

Item 14. Principal Accountant Fees
and Services

The information required by Items 11
through 14 is hereby incorporated by reference from the Registrants definitive proxy
statement in connection with its annual meeting of shareholders scheduled for May 9, 2006
which will be filed with the Commission on or about April 1, 2006, pursuant to Regulation
14A.

---

PART IV

Item 15. Exhibits, Financial
Statement Schedules

(a)1.     Financial Statements

The following consolidated financial
statements and report of independent registered accounting firm of the Company is
included in Part II, Item 8 on pages 37 thru 65:

Report of Independent Registered
Public Accounting Firm on Financial StatementsConsolidated Balance SheetsConsolidated
Statements of IncomeConsolidated Statements of Comprehensive IncomeConsolidated
Statements of Changes in Shareholders EquityConsolidated Statements of Cash FlowsNotes
to Consolidated Financial Statements

(a)2.     Financial Statement Schedules

All schedules are omitted for the
reason they are not required, or are not applicable, or the required information is
disclosed elsewhere in the financial statements and related notes thereto.

(a)3.    
          Exhibits:

| | 3.1 | Amended
and Restated Articles of Incorporation of the Registrant (incorporated by reference to
Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1998).
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3.2 | Amended
and Restated Bylaws of the Registrant (incorporated by reference to Annual Report of Form
10-K for the fiscal year ended December 31, 1997).
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------

| | 3.3 | Amendments
to Bylaws of the Registrant (incorporated by reference to Quarterly Report of Form 10-Q
for the quarterly period ended March 31, 2003).
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------

| | 4 | Articles
of Incorporation and Bylaws of the Registrant (incorporated by reference to Quarterly
Report on Form 10-Q for the quarterly period ended June 30, 1998, the Annual Report on
Form 10-K for the fiscal year ended December 31, 1997, and the Quarterly Report on Form
10-Q for the quarterly period ended March 31, 2003).
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 21 | Subsidiaries
of the Registrant
| | -- | ------------------------------

| | 23 | Consent
of Independent Registered Public Accounting Firm
| | -- | --------------------------------------------------------

| | 31.1 | CEO
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
| | ---- | ---------------------------------------------------------------------------

| | 31.2 | CFO
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
| | ---- | ---------------------------------------------------------------------------

| | 32 | CEO
and CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
| | -- | -----------------------------------------------------------------------------------

---

SIGNATURES

Pursuant to the requirements of
Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned, thereunto duly authorized.

FARMERS CAPITAL BANK CORPORATION

|      |                                      
|----- | -------------------------------------
|By:   | /s/ G. Anthony Busseni               
|      | G. Anthony Busseni                   
|      | President and Chief Executive Officer
|      |                                      
|Date: | March 6, 2006                        

Pursuant to the requirements of the
Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the Registrant and in the capacities and on the dates indicated.

|                          |                                                 |              
|------------------------- | ----------------------------------------------- | -------------
|/s/ G. Anthony Busseni    | President, Chief Executive Officer and Director | March 6, 2006
|G. Anthony Busseni        | (principal executive officer of the Registrant)
|                         
|/s/ Frank W. Sower Jr.    | Chairman                                        | 3-06-06      
|Frank W. Sower, Jr       
|                         
|/s/ Frank R. Hamilton Jr. | Director                                        | 3/8/06       
|Frank R. Hamilton, Jr    
|                         
|/s/ Lloyd C. Hillard Jr.  | Director                                        | 3/10/06      
|Lloyd C. Hillard, Jr     
|                         
|/s/ Cecil D. Bell Jr.     | Director                                        | 3-8-06       
|Cecil D. Bell, Jr        
|                         
|/s/ Shelley S. Sweeney    | Director                                        | 3-9-06       
|Shelley S. Sweeney       
|                         
|/s/ Donald J Mullineaux   | Director                                        | 3/6/06       
|Dr. Donald J. Mullineaux 
|                         
|/s/ Harold G. Mays        | Director                                        | 3/6/06       
|Harold G. Mays           
|                         
|/s/ J.D. Sutterlin        | Director                                        | 3/6/06       
|Dr. John D. Sutterlin    
|                         
|/s/ Michael M Sullivan    | Director                                        | 3/3/06       
|Michael M. Sullivan      
|                         
|/s/ J. Barry Banker       | Director                                        | 3-6-06       
|J. Barry Banker          
|                         
|/s/ Robert Roach Jr.      | Director                                        | 3/3/06       
|Robert Roach, Jr         
|                         
|/s/ C Douglas Carpenter   | Senior Vice President, Secretary and CFO        | 3-3-06       
|C. Douglas Carpenter      | (principal financial and accounting officer)   
|                         

---

INDEX OF EXHIBITS

|Exhibit |                                                                                      | Page
|------- | ------------------------------------------------------------------------------------ | ----
|       
|21.     | Subsidiaries of the Registrant                                                       | 71  
|       
|23      | Consent of Independent Registered Public Accounting Firm                             | 73  
|       
|31.1    | CEO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002          | 74  
|       
|31.2    | CFO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002          | 75  
|       
|32      | CEO and CFO Certifications Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | 76  
|