**UNITED        STATES**

**SECURITIES        AND EXCHANGE COMMISSION**

**Washington,        D.C. 20549**

**FORM        10-K**

| x | **ANNUAL                  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE                  ACT OF                  1934** |
|---|---------------------------------------------------------------------------------------------------------------------------------------------|

| o | **TRANSITION                  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE                  ACT OF                  1934** |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------|

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

| Kentucky                                                                                        |   | 61-1017851                                                                |
|-------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------|
| (State                  or other jurisdiction ofincorporation                  or organization) |   | (I.R.S.                  Employer Identification                  Number) |

| P.O.                  Box 309, 202 West Main St.          |   |                        |
|-----------------------------------------------------------|--------|-----------------------------|
| Frankfort,                  Kentucky                      |   | 40601                       |
| (Address                  of principal executive offices) |   | (Zip                  Code) |

| Common                  Stock - $.125 per share Par Value |   | The                  NASDAQ Global Select Market                              |
|-----------------------------------------------------------|--------|-------------------------------------------------------------------------------|
| (Title                  of each class)                    |   | (Name                  of each exchange on which                  registered) |

|   | None                              |   |
|--------|-----------------------------------|--------|
|   | (Title                  of Class) |   |

| Yes                  o | No                  x |
|------------------------|-----------------------|

| Yes                  o | No                  x |
|------------------------|-----------------------|

| Yes                  x | No                  o |
|------------------------|-----------------------|

| Large                  accelerated filer o | Accelerated                  filer x | Non-accelerated                  filer o |
|--------------------------------------------|--------------------------------------|------------------------------------------|

----

| Yes                  o | No                  x |
|------------------------|-----------------------|

index        of exhibits 

----

|                      |                               |                                                                                                                                                            | Page   |
|---------------------------|------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| Part                  I   |                               |                                                                                                                                                            |   |
|                      |                               |                                                                                                                                                            |   |
|                      | Item                  1.           | Business                                                                                                                                                        | 4      |
|                      | Item                  1A.          | Risk                  Factors                                                                                                                                   | 12     |
|                      | Item                  1B.          | Unresolved                  Staff                  Comments                                                                                                     | 14     |
|                      | Item                  2.           | Properties                                                                                                                                                      | 15     |
|                      | Item                  3.           | Legal                  Proceedings                                                                                                                              | 16     |
|                      | Item                  4.           | Submission                  of Matters to a Vote of                  Security Holders                                                                           | 16     |
|                      |                               |                                                                                                                                                            |   |
| Part                  II  |                               |                                                                                                                                                            |   |
|                      |                               |                                                                                                                                                            |   |
|                      | Item                  5.           | Market                  for Registrant's Common                  Equity, Related Stockholder Matters and Issuer Purchases of Equity                  Securities | 16     |
|                      | Item                  6.           | Selected                  Financial Data                                                                                                                        | 19     |
|                      | Item                  7.           | Management's                  Discussion and Analysis of Financial                  Condition and Results of Operations                                         | 20     |
|                      | Item                  7A.          | Quantitative                  and Qualitative Disclosures About                  Market Risk                                                                    | 40     |
|                      | Item                  8.           | Financial                  Statements and Supplementary                  Data                                                                                   | 41     |
|                      | Item                  9.           | Changes                  in and Disagreements With                  Accountants on Accounting and Financial Disclosure                                          | 75     |
|                      | Item                  9A.          | Controls                  and                  Procedures                                                                                                       | 75     |
|                      | Item                  9B.          | Other                  Information                                                                                                                              | 80     |
|                      |                               |                                                                                                                                                            |   |
| Part                  III |                               |                                                                                                                                                            |   |
|                      |                               |                                                                                                                                                            |   |
|                      | Item                  10.          | Directors,                  Executive Officers and Corporate                  Governance                                                                        | 80     |
|                      | Item                  11.          | Executive                  Compensation                                                                                                                         | 80     |
|                      | Item                  12.          | Security                  Ownership of Certain Beneficial                  Owners and Management and Related Stockholder Matters                                | 80     |
|                      | Item                  13.          | Certain                  Relationships and Related                  Transactions                                                                                | 80     |
|                      | Item                  14.          | Principal                  Accounting Fees and                  Services                                                                                        | 80     |
|                      |                               |                                                                                                                                                            |   |
| Part                  IV  |                               |                                                                                                                                                            |   |
|                      |                               |                                                                                                                                                            |   |
|                      | Item                  15.          | Exhibits,                  Financial Statement                  Schedules                                                                                       | 81     |
|                      |                               |                                                                                                                                                            |   |
|                      | Signatures                         | 82                                                                                                                                                              |
|                      | Index                  of Exhibits | 83                                                                                                                                                              |

----

Item        1. Business

Risk Factors
Forward-Looking        Statements

**Organization**

**Organization        Chart**

----

| Tier   | Entity                                                          |
|--------|-----------------------------------------------------------------|
| 1      | Farmers                  Capital Bank Corporation, Frankfort KY |
|   |                                                            |   |
| 2      |                                                            | United                  Bank & Trust Co., Versailles KY 100% |
| 3      |                                                            |   | EV                  Properties, Inc., Versailles KY 100% |
|   |                                                            |   |   |
| 2      |                                                            | Lawrenceburg                  National Bank, Harrodsburg KY 100% |
|   |                                                            |   |
| 2      |                                                            | Farmers                  Bank & Capital Trust Co., Frankfort KY 100% |
| 3      |                                                            |   | Farmers                  Bank Realty Co., Frankfort KY 100% |
| 3      |                                                            |   | Leasing                  One Corporation, Frankfort KY 100% |
| 3      |                                                            |   | EG                  Properties, Inc., Frankfort KY 100% |
| 3      |                                                            |   | Austin                  Park Apartments, LTD, Frankfort KY 99% |
| 3      |                                                            |   | Frankfort                  Apartments II, LTD, Frankfort KY 99.9% |
| 3      |                                                            |   | Farmers                  Capital Insurance Corp., Frankfort KY 100% |
| 4      |                                                            |   |   | Farmers                  Fidelity Insurance Agency, LLP, Lexington KY 50% |
|   |                                                            |   |   |   |
| 2      |                                                            | Citizens                  National Bank of Jessamine County, Nicholasville KY                  100% |
|   |                                                            |   |
| 2      |                                                            | First                  Citizens Bank, Elizabethtown KY 100% |
| 3      |                                                            |   | EH                  Properties, Inc., Elizabethtown KY 100% (Dissolved in January,                  2007) |
|   |                                                            |   |   |
| 2      |                                                            | Farmers                  Bank and Trust Company, Georgetown KY 100% |
| 3      |                                                            |   | Pro                  Mortgage Partners, LLC, Georgetown KY 100% |
|   |                                                            |   |   |
| 2      |                                                            | FCB                  Services, Inc., Frankfort KY 100% |
|   |                                                            |   |
| 2      |                                                            | Kentucky                  General Holdings, LLC, Frankfort, KY 100% |
| 3      |                                                            |   | KHL                  Holdings, LLC, Frankfort KY 45% (equity), 50% (voting) |
| 4      |                                                            |   |   | Kentucky                  Home Life Insurance Company, Frankfort KY 100% |
|   |                                                            |   |   |   |
| 2      |                                                            | Kentucky                  General Life Insurance Company, Frankfort KY (Inactive) |
|   |                                                            |   |   |   |
| 2      |                                                            | FFKT                  Insurance Services, Inc., Frankfort, KY 100% |
|   |                                                            |   |
| 2      |                                                            | Citizens                  Acquisition Subsidiary Corporation, Frankfort, KY 100% (Dissolved                  in                  January, 2007) |
| 3      |                                                            |   | Citizens                  Bank of Northern Kentucky, Inc., Newport, KY 100% (Became a Tier                  2                  subsidiary in January, 2007) |
|   |                                                            |   |   |
| 2      |                                                            | Farmers                  Capital Bank Trust I, Frankfort, KY 100% |
|   |                                                            |   |
| 2      |                                                            | Farmers                  Capital Bank Trust II, Frankfort, KY                  100% |

----

----

----

**Lending**

**Supervision        and Regulation**

----

** **

----

*Anti-Money        Laundering.*

*Sections        23A and 23B of the Federal Reserve Act.*

*Dividends.*

*Community        Reinvestment Act.*

*Insurance        Regulation*

*Consumer        Regulation.*

|   | · | limit                  the interest and other charges collected or contracted for by all                  of the                  Company’s subsidiary banks; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | govern                  disclosures of credit terms to consumer borrowers; |
|--------|--------|----------------------------------------------------------------------------|

|   | · | require                  financial institutions to provide information to enable the public                  and                  public officials to determine whether a financial institution is                  fulfilling its obligation to help meet the housing needs of the                  community                  it serves; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | prohibit                  discrimination on the basis of race, creed, or other prohibited                  factors in                  extending credit; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | require                  all of the Company’s subsidiary banks to safeguard the personal non-public                  information of its customers, provide annual notices to consumers                  regarding the usage and sharing of such information and limit disclosure                  of such information to third parties except under specific circumstances;                  and |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | govern                  the manner in which consumer debts may be collected by collection                  agencies. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------|

|   | · | require                  disclosure of the interest rate and other terms of consumer deposit                  accounts; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------|

|   | · | impose                  a duty to maintain the confidentiality of consumer financial records                  and                  prescribe procedures for complying with administrative subpoenas                  of                  financial records; and |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | govern                  automatic deposits to and withdrawals from deposit accounts and                  customers’                  rights and liabilities arising from the use of automated teller                  machines                  and other electronic banking services. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Competition**

**Employees**

----

**Available        Information**

Item        1A. Risk Factors

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

**The        Company’s status as a holding company makes it dependent on dividends from its        subsidiaries to meet its obligations**

**Interest        rate volatility could significantly harm the Company’s        business**

**Available        Information**

Item        1A. Risk Factors

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

**The        Company’s status as a holding company makes it dependent on dividends from its        subsidiaries to meet its obligations**

**Interest        rate volatility could significantly harm the Company’s        business**

**The        Company’s results of operations are significantly affected by the ability of its        borrowers to repay their loans**

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

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

----

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

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

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

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

|   | · | historical                  loan loss experience; |
|--------|--------|---------------------------------------------------|

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

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

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

**Combining        Citizens Jessamine or other business entities with the Company’s network of        banks may be more difficult, costly or time-consuming than we        expect**

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

**The        Company’s controls and procedures may fail or be        circumvented**

----

**Trading        volume in the Company’s common stock is less than that of other similar        companies**

Item        1B. Unresolved Staff        Comments

----

Item        2. Properties

Notes to        Consolidated Financial Statements 

**Corporate        Headquarters**

| **Banking                  Offices**                                           |   |
|--------------------------------------------------------------------------------|--------|
| 125                  W. Main Street, Frankfort, KY                             |   |
| 555                  Versailles Road, Frankfort, KY                            |   |
| 835                  Louisville Road, Frankfort, KY (leased)                   |   |
| 154                  Versailles Road, Frankfort, KY                            |   |
| 1301                  US 127 South, Frankfort, 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)                 |   |
| 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                        |   |
| 1035                  Ben Ali Drive, Danville, KY (leased)                     |   |
| 425                  W. Dixie Avenue, Elizabethtown, KY                        |   |
| 3030                  Ring Road, Elizabethtown, KY                             |   |
| 111                  Towne Drive (Kroger Store) Elizabethtown, KY (leased)     |   |
| 232                  Redmar Plaza, Radcliff, KY (leased)                       |   |
| 4810                  N. Preston Highway, Shepherdsville, KY                   |   |
| 103                  Churchill Drive, Newport, KY                              |   |
| 7300                  Alexandria Pike, Alexandria, KY                          |   |
| 164                  Fairfield Avenue, Bellevue, KY                            |   |
| 8730                  US Highway 42, Florence, KY                              |   |
| 34                  N. Ft. Thomas Avenue, Ft. Thomas, KY (leased)              |   |
| 2911                  Alexandria Pike, Highland Heights, KY (leased)           |   |
| 2006                  Patriot Way, Independence, KY                            |   |
| 2774                  Town Center Blvd., Crestview Hills, KY (leased)          |   |
| 201                  N. Main Street, Nicholasville, KY                         |   |
| 995                  S. Main Street (Kroger Store), Nicholasville, KY (leased) |   |
| 986                  N. Main Street, Nicholasville, KY                         |   |
| 106                  S. Lexington Avenue, Wilmore, KY                          |   |

**Data        Processing Center**

**Leasing        One Corporation & Farmers Capital Insurance        Corporation**

----

Item        3. Legal Proceedings

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

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

|                                                                    |                                                              |                                                          |                                                                                                                                              |                                                                                                                                            |
|-------------------------------------------------------------------------|-------------------------------------------------------------------|---------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------|
| Period                                                                  | Total                  Number ofShares                  Purchased | Average                  Price Paidper                  Share | Total                  Number of SharesPurchased                  as Part ofPublicly                  Announced Plansor                  Programs | Maximum                  Number ofShares                  that May Yet BePurchased                  Under the Plansor                  Programs |
| October                  1, 2006 to October                  31, 2006   | 2,967                                                             | $                  34.16                                      | 2,967                                                                                                                                             | 153,145                                                                                                                                         |
| November                  1, 2006 to November                  30, 2006 |                     130                                 |                     33.94                           |                     130                                                                                                                 | 153,015                                                                                                                                         |
| December                  1, 2006 to December                  31, 2006 |                                                              |                                                          |                                                                                                                                              | 153,015                                                                                                                                         |
| Total                                                                   | 3,097                                                             | $                   34.15                                | 3,097                                                                                                                                             |                                                                                                                                            |

----

**Performance        Graph**

|                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
|---------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                                                      |   | 2001   |   | 2002   |   | 2003   |   | 2004   |   | 2005   |   | 2006   |   |
| Farmers                  Capital Bank Corporation                         |   | $      | 100.00 |   | $      | 94.03  |   | $      | 99.97  |   | $      | 125.76 |   | $ | 97.61 |   | $ | 114.84 |   |
| NASDAQ                  Composite                                         |   |   | 100.00 |   |   | 71.97  |   |   | 107.18 |   |   | 117.07 |   |   | 120.50 |   |   | 137.02 |   |
| Southeastern                  Banks Under 1 Billion Market Capitalization |   |   | 100.00 |   |   | 119.52 |   |   | 169.59 |   |   | 202.36 |   |   | 206.28 |   |   | 240.80 |   |

----

**Corporate        Address**

**Annual        Meeting**

**Form        10-K**

**Web        Site Access to Filings**

| **NASDAQ                  Market Makers**          |                                        |
|----------------------------------------------------|---------------------------------------------|
| J.J.B.                  Hilliard, W.L. Lyons, Inc. | Morgan,                  Keegan and Company |
| (502)                  588-8400                    | (800)                  260-0280             |
| (800)                  444-1854                    |                                        |

| UBS                  Securities, LLC | Howe                  Barnes Investments, Inc. |
|--------------------------------------|------------------------------------------------|
| 859-269-6900                         | (800)                  621-2364                |
| 502-589-4000                         |                                           |

Shareholder Information
Stock Prices
Note 17 

----

Item        6. Selected Financial Data

| **Selected                  Financial Highlights**                                         |   |   |      |   |   |      |   |   |      |   |   |
|--------------------------------------------------------------------------------------------|--------|--------|-----------|--------|--------|-----------|--------|--------|-----------|--------|--------|
|                                                                                       |   |   |      |   |   |      |   |   |      |   |   |
| **December                  31,**(In                  thousands, except per share data)    |   | 2006   |      | 2005   |   | 2004      |   | 2003   |      | 2002   |   |
| **Results                  of Operations**                                                 |   |   |      |   |   |      |   |   |      |   |   |   |   |   |   |   |
| Interest                  income                                                           |   | $      | 92,340    |   | $      | 65,651    |   | $      | 55,296    |   | $      | 52,218 |   | $ | 59,695 |   |
| Interest                  expense                                                          |   |   | 41,432    |   |   | 24,409    |   |   | 16,729    |   |   | 17,565 |   |   | 22,789 |   |
| Net                  interest income                                                       |   |   | 50,908    |   |   | 41,242    |   |   | 38,567    |   |   | 34,653 |   |   | 36,906 |   |
| Provision                  for loan losses                                                 |   |   | 965       |   |   | 622       |   |   | 856       |   |   | 1,895 |   |   | 4,095 |   |
| Noninterest                  income                                                        |   |   | 20,459    |   |   | 19,867    |   |   | 17,164    |   |   | 17,179 |   |   | 15,797 |   |
| Noninterest                  expense                                                       |   |   | 53,377    |   |   | 42,164    |   |   | 38,812    |   |   | 34,555 |   |   | 33,256 |   |
| Income                  from continuing operations                                         |   |   | 13,665    |   |   | 14,532    |   |   | 13,064    |   |   | 12,267 |   |   | 11,861 |   |
| Income                  from discontinued operations1                                      |   |   | 7,707     |   |   | 1,240     |   |   | 328       |   |   | 696 |   |   | 700 |   |
| Net                  income                                                                |   |   | 21,372    |   |   | 15,772    |   |   | 13,392    |   |   | 12,963 |   |   | 12,561 |   |
| **Per                  Share Data**                                                        |   |   |      |   |   |      |   |   |      |   |   |   |   |   |   |   |
| Basic:                                                                                     |   |   |      |   |   |      |   |   |      |   |   |   |   |   |   |   |
| Income                  from continuing operations                                         |   | $      | 1.82      |   | $      | 2.13      |   | $      | 1.94      |   | $      | 1.82 |   | $ | 1.73 |   |
| Net                  income                                                                |   |   | 2.85      |   |   | 2.31      |   |   | 1.99      |   |   | 1.93 |   |   | 1.83 |   |
| Diluted:                                                                                   |   |   |      |   |   |      |   |   |      |   |   |   |   |   |   |   |
| Income                  from continuing operations                                         |   |   | 1.82      |   |   | 2.12      |   |   | 1.93      |   |   | 1.81 |   |   | 1.72 |   |
| Net                  income                                                                |   |   | 2.84      |   |   | 2.30      |   |   | 1.98      |   |   | 1.92 |   |   | 1.82 |   |
| Cash                  dividends declared                                                   |   |   | 1.43      |   |   | 1.32      |   |   | 1.32      |   |   | 1.29 |   |   | 1.25 |   |
| Book                  value                                                                |   |   | 22.60     |   |   | 20.87     |   |   | 19.38     |   |   | 18.83 |   |   | 18.52 |   |
| **Selected                  Ratios**                                                       |   |   |      |   |   |      |   |   |      |   |   |   |   |   |   |   |
| Percentage                  of income from continuing operations to:                       |   |   |      |   |   |      |   |   |      |   |   |   |   |   |   |   |
| Average                  shareholders’ equity (ROE)                                  |   |   | 8.49      | %      |   | 10.81     | %      |   | 10.21     | %      |   | 9.83 | % |   | 9.48 | % |
| Average                  total assets2                  (ROA)                              |   |   | .85       |   |   | 1.10      |   |   | 1.07      |   |   | 1.07 |   |   | 1.07 |   |
| Percentage                  of dividends declared to income from continuing operations     |   |   | 78.89     |   |   | 61.67     |   |   | 68.10     |   |   | 70.70 |   |   | 72.41 |   |
| Percentage                  of average shareholders’ equity to average total assets2 |   |   | 10.04     |   |   | 10.19     |   |   | 10.45     |   |   | 10.88 |   |   | 11.23 |   |
| Total                  shareholders’ equity                                          |   | $      | 178,441   |   | $      | 154,236   |   | $      | 131,450   |   | $      | 126,471 |   | $ | 125,773 |   |
| Total                  assets                                                              |   |   | 1,824,366 |   |   | 1,673,943 |   |   | 1,399,896 |   |   | 1,324,341 |   |   | 1,280,108 |   |
| Long-term                  debt                                                            |   |   | 87,992    |   |   | 75,291    |   |   | 51,265    |   |   | 53,932 |   |   | 55,593 |   |
| **Weighted                  Average Shares Outstanding**                                   |   |   |      |   |   |      |   |   |      |   |   |   |   |   |   |   |
| Basic                                                                                      |   |   | 7,511     |   |   | 6,831     |   |   | 6,737     |   |   | 6,727 |   |   | 6,870 |   |
| Diluted                                                                                    |   |   | 7,526     |   |   | 6,864     |   |   | 6,780     |   |   | 6,770 |   |   | 6,910 |   |

----

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

**Glossary        of Financial Terms**

**Allowance        for loan losses**

**Dividend        payout**

**Basis        points**

**Interest        rate sensitivity**

**Net        charge-offs**

**Net        interest income**

**Net        interest margin**

**Net        interest spread**

**Other        real estate owned**

**Provision        for loan losses**

**Return        on average assets (ROA)**

**Return        on average equity (ROE)**

**Tax        equivalent basis (TE)**

**Weighted        average number of common shares outstanding**

----

**Management’s        Discussion and Analysis of Financial Condition and Results of        Operations**

**Forward-Looking        Statements**

**DISCONTINUED        OPERATIONS**

*Unless        otherwise noted, this Management’s Discussion and Analysis of Financial        Condition and Results of Operations relate only to the Company’s continuing        operations.*

**Application        of Critical Accounting Policies**

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Asset Quality
Nonperforming        Assets
1
5

**EXECUTIVE        LEVEL OVERVIEW**

----

|   | · | Since                  2004, the general trend of the short-term interest rate environment                  has                  been 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 2006. In all, the federal                  funds rate                  was increased 125 basis points during 2004, 200 basis points during                  2005,                  and 100 basis points during 2006 and ended the year at 5.25%. The                  prime                  interest rate, which significantly impacts the Company’s loan portfolio,                  moved in a similar manner as the federal funds rate in the periods                  discussed above. Longer-term yields, such as for the 3, 5, 10,                  and 20 year                  treasuries, were also up at year-end 2006 compared to year-end                  2005, with                  the 3, 5, and 10 year notes up 37, 35,  and 32 basis points,                  respectively and the 20 year bond up 30 basis points. For the Company,                  this has had a relatively neutral impact on net interest spread                  in the                  twelve-month comparison of 2006 compared to 2005. Net interest                  spread for                  2005 was unchanged at 3.32% in the comparable periods. Net interest                  margin                  increased 6 basis points to 3.75% from 3.69% due to the impact                  of                  noninterest bearing sources of funds used to support the increase                  in                  interest earning assets. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | On                  October 1, 2006, the Company acquired 100% of the outstanding common                  shares of Citizens Bancshares. Citizens Bancshares, which was subsequently                  merged into the Company, was the parent company of Citizens Jessamine                  before the merger. Citizens Jessamine operates four banking locations                  in                  Jessamine County in Central Kentucky. The impact on this acquisition                  was                  an immediate increase in loans and deposits of $120 million and                  $139                  million, respectively, to the Company’s consolidated balance sheet. The                  purchase also resulted in an additional $14.6 million and $4.5                  million of                  goodwill and core deposit intangible assets, respectively. The                  additional                  core deposit intangible added $255 thousand in amortization expense                  for                  the Company in 2006. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | During                  the fourth quarter of 2006 the Company sold KBC and the Bath County                  branches of its Farmers Georgetown bank subsidiary. The Company                  recorded a                  pretax gain on these sales of $9.8 million. The impact from these                  sales,                  which has been classified as discontinued operations, was a decrease                  in                  net loans and deposits of $88.6 million and $146 million, respectively. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | On                  December 6, 2005, the Company acquired Citizens Bancorp in a cash                  and                  stock transaction. Citizens Bancorp is the former parent company                  of                  Citizens Northern, which has eight banking locations in our Northern                  Kentucky market. The impact of this acquisition generally resulted                  in                  higher income and expense amounts during 2006 compared to 2005                  due to the                  timing of this transaction. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | In                  addition to the four new banking sites acquired in the Citizens                  Jessamine                  purchase, the Company replaced one existing site in Elizabethtown                  and                  opened new branches in Danville, Independence, and Crestview Hills.                  Additional sites are anticipated to open during                  2007. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**RESULTS        OF OPERATIONS**

----

**Interest        Income**

----

**Interest        Expense**

**Net        Interest Income**

----

----

**Distribution        of Assets, Liabilities and Shareholders’ Equity: Interest Rates and Interest        Differential**

|                                                                                                                                                |   |    |      |     |   |    |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------|-----------|----------|--------|---------|--------|
| Years                  Ended December 31,                                                                                                           |   | 2006    |      | 2005     |   | 2004    |   |
|                                                                                                                                                |   | Average |      |     |   | Average |   | Average |   |   |   | Average |   | Average |   |   |   | Average |   |
| (In                  thousands)                                                                                                                     |   | Balance |      | Interest |   | Rate    |   | Balance |   | Interest |   | Rate |   | Balance |   | Interest |   | Rate |   |
| **Earning                  Assets**                                                                                                                 |   |    |      |     |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Investment                  securities                                                                                                              |   |    |      |     |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Taxable                                                                                                                                             |   | $       | 212,357   |     | $      | 9,025   |   |   | 4.25 | % | $ | 208,967 |   | $ | 7,483 |   |   | 3.58 | % | $ | 220,518 |   | $ | 7,321 |   |   | 3.32 | % |
| Nontaxable1                                                                                                                                         |   |    | 91,413    |     |   | 5,278   |   |   | 5.77 |   |   | 90,758 |   |   | 5,419 |   |   | 5.97 |   |   | 91,060 |   |   | 5,721 |   |   | 6.28 |   |
| Time                  deposits with banks, federal funds sold and securities purchased                  under                  agreements to resell |   |    | 62,378    |     |   | 2,355   |   |   | 3.78 |   |   | 68,212 |   |   | 1,811 |   |   | 2.65 |   |   | 40,349 |   |   | 472 |   |   | 1.17 |   |
| Loans                  1,2,3                                                                                                                        |   |    | 1,051,002 |     |   | 77,836  |   |   | 7.41 |   |   | 805,014 |   |   | 52,990 |   |   | 6.58 |   |   | 735,697 |   |   | 43,874 |   |   | 5.96 |   |
| Total                  earning assets                                                                                                               |   |    | 1,417,150 |     | $      | 94,494  |   |   | 6.67 | % |   | 1,172,951 |   | $ | 67,703 |   |   | 5.77 | % |   | 1,087,624 |   | $ | 57,388 |   |   | 5.28 | % |
| Allowance                  for loan losses                                                                                                          |   |    | (11,094   | )        |   |    |   |   |   |   |   | (10,528 | ) |   |   |   |   |   |   |   | (10,811 | ) |   |   |   |   |   |   |
| Total                  earning assets, net of allowance for loan losses                                                                             |   |    | 1,406,056 |     |   |    |   |   |   |   |   | 1,162,423 |   |   |   |   |   |   |   |   | 1,076,813 |   |   |   |   |   |   |   |
| **Nonearning                  Assets**                                                                                                              |   |    |      |     |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash                  and due from banks                                                                                                            |   |    | 77,509    |     |   |    |   |   |   |   |   | 75,302 |   |   |   |   |   |   |   |   | 84,674 |   |   |   |   |   |   |   |
| Premises                  and equipment, net                                                                                                        |   |    | 32,029    |     |   |    |   |   |   |   |   | 22,759 |   |   |   |   |   |   |   |   | 21,403 |   |   |   |   |   |   |   |
| Other                  assets                                                                                                                       |   |    | 88,044    |     |   |    |   |   |   |   |   | 58,566 |   |   |   |   |   |   |   |   | 41,637 |   |   |   |   |   |   |   |
| Assets                  of discontinued operations                                                                                                  |   |    | 129,827   |     |   |    |   |   |   |   |   | 148,474 |   |   |   |   |   |   |   |   | 131,845 |   |   |   |   |   |   |   |
| Total                  assets                                                                                                                       |   | $       | 1,733,465 |     |   |    |   |   |   |   | $ | 1,467,524 |   |   |   |   |   |   |   | $ | 1,356,372 |   |   |   |   |   |   |   |
| **Interest                  Bearing Liabilities**                                                                                                   |   |    |      |     |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                                                                                                                            |   |    |      |     |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest                  bearing demand                                                                                                            |   | $       | 260,417   |     | $      | 3,774   |   |   | 1.45 | % | $ | 214,548 |   | $ | 1,878 |   |   | .88 | % | $ | 214,150 |   | $ | 1,077 |   |   | .50 | % |
| Savings                                                                                                                                             |   |    | 212,948   |     |   | 4,437   |   |   | 2.08 |   |   | 182,337 |   |   | 2,575 |   |   | 1.41 |   |   | 176,723 |   |   | 1,668 |   |   | .94 |   |
| Time                                                                                                                                                |   |    | 587,047   |     |   | 24,343  |   |   | 4.15 |   |   | 453,419 |   |   | 14,677 |   |   | 3.24 |   |   | 390,195 |   |   | 10,637 |   |   | 2.73 |   |
| Federal                  funds purchased and securities sold under agreements to                  repurchase                                        |   |    | 92,092    |     |   | 4,348   |   |   | 4.72 |   |   | 81,318 |   |   | 2,573 |   |   | 3.16 |   |   | 90,092 |   |   | 1,293 |   |   | 1.44 |   |
| Other                  borrowed funds                                                                                                               |   |    | 84,869    |     |   | 4,530   |   |   | 5.34 |   |   | 64,027 |   |   | 2,706 |   |   | 4.23 |   |   | 54,257 |   |   | 2,055 |   |   | 3.79 |   |
| Total                  interest bearing liabilities                                                                                                 |   |    | 1,237,373 |     | $      | 41,432  |   |   | 3.35 | % |   | 995,649 |   | $ | 24,409 |   |   | 2.45 | % |   | 925,417 |   | $ | 16,730 |   |   | 1.81 | % |
| **Noninterest                  Bearing Liabilities**                                                                                                |   |    |      |     |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commonwealth                  of Kentucky deposits                                                                                                  |   |    | 38,627    |     |   |    |   |   |   |   |   | 37,978 |   |   |   |   |   |   |   |   | 35,875 |   |   |   |   |   |   |   |
| Other                  demand deposits                                                                                                              |   |    | 157,355   |     |   |    |   |   |   |   |   | 141,219 |   |   |   |   |   |   |   |   | 133,767 |   |   |   |   |   |   |   |
| Other                  liabilities                                                                                                                  |   |    | 7,705     |     |   |    |   |   |   |   |   | 11,292 |   |   |   |   |   |   |   |   | 8,634 |   |   |   |   |   |   |   |
| Liabilities                  of discontinued operations                                                                                             |   |    | 131,437   |     |   |    |   |   |   |   |   | 147,010 |   |   |   |   |   |   |   |   | 124,686 |   |   |   |   |   |   |   |
| Total                  liabilities                                                                                                                  |   |    | 1,572,497 |     |   |    |   |   |   |   |   | 1,333,148 |   |   |   |   |   |   |   |   | 1,228,379 |   |   |   |   |   |   |   |
| Shareholders’                  equity                                                                                                         |   |    | 160,968   |     |   |    |   |   |   |   |   | 134,376 |   |   |   |   |   |   |   |   | 127,993 |   |   |   |   |   |   |   |
| Total                  liabilities and shareholders’ equity                                                                                   |   | $       | 1,733,465 |     |   |    |   |   |   |   | $ | 1,467,524 |   |   |   |   |   |   |   | $ | 1,356,372 |   |   |   |   |   |   |   |
| Net                  interest income                                                                                                                |   |    |      |     |   | 53,062  |   |   |   |   |   |   |   |   | 43,294 |   |   |   |   |   |   |   |   | 40,658 |   |   |   |   |
| TE                  basis adjustment                                                                                                                |   |    |      |     |   | (2,154  | )      |   |   |   |   |   |   |   | (2,052 | ) |   |   |   |   |   |   |   | (2,091 | ) |   |   |   |
| Net                  interest income                                                                                                                |   |    |      |     | $      | 50,908  |   |   |   |   |   |   |   | $ | 41,242 |   |   |   |   |   |   |   | $ | 38,567 |   |   |   |   |
| Net                  interest spread                                                                                                                |   |    |      |     |   |    |   |   | 3.32 | % |   |   |   |   |   |   |   | 3.32 | % |   |   |   |   |   |   |   | 3.47 | % |
| Effect                  of noninterest bearing sources of funds                                                                                     |   |    |      |     |   |    |   |   | .43 |   |   |   |   |   |   |   |   | .37 |   |   |   |   |   |   |   |   | .27 |   |
| Net                  interest margin                                                                                                                |   |    |      |     |   |    |   |   | 3.75 | % |   |   |   |   |   |   |   | 3.69 | % |   |   |   |   |   |   |   | 3.74 | % |

| 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 $2.0 million,                  $2.1 million, and $1.8 million for 2006, 2005, and 2004,                  respectively. |
|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Analysis        of Changes in Net Interest Income (tax equivalent basis**
**)**

|                                                                                                                                                |   |       |   |                                    |   |     |   |                                    |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------|--------|-----------------------------------------|--------|----------|--------|-----------------------------------------|--------|
|                                                                                                                                                |   | Variance   |   | Variance                  Attributed to |   | Variance |   | Variance                  Attributed to |   |
| (In                  thousands)                                                                                                                     |   | 2006/20051 |   | Volume                                  |   | Rate     |   | 2005/20041                              |   | Volume |   | Rate |   |
| **Interest                  Income**                                                                                                                |   |       |   |                                    |   |     |   |                                    |   |   |   |   |   |   |   |   |   |   |   |
| Taxable                  investment securities                                                                                                      |   | $          | 1,542  |                                    | $      | 123      |   | $                                       | 1,419  |   | $ | 162 |   | $ | (394 | ) | $ | 556 |   |
| Nontaxable                  investment securities2                                                                                                  |   |       | (141   | )                                       |   | 39       |   |                                    | (180   | ) |   | (302 | ) |   | (19 | ) |   | (283 | ) |
| Time                  deposits with banks, federal funds sold and securities purchased                  under                  agreements to resell |   |       | 544    |                                    |   | (167     | )      |                                    | 711    |   |   | 1,339 |   |   | 473 |   |   | 866 |   |
| Loans2                                                                                                                                              |   |       | 24,846 |                                    |   | 17,586   |   |                                    | 7,260  |   |   | 9,116 |   |   | 4,333 |   |   | 4,783 |   |
| Total                  interest income                                                                                                              |   |       | 26,791 |                                    |   | 17,581   |   |                                    | 9,210  |   |   | 10,315 |   |   | 4,393 |   |   | 5,922 |   |
| **Interest                  Expense**                                                                                                               |   |       |   |                                    |   |     |   |                                    |   |   |   |   |   |   |   |   |   |   |   |
| Interest                  bearing demand deposits                                                                                                   |   |       | 1,896  |                                    |   | 471      |   |                                    | 1,425  |   |   | 801 |   |   | 2 |   |   | 799 |   |
| Savings                  deposits                                                                                                                   |   |       | 1,862  |                                    |   | 486      |   |                                    | 1,376  |   |   | 907 |   |   | 54 |   |   | 853 |   |
| Time                  deposits                                                                                                                      |   |       | 9,666  |                                    |   | 4,950    |   |                                    | 4,716  |   |   | 4,040 |   |   | 1,876 |   |   | 2,164 |   |
| Federal                  funds purchased and securities sold under agreements to                  repurchase                                        |   |       | 1,775  |                                    |   | 375      |   |                                    | 1,400  |   |   | 1,280 |   |   | (137 | ) |   | 1,417 |   |
| Other                  borrowed funds                                                                                                               |   |       | 1,824  |                                    |   | 1,010    |   |                                    | 814    |   |   | 651 |   |   | 396 |   |   | 255 |   |
| Total                  interest expense                                                                                                             |   |       | 17,023 |                                    |   | 7,292    |   |                                    | 9,731  |   |   | 7,679 |   |   | 2,191 |   |   | 5,488 |   |
| Net                  interest income                                                                                                                |   | $          | 9,768  |                                    | $      | 10,289   |   | $                                       | (521   | ) | $ | 2,636 |   | $ | 2,202 |   | $ | 434 |   |
| Percentage                  change                                                                                                                  |   |       | 100.0  | %                                       |   | 105.3    | %      |                                    | (5.3   | )% |   | 100.0 | % |   | 83.5 | % |   | 16.5 | % |

| 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        Expense**

**Income        Tax**

**Income        From Discontinued Operations**

**FINANCIAL        CONDITION**

----

**Loans**

|                                                                                               |   |   |      |    |   |   |   |    |    |   |   |    |   |   |    |    |   |   |   |    |    |
|----------------------------------------------------------------------------------------------------|--------|--------|-----------|---------|--------|--------|--------|---------|---------|--------|--------|---------|--------|--------|---------|---------|--------|--------|--------|---------|---------|
| (In                  thousands)December                  31,                                       |   | 2006   |      | %  |   | 2005   |   |  % |    | 2004   |   | %  |   | 2003   |    | %  |   | 2002   |   | %  |    |
| Commercial,                  financial, and agricultural                                           |   | $      | 197,613   |    |   | 16.5   | %      | $       | 173,797 |   |   | 18.1    | %      | $      | 119,004 |    |   | 15.3   | %      | $       | 99,291  |   |   | 14.7 | % | $ | 98,392 |   |   | 14.8 | % |
| Real                  estate - construction                                                        |   |   | 176,779   |    |   | 14.7   |   |    | 88,693  |   |   | 9.2     |   |   | 62,111  |    |   | 8.0    |   |    | 44,622  |   |   | 6.6 |   |   | 54,177 |   |   | 8.2 |   |
| Real                  estate mortgage - residential                                                |   |   | 381,081   |    |   | 31.8   |   |    | 331,508 |   |   | 34.4    |   |   | 280,869 |    |   | 36.2   |   |    | 245,737 |   |   | 36.4 |   |   | 229,990 |   |   | 34.7 |   |
| Real                  estate mortgage - farmland and other commercial                  enterprises |   |   | 351,793   |    |   | 29.4   |   |    | 274,411 |   |   | 28.5    |   |   | 210,701 |    |   | 27.2   |   |    | 192,541 |   |   | 28.5 |   |   | 182,281 |   |   | 27.5 |   |
| Installment                                                                                        |   |   | 57,116    |    |   | 4.8    |   |    | 56,169  |   |   | 5.8     |   |   | 63,684  |    |   | 8.2    |   |    | 58,274  |   |   | 8.6 |   |   | 61,932 |   |   | 9.3 |   |
| Lease                  financing                                                                   |   |   | 33,454    |    |   | 2.8    |   |    | 37,993  |   |   | 4.0     |   |   | 39,348  |    |   | 5.1    |   |    | 35,372  |   |   | 5.2 |   |   | 36,730 |   |   | 5.5 |   |
| Total                                                                                              |   | $      | 1,197,836 |    |   | 100.0  | %      | $       | 962,571 |   |   | 100.0   | %      | $      | 775,717 |    |   | 100.0  | %      | $       | 675,837 |   |   | 100.0 | % | $ | 663,502 |   |   | 100.0 | % |

**Loan        Maturities**

|                                                     |   |                      |    |                               |   |                        |   |   |   |
|----------------------------------------------------------|--------|---------------------------|---------|------------------------------------|--------|-----------------------------|--------|--------|--------|
|                                                     |   | Within                    |    | After                  One But     |   | After                       |   |   |   |
| (In                  thousands)                          |   | One                  Year |    | Within                  Five Years |   | Five                  Years |   | Total  |   |
| Commercial,                  financial, and agricultural |   | $                         | 89,589  |                               | $      | 58,312                      |   | $      | 49,712 |   | $ | 197,613 |   |
| Real                  estate - construction              |   |                      | 120,894 |                               |   | 47,883                      |   |   | 8,002  |   |   | 176,779 |   |
| Total                                                    |   | $                         | 210,483 |                               | $      | 106,195                     |   | $      | 57,714 |   | $ | 374,392 |   |

----

**Interest        Sensitivity**

|                                                 |   |   |   |     |   |
|------------------------------------------------------|--------|--------|--------|----------|--------|
|                                                 |   | Fixed  |   | Variable |   |
| (In                  thousands)                      |   | Rate   |   | Rate     |   |
| Due                  after one but within five years |   | $      | 60,426 |     | $      | 45,769 |   |
| Due                  after five years                |   |   | 14,787 |     |   | 42,927 |   |
| Total                                                |   | $      | 75,213 |     | $      | 88,696 |   |

**Asset        Quality**

----

|                                                                                                            |   |   |      |   |   |    |   |   |    |   |   |
|-----------------------------------------------------------------------------------------------------------------|--------|--------|-----------|--------|--------|---------|--------|--------|---------|--------|--------|
| Years                  Ended December 31, (In thousands)                                                        |   | 2006   |      | 2005   |   | 2004    |   | 2003   |    | 2002   |   |
| Balance                  of allowance for loan losses at beginning of year                                      |   | $      | 11,069    |   | $      | 11,043  |   | $      | 10,088  |   | $      | 9,931 |   | $ | 9,570 |   |
| Acquisition                  of Citizens National Bancshares                                                    |   |   | 1,066     |   |   |    |   |   |    |   |   |   |   |   |   |   |
| Acquisition                  of Citizens Bancorp, Inc.                                                          |   |   |      |   |   | 1,410   |   |   |    |   |   |   |   |   |   |   |
| Acquisition                  of Citizens Bank (Kentucky), Inc.                                                  |   |   |      |   |   |    |   |   | 2,005   |   |   |   |   |   |   |   |
| Loans                  charged off:                                                                             |   |   |      |   |   |    |   |   |    |   |   |   |   |   |   |   |
| Commercial,                  financial, and agricultural                                                        |   |   | 486       |   |   | 301     |   |   | 678     |   |   | 171 |   |   | 336 |   |
| Real                  estate                                                                                    |   |   | 200       |   |   | 288     |   |   | 462     |   |   | 650 |   |   | 2,668 |   |
| Installment                  loans to individuals                                                               |   |   | 839       |   |   | 1,254   |   |   | 1,115   |   |   | 898 |   |   | 949 |   |
| Lease                  financing                                                                                |   |   | 254       |   |   | 602     |   |   | 113     |   |   | 385 |   |   | 144 |   |
| Total                  loans charged off                                                                        |   |   | 1,779     |   |   | 2,445   |   |   | 2,368   |   |   | 2,104 |   |   | 4,097 |   |
| Recoveries                  of loans previously charged off:                                                    |   |   |      |   |   |    |   |   |    |   |   |   |   |   |   |   |
| Commercial,                  financial, and agricultural                                                        |   |   | 262       |   |   | 69      |   |   | 119     |   |   | 73 |   |   | 62 |   |
| Real                  estate                                                                                    |   |   | 81        |   |   | 66      |   |   | 89      |   |   | 47 |   |   | 71 |   |
| Installment                  loans to individuals                                                               |   |   | 294       |   |   | 260     |   |   | 229     |   |   | 227 |   |   | 226 |   |
| Lease                  financing                                                                                |   |   | 41        |   |   | 44      |   |   | 25      |   |   | 19 |   |   | 5 |   |
| Total                  recoveries                                                                               |   |   | 678       |   |   | 439     |   |   | 462     |   |   | 366 |   |   | 364 |   |
| Net                  loans charged off                                                                          |   |   | 1,101     |   |   | 2,006   |   |   | 1,906   |   |   | 1,738 |   |   | 3,733 |   |
| Additions                  to allowance charged to expense                                                      |   |   | 965       |   |   | 622     |   |   | 856     |   |   | 1,895 |   |   | 4,094 |   |
| Balance                  at end of year                                                                         |   | $      | 11,999    |   | $      | 11,069  |   | $      | 11,043  |   | $      | 10,088 |   | $ | 9,931 |   |
| Average                  loans net of unearned income                                                           |   | $      | 1,051,002 |   | $      | 805,014 |   | $      | 735,697 |   | $      | 663,442 |   | $ | 634,985 |   |
| Ratio                  of net charge-offs during year to average loans, net of unearned                  income |   |   | .10       | %      |   | .25     | %      |   | .26     | %      |   | .26 | % |   | .59 | % |

**Allowance        For Loan Losses**

|                                                     |   |   |   |   |   |   |   |   |   |   |   |
|----------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| December                  31, (In thousands)             |   | 2006   |   | 2005   |   | 2004   |   | 2003   |   | 2002   |   |
| Commercial,                  financial, and agricultural |   | $      | 2,223  |   | $      | 2,840  |   | $      | 2,108  |   | $      | 2,068 |   | $ | 3,436 |   |
| Real                  estate                             |   |   | 6,497  |   |   | 5,849  |   |   | 6,206  |   |   | 5,560 |   |   | 4,517 |   |
| Installment                  loans to individuals        |   |   | 2,316  |   |   | 1,601  |   |   | 1,634  |   |   | 1,478 |   |   | 1,550 |   |
| Lease                  financing                         |   |   | 963    |   |   | 779    |   |   | 1,095  |   |   | 982 |   |   | 428 |   |
| Total                                                    |   | $      | 11,999 |   | $      | 11,069 |   | $      | 11,043 |   | $      | 10,088 |   | $ | 9,931 |   |

**Nonperforming        Assets**

----

|                                                               |   |   |   |   |   |   |   |   |   |   |   |
|--------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| December                  31, (In thousands)                       |   | 2006   |   | 2005   |   | 2004   |   | 2003   |   | 2002   |   |
| Loans                  accounted for on nonaccrual basis           |   | $      | 1,462  |   | $      | 2,269  |   | $      | 4,990  |   | $      | 4,823 |   | $ | 15,474 |   |
| Loans                  past due 90 days or more and still accruing |   |   | 2,856  |   |   | 2,383  |   |   | 2,831  |   |   | 3,235 |   |   | 3,558 |   |
| Total                  nonperforming loans                         |   |   | 4,318  |   |   | 4,652  |   |   | 7,821  |   |   | 8,058 |   |   | 19,032 |   |
| Other                  real estate owned                           |   |   | 5,031  |   |   | 8,786  |   |   | 3,719  |   |   | 1,662 |   |   | 282 |   |
| Other                  foreclosed assets                           |   |   | 54     |   |   | 21     |   |   | 32     |   |   | 218 |   |   | 60 |   |
| Total                  nonperforming assets                        |   | $      | 9,403  |   | $      | 13,459 |   | $      | 11,572 |   | $      | 9,938 |   | $ | 19,374 |   |

**Temporary        Investments**

**Investment        Securities**

----

|                                                               |   |                               |    |                             |   |                               |   |
|--------------------------------------------------------------------|--------|------------------------------------|---------|----------------------------------|--------|------------------------------------|--------|
| December                  31,                                      |   | 2006                               |    | 2005                             |   | 2004                               |   |
|  (In                  thousands)                              |   | Availablefor                  Sale |    | Held                  toMaturity |   | Availablefor                  Sale |   | Held                  toMaturity |   | Availablefor                  Sale |   | Held                  toMaturity |   |
| Obligations                  of U.S. government-sponsored agencies |   | $                                  | 141,832 |                             |   |                               |   | $ | 123,684 |   |   |   |   | $ | 109,517 |   |   |   |   |
| Obligations                  of states and political subdivisions  |   |                               | 88,147  |                             | $      | 7,788                              |   |   | 86,031 |   | $ | 13,610 |   |   | 81,154 |   | $ | 17,885 |   |
| Mortgage-backed                  securities                        |   |                               | 86,716  |                             |   |                               |   |   | 98,025 |   |   |   |   |   | 108,772 |   |   |   |   |
| U.S.                  Treasury securities                          |   |                               | 484     |                             |   |                               |   |   | 104 |   |   |   |   |   |   |   |   |   |   |
| Money                  market mutual funds                         |   |                               | 1,396   |                             |   |                               |   |   | 925 |   |   |   |   |   |   |   |   |   |   |
| Equity                  securities                                 |   |                               | 7,910   |                             |   |                               |   |   | 6,298 |   |   |   |   |   | 5,222 |   |   |   |   |
| Total                                                              |   | $                                  | 326,485 |                             | $      | 7,788                              |   | $ | 315,067 |   | $ | 13,610 |   | $ | 304,665 |   | $ | 17,885 |   |

**Available        for Sale**

|                                                               |   |                             |    |                               |   |                              |   |                             |   |
|--------------------------------------------------------------------|--------|----------------------------------|---------|------------------------------------|--------|-----------------------------------|--------|----------------------------------|--------|
|                                                               |   |                             |    | After                  One But     |   | After                  Five But   |   |                             |   |
|                                                               |   | Within                  One Year |    | Within                  Five Years |   | Within                  Ten Years |   | After                  Ten Years |   |
| (In                  thousands)                                    |   | Amount                           |    | Rate                               |   | Amount                            |   | Rate                             |   | Amount |   | Rate |   | Amount |   | Rate |   |
| Obligations                  of U.S. government-sponsored agencies |   | $                                | 88,317  |                               |   | 4.8                               | %      | $                                | 43,857 |   |   | 4.4 | % | $ | 8,675 |   |   | 5.3 | % | $ | 983 |   |   | 5.4 | % |
| Obligations                  of states and political subdivisions  |   |                             | 805     |                               |   | 7.0                               |   |                             | 25,116 |   |   | 6.7 |   |   | 52,785 |   |   | 5.0 |   |   | 9,441 |   |   | 6.4 |   |
| Mortgage-backed                  securities                        |   |                             | 19,941  |                               |   | 4.5                               |   |                             | 19,290 |   |   | 4.8 |   |   | 31,199 |   |   | 4.7 |   |   | 16,286 |   |   | 5.1 |   |
| U.S.                  Treasury securities                          |   |                             | 151     |                               |   | 5.1                               |   |                             | 333    |   |   | 4.9 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Money                  market mutual funds                         |   |                             | 1,396   |                               |   | 4.8                               |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                                              |   | $                                | 110,610 |                               |   | 4.7                               | %      | $                                | 88,596 |   |   | 5.3 | % | $ | 92,659 |   |   | 4.9 | % | $ | 26,710 |   |   | 5.7 | % |

**Held        to Maturity**

|                                                              |   |                             |   |                               |   |                              |   |                             |   |
|-------------------------------------------------------------------|--------|----------------------------------|--------|------------------------------------|--------|-----------------------------------|--------|----------------------------------|--------|
|                                                              |   |                             |   | After                  One But     |   | After                  Five But   |   |                             |   |
|                                                              |   | Within                  One Year |   | Within                  Five Years |   | Within                  Ten Years |   | After                  Ten Years |   |
| (In                  thousands)                                   |   | Amount                           |   | Rate                               |   | Amount                            |   | Rate                             |   | Amount |   | Rate |   | Amount |   | Rate |   |
| Obligations                  of states and political subdivisions |   | $                                | 3,778  |                               |   | 6.9                               | %      | $                                | 2,885  |   |   | 6.8 | % | $ | 0 |   |   | 0 | % | $ | 1,125 |   |   | 6.3 | % |

**Deposits**

----

|                                        |   |           |      |        |   |           |   |
|---------------------------------------------|--------|----------------|-----------|-------------|--------|----------------|--------|
| Years                  Ended December 31,   |   | 2006           |      | 2005        |   | 2004           |   |
|  (In                  thousands)       |   | AverageBalance |      | AverageRate |   | AverageBalance |   | AverageRate |   | AverageBalance |   | AverageRate |   |
| Noninterest                  bearing demand |   | $              | 195,982   |        |   |           |   | $ | 179,197 |   |   |   |   | $ | 169,642 |   |   |   |   |
| Interest                  bearing demand    |   |           | 260,417   |        |   | 1.45           | %      |   | 214,548 |   |   | .88 | % |   | 214,150 |   |   | .50 | % |
| Savings                                     |   |           | 212,948   |        |   | 2.08           |   |   | 182,337 |   |   | 1.41 |   |   | 176,723 |   |   | .94 |   |
| Time                                        |   |           | 587,047   |        |   | 4.15           |   |   | 453,419 |   |   | 3.24 |   |   | 390,195 |   |   | 2.73 |   |
| Total                                       |   | $              | 1,256,394 |        |   | 2.59           | %      | $ | 1,029,501 |   |   | 1.85 | % | $ | 950,710 |   |   | 1.41 | % |

|                                      |   |   |    |
|-------------------------------------------|--------|--------|---------|
| (In                  thousands)           |   | Amount |    |
| 3                  months or less         |   | $      | 35,542  |   |
| Over                  3 through 6 months  |   |   | 37,231  |   |
| Over                  6 through 12 months |   |   | 89,610  |   |
| Over                  12 months           |   |   | 52,986  |   |
| Total                                     |   | $      | 215,369 |   |

**Short-term        Borrowings**

|                                                   |   |   |   |   |   |    |   |
|--------------------------------------------------------|--------|--------|--------|--------|--------|---------|--------|
| (In                  thousands)                        |   | 2006   |   | 2005   |   | 2004    |   |
| Amount                  outstanding at year-end        |   | $      | 76,718 |   | $      | 72,115  |   | $ | 61,349 |   |
| Maximum                  outstanding at any month-end  |   |   | 98,926 |   |   | 166,550 |   |   | 122,671 |   |
| Average                  outstanding                   |   |   | 94,703 |   |   | 82,030  |   |   | 91,053 |   |
| Weighted                  average rate at year-end     |   |   | 4.55   | %      |   | 3.89    | %      |   | 2.09 | % |
| Weighted                  average rate during the year |   |   | 4.74   |   |   | 3.16    |   |   | 1.44 |   |

**Long-term        Borrowings**

----

**Contractual        Obligations**

|                                                          |   |                                    |   |
|---------------------------------------------------------------|--------|-----------------------------------------|--------|
|                                                          |   | Payments                  Due by Period |   |
|  Contractual                  Obligations (In thousands) |   |  Total                             |   | Less                  ThanOne                  Year |   | One                  to ThreeYears |   | Three                  to FiveYears |   | More                  Than FiveYears |   |
| Long-term                  debt                               |   | $                                       | 61,174 |   | $ | 20,447 |   | $ | 20,841 |   | $ | 5,806 |   | $ | 14,080 |   |
| Subordinated                  notes payable                   |   |                                    | 25,774 |   |   |   |   |   |   |   |   |   |   |   | 25,774 |   |
| Unfunded                  postretirement benefit obligations  |   |                                    | 4,701  |   |   | 383 |   |   | 813 |   |   | 902 |   |   | 2,603 |   |
| Operating                  leases                             |   |                                    | 4,494  |   |   | 613 |   |   | 1,017 |   |   | 760 |   |   | 2,104 |   |
| Capital                  lease obligations                    |   |                                    | 1,044  |   |   | 232 |   |   | 480 |   |   | 332 |   |   |   |   |
| Total                                                         |   | $                                       | 97,187 |   | $ | 21,675 |   | $ | 23,151 |   | $ | 7,800 |   | $ | 44,561 |   |

Long-Term        Borrowings
Note 8

**Effects        of Inflation**

**Market        Risk Management**

----

**LIQUIDITY**

Note 17 

----

Note 14 

----

**CAPITAL        RESOURCES**

|                               |   |                                                              |   |              |   |
|------------------------------------|--------|-------------------------------------------------------------------|--------|-------------------|--------|
|                               |   | Farmers                  CapitalBank                  Corporation |   | RegulatoryMinimum |   |
| Tier                  1 risk-based |   |                                                              | 12.23  | %                 |   | 4.00 | % |
| Total                  risk-based  |   |                                                              | 13.17  |              |   | 8.00 |   |
| Leverage                           |   |                                                              | 8.47   |              |   | 4.00 |   |

|                                                                                       |   |   |   |   |   |   |   |   |   |   |   |
|--------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Years                  Ended December 31,                                                  |   | 2006   |   | 2005   |   | 2004   |   | 2003   |   | 2002   |   |
| Percentage                  of dividends declared to income from continuing operations     |   |   | 78.89  | %      |   | 61.67  | %      |   | 68.10  | %      |   | 70.70 | % |   | 72.41 | % |   |
| Percentage                  of average shareholders’ equity to average total assets1 |   |   | 10.04  |   |   | 10.19  |   |   | 10.45  |   |   | 10.88 |   |   | 11.23 |   |

**Share        Buy Back Program**

**Shareholder        Information**

----

**Stock        Prices**

**Stock        Prices**

|                            |   |   |   |   |   |                                |   |
|---------------------------------|--------|--------|--------|--------|--------|-------------------------------------|--------|
|                            |   | High   |   | Low    |   | Dividends                  Declared |   |
| **2006**                        |   |   |   |   |   |                                |   |   |   |   |
| Fourth                  Quarter |   | $      | 36.98  |   | $      | 32.40                               |   | $ | .44 |   |
| Third                  Quarter  |   |   | 34.59  |   |   | 29.78                               |   |   | .33 |   |
| Second                  Quarter |   |   | 32.82  |   |   | 29.25                               |   |   | .33 |   |
| First                  Quarter  |   |   | 33.54  |   |   | 30.59                               |   |   | .33 |   |
|                            |   |   |   |   |   |                                |   |   |   |   |
| **2005**                        |   |   |   |   |   |                                |   |   |   |   |
| Fourth                  Quarter |   | $      | 33.73  |   | $      | 28.54                               |   | $ | .33 |   |
| Third                  Quarter  |   |   | 35.85  |   |   | 30.61                               |   |   | .33 |   |
| Second                  Quarter |   |   | 34.64  |   |   | 31.75                               |   |   | .33 |   |
| First                  Quarter  |   |   | 41.25  |   |   | 32.90                               |   |   | .33 |   |

**Recently        Issued Accounting Standards**

Recently Issued But Not Yet        Effective Accounting Standards

**2005        Compared to 2004**

Item        7A. Quantitative and Qualitative Disclosures About        Market Risk

Market Risk Management

----

Item        8. Financial Statements and Supplementary        Data

**MANAGEMENT’S        RESPONSIBILITY FOR FINANCIAL REPORTING**

|                                |                                                       |
|-------------------------------------|------------------------------------------------------------|
| G.                  Anthony Busseni | C.                  Douglas Carpenter                      |
| President                  and CEO  | Senior                  Vice President, Secretary, and CFO |
|                                |                                                       |
|                                |                                                       |
| March                  12, 2007     |                                                       |

----

**REPORT        OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING        FIRM**

**ON        FINANCIAL STATEMENTS**

----

**Consolidated        Balance Sheets**

|                                                                                                                                                                                                                      |   |   |      |   |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-----------|--------|--------|
| December                  31, (In thousands, except share data)                                                                                                                                                           |   | 2006   |      | 2005   |   |
| **Assets**                                                                                                                                                                                                                |   |   |      |   |   |   |   |
| Cash                  and cash equivalents:                                                                                                                                                                               |   |   |      |   |   |   |   |
| Cash                  and due from banks                                                                                                                                                                                  |   | $      | 115,640   |   | $      | 71,496 |   |
| Interest                  bearing deposits in other banks                                                                                                                                                                 |   |   | 1,783     |   |   | 2,565 |   |
| Federal                  funds sold and securities purchased under agreements to                  resell                                                                                                                  |   |   | 39,405    |   |   | 56,957 |   |
| Total                  cash and cash equivalents                                                                                                                                                                          |   |   | 156,828   |   |   | 131,018 |   |
| Investment                  securities:                                                                                                                                                                                   |   |   |      |   |   |   |   |
| Available                  for sale, amortized cost of $328,499 (2006) and $317,759                  (2005)                                                                                                               |   |   | 326,485   |   |   | 315,067 |   |
| Held                  to maturity, fair value of $7,849 (2006) and $13,814                  (2005)                                                                                                                        |   |   | 7,788     |   |   | 13,610 |   |
| Total                  investment securities                                                                                                                                                                              |   |   | 334,273   |   |   | 328,677 |   |
| Loans,                  net of unearned income                                                                                                                                                                            |   |   | 1,197,836 |   |   | 962,571 |   |
| Allowance                  for loan losses                                                                                                                                                                                |   |   | (11,999   | )      |   | (11,069 | ) |
| Loans,                  net                                                                                                                                                                                               |   |   | 1,185,837 |   |   | 951,502 |   |
| Premises                  and equipment, net                                                                                                                                                                              |   |   | 37,775    |   |   | 28,832 |   |
| Company-owned                  life insurance                                                                                                                                                                             |   |   | 32,929    |   |   | 30,049 |   |
| Goodwill                                                                                                                                                                                                                  |   |   | 42,822    |   |   | 28,437 |   |
| Other                  intangible assets, net                                                                                                                                                                             |   |   | 9,755     |   |   | 7,271 |   |
| Assets                  of discontinued operations                                                                                                                                                                        |   |   |      |   |   | 143,569 |   |
| Other                  assets                                                                                                                                                                                             |   |   | 24,147    |   |   | 24,588 |   |
| Total                  assets                                                                                                                                                                                             |   | $      | 1,824,366 |   | $      | 1,673,943 |   |
|                                                                                                                                                                                                                      |   |   |      |   |   |   |   |
| **Liabilities**                                                                                                                                                                                                           |   |   |      |   |   |   |   |
| Deposits:                                                                                                                                                                                                                 |   |   |      |   |   |   |   |
| Noninterest                  bearing                                                                                                                                                                                      |   | $      | 242,938   |   | $      | 183,248 |   |
| Interest                  bearing                                                                                                                                                                                         |   |   | 1,211,882 |   |   | 1,008,403 |   |
| Total                  deposits                                                                                                                                                                                           |   |   | 1,454,820 |   |   | 1,191,651 |   |
| Federal                  funds purchased and securities sold under agreements to                  repurchase                                                                                                              |   |   | 67,941    |   |   | 71,336 |   |
| Other                  short-term borrowings                                                                                                                                                                              |   |   | 8,777     |   |   | 779 |   |
| Subordinated                  notes payable to unconsolidated trusts                                                                                                                                                      |   |   | 25,774    |   |   | 25,774 |   |
| Other                  long-term debt                                                                                                                                                                                     |   |   | 62,218    |   |   | 49,517 |   |
| Dividends                  payable                                                                                                                                                                                        |   |   | 3,472     |   |   | 2,244 |   |
| Accrued                  purchase price-Citizens Bancorp, Inc.                                                                                                                                                            |   |   |      |   |   | 21,846 |   |
| Liabilities                  of discontinued operations                                                                                                                                                                   |   |   |      |   |   | 144,409 |   |
| Other                  liabilities                                                                                                                                                                                        |   |   | 22,923    |   |   | 12,151 |   |
| Total                  liabilities                                                                                                                                                                                        |   |   | 1,645,925 |   |   | 1,519,707 |   |
|                                                                                                                                                                                                                      |   |   |      |   |   |   |   |
| **Commitments                  and contingencies**                                                                                                                                                                        |   |   |      |   |   |   |   |
|                                                                                                                                                                                                                      |   |   |      |   |   |   |   |
| **Shareholders’                  Equity**                                                                                                                                                                           |   |   |      |   |   |   |   |
| Common                  stock, par value $.125 per share; 9,608,000 shares                  authorized;9,388,900                  and 8,856,249 shares issued atDecember                  31, 2006 and 2005, respectively |   |   | 1,174     |   |   | 1,107 |   |
| Capital                  surplus                                                                                                                                                                                          |   |   | 56,679    |   |   | 39,829 |   |
| Retained                  earnings                                                                                                                                                                                        |   |   | 167,387   |   |   | 156,796 |   |
| Treasury                  stock, at cost, 1,493,448 and 1,467,351 shares atDecember                  31, 2006 and 2005, respectively                                                                                      |   |   | (42,399   | )      |   | (41,579 | ) |
| Accumulated                  other comprehensive loss                                                                                                                                                                     |   |   | (4,400    | )      |   | (1,917 | ) |
| Total                  shareholders’ equity                                                                                                                                                                         |   |   | 178,441   |   |   | 154,236 |   |
| Total                  liabilities and shareholders’ equity                                                                                                                                                         |   | $      | 1,824,366 |   | $      | 1,673,943 |   |

----

**Consolidated        Statements of Income**

|                                                                                                                                                       |   |   |   |   |   |   |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|
| (In                  thousands, except per share data)                                                                                                     |   |   |   |   |   |   |   |
| Years                  Ended December 31,                                                                                                                  |   | 2006   |   | 2005   |   | 2004   |   |
| **Interest                  Income**                                                                                                                       |   |   |   |   |   |   |   |   |   |   |
| Interest                  and fees on loans                                                                                                                |   | $      | 77,303 |   | $      | 52,579 |   | $ | 43,872 |   |
| Interest                  on investment securities:                                                                                                        |   |   |   |   |   |   |   |   |   |   |
| Taxable                                                                                                                                                    |   |   | 9,025  |   |   | 7,483  |   |   | 7,321 |   |
| Nontaxable                                                                                                                                                 |   |   | 3,657  |   |   | 3,778  |   |   | 3,739 |   |
| Interest                  on deposits in other banks                                                                                                       |   |   | 53     |   |   | 61     |   |   | 17 |   |
| Interest                  on federal funds sold and securities purchased under agreements                  to                  resell                      |   |   | 2,302  |   |   | 1,750  |   |   | 347 |   |
| Total                  interest income                                                                                                                     |   |   | 92,340 |   |   | 65,651 |   |   | 55,296 |   |
| **Interest                  Expense**                                                                                                                      |   |   |   |   |   |   |   |   |   |   |
| Interest                  on deposits                                                                                                                      |   |   | 32,554 |   |   | 19,130 |   |   | 13,381 |   |
| Interest                  on federal funds purchased and securities sold under agreements                  to                  repurchase                  |   |   | 4,348  |   |   | 2,573  |   |   | 1,293 |   |
| Interest                  on subordinated notes payable to unconsolidated trusts                                                                           |   |   | 1,747  |   |   | 623    |   |   |   |   |
| Interest                  on other borrowed funds                                                                                                          |   |   | 2,783  |   |   | 2,083  |   |   | 2,055 |   |
| Total                  interest expense                                                                                                                    |   |   | 41,432 |   |   | 24,409 |   |   | 16,729 |   |
| Net                  interest income                                                                                                                       |   |   | 50,908 |   |   | 41,242 |   |   | 38,567 |   |
| Provision                  for loan losses                                                                                                                 |   |   | 965    |   |   | 622    |   |   | 856 |   |
| Net                  interest income after provision for loan losses                                                                                       |   |   | 49,943 |   |   | 40,620 |   |   | 37,711 |   |
| **Noninterest                  Income**                                                                                                                    |   |   |   |   |   |   |   |   |   |   |
| Service                  charges and fees on deposits                                                                                                      |   |   | 9,191  |   |   | 8,543  |   |   | 7,675 |   |
| Allotment                  processing fees                                                                                                                 |   |   | 2,601  |   |   | 2,656  |   |   | 1,124 |   |
| Other                  service charges, commissions, and fees                                                                                              |   |   | 2,617  |   |   | 2,245  |   |   | 2,652 |   |
| Data                  processing income                                                                                                                    |   |   | 1,719  |   |   | 1,786  |   |   | 1,709 |   |
| Trust                  income                                                                                                                              |   |   | 1,790  |   |   | 1,616  |   |   | 1,589 |   |
| Investment                  securities (losses) gains, net                                                                                                 |   |   | (195   | )      |   | (3     | )      |   | 391 |   |
| Gains                  on sale of mortgage loans, net                                                                                                      |   |   | 649    |   |   | 653    |   |   | 370 |   |
| Income                  from company-owned life insurance                                                                                                  |   |   | 1,343  |   |   | 1,189  |   |   | 1,412 |   |
| Other                                                                                                                                                      |   |   | 744    |   |   | 1,182  |   |   | 242 |   |
| Total                  noninterest income                                                                                                                  |   |   | 20,459 |   |   | 19,867 |   |   | 17,164 |   |
| **Noninterest                  Expense**                                                                                                                   |   |   |   |   |   |   |   |   |   |   |
| Salaries                  and employee benefits                                                                                                            |   |   | 28,978 |   |   | 22,347 |   |   | 21,074 |   |
| Occupancy                  expenses, net                                                                                                                   |   |   | 3,664  |   |   | 2,751  |   |   | 2,482 |   |
| Equipment                  expenses                                                                                                                        |   |   | 2,929  |   |   | 2,587  |   |   | 2,295 |   |
| Data                  processing and communications expenses                                                                                               |   |   | 4,980  |   |   | 4,161  |   |   | 3,962 |   |
| Bank                  franchise tax                                                                                                                        |   |   | 1,831  |   |   | 1,377  |   |   | 1,373 |   |
| Correspondent                  bank fees                                                                                                                   |   |   | 692    |   |   | 883    |   |   | 775 |   |
| Amortization                  of intangibles                                                                                                               |   |   | 2,009  |   |   | 934    |   |   | 385 |   |
| Other                                                                                                                                                      |   |   | 8,294  |   |   | 7,124  |   |   | 6,466 |   |
| Total                  noninterest expense                                                                                                                 |   |   | 53,377 |   |   | 42,164 |   |   | 38,812 |   |
| Income                  from continuing operations before income taxes                                                                                     |   |   | 17,025 |   |   | 18,323 |   |   | 16,063 |   |
| Income                  tax expense from continuing operations                                                                                             |   |   | 3,360  |   |   | 3,791  |   |   | 2,999 |   |
| Income                  from continuing operations                                                                                                         |   |   | 13,665 |   |   | 14,532 |   |   | 13,064 |   |
| Income                  from discontinued operations before income taxes (including gain                  on                  disposals of $9,873 in 2006) |   |   | 11,842 |   |   | 1,723  |   |   | 351 |   |
| Income                  tax expense from discontinued operations (including $3,456 related                  to gain                  on disposals)         |   |   | 4,135  |   |   | 483    |   |   | 23 |   |
| Income                  from discontinued operations                                                                                                       |   |   | 7,707  |   |   | 1,240  |   |   | 328 |   |
| Net                  income                                                                                                                                |   | $      | 21,372 |   | $      | 15,772 |   | $ | 13,392 |   |
| **Net                  Income Per Common Share**                                                                                                           |   |   |   |   |   |   |   |   |   |   |
| Income                  from continuing operations - basic                                                                                                 |   | $      | 1.82   |   | $      | 2.13   |   | $ | 1.94 |   |
| Income                  from discontinued operations - basic                                                                                               |   |   | 1.03   |   |   | .18    |   |   | .05 |   |
| Net                  income per common share - basic                                                                                                       |   |   | 2.85   |   |   | 2.31   |   |   | 1.99 |   |
| Income                  from continuing operations - diluted                                                                                               |   |   | 1.82   |   |   | 2.12   |   |   | 1.93 |   |
| Income                  from discontinued operations - diluted                                                                                             |   |   | 1.02   |   |   | .18    |   |   | .05 |   |
| Net                  income per common share - diluted                                                                                                     |   |   | 2.84   |   |   | 2.30   |   |   | 1.98 |   |
| **Weighted                  Average Shares Outstanding**                                                                                                   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                                                                                                      |   |   | 7,511  |   |   | 6,831  |   |   | 6,737 |   |
| Diluted                                                                                                                                                    |   |   | 7,526  |   |   | 6,864  |   |   | 6,780 |   |

----

**Consolidated        Statements of Comprehensive        Income**

|                                                                                                                                                                                                                                                                                       |   |   |   |   |   |   |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|
| (In                  thousands)                                                                                                                                                                                                                                                            |   |   |   |   |   |   |   |
| Years                  Ended December 31,                                                                                                                                                                                                                                                  |   | 2006   |   | 2005   |   | 2004   |   |
| **Net                  income**                                                                                                                                                                                                                                                            |   | $      | 21,372 |   | $      | 15,772 |   | $ | 13,392 |   |
| Other                  comprehensive income:                                                                                                                                                                                                                                               |   |   |   |   |   |   |   |   |   |   |
| Unrealized                  holding gain (loss) on available for sale securities arising during                  the                  period on securities held at end of period, net of tax of $306,                  $1,410,                  and $547, respectively                     |   |   | 568    |   |   | (2,622 | )      |   | (1,015 | ) |
| Reclassification                  adjustment for prior period unrealized loss (gain) previously reported                  in                  other comprehensive income recognized during current period, net                  of tax of                  $22, $3, and $219, respectively |   |   | 40     |   |   | 5      |   |   | (407 | ) |
| Other                  comprehensive income (loss)                                                                                                                                                                                                                                         |   |   | 608    |   |   | (2,617 | )      |   | (1,422 | ) |
| Comprehensive                  income                                                                                                                                                                                                                                                      |   | $      | 21,980 |   | $      | 13,155 |   | $ | 11,970 |   |

----

**Consolidated        Statements of Changes in Shareholders'        Equity**

|                                                                                                                  |   |                          |   |    |   |     |   |                            |   |          |   |                               |   |                           |   |
|-----------------------------------------------------------------------------------------------------------------------|--------|-------------------------------|--------|---------|--------|----------|--------|---------------------------------|--------|---------------|--------|------------------------------------|--------|--------------------------------|--------|
| (In                  thousands, except per share data)                                                                |   |                          |   |    |   |     |   |                            |   |          |   | Accumulated                  Other |   | Total                          |   |
| Years                  Ended                                                                                          |   | Common                  Stock |   | Capital |   | Retained |   | Treasury                  Stock |   | Comprehensive |   | Shareholders’                |   |
| December                  31, 2006, 2005, and 2004                                                                    |   | Shares                        |   | Amount  |   | Surplus  |   | Earnings                        |   | Shares        |   | Amount                             |   | Income                  (Loss) |   | Equity |   |
| Balance                  at January 1, 2004                                                                           |   |                          | 8,161  |    | $      | 1,020    |   | $                               | 18,670 |          | $      | 145,489                            |   |                           | 1,445  |   | $ | (40,830 | ) | $ | 2,122 |   | $ | 126,471 |   |
| Net                  income                                                                                           |   |                          |   |    |   |     |   |                            |   |          |   | 13,392                             |   |                           |   |   |   |   |   |   |   |   |   | 13,392 |   |
| Other                  comprehensive loss                                                                             |   |                          |   |    |   |     |   |                            |   |          |   |                               |   |                           |   |   |   |   |   |   | (1,422 | ) |   | (1,422 | ) |
| Cash                  dividends declared, $1.32 per share                                                             |   |                          |   |    |   |     |   |                            |   |          |   | (8,896                             | )      |                           |   |   |   |   |   |   |   |   |   | (8,896 | ) |
| Purchase                  of common stock                                                                             |   |                          |   |    |   |     |   |                            |   |          |   |                               |   |                           | 5      |   |   | (178 | ) |   |   |   |   | (178 | ) |
| Stock                  options exercised, including related tax benefits                                              |   |                          | 70     |    |   | 9        |   |                            | 1,764  |          |   |                               |   |                           |   |   |   |   |   |   |   |   |   | 1,773 |   |
| Shares                  issued pursuant to Employee Stock Purchase Plan                                               |   |                          | 3      |    |   |     |   |                            | 93     |          |   |                               |   |                           |   |   |   |   |   |   |   |   |   | 93 |   |
| Stock                  option expense                                                                                 |   |                          |   |    |   |     |   |                            | 217    |          |   |                               |   |                           |   |   |   |   |   |   |   |   |   | 217 |   |
| Balance                  at December 31, 2004                                                                         |   |                          | 8,234  |    |   | 1,029    |   |                            | 20,744 |          |   | 149,985                            |   |                           | 1,450  |   |   | (41,008 | ) |   | 700 |   |   | 131,450 |   |
| Net                  income                                                                                           |   |                          |   |    |   |     |   |                            |   |          |   | 15,772                             |   |                           |   |   |   |   |   |   |   |   |   | 15,772 |   |
| Other                  comprehensive loss                                                                             |   |                          |   |    |   |     |   |                            |   |          |   |                               |   |                           |   |   |   |   |   |   | (2,617 | ) |   | (2,617 | ) |
| Cash                  dividends declared, $1.32 per share                                                             |   |                          |   |    |   |     |   |                            |   |          |   | (8,961                             | )      |                           |   |   |   |   |   |   |   |   |   | (8,961 | ) |
| Purchase                  of common stock                                                                             |   |                          |   |    |   |     |   |                            |   |          |   |                               |   |                           | 17     |   |   | (571 | ) |   |   |   |   | (571 | ) |
| Stock                  options exercised, including related tax benefits                                              |   |                          | 31     |    |   | 4        |   |                            | 770    |          |   |                               |   |                           |   |   |   |   |   |   |   |   |   | 774 |   |
| Shares                  issued pursuant to Employee Stock Purchase Plan                                               |   |                          | 7      |    |   | 1        |   |                            | 186    |          |   |                               |   |                           |   |   |   |   |   |   |   |   |   | 187 |   |
| Shares                  issued in connection with the purchase of Citizens Bancorp,                  Inc.             |   |                          | 584    |    |   | 73       |   |                            | 18,129 |          |   |                               |   |                           |   |   |   |   |   |   |   |   |   | 18,202 |   |
| Balance                  at December 31, 2005                                                                         |   |                          | 8,856  |    |   | 1,107    |   |                            | 39,829 |          |   | 156,796                            |   |                           | 1,467  |   |   | (41,579 | ) |   | (1,917 | ) |   | 154,236 |   |
| Net                  income                                                                                           |   |                          |   |    |   |     |   |                            |   |          |   | 21,372                             |   |                           |   |   |   |   |   |   |   |   |   | 21,372 |   |
| Other                  comprehensive income                                                                           |   |                          |   |    |   |     |   |                            |   |          |   |                               |   |                           |   |   |   |   |   |   | 608 |   |   | 608 |   |
| Cash                  dividends declared, $1.43 per share                                                             |   |                          |   |    |   |     |   |                            |   |          |   | (10,781                            | )      |                           |   |   |   |   |   |   |   |   |   | (10,781 | ) |
| Purchase                  of common stock                                                                             |   |                          |   |    |   |     |   |                            |   |          |   |                               |   |                           | 26     |   |   | (820 | ) |   |   |   |   | (820 | ) |
| Stock                  options exercised, including related tax benefits                                              |   |                          | 60     |    |   | 8        |   |                            | 1,536  |          |   |                               |   |                           |   |   |   |   |   |   |   |   |   | 1,544 |   |
| Shares                  issued pursuant to Employee Stock Purchase Plan                                               |   |                          | 8      |    |   | 1        |   |                            | 222    |          |   |                               |   |                           |   |   |   |   |   |   |   |   |   | 223 |   |
| Stock                  option expense                                                                                 |   |                          |   |    |   |     |   |                            | 154    |          |   |                               |   |                           |   |   |   |   |   |   |   |   |   | 154 |   |
| Shares                  issued in connection with the purchase of Citizens National Bancshares,                  Inc. |   |                          | 464    |    |   | 58       |   |                            | 14,938 |          |   |                               |   |                           |   |   |   |   |   |   |   |   |   | 14,996 |   |
| Adjustment                  to initially apply SFAS No. 158, net of tax of $1,664                                     |   |                          |   |    |   |     |   |                            |   |          |   |                               |   |                           |   |   |   |   |   |   | (3,091 | ) |   | (3,091 | ) |
| Balance                  at December 31, 2006                                                                         |   |                          | 9,388  |    | $      | 1,174    |   | $                               | 56,679 |          | $      | 167,387                            |   |                           | 1,493  |   | $ | (42,399 | ) | $ | (4,400 | ) | $ | 178,441 |   |

----

**Consolidated        Statements of Cash Flows**

|                                                                                                                                                     |   |   |     |   |   |     |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|----------|--------|--------|----------|--------|
| Years                  Ended December 31, (In thousands)                                                                                                 |   | 2006   |     | 2005   |   | 2004     |   |
| **Cash                  Flows from Operating Activities**                                                                                                |   |   |     |   |   |     |   |   |   |   |
| Net                  income                                                                                                                              |   | $      | 21,372   |   | $      | 15,772   |   | $ | 13,392 |   |
| Adjustments                  to reconcile net income to net cash provided by operating                  activities:                                      |   |   |     |   |   |     |   |   |   |   |
| Depreciation                  and amortization                                                                                                           |   |   | 5,826    |   |   | 4,085    |   |   | 3,190 |   |
| Net                  amortization (accretion) of investment security premiums and                  discounts:                                            |   |   |     |   |   |     |   |   |   |   |
| Available                  for sale                                                                                                                      |   |   | (424     | )      |   | 323      |   |   | 1,294 |   |
| Held                  to maturity                                                                                                                        |   |   | (25      | )      |   | (39      | )      |   | (38 | ) |
| Provision                  for loan losses                                                                                                               |   |   | 965      |   |   | 622      |   |   | 856 |   |
| Deferred                  income tax (benefit) expense                                                                                                   |   |   | (1,848   | )      |   | (194     | )      |   | 965 |   |
| Noncash                  stock option expense                                                                                                            |   |   | 125      |   |   |     |   |   | 196 |   |
| Mortgage                  loans originated for sale                                                                                                      |   |   | (29,539  | )      |   | (35,456  | )      |   | (20,243 | ) |
| Proceeds                  from sale of mortgage loans                                                                                                    |   |   | 26,973   |   |   | 35,849   |   |   | 19,052 |   |
| Gains                  on sale of mortgage loans, net                                                                                                    |   |   | (649     | )      |   | (653     | )      |   | (370 | ) |
| Gain                  on sale of credit card portfolio                                                                                                   |   |   |     |   |   | (700     | )      |   |   |   |
| (Gain)                  loss on sale of premises and equipment                                                                                           |   |   | (174     | )      |   | 14       |   |   | 16 |   |
| Loss                  (gain) on sale of available for sale investment securities,                  net                                                   |   |   | 195      |   |   | 3        |   |   | (391 | ) |
| Increase                  in accrued interest receivable                                                                                                 |   |   | (3,450   | )      |   | (1,705   | )      |   | (788 | ) |
| Income                  from company-owned life insurance                                                                                                |   |   | (1,301   | )      |   | (1,162   | )      |   | (1,401 | ) |
| Decrease                  (increase) in other assets                                                                                                     |   |   | 6,157    |   |   | 2,869    |   |   | (2,304 | ) |
| Increase                  in accrued interest payable                                                                                                    |   |   | 2,594    |   |   | 618      |   |   | 375 |   |
| Increase                  (decrease) in other liabilities                                                                                                |   |   | 4,577    |   |   | (1,226   | )      |   | 1,255 |   |
| Gain                  on sales of discontinued operations                                                                                                |   |   | (9,873   | )      |   |     |   |   |   |   |
| Net                  cash provided by discontinued operating activities                                                                                  |   |   | 1,390    |   |   | 1,638    |   |   | 2,124 |   |
| Net                  cash provided by operating activities                                                                                               |   |   | 22,891   |   |   | 20,658   |   |   | 17,180 |   |
| **Cash                  Flows from Investing Activities**                                                                                                |   |   |     |   |   |     |   |   |   |   |
| Proceeds                  from maturities and calls of investment securities:                                                                            |   |   |     |   |   |     |   |   |   |   |
| Available                  for sale                                                                                                                      |   |   | 121,699  |   |   | 164,014  |   |   | 236,636 |   |
| Held                  to maturity                                                                                                                        |   |   | 5,847    |   |   | 4,314    |   |   | 4,748 |   |
| Proceeds                  from sale of available for sale investment securities                                                                          |   |   | 19,263   |   |   | 3,038    |   |   | 66,916 |   |
| Purchases                  of investment securities:                                                                                                     |   |   |     |   |   |     |   |   |   |   |
| Available                  for sale                                                                                                                      |   |   | (138,081 | )      |   | (158,252 | )      |   | (262,919 | ) |
| Loans                  originated for investment, net of principal collected                                                                             |   |   | (112,426 | )      |   | (37,461  | )      |   | (66,637 | ) |
| Purchase                  of company-owned life insurance                                                                                                |   |   | (1,579   | )      |   |     |   |   |   |   |
| Payment                  of prior year accrued purchase price-Citizens Bancorp,                  Inc.                                                    |   |   | (21,846  | )      |   |     |   |   |   |   |
| Net                  cash acquired in purchase of Citizens National Bancshares,                  Inc.                                                    |   |   | 1,066    |   |   |     |   |   |   |   |
| Purchase                  of Citizens Bancorp, Inc., net of cash acquired                                                                                |   |   | (29      | )      |   | 10,620   |   |   |   |   |
| Purchase                  of Citizens Bank (Kentucky), Inc., net of cash acquired                                                                        |   |   |     |   |   | (2       | )      |   | (5,820 | ) |
| Purchase                  of FiNET, Inc.                                                                                                                 |   |   |     |   |   | (203     | )      |   | (6,586 | ) |
| Investment                  in unconsolidated trusts                                                                                                     |   |   |     |   |   | (774     | )      |   |   |   |
| Additions                  to mortgage servicing rights, net                                                                                             |   |   | (47      | )      |   |     |   |   |   |   |
| Purchases                  of premises and equipment                                                                                                     |   |   | (9,682   | )      |   | (3,341   | )      |   | (4,018 | ) |
| Proceeds                  from sale of equipment                                                                                                         |   |   | 720      |   |   | 124      |   |   | 988 |   |
| Net                  cash received on disposal of discontinued operations                                                                                |   |   | 47       |   |   |     |   |   |   |   |
| Net                  cash provided by (used in) discontinued investing                  activities                                                       |   |   | 9,384    |   |   | 15,058   |   |   | (25,810 | ) |
| Net                  cash used in investing activities                                                                                                   |   |   | (125,664 | )      |   | (2,865   | )      |   | (62,502 | ) |
| **Cash                  Flows from Financing Activities**                                                                                                |   |   |     |   |   |     |   |   |   |   |
| Net                  increase (decrease) in deposits                                                                                                     |   |   | 123,728  |   |   | 29,891   |   |   | (7,506 | ) |
| Net                  (decrease) increase in federal funds purchased and securities sold                  under                  agreements to repurchase |   |   | (6,275   | )      |   | 11,778   |   |   | (2,734 | ) |
| Proceeds                  from long-term debt                                                                                                            |   |   | 26,198   |   |   | 27,774   |   |   | 1,800 |   |
| Repayments                  of long-term debt                                                                                                            |   |   | (13,496  | )      |   | (7,750   | )      |   | (9,707 | ) |
| Net                  increase (decrease) in other borrowed funds                                                                                         |   |   | 7,997    |   |   | (1,011   | )      |   | 1,373 |   |
| Dividends                  paid                                                                                                                          |   |   | (9,553   | )      |   | (8,949   | )      |   | (8,879 | ) |
| Purchase                  of common stock                                                                                                                |   |   | (820     | )      |   | (571     | )      |   | (178 | ) |
| Shares                  issued under Employee Stock Purchase Plan                                                                                        |   |   | 223      |   |   | 187      |   |   | 93 |   |
| Stock                  options exercised                                                                                                                 |   |   | 1,529    |   |   | 771      |   |   | 1,755 |   |
| Net                  cash provided by (used in) discontinued financing                  activities                                                       |   |   | 3,710    |   |   | (12,607  | )      |   | 17,965 |   |
| Net                  cash provided by (used in) financing activities                                                                                     |   |   | 133,241  |   |   | 39,513   |   |   | (6,018 | ) |
| Net                  increase (decrease) in cash and cash equivalents                                                                                    |   |   | 30,468   |   |   | 57,306   |   |   | (51,340 | ) |
| Less:                  net (increase) decrease in cash and cash equivalents of discontinued                  operations                                  |   |   | (4,658   | )      |   | (4,089   | )      |   | 5,721 |   |
| Net                  increase (decrease) in cash and cash equivalents from continuing                  operations                                        |   |   | 25,810   |   |   | 53,217   |   |   | (45,619 | ) |
| Cash                  and cash equivalents from continuing operations at beginning of                  year                                              |   |   | 131,018  |   |   | 77,801   |   |   | 123,420 |   |
| Cash                  and cash equivalents from continuing operations at end of                  year                                                    |   | $      | 156,828  |   | $      | 131,018  |   | $ | 77,801 |   |

----

| **Supplemental                  Disclosures**                                                                                                                           |   |   |   |   |   |   |   |   |   |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Cash                  paid during the year for:                                                                                                                         |   |   |   |   |   |   |   |   |   |   |
| Interest                                                                                                                                                                |   | $      | 29,695 |   | $      | 26,973 |   | $      | 18,813 |   |
| Income                  taxes                                                                                                                                           |   |   | 4,900  |   |   | 2,725  |   |   | 2,525  |   |
| Transfers                  from loans to repossessed assets                                                                                                             |   |   | 1,973  |   |   | 2,751  |   |   | 3,454  |   |
| Cash                  dividend declared and unpaid at year-end                                                                                                          |   |   | 3,472  |   |   | 2,244  |   |   | 2,232  |   |
| Issuance                  of 464 and 584 shares of common stock to acquire Citizens National                  Bancshares, Inc. and Citizens Bancorp, Inc., respectively |   |   | 14,996 |   |   | 18,202 |   |   |   |   |
| Acquisition                  purchase price payable at year-end                                                                                                         |   |   |   |   |   | 21,846 |   |   |   |   |

----

**NOTES        TO CONSOLIDATED FINANCIAL        STATEMENTS**

| **1.** | **Summary                  of Significant Accounting                  Policies** |
|--------|----------------------------------------------------------------------------------|

**Principles        of Consolidation and Nature of Operations**

**Use        of Estimates**

**Reclassifications**

**Segment        Information**

**Cash        Flows**

----

**Investment        Securities**

**Loans        and Interest Income**

**Loans        Held for Sale**

**Provision        and Allowance for Loan Losses**

----

*Accounting        by Creditors for Impairment of a Loan*
*Accounting        by Creditors for Impairment of a Loan - Income Recognition*

**Mortgage        Servicing Rights**

**Business        Combinations**

**Goodwill        and Other Intangible Assets**

**Other        Real Estate**

**Income        Taxes**

** **

----

**Premises        and Equipment**

**Company-owned        Life Insurance**

**Net        Income Per Common Share**

|                                                                                            |   |   |   |   |   |   |   |
|-------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|
| (In                  thousands, except per share data)Years                  Ended December 31, |   | 2006   |   | 2005   |   | 2004   |   |
|                                                                                            |   |   |   |   |   |   |   |
| Net                  income, basic and diluted                                                  |   | $      | 21,372 |   | $      | 15,772 |   | $ | 13,392 |   |
|                                                                                            |   |   |   |   |   |   |   |   |   |   |
| Average                  shares outstanding                                                     |   |   | 7,511  |   |   | 6,831  |   |   | 6,737 |   |
| Effect                  of dilutive stock options                                               |   |   | 15     |   |   | 33     |   |   | 43 |   |
| Average                  diluted shares outstanding                                             |   |   | 7,526  |   |   | 6,864  |   |   | 6,780 |   |
|                                                                                            |   |   |   |   |   |   |   |   |   |   |
|                                                                                            |   |   |   |   |   |   |   |   |   |   |
| Net                  income per share, basic                                                    |   | $      | 2.85   |   | $      | 2.31   |   | $ | 1.99 |   |
| Net                  income per share, diluted                                                  |   |   | 2.84   |   |   | 2.30   |   |   | 1.98 |   |

| Income                  from continuing operations, basic and diluted |   | $      | 13,665 |   | $      | 14,532 |   | $      | 13,064 |   |
|-----------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                                                  |   |   |   |   |   |   |   |   |   |   |
| Income                  per share from continuing operations, basic   |   | $      | 1.82   |   | $      | 2.13   |   | $      | 1.94   |   |
| Income                  per share from continuing operations, diluted |   |   | 1.82   |   |   | 2.12   |   |   | 1.93   |   |

| Income                  from discontinued operations, basic and diluted |   | $      | 7,707  |   | $      | 1,240  |   | $      | 328    |   |
|-------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                                                    |   |   |   |   |   |   |   |   |   |   |
| Income                  per share from discontinued operations, basic   |   | $      | 1.03   |   | $      | .18    |   | $      | .05    |   |
| Income                  per share from discontinued operations, diluted |   |   | 1.02   |   |   | .18    |   |   | .05    |   |

**Comprehensive        Income**

----

**Treasury        Stock**

**Trust Assets**

**Stock-Based        Compensation**

*Share-based        Payment*

|                                                                                                                                                                          |   |   |   |   |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|
| (In                  thousands, except per share data)Years                  Ended December 31,                                                                               |   | 2005   |   | 2004   |   |
| **Net                  Income**                                                                                                                                               |   |   |   |   |   |
| As                  reported                                                                                                                                                  |   | $      | 15,772 |   | $      | 13,392 |   |
| Add:                  Stock-based compensation expense included in reported net                  income                                                                       |   |   |   |   |   | 141 |   |
| Less:                  Stock-based compensation expense determined under fair value based                  method                  for all awards, net of related tax effects |   |   | (112   | )      |   | (208 | ) |
| Proforma                                                                                                                                                                      |   | $      | 15,660 |   | $      | 13,325 |   |
| **Net                  Income Per Common Share**                                                                                                                              |   |   |   |   |   |   |   |
| Basic,                  as reported                                                                                                                                           |   | $      | 2.31   |   | $      | 1.99 |   |
| Basic,                  proforma                                                                                                                                              |   |   | 2.29   |   |   | 1.98 |   |
|                                                                                                                                                                          |   |   |   |   |   |   |   |
| Diluted,                  as reported                                                                                                                                         |   |   | 2.30   |   |   | 1.98 |   |
| Diluted,                  proforma                                                                                                                                            |   |   | 2.28   |   |   | 1.97 |   |

| **Income                  From Continuing Operations**                                                                                                                        |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| As                  reported                                                                                                                                                  |   | $ | 14,532 |   | $ | 13,064 |   |
| Add:                  Stock-based compensation expense included in reported net                  income                                                                       |   |   |   |   |   | 127 |   |
| Less:                  Stock-based compensation expense determined under fair value based                  method                  for all awards, net of related tax effects |   |   | (100 | ) |   | (190 | ) |
| Proforma                                                                                                                                                                      |   | $ | 14,432 |   | $ | 13,001 |   |
| **Income                  Per Common Share From Continuing Operations**                                                                                                       |   |   |   |   |   |   |   |
| Basic,                  as reported                                                                                                                                           |   | $ | 2.13 |   | $ | 1.94 |   |
| Basic,                  proforma                                                                                                                                              |   |   | 2.11 |   |   | 1.93 |   |
|                                                                                                                                                                          |   |   |   |   |   |   |   |
| Diluted,                  as reported                                                                                                                                         |   |   | 2.12 |   |   | 1.93 |   |
| Diluted,                  proforma                                                                                                                                            |   |   | 2.10 |   |   | 1.92 |   |

| **Income                  From Discontinued Operations**                                                                                                                      |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| As                  reported                                                                                                                                                  |   | $ | 1,240 |   | $ | 328 |   |
| Add:                  Stock-based compensation expense included in reported net                  income                                                                       |   |   |   |   |   | 14 |   |
| Less:                  Stock-based compensation expense determined under fair value based                  method                  for all awards, net of related tax effects |   |   | (12 | ) |   | (18 | ) |
| Proforma                                                                                                                                                                      |   | $ | 1,228 |   | $ | 324 |   |
| **Income                  Per Common Share From Discontinued Operations**                                                                                                     |   |   |   |   |   |   |   |
| Basic                  and diluted, as reported                                                                                                                               |   | $ | .18 |   | $ | .05 |   |
| Basic                  and diluted, proforma                                                                                                                                  |   |   | .18 |   |   | .05 |   |

----

|                                      |   |   |   |   |   |   |
|-------------------------------------------|--------|--------|--------|--------|--------|--------|
|                                      |   | Grant  |   |   | ESPP   |   |
|                                      |   | 1997   |   | 2000   |   | 2004   |   |   | 2006 |   | 2005 |   | 2004 |   |
| Dividend                  yield           |   |   | 3.18   | %      |   | 3.12   | % |   | 3.80 | % |   |   | 3.88 |   |   | 3.82 | % |   | 3.80 | % |
| Expected                  volatility      |   |   | 23.4   |   |   | 29.6   |   |   | 10.5 |   |   |   | 14.0 |   |   | 13.0 |   |   | 10.8 |   |
| Risk-free                  interest rate  |   |   | 5.75   |   |   | 6.71   |   |   | 2.78 |   |   |   | 4.70 |   |   | 2.98 |   |   | 1.47 |   |
| Expected                  life (in years) |   |   | 7      |   |   | 7      |   |   | 3 |   |   |   | .25 |   |   | .25 |   |   | .25 |   |
|                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fair                  value               |   | $      | 16.11  |   | $      | 9.25   |   | $ | 1.79 |   |   | $ | 5.75 |   | $ | 5.97 |   | $ | 5.72 |   |

**Adoption        of New Accounting Standards**

*Share-based        Payment*

*Employers’        Accounting for Defined Benefit Pension and Other Postretirement Plans - an        amendment of FASB Statements No. 87, 88, 106 and 132(R)*

|                                                   |   |                                                                |            |        |   |                                                               |   |
|--------------------------------------------------------|--------|---------------------------------------------------------------------|-----------------|-------------|--------|--------------------------------------------------------------------|--------|
| (In                  thousands)                        |   | Before                  Applicationof                  SFAS No. 158 |            | Adjustments |   | After                  Applicationof                  SFAS No. 158 |   |
| Liability                  for postretirement benefits |   | $                                                                   | 4,534           |        | $      | 4,755                                                              |   | $ | 9,289 |   |
| Deferred                  income tax (liability) asset |   |                                                                | (410            | )      |   | (1,664                                                             | )      |   | 1,254 |   |
| Accumulated                  other comprehensive loss  |   |                                                                | (1,309          | )           |   | (3,091                                                             | )      |   | (4,400 | ) |
|  Total                assets                      |   |                                                                | 1,832,112  |        |   | 1,254                                                         |   |   | 1,824,366  |   |
|  Total                liabilities                 |   |                                                                | 1,641,580  |        |   | 4,345                                                         |   |   | 1,645,925  |   |
| Total                  shareholders’ equity      |   |                                                                | 181,532         |        |   | (3,091                                                             | )      |   | 178,441 |   |

*Considering        the Effects of Prior Year Misstatements when Quantifying Misstatements in        Current Year Financial Statements, *

----

**Recently        Issued But Not Yet Effective Accounting        Standards**

*"Accounting        for Certain Hybrid Financial Instruments”*

*"Accounting        for Servicing of Financial Assets”.*
*"Accounting        for Transfers and Servicing of Financial Assets and Extinguishments of        Liabilities"*

*“Accounting        for Uncertainty in Income Taxes - an interpretation of FASB Statement No.        109”*

*Fair        Value Measurements*

**2.        Discontinued Operations**

*“Accounting        for the Impairment or Disposal of Long-Lived Assets”*

----

**Condensed        Combined Balance Sheets - Discontinued Operations**

|                                         |   |                               |    |                               |   |
|----------------------------------------------|--------|------------------------------------|---------|------------------------------------|--------|
| (In                  thousands)              |   | November                  30, 2006 |    | December                  31, 2005 |   |
|                                         |   |                               |    |                               |   |
| **Assets**                                   |   |                               |    |                               |   |   |   |
| Cash                  and cash equivalents   |   | $                                  | 13,544  |                               | $      | 3,718 |   |
| Investment                  securities       |   |                               | 32,276  |                               |   | 36,027 |   |
| Loans,                  net                  |   |                               | 88,631  |                               |   | 94,043 |   |
| Premises                  and equipment, net |   |                               | 4,978   |                               |   | 5,164 |   |
| Other                  assets                |   |                               | 5,118   |                               |   | 4,616 |   |
| Total                  assets                |   | $                                  | 144,547 |                               | $      | 143,568 |   |
|                                         |   |                               |    |                               |   |   |   |
| **Liabilities**                              |   |                               |    |                               |   |   |   |
| Deposits                                     |   | $                                  | 146,208 |                               | $      | 141,589 |   |
| Other                  borrowed funds        |   |                               | 1,459   |                               |   | 2,368 |   |
| Other                  liabilities           |   |                               | 921     |                               |   | 451 |   |
| Total                  liabilities           |   |                               | 148,588 |                               |   | 144,408 |   |
|                                         |   |                               |    |                               |   |   |   |
| **Net                  liabilities**         |   | $                                  | 4,041   |                               | $      | 840 |   |

**Condensed        Combined Statements of Income - Discontinued Operations**

|                                       |   |                                                             |   |                                                             |   |
|--------------------------------------------|--------|------------------------------------------------------------------|--------|------------------------------------------------------------------|--------|
|                                       |   | Eleven                  months endedNovember                  30 |   | Twelve                  months endedDecember                  31 |   |
| (In                  thousands)            |   | 2006                                                             |   | 2005                                                             |   | 2004 |   |
|                                       |   |                                                             |   |                                                             |   |   |   |
| Interest                  income           |   | $                                                                | 9,008  |                                                             | $      | 8,443 |   | $ | 6,712 |   |
| Interest                  expense          |   |                                                             | 3,696  |                                                             |   | 3,370 |   |   | 2,553 |   |
| Net                  interest income       |   |                                                             | 5,312  |                                                             |   | 5,073 |   |   | 4,159 |   |
| Provision                  for loan losses |   |                                                             | 17     |                                                             |   | 96 |   |   | 1,274 |   |
| Noninterest                  income        |   |                                                             | 1,272  |                                                             |   | 1,305 |   |   | 1,266 |   |
| Noninterest                  expense       |   |                                                             | 4,597  |                                                             |   | 4,559 |   |   | 3,799 |   |
| Income                  tax expense        |   |                                                             | 679    |                                                             |   | 483 |   |   | 24 |   |
| Net                  income                |   | $                                                                | 1,291  |                                                             | $      | 1,240 |   | $ | 328 |   |

| **3.** | **Investment                  Securities** |
|--------|--------------------------------------------|

|                                                               |   |      |    |                              |   |                               |   |                        |   |
|--------------------------------------------------------------------|--------|-----------|---------|-----------------------------------|--------|------------------------------------|--------|-----------------------------|--------|
|                                                               |   | Amortized |    | Gross                             |   | Gross                              |   | Estimated                   |   |
| December                  31, 2006 (In thousands)                  |   | Cost      |    | Unrealized                  Gains |   | Unrealized                  Losses |   | Fair                  Value |   |
| **Available                  For Sale**                            |   |      |    |                              |   |                               |   |                        |   |   |   |   |   |
| Obligations                  of U.S. government-sponsored agencies |   | $         | 142,128 |                              | $      | 74                                 |   | $                           | 370    |   | $ | 141,832 |   |
| Obligations                  of states and political subdivisions  |   |      | 87,974  |                              |   | 939                                |   |                        | 766    |   |   | 88,147 |   |
| Mortgage-backed                  securities                        |   |      | 88,607  |                              |   | 87                                 |   |                        | 1,978  |   |   | 86,716 |   |
| U.S.                  Treasury securities                          |   |      | 484     |                              |   |                               |   |                        |   |   |   | 484 |   |
| Money                  market mutual funds                         |   |      | 1,396   |                              |   |                               |   |                        |   |   |   | 1,396 |   |
| Equity                  securities                                 |   |      | 7,910   |                              |   |                               |   |                        |   |   |   | 7,910 |   |
| Total                  securities - available for sale             |   | $         | 328,499 |                              | $      | 1,100                              |   | $                           | 3,114  |   | $ | 326,485 |   |
| **Held                  To Maturity**                              |   |      |    |                              |   |                               |   |                        |   |   |   |   |   |
| Obligations                  of states and political subdivisions  |   | $         | 7,788   |                              | $      | 61                                 |   | $                           | 0      |   | $ | 7,849 |   |

----

|                                                               |   |      |    |                              |   |                               |   |                        |   |
|--------------------------------------------------------------------|--------|-----------|---------|-----------------------------------|--------|------------------------------------|--------|-----------------------------|--------|
|                                                               |   | Amortized |    | Gross                             |   | Gross                              |   | Estimated                   |   |
| December                  31, 2005 (In thousands)                  |   | Cost      |    | Unrealized                  Gains |   | Unrealized                  Losses |   | Fair                  Value |   |
| **Available                  For Sale**                            |   |      |    |                              |   |                               |   |                        |   |   |   |   |   |
| Obligations                  of U.S. government-sponsored agencies |   | $         | 124,668 |                              | $      | 66                                 |   | $                           | 1,050  |   | $ | 123,684 |   |
| Obligations                  of states and political subdivisions  |   |      | 85,546  |                              |   | 1,243                              |   |                        | 758    |   |   | 86,031 |   |
| Mortgage-backed                  securities                        |   |      | 100,218 |                              |   | 121                                |   |                        | 2,314  |   |   | 98,025 |   |
| U.S.                  Treasury securities                          |   |      | 104     |                              |   |                               |   |                        |   |   |   | 104 |   |
| Money                  market mutual funds                         |   |      | 925     |                              |   |                               |   |                        |   |   |   | 925 |   |
| Equity                  securities                                 |   |      | 6,298   |                              |   |                               |   |                        |   |   |   | 6,298 |   |
| Total                  securities - available for sale             |   | $         | 317,759 |                              | $      | 1,430                              |   | $                           | 4,122  |   | $ | 315,067 |   |
| **Held                  To Maturity**                              |   |      |    |                              |   |                               |   |                        |   |   |   |   |   |
| Obligations                  of states and political subdivisions  |   | $         | 13,610  |                              | $      | 204                                |   | $                           | 0      |   | $ | 13,814 |   |

|                                                    |   |                                |    |                              |   |
|---------------------------------------------------------|--------|-------------------------------------|---------|-----------------------------------|--------|
|                                                    |   | Available                  For Sale |    | Held                  To Maturity |   |
|                                                    |   | Amortized                           |    | Estimated                         |   | Amortized |   | Estimated |   |
| December                  31, 2006 (In thousands)       |   | Cost                                |    | Fair                  Value       |   | Cost |   | Fair                  Value |   |
| Due                  in one year or less                |   | $                                   | 90,698  |                              | $      | 90,669 |   | $ | 3,778 |   | $ | 3,801 |   |
| Due                  after one year through five years  |   |                                | 69,822  |                              |   | 69,306 |   |   | 2,885 |   |   | 2,923 |   |
| Due                  after five years through ten years |   |                                | 61,224  |                              |   | 61,460 |   |   |   |   |   |   |   |
| Due                  after ten years                    |   |                                | 10,238  |                              |   | 10,424 |   |   | 1,125 |   |   | 1,125 |   |
| Mortgage-backed                  securities             |   |                                | 88,607  |                              |   | 86,716 |   |   |   |   |   |   |   |
| Total                                                   |   | $                                   | 320,589 |                              | $      | 318,575 |   | $ | 7,788 |   | $ | 7,849 |   |

|                                                               |   |                                 |   |                               |   |                              |   |
|--------------------------------------------------------------------|--------|--------------------------------------|--------|------------------------------------|--------|-----------------------------------|--------|
|                                                               |   | Less                  than 12 Months |   | 12                  Months or More |   | Total                             |   |
|  December                  31, 2006 (In thousands)            |   |  Fair                  Value    |   | UnrealizedLosses                   |   |  Fair                  Value |   | UnrealizedLosses |   |  Fair                  Value |   | UnrealizedLosses |   |
| Obligations                  of U.S. government-sponsored agencies |   | $                                    | 25,591 |                               | $      | 34                                |   | $ | 34,949 |   | $ | 336 |   | $ | 60,540 |   | $ | 370 |   |
| Obligations                  of states and political subdivisions  |   |                                 | 12,756 |                               |   | 63                                |   |   | 25,793 |   |   | 703 |   |   | 38,549 |   |   | 766 |   |
| Mortgage-backed                  securities                        |   |                                 | 2,467  |                               |   | 6                                 |   |   | 68,993 |   |   | 1,972 |   |   | 71,460 |   |   | 1,978 |   |
| Total                                                              |   | $                                    | 40,814 |                               | $      | 103                               |   | $ | 129,735 |   | $ | 3,011 |   | $ | 170,549 |   | $ | 3,114 |   |

|                                                               |   |                                 |    |                               |   |                              |   |
|--------------------------------------------------------------------|--------|--------------------------------------|---------|------------------------------------|--------|-----------------------------------|--------|
|                                                               |   | Less                  than 12 Months |    | 12                  Months or More |   | Total                             |   |
|  December                  31, 2005 (In thousands)            |   |  Fair                  Value    |    | UnrealizedLosses                   |   |  Fair                  Value |   | UnrealizedLosses |   |  Fair                  Value |   | UnrealizedLosses |   |
| Obligations                  of U.S. government-sponsored agencies |   | $                                    | 54,184  |                               | $      | 388                               |   | $ | 44,159 |   | $ | 662 |   | $ | 98,343 |   | $ | 1,050 |   |
| Obligations                  of states and political subdivisions  |   |                                 | 23,287  |                               |   | 285                               |   |   | 13,107 |   |   | 473 |   |   | 36,394 |   |   | 758 |   |
| Mortgage-backed                  securities                        |   |                                 | 31,326  |                               |   | 413                               |   |   | 54,583 |   |   | 1,901 |   |   | 85,909 |   |   | 2,314 |   |
| Total                                                              |   | $                                    | 108,797 |                               | $      | 1,086                             |   | $ | 111,849 |   | $ | 3,036 |   | $ | 220,646 |   | $ | 4,122 |   |

----

| **4.** | **Loans** |
|--------|-----------|

|                                                                                               |   |   |      |   |   |
|----------------------------------------------------------------------------------------------------|--------|--------|-----------|--------|--------|
| December                  31, (In thousands)                                                       |   | 2006   |      | 2005   |   |
| Commercial,                  financial, and agricultural                                           |   | $      | 197,613   |   | $      | 173,797 |   |
| Real                  estate - construction                                                        |   |   | 176,779   |   |   | 88,693 |   |
| Real                  estate mortgage - residential                                                |   |   | 381,081   |   |   | 331,508 |   |
| Real                  estate mortgage - farmland and other commercial                  enterprises |   |   | 351,793   |   |   | 274,411 |   |
| Installment                  loans                                                                 |   |   | 57,116    |   |   | 56,169 |   |
| Lease                  financing                                                                   |   |   | 37,522    |   |   | 42,501 |   |
| Total                  loans                                                                       |   |   | 1,201,904 |   |   | 967,079 |   |
| Less                  unearned income                                                              |   |   | (4,068    | )      |   | (4,508 | ) |
| Total                  loans, net of unearned income                                               |   | $      | 1,197,836 |   | $      | 962,571 |   |

|                                                                                                                                                |   |   |    |
|-----------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------|
| (In                  thousands)                                                                                                                     |   | Amount |    |
| Balance,                  December 31, 2005                                                                                                         |   | $      | 25,103  |   |
| New                  loans                                                                                                                          |   |   | 15,081  |   |
| Repayments                                                                                                                                          |   |   | (18,938 | ) |
| Loans                  no longer meeting disclosure requirements, new loans meeting disclosure                  requirements, and other adjustments |   |   | 4,657   |   |
| Balance,                  December 31, 2006                                                                                                         |   | $      | 25,903  |   |

| **5.** | **Allowance                  for Loan                  Losses** |
|--------|-----------------------------------------------------------------|

----

|                                                               |   |   |   |   |   |   |   |
|--------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|
| Years                  Ended December 31, (In thousands)           |   | 2006   |   | 2005   |   | 2004   |   |
| Balance,                  beginning of year                        |   | $      | 11,069 |   | $      | 11,043 |   | $ | 10,088 |   |
| Acquisition                  of Citizens National Bancshares, Inc. |   |   | 1,066  |   |   |   |   |   |   |   |
| Acquisition                  of Citizens Bancorp, Inc.             |   |   |   |   |   | 1,410  |   |   |   |   |
| Acquisition                  of Citizens Bank (Kentucky), Inc.     |   |   |   |   |   |   |   |   | 2,005 |   |
| Provision                  for loan losses                         |   |   | 965    |   |   | 622    |   |   | 856 |   |
| Recoveries                                                         |   |   | 678    |   |   | 439    |   |   | 462 |   |
| Loans                  charged off                                 |   |   | (1,779 | )      |   | (2,445 | )      |   | (2,368 | ) |
| Balance,                  end of year                              |   | $      | 11,999 |   | $      | 11,069 |   | $ | 11,043 |   |

|                                                               |   |   |   |   |   |
|--------------------------------------------------------------------|--------|--------|--------|--------|--------|
| December                  31, (In thousands)                       |   | 2006   |   | 2005   |   |
| Nonaccrual                  loans                                  |   | $      | 1,462  |   | $      | 2,269 |   |
| Loans                  past due 90 days or more and still accruing |   |   | 2,856  |   |   | 2,383 |   |
| Total                  nonperforming loans                         |   | $      | 4,318  |   | $      | 4,652 |   |

| **6.** | **Premises                  and Equipment** |
|--------|---------------------------------------------|

|                                                            |   |   |    |   |   |
|-----------------------------------------------------------------|--------|--------|---------|--------|--------|
| December                  31, (In thousands)                    |   | 2006   |    | 2005   |   |
| Land,                  buildings, and leasehold improvements    |   | $      | 45,652  |   | $      | 37,034 |   |
| Furniture                  and equipment                        |   |   | 21,470  |   |   | 19,413 |   |
| Total                  premises and equipment                   |   |   | 67,122  |   |   | 56,447 |   |
| Less                  accumulated depreciation and amortization |   |   | (29,347 | )      |   | (27,615 | ) |
| Premises                  and equipment, net                    |   | $      | 37,775  |   | $      | 28,832 |   |

| **7.** | **Deposit                  Liabilities** |
|--------|------------------------------------------|

|                            |   |   |    |
|---------------------------------|--------|--------|---------|
| (In                  thousands) |   | Amount |    |
| 2007                            |   | $      | 482,687 |   |
| 2008                            |   |   | 137,745 |   |
| 2009                            |   |   | 61,138  |   |
| 2010                            |   |   | 15,772  |   |
| 2011                            |   |   | 9,125   |   |
| Thereafter                      |   |   | 4,482   |   |
| Total                           |   | $      | 710,949 |   |

----

| **8.** | **Federal                  Funds Purchased, Securities Sold Under Agreements to                  Repurchase, and Other Borrowed                  Funds** |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                       |   |   |   |   |   |
|------------------------------------------------------------|--------|--------|--------|--------|--------|
| December                  31, (Dollars in thousands)       |   | 2006   |   | 2005   |   |
| Average                  balance during the year           |   | $      | 92,092 |   | $      | 81,318 |   |
| Average                  interest rate during the year     |   |   | 4.72   | %      |   | 3.16 | % |
| Average                  interest rate at year-end         |   |   | 4.47   |   |   | 3.90 |   |
| Maximum                  month-end balance during the year |   | $      | 90,149 |   | $      | 165,167 |   |

*Consolidation        of Variable Interest Entities*

|                                                                                                         |   |   |   |             |   |   |   |             |   |
|--------------------------------------------------------------------------------------------------------------|--------|--------|--------|------------------|--------|--------|--------|------------------|--------|
|                                                                                                         |   |   |   | Average          |   |   |   | Average          |   |
| December                  31, (Dollars in thousands)                                                         |   | 2006   |   | Rate   |   | 2005   |   | Rate   |   |
| **Short-term**                                                                                               |   |   |   |             |   |   |   |             |   |   |   |   |   |
| Federal                  funds purchased and securities sold under agreements to                  repurchase |   | $      | 67,941 |             |   | 4.47   | %      | $                | 71,336 |   |   | 3.90 | % |
| FHLB                  advances                                                                               |   |   | 8,000  |             |   | 5.49   |   |             |   |   |   |   |   |
| Other                                                                                                        |   |   | 777    |             |   | 2.00   |   |             | 779    |   |   | 3.20 |   |
| Total                  short-term                                                                            |   | $      | 76,718 |             |   | 4.55   | %      | $                | 72,115 |   |   | 3.89 | % |
| **Long-term**                                                                                                |   |   |   |             |   |   |   |             |   |   |   |   |   |
| FHLB                  advances                                                                               |   | $      | 61,174 |             |   | 4.51   | %      | $                | 49,162 |   |   | 4.16 | % |
| Subordinated                  notes payable                                                                  |   |   | 25,774 |             |   | 6.96   |   |             | 25,774 |   |   | 5.61 |   |
| Other                                                                                                        |   |   | 1,044  |             |   | 2.32   |   |             | 355    |   |   | 2.32 |   |
| Total                  long-term                                                                             |   | $      | 87,992 |             |   | 5.20   | %      | $                | 75,291 |   |   | 4.65 | % |

----

|                            |   |   |   |
|---------------------------------|--------|--------|--------|
| (In                  thousands) |   | Amount |   |
| 2007                            |   | $      | 20,679 |   |
| 2008                            |   |   | 10,663 |   |
| 2009                            |   |   | 10,658 |   |
| 2010                            |   |   | 654    |   |
| 2011                            |   |   | 5,484  |   |
| Thereafter                      |   |   | 39,854 |   |
| Total                           |   | $      | 87,992 |   |

**9.**
**Income        Taxes**

**Continuing        Operations**

|                                                                               |   |   |   |   |   |   |   |
|------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|
| December                  31, (In thousands)                                       |   | 2006   |   | 2005   |   | 2004   |   |
| Currently                  payable                                                 |   | $      | 5,208  |   | $      | 3,985  |   | $ | 2,034 |   |
| Deferred                                                                           |   |   | (1,848 | )      |   | (194   | )      |   | 965 |   |
| Total                  applicable to continuing operations                         |   |   | 3,360  |   |   | 3,791  |   |   | 2,999 |   |
| Deferred                  tax charged to components of shareholders’ equity: |   |   |   |   |   |   |   |   |   |   |
| Unfunded                  status of postretirement benefits                        |   |   | 1,664  |   |   |   |   |   |   |   |
| Net                  unrealized securities gains (losses)                          |   |   | 237    |   |   | (1,362 | )      |   | (713 | ) |
| Total                  income taxes from continuing operations                     |   | $      | 5,261  |   | $      | 2,429  |   | $ | 2,286 |   |

**Discontinued        Operations**

|                                                                               |   |   |   |   |   |   |   |
|------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|
| December                  31, (In thousands)                                       |   | 2006   |   | 2005   |   | 2004   |   |
| Currently                  payable                                                 |   | $      | 4,287  |   | $      | 294    |   | $ | 276 |   |
| Deferred                                                                           |   |   | (152   | )      |   | 189    |   |   | (253 | ) |
| Total                  applicable to discontinued operations                       |   |   | 4,135  |   |   | 483    |   |   | 23 |   |
| Deferred                  tax charged to components of shareholders’ equity: |   |   |   |   |   |   |   |   |   |   |
| Net                  unrealized securities gains (losses)                          |   |   | 90     |   |   | (47    | )      |   | (52 | ) |
| Total                  income taxes from discontinued operations                   |   | $      | 4,225  |   | $      | 436    |   | $ | (29 | ) |

----

**Continuing        Operations**

|                                                                            |   |   |   |   |   |   |   |
|---------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|
| December                  31,                                                   |   | 2006   |   | 2005   |   | 2004   |   |
| Federal                  statutory rate                                         |   |   | 35.0   | %      |   | 35.0   | %      |   | 35.0 | % |
| Changes                  from statutory rates resulting from:                   |   |   |   |   |   |   |   |   |   |   |
| Tax-exempt                  interest                                            |   |   | (9.7   | )      |   | (8.3   | )      |   | (9.4 | ) |
| Nondeductible                  interest to carry tax-exempt obligations         |   |   | 1.2    |   |   | .7     |   |   | .6 |   |
| Tax                  credits                                                    |   |   | (3.8   | )      |   | (3.6   | )      |   | (4.1 | ) |
| Premium                  income not subject to tax                              |   |   | (2.4   | )      |   | (.2    | )      |   |   |   |
| Company-owned                  life insurance                                   |   |   | (2.4   | )      |   | (1.9   | )      |   | (2.5 | ) |
| Other,                  net                                                     |   |   | 1.8    |   |   | (1.0   | )      |   | (.9 | ) |
| Effective                  tax rate on pretax income from continuing operations |   |   | 19.7   | %      |   | 20.7   | %      |   | 18.7 | % |

**Discontinued        Operations**

|                                                                              |   |   |   |   |   |   |   |
|-----------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|
| December                  31,                                                     |   | 2006   |   | 2005   |   | 2004   |   |
| Federal                  statutory rate                                           |   |   | 35.0   | %      |   | 35.0   | %      |   | 35.0 | % |
| Changes                  from statutory rates resulting from:                     |   |   |   |   |   |   |   |   |   |   |
| Tax-exempt                  interest                                              |   |   | (.7    | )      |   | (5.4   | )      |   | (23.2 | ) |
| Nondeductible                  interest to carry tax-exempt obligations           |   |   | .1     |   |   | .6     |   |   | 2.1 |   |
| Company-owned                  life insurance                                     |   |   | (.2    | )      |   | (1.1   | )      |   | (6.7 | ) |
| Other,                  net                                                       |   |   | .7     |   |   | (1.1   | )      |   | (.6 | ) |
| Effective                  tax rate on pretax income from discontinued operations |   |   | 34.9   | %      |   | 28.0   | %      |   | 6.6 | % |

|                                                                                |   |   |   |                 |   |                   |   |
|-------------------------------------------------------------------------------------|--------|--------|--------|----------------------|--------|------------------------|--------|
| December                  31, (In thousands)                                        |   | 2006   |   | 2005                 |   |
|                                                                                |   |   |   | ContinuingOperations |   | DiscontinuedOperations |   |
| **Assets**                                                                          |   |   |   |                 |   |                   |   |   |   |   |
| Allowance                  for loan losses                                          |   | $      | 4,122  |                 | $      | 3,832                  |   | $ | 488 |   |
| Unrealized                  losses on available for sale investment securities, net |   |   | 705    |                 |   | 943                    |   |   | 90 |   |
| Deferred                  directors’ fees                                     |   |   | 131    |                 |   | 137                    |   |   |   |   |
| Postretirement                  benefit obligations                                 |   |   | 3,251  |                 |   | 1,277                  |   |   | 40 |   |
| Stock                  options                                                      |   |   | 513    |                 |   | 902                    |   |   | 67 |   |
| Commissions                                                                         |   |   | 12     |                 |   | 67                     |   |   |   |   |
| Self-funded                  insurance                                              |   |   | 279    |                 |   | 200                    |   |   |   |   |
| Paid                  time off                                                      |   |   | 455    |                 |   |                   |   |   |   |   |
| Other                                                                               |   |   | 157    |                 |   | 46                     |   |   |   |   |
| Total                  deferred tax assets                                          |   |   | 9,625  |                 |   | 7,404                  |   |   | 685 |   |
| **Liabilities**                                                                     |   |   |   |                 |   |                   |   |   |   |   |
| Depreciation                                                                        |   |   | 925    |                 |   | 971                    |   |   | 287 |   |
| Prepaid                  expenses                                                   |   |   | 590    |                 |   | 557                    |   |   | 41 |   |
| Discount                  on investment securities                                  |   |   | 1,040  |                 |   | 860                    |   |   | 178 |   |
| Deferred                  loan fees                                                 |   |   | 1,000  |                 |   | 1,093                  |   |   | 241 |   |
| Lease                  financing operations                                         |   |   | 1,942  |                 |   | 2,368                  |   |   |   |   |
| Intangibles                                                                         |   |   | 2,874  |                 |   | 2,331                  |   |   |   |   |
| Total                  deferred tax liabilities                                     |   |   | 8,371  |                 |   | 8,180                  |   |   | 747 |   |
| Net                  deferred tax asset (liability)                                 |   | $      | 1,254  |                 | $      | (776                   | )      | $ | (62 | ) |

----

**10.**
**Retirement        Plans**

| **11.** | **Common                  Stock Options** |
|---------|-------------------------------------------|

|                                             |   |   |    |
|--------------------------------------------------|--------|--------|---------|
|                                             |   | 2006   |    |
|                                             |   |   |    | Weighted |   |
|                                             |   | Shares |    | Average                  Price |   |
| Outstanding                  at January 1        |   |   | 189,447 |   | $ | 27.67 |   |
| Granted                                          |   |   |    |   |   |   |   |
| Forfeited                                        |   |   | (3,714  | ) |   | 32.47 |   |
| Exercised                                        |   |   | (60,211 | ) |   | 25.37 |   |
| Outstanding                  at December 31      |   |   | 125,522 |   | $ | 28.62 |   |
|                                             |   |   |    |   |   |   |   |
| Options                  exercisable at year-end |   |   | 120,379 |   | $ | 28.58 |   |

|                                      |   |        |    |                                   |   |
|-------------------------------------------|--------|-------------|---------|----------------------------------------|--------|
|                                      |   | Outstanding |    | Exercisable                            |   |
|                                      |   |        |    | Weighted                  Average      |   |   |   |   |   |   |   |
|                                      |   |        |    | Remaining                  Contractual |   | Weighted                  Average |   |   |   | Weighted                  Average |   |
| Range                  of Exercise Prices |   | Number      |    | Life                  (Years)          |   | Exercise                  Price |   | Number |   | Exercise                  Price |   |
| $24.50                                    |   |        | 61,615  |                                   |   | .75 |   | $ | 24.50 |   |   | 61,615 |   | $ | 24.50 |   |
| $29.75                                    |   |        | 27,858  |                                   |   | 3.00 |   |   | 29.75 |   |   | 22,715 |   |   | 29.75 |   |
| $34.80                                    |   |        | 36,049  |                                   |   | 7.83 |   |   | 34.80 |   |   | 36,049 |   |   | 34.80 |   |
| Outstanding                  at year-end  |   |        | 125,522 |                                   |   | 3.28 |   | $ | 28.62 |   |   | 120,379 |   | $ | 28.58 |   |

----

|                                                         |   |   |   |   |   |   |   |
|--------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|
| (In                  thousands)                              |   | 2006   |   | 2005   |   | 2004   |   |
| Tax                  benefit realized from options exercised |   | $      | 168    |   | $      | 109    |   | $ | 283 |   |
| Total                  intrinsic value of options exercised  |   |   | 479    |   |   | 311    |   |   | 810 |   |
| Total                  fair value of options vested          |   |   | 63     |   |   | 135    |   |   | 404 |   |
| Cash                  received from options exercised        |   |   | 1,529  |   |   | 771    |   |   | 1,755 |   |

| **12.** | **Postretirement                  Benefits** |
|---------|----------------------------------------------|

|                                                                                                                                    |   | Postretirement                  Medical Benefits |   | Supplemental                  Retirement Plan |   |
|-----------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------|--------|-----------------------------------------------|--------|
| (In                  thousands)                                                                                                         |   | 2006                                             |   | 2005                                          |   | 2006 |   | 2005 |   |
| **Change                  in Benefit Obligation**                                                                                       |   |                                             |   |                                          |   |   |   |   |   |
| Obligation                  at beginning of year                                                                                        |   | $                                                | 7,354  |                                          | $      | 6,414 |   | $ | 374 |   |   |   |   |
| Service                  cost                                                                                                           |   |                                             | 258    |                                          |   | 186 |   |   | 41 |   |   |   |   |
| Interest                  cost                                                                                                          |   |                                             | 415    |                                          |   | 376 |   |   | 22 |   |   |   |   |
| Prior                  service cost                                                                                                     |   |                                             | 222    |                                          |   | 215 |   |   |   |   |   |   |   |
| Actuarial                  loss                                                                                                         |   |                                             | 814    |                                          |   | 462 |   |   | 124 |   |   |   |   |
| Participant                  contributions                                                                                              |   |                                             | 32     |                                          |   |   |   |   |   |   |   |   |   |
| Benefit                  payments                                                                                                       |   |                                             | (367   | )                                             |   | (299 | ) |   |   |   |   |   |   |
| Acquisition                                                                                                                             |   |                                             |   |                                          |   |   |   |   |   |   | $ | 374 |   |
| Obligation                  at end of year                                                                                              |   | $                                                | 8,728  |                                          | $      | 7,354 |   | $ | 561 |   | $ | 374 |   |
| **Reconciliation                  of Funded Status**                                                                                    |   |                                             |   |                                          |   |   |   |   |   |   |   |   |   |
| Benefit                  obligation                                                                                                     |   | $                                                | (8,728 | )                                             | $      | (7,354 | ) | $ | (561 | ) | $ | (374 | ) |
| Unrecognized                  transition obligation                                                                                     |   |                                             | 609    |                                          |   | 710 |   |   |   |   |   |   |   |
| Unamortized                  prior service cost                                                                                         |   |                                             | 2,121  |                                          |   | 2,167 |   |   |   |   |   |   |   |
| Unrecognized                  net actuarial loss                                                                                        |   |                                             | 1,721  |                                          |   | 929 |   |   | 304 |   |   |   |   |
| Adjustment                  to accumulated other comprehensive loss upon the adoption of SFAS                  No.                  158 |   |                                             | (4,451 | )                                             |   |   |   |   | (304 | ) |   |   |   |
| Plan                  liability                                                                                                         |   | $                                                | (8,728 | )                                             | $      | (3,548 | ) | $ | (561 | ) | $ | (374 | ) |

----

|                                                   |   |                                             |   |                                          |   |
|--------------------------------------------------------|--------|--------------------------------------------------|--------|-----------------------------------------------|--------|
|                                                   |   | Postretirement                  Medical Benefits |   | Supplemental                  Retirement Plan |   |
| (In                  thousands)                        |   | 2006                                             |   | 2005                                          |   | 2006 |   |
| Service                  cost                          |   | $                                                | 258    |                                          | $      | 186 |   | $ | 41 |   |
| Interest                  cost                         |   |                                             | 415    |                                          |   | 376 |   |   | 21 |   |
| Amortization                  of transition obligation |   |                                             | 102    |                                          |   | 101 |   |   |   |   |
| Recognized                  prior service cost         |   |                                             | 268    |                                          |   | 250 |   |   |   |   |
| Recognized                  net actuarial loss         |   |                                             | 21     |                                          |   | 7 |   |   | 17 |   |
| Net                  periodic benefit cost             |   | $                                                | 1,064  |                                          | $      | 920 |   | $ | 79 |   |
| Major                  assumptions:                    |   |                                             |   |                                          |   |   |   |   |   |   |
| Discount                  rate                         |   |                                             | 5.75   | %                                             |   | 5.75 | % |   | 5.75 | % |

|                                                                                                                                              |   |                         |   |                         |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------|--------|------------------------------|--------|
| (In                  thousands)                                                                                                                   |   | 1%                  Increase |   | 1%                  Decrease |   |
| Effect                  on total of service and interest cost components of net periodic                  postretirement health care benefit cost |   | $                            | 167    |                         | $      | (131 | ) |
| Effect                  on postretirement benefit obligation                                                                                      |   |                         | 1,341  |                         |   | (1,091 | ) |

|                            |   |                                            |   |                                          |   |
|---------------------------------|--------|-------------------------------------------------|--------|-----------------------------------------------|--------|
| (In                  thousands) |   | PostretirementMedical                  Benefits |   | Supplemental                  Retirement Plan |   |
| 2007                            |   | $                                               | 363    |                                          | $      | 20 |   |
| 2008                            |   |                                            | 372    |                                          |   | 20 |   |
| 2009                            |   |                                            | 401    |                                          |   | 20 |   |
| 2010                            |   |                                            | 428    |                                          |   | 20 |   |
| 2011                            |   |                                            | 434    |                                          |   | 20 |   |
| 2012-2016                       |   |                                            | 2,397  |                                          |   | 206 |   |
| Total                           |   | $                                               | 4,395  |                                          | $      | 306 |   |

|                                                |   |                                            |   |                                          |   |
|-----------------------------------------------------|--------|-------------------------------------------------|--------|-----------------------------------------------|--------|
| (In                  thousands)                     |   | PostretirementMedical                  Benefits |   | Supplemental                  Retirement Plan |   |
| Unrecognized                  net actuarial loss    |   | $                                               | 1,721  |                                          | $      | 304 |   |
| Unrecognized                  transition obligation |   |                                            | 609    |                                          |   |   |   |
| Unrecognized                  prior service cost    |   |                                            | 2,121  |                                          |   |   |   |
| Total                                               |   | $                                               | 4,451  |                                          | $      | 304 |   |

|                                             |   |                                            |   |                                          |   |
|--------------------------------------------------|--------|-------------------------------------------------|--------|-----------------------------------------------|--------|
| (In                  thousands)                  |   | PostretirementMedical                  Benefits |   | Supplemental                  Retirement Plan |   |
| Unrecognized                  net actuarial loss |   | $                                               | 4      |                                          |   |   |   |
| Unrecognized                  prior service cost |   |                                            | 287    |                                          |   |   |   |
| Net                  actuarial loss              |   |                                            |   |                                          | $      | 23 |   |
| Total                                            |   | $                                               | 291    |                                          | $      | 23 |   |

**13.        Leases**

*“Accounting        for Leases”*

----

|                                                      |   |            |   |         |   |
|-----------------------------------------------------------|--------|-----------------|--------|--------------|--------|
| (In                  thousands)                           |   | OperatingLeases |   | CapitalLease |   |
| 2007                                                      |   | $               | 613    |         | $      | 254 |   |
| 2008                                                      |   |            | 540    |         |   | 254 |   |
| 2009                                                      |   |            | 477    |         |   | 254 |   |
| 2010                                                      |   |            | 402    |         |   | 254 |   |
| 2011                                                      |   |            | 358    |         |   | 84 |   |
| Thereafter                                                |   |            | 2,104  |         |   |   |   |
|                                                      |   | $               | 4,494  |         |   | 1,100 |   |
| Less:                  amount representing interest       |   |            |   |         |   | 56 |   |
| Long-term                  obligation under capital lease |   |            |   |         | $      | 1,044 |   |

| **14.** | **Financial                  Instruments With Off-Balance Sheet                  Risk** |
|---------|-----------------------------------------------------------------------------------------|

|                                          |   |                        |   |                           |   |
|-----------------------------------------------|--------|-----------------------------|--------|--------------------------------|--------|
| December                  31,                 |   | 2006                        |   | 2005                           |   |
| (In                  thousands)               |   | Fixed                  Rate |   | Variable                  Rate |   | Fixed                  Rate |   | Variable                  Rate |   |
| Commitments                  to extend credit |   | $                           | 84,590 |                           | $      | 132,695 |   | $ | 34,707 |   | $ | 126,029 |   |
| Standby                  letters of credit    |   |                        | 15,102 |                           |   | 1,761 |   |   | 11,049 |   |   | 583 |   |
| Total                                         |   | $                           | 99,692 |                           | $      | 134,456 |   | $ | 45,756 |   | $ | 126,612 |   |

**15.**
**Concentration        of Credit Risk**

| **16.** | **Loss                  Contingencies** |
|---------|-----------------------------------------|

----

| **17.** | **Regulatory                  Matters** |
|---------|-----------------------------------------|

----

|                                                          |   |   |    |                               |   |                                     |   |
|---------------------------------------------------------------|--------|--------|---------|------------------------------------|--------|------------------------------------------|--------|
|                                                          |   |   |    |                               |   | To                  Be Well Capitalized  |   |
|                                                          |   |   |    | For                  Capital       |   | Under                  Prompt Corrective |   |
|                                                          |   | Actual |    | Adequacy                  Purposes |   | Action                  Provisions       |   |
| December                  31, 2006 (Dollars in thousands)     |   | Amount |    | Ratio                              |   | Amount                                   |   | Ratio |   | Amount |   | Ratio |   |
| **Tier                  1 Capital (to Risk-Weighted Assets)** |   |   |    |                               |   |                                     |   |   |   |   |   |   |   |
| Consolidated                                                  |   | $      | 155,264 |                               |   | 12.23                                    | %      | $ | 50,793 |   |   | 4.00 | % |   | N/A |   |   | N/A |   |
| Farmers                  Bank & Capital Trust Co.         |   |   | 38,411  |                               |   | 10.94                                    |   |   | 14,046 |   |   | 4.00 |   | $ | 21,069 |   |   | 6.00 | % |
| Farmers                  Bank and Trust Company               |   |   | 26,975  |                               |   | 11.04                                    |   |   | 9,771 |   |   | 4.00 |   |   | 14,656 |   |   | 6.00 |   |
| Lawrenceburg                  National Bank                   |   |   | 11,888  |                               |   | 10.78                                    |   |   | 4,413 |   |   | 4.00 |   |   | 6,619 |   |   | 6.00 |   |
| First                  Citizens Bank                          |   |   | 18,072  |                               |   | 11.62                                    |   |   | 6,223 |   |   | 4.00 |   |   | 9,335 |   |   | 6.00 |   |
| United                  Bank & Trust Co.                  |   |   | 14,084  |                               |   | 11.19                                    |   |   | 5,034 |   |   | 4.00 |   |   | 7,552 |   |   | 6.00 |   |
| Citizens                  National Bank of Jessamine County   |   |   | 11,429  |                               |   | 9.50                                     |   |   | 4,813 |   |   | 4.00 |   |   | 7,220 |   |   | 6.00 |   |
| Citizens                  Bank of Northern Kentucky           |   |   | 17,345  |                               |   | 10.05                                    |   |   | 6,902 |   |   | 4.00 |   |   | 10,353 |   |   | 6.00 |   |
| **Total                  Capital (to Risk-Weighted Assets)**  |   |   |    |                               |   |                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Consolidated                                                  |   | $      | 167,263 |                               |   | 13.17                                    | %      | $ | 101,587 |   |   | 8.00 | % |   | N/A |   |   | N/A |   |
| Farmers                  Bank & Capital Trust Co.         |   |   | 41,931  |                               |   | 11.94                                    |   |   | 28,092 |   |   | 8.00 |   | $ | 35,115 |   |   | 10.00 | % |
| Farmers                  Bank and Trust Company               |   |   | 28,839  |                               |   | 11.81                                    |   |   | 19,541 |   |   | 8.00 |   |   | 24,427 |   |   | 10.00 |   |
| Lawrenceburg                  National Bank                   |   |   | 13,269  |                               |   | 12.03                                    |   |   | 8,825 |   |   | 8.00 |   |   | 11,032 |   |   | 10.00 |   |
| First                  Citizens Bank                          |   |   | 19,341  |                               |   | 12.43                                    |   |   | 12,447 |   |   | 8.00 |   |   | 15,559 |   |   | 10.00 |   |
| United                  Bank & Trust Co.                  |   |   | 15,332  |                               |   | 12.18                                    |   |   | 10,069 |   |   | 8.00 |   |   | 12,586 |   |   | 10.00 |   |
| Citizens                  National Bank of Jessamine County   |   |   | 12,673  |                               |   | 10.53                                    |   |   | 9,626 |   |   | 8.00 |   |   | 12,033 |   |   | 10.00 |   |
| Citizens                  Bank of Northern Kentucky           |   |   | 18,657  |                               |   | 10.81                                    |   |   | 13,804 |   |   | 8.00 |   |   | 17,255 |   |   | 10.00 |   |
| **Tier                  1 Capital (to Average Assets)**       |   |   |    |                               |   |                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Consolidated                                                  |   | $      | 155,264 |                               |   | 8.47                                     | %      | $ | 73,314 |   |   | 4.00 | % |   | N/A |   |   | N/A |   |
| Farmers                  Bank & Capital Trust Co.         |   |   | 38,411  |                               |   | 6.55                                     |   |   | 23,449 |   |   | 4.00 |   | $ | 29,312 |   |   | 5.00 | % |
| Farmers                  Bank and Trust Company               |   |   | 26,975  |                               |   | 8.05                                     |   |   | 13,406 |   |   | 4.00 |   |   | 16,757 |   |   | 5.00 |   |
| Lawrenceburg                  National Bank                   |   |   | 11,888  |                               |   | 6.86                                     |   |   | 6,935 |   |   | 4.00 |   |   | 8,669 |   |   | 5.00 |   |
| First                  Citizens Bank                          |   |   | 18,072  |                               |   | 8.41                                     |   |   | 8,594 |   |   | 4.00 |   |   | 10,743 |   |   | 5.00 |   |
| United                  Bank & Trust Co.                  |   |   | 14,084  |                               |   | 7.90                                     |   |   | 7,128 |   |   | 4.00 |   |   | 8,910 |   |   | 5.00 |   |
| Citizens                  National Bank of Jessamine County   |   |   | 11,429  |                               |   | 7.61                                     |   |   | 6,005 |   |   | 4.00 |   |   | 7,507 |   |   | 5.00 |   |
| Citizens                  Bank of Northern Kentucky           |   |   | 17,345  |                               |   | 8.17                                     |   |   | 8,489 |   |   | 4.00 |   |   | 10,611 |   |   | 5.00 |   |

|                                                          |   |   |    |                               |   |                                     |   |
|---------------------------------------------------------------|--------|--------|---------|------------------------------------|--------|------------------------------------------|--------|
|                                                          |   |   |    |                               |   | To                  Be Well Capitalized  |   |
|                                                          |   |   |    | For                  Capital       |   | Under                  Prompt Corrective |   |
|                                                          |   | Actual |    | Adequacy                  Purposes |   | Action                  Provisions       |   |
| December                  31, 2005 (Dollars in thousands)     |   | Amount |    | Ratio                              |   | Amount                                   |   | Ratio |   | Amount |   | Ratio |   |
| **Tier                  1 Capital (to Risk-Weighted Assets)** |   |   |    |                               |   |                                     |   |   |   |   |   |   |   |
| Consolidated                                                  |   | $      | 143,861 |                               |   | 12.68                                    | %      | $ | 45,395 |   |   | 4.00 | % |   | N/A |   |   | N/A |   |
| Farmers                  Bank & Capital Trust Co.         |   |   | 38,022  |                               |   | 12.25                                    |   |   | 12,416 |   |   | 4.00 |   | $ | 18,624 |   |   | 6.00 | % |
| Farmers                  Bank and Trust Company               |   |   | 22,316  |                               |   | 10.69                                    |   |   | 8,347 |   |   | 4.00 |   |   | 12,521 |   |   | 6.00 |   |
| Lawrenceburg                  National Bank                   |   |   | 12,112  |                               |   | 11.26                                    |   |   | 4,304 |   |   | 4.00 |   |   | 6,456 |   |   | 6.00 |   |
| First                  Citizens Bank                          |   |   | 14,323  |                               |   | 10.56                                    |   |   | 5,425 |   |   | 4.00 |   |   | 8,138 |   |   | 6.00 |   |
| United                  Bank & Trust Co.                  |   |   | 14,068  |                               |   | 11.13                                    |   |   | 5,055 |   |   | 4.00 |   |   | 7,583 |   |   | 6.00 |   |
| Citizens                  Bank of Northern Kentucky           |   |   | 15,591  |                               |   | 9.53                                     |   |   | 6,545 |   |   | 4.00 |   |   | 9,817 |   |   | 6.00 |   |
| **Total                  Capital (to Risk-Weighted Assets)**  |   |   |    |                               |   |                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Consolidated                                                  |   | $      | 156,323 |                               |   | 13.77                                    | %      | $ | 90,791 |   |   | 8.00 | % |   | N/A |   |   | N/A |   |
| Farmers                  Bank & Capital Trust Co.         |   |   | 41,458  |                               |   | 13.36                                    |   |   | 24,832 |   |   | 8.00 |   | $ | 31,040 |   |   | 10.00 | % |
| Farmers                  Bank and Trust Company               |   |   | 24,482  |                               |   | 11.73                                    |   |   | 16,694 |   |   | 8.00 |   |   | 20,868 |   |   | 10.00 |   |
| Lawrenceburg                  National Bank                   |   |   | 13,459  |                               |   | 12.51                                    |   |   | 8,608 |   |   | 8.00 |   |   | 10,760 |   |   | 10.00 |   |
| First                  Citizens Bank                          |   |   | 15,625  |                               |   | 11.52                                    |   |   | 10,850 |   |   | 8.00 |   |   | 13,563 |   |   | 10.00 |   |
| United                  Bank & Trust Co.                  |   |   | 15,528  |                               |   | 12.29                                    |   |   | 10,111 |   |   | 8.00 |   |   | 12,639 |   |   | 10.00 |   |
| Citizens                  Bank of Northern Kentucky           |   |   | 17,017  |                               |   | 10.40                                    |   |   | 13,089 |   |   | 8.00 |   |   | 16,362 |   |   | 10.00 |   |
| **Tier                  1 Capital (to Average Assets)**       |   |   |    |                               |   |                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Consolidated                                                  |   | $      | 143,861 |                               |   | 9.59                                     | %      | $ | 59,992 |   |   | 4.00 | % |   | N/A |   |   | N/A |   |
| Farmers                  Bank & Capital Trust Co.         |   |   | 38,022  |                               |   | 6.55                                     |   |   | 23,216 |   |   | 4.00 |   | $ | 29,020 |   |   | 5.00 | % |
| Farmers                  Bank and Trust Company               |   |   | 22,316  |                               |   | 7.62                                     |   |   | 11,715 |   |   | 4.00 |   |   | 14,644 |   |   | 5.00 |   |
| Lawrenceburg                  National Bank                   |   |   | 12,112  |                               |   | 7.22                                     |   |   | 6,711 |   |   | 4.00 |   |   | 8,388 |   |   | 5.00 |   |
| First                  Citizens Bank                          |   |   | 14,323  |                               |   | 7.44                                     |   |   | 7,702 |   |   | 4.00 |   |   | 9,627 |   |   | 5.00 |   |
| United                  Bank & Trust Co.                  |   |   | 14,068  |                               |   | 7.49                                     |   |   | 7,514 |   |   | 4.00 |   |   | 9,392 |   |   | 5.00 |   |
| Citizens                  Bank of Northern Kentucky           |   |   | 15,591  |                               |   | 7.99                                     |   |   | 7,805 |   |   | 4.00 |   |   | 9,756 |   |   | 5.00 |   |

----

**18.**
**Fair        Value of Financial Instruments**

*Disclosures        About Fair Value of Financial Instruments*

|                                                                                                         |   |     |      |   |   |
|--------------------------------------------------------------------------------------------------------------|--------|----------|-----------|--------|--------|
| December                  31,                                                                                |   | 2006     |      | 2005   |   |
|                                                                                                         |   | Carrying |      | Fair   |   | Carrying |   | Fair |   |
| (In                  thousands)                                                                              |   | Amount   |      | Value  |   | Amount |   | Value |   |
| **Assets**                                                                                                   |   |     |      |   |   |   |   |   |   |   |   |   |   |
| Cash                  and cash equivalents                                                                   |   | $        | 156,828   |   | $      | 156,828 |   | $ | 131,018 |   | $ | 131,018 |   |
| Investment                  securities:                                                                      |   |     |      |   |   |   |   |   |   |   |   |   |   |
| Available                  for sale                                                                          |   |     | 326,485   |   |   | 326,485 |   |   | 315,067 |   |   | 315,067 |   |
| Held                  to maturity                                                                            |   |     | 7,788     |   |   | 7,849 |   |   | 13,610 |   |   | 13,814 |   |
| Loans,                  net                                                                                  |   |     | 1,185,837 |   |   | 1,161,656 |   |   | 951,502 |   |   | 938,816 |   |
| Accrued                  interest receivable                                                                 |   |     | 11,735    |   |   | 11,735 |   |   | 8,285 |   |   | 8,285 |   |
|                                                                                                         |   |     |      |   |   |   |   |   |   |   |   |   |   |
| **Liabilities**                                                                                              |   |     |      |   |   |   |   |   |   |   |   |   |   |
| Deposits                                                                                                     |   |     | 1,454,820 |   |   | 1,452,129 |   |   | 1,191,651 |   |   | 1,189,528 |   |
| Federal                  funds purchased and securities sold under agreements to                  repurchase |   |     | 67,941    |   |   | 67,941 |   |   | 71,336 |   |   | 71,336 |   |
| FHLB                  and other borrowings                                                                   |   |     | 70,995    |   |   | 79,796 |   |   | 50,296 |   |   | 57,381 |   |
| Subordinated                  notes payable to unconsolidated trusts                                         |   |     | 25,774    |   |   | 25,774 |   |   | 25,774 |   |   | 25,774 |   |
| Accrued                  interest payable                                                                    |   |     | 4,773     |   |   | 4,773 |   |   | 2,179 |   |   | 2,179 |   |

----

| **19.** | **Parent                  Company Financial                  Statements** |
|---------|---------------------------------------------------------------------------|

**Condensed        Balance Sheets**

|                                                                 |   |   |    |   |   |
|----------------------------------------------------------------------|--------|--------|---------|--------|--------|
| December                  31, (In thousands)                         |   | 2006   |    | 2005   |   |
| **Assets**                                                           |   |   |    |   |   |   |   |
| Cash                  on deposit with subsidiaries                   |   | $      | 11,103  |   | $      | 32,121 |   |
| Investment                  in subsidiaries                          |   |   | 192,459 |   |   | 165,091 |   |
| Net                  assets of discontinued operations               |   |   |    |   |   | 840 |   |
| Other                  assets                                        |   |   | 11,610  |   |   | 8,482 |   |
| Total                  assets                                        |   | $      | 215,172 |   | $      | 206,534 |   |
|                                                                 |   |   |    |   |   |   |   |
| **Liabilities**                                                      |   |   |    |   |   |   |   |
| Dividends                  payable                                   |   | $      | 3,472   |   | $      | 2,244 |   |
| Subordinated                  notes payable to unconsolidated trusts |   |   | 25,774  |   |   | 25,774 |   |
| Accrued                  purchase price-Citizens Bancorp, Inc.       |   |   |    |   |   | 21,846 |   |
| Other                  liabilities                                   |   |   | 7,485   |   |   | 2,434 |   |
| Total                  liabilities                                   |   |   | 36,731  |   |   | 52,298 |   |
|                                                                 |   |   |    |   |   |   |   |
| **Shareholders’                  Equity**                      |   |   |    |   |   |   |   |
| Common                  stock                                        |   |   | 1,174   |   |   | 1,107 |   |
| Capital                  surplus                                     |   |   | 56,679  |   |   | 39,829 |   |
| Retained                  earnings                                   |   |   | 167,387 |   |   | 156,796 |   |
| Treasury                  stock                                      |   |   | (42,399 | )      |   | (41,579 | ) |
| Accumulated                  other comprehensive loss                |   |   | (4,400  | )      |   | (1,917 | ) |
| Total                  shareholders’ equity                    |   |   | 178,441 |   |   | 154,236 |   |
| Total                  liabilities and shareholders’ equity    |   | $      | 215,172 |   | $      | 206,534 |   |

**Condensed        Statements of Income**

|                                                                                                                  |   |   |   |   |   |   |   |
|-----------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|
| Years                  Ended December 31, (In thousands)                                                              |   | 2006   |   | 2005   |   | 2004   |   |
| **Income**                                                                                                            |   |   |   |   |   |   |   |   |   |   |
| Dividends                  from subsidiaries                                                                          |   | $      | 9,086  |   | $      | 7,490  |   | $ | 8,457 |   |
| Interest                  income                                                                                      |   |   | 74     |   |   | 85     |   |   | 80 |   |
| Other                  dividend income                                                                                |   |   |   |   |   |   |   |   | 24 |   |
| Investment                  securities gains, net                                                                     |   |   |   |   |   |   |   |   | 250 |   |
| Gain                  on sale of discontinued operations                                                              |   |   | 9,442  |   |   |   |   |   |   |   |
| Other                  noninterest income                                                                             |   |   | 2,732  |   |   | 2,110  |   |   | 2,003 |   |
| Total                  income                                                                                         |   |   | 21,334 |   |   | 9,685  |   |   | 10,814 |   |
| **Expense**                                                                                                           |   |   |   |   |   |   |   |   |   |   |
| Interest                  expense-subordinated notes payable to unconsolidated                  trusts                |   |   | 1,747  |   |   | 623    |   |   |   |   |
| Interest                  expense on other borrowed funds                                                             |   |   | 186    |   |   |   |   |   |   |   |
| Noninterest                  expense                                                                                  |   |   | 4,021  |   |   | 3,290  |   |   | 3,417 |   |
| Total                  expense                                                                                        |   |   | 5,954  |   |   | 3,913  |   |   | 3,417 |   |
| Income                  before income tax benefit and equity in undistributed income of                  subsidiaries |   |   | 15,380 |   |   | 5,772  |   |   | 7,397 |   |
| Income                  tax expense (benefit)                                                                         |   |   | 2,321  |   |   | (772   | )      |   | (608 | ) |
| Income                  before equity in undistributed income of subsidiaries                                         |   |   | 13,059 |   |   | 6,544  |   |   | 8,005 |   |
| Equity                  in undistributed income of subsidiaries1                                                      |   |   | 8,313  |   |   | 9,228  |   |   | 5,387 |   |
| Net                  income                                                                                           |   | $      | 21,372 |   | $      | 15,772 |   | $ | 13,392 |   |

----

**Condensed        Statements of Cash Flows**

|                                                                                                                |   |   |    |   |   |   |   |
|---------------------------------------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|--------|
| Years                  Ended December 31, (In thousands)                                                            |   | 2006   |    | 2005   |   | 2004   |   |
| **Cash                  Flows From Operating Activities**                                                           |   |   |    |   |   |   |   |   |   |   |
| Net                  income                                                                                         |   | $      | 21,372  |   | $      | 15,772 |   | $ | 13,392 |   |
| Adjustments                  to reconcile net income to net cash provided by operating                  activities: |   |   |    |   |   |   |   |   |   |   |
| Gain                  on sale of discontinued operations                                                            |   |   | (9,442  | )      |   |   |   |   |   |   |
| Equity                  in undistributed income of subsidiaries                                                     |   |   | (8,313  | )      |   | (9,228 | )      |   | (5,387 | ) |
| Noncash                  stock option expense                                                                       |   |   | 52      |   |   |   |   |   | 39 |   |
| Gain                  on sale of available for sale investment securities                                           |   |   |    |   |   |   |   |   | (250 | ) |
| Change                  in other assets and liabilities, net                                                        |   |   | 3,925   |   |   | (793   | )      |   | 691 |   |
| Deferred                  income tax (benefit) expense                                                              |   |   | (742    | )      |   | 8      |   |   | (512 | ) |
| Net                  cash provided by operating activities                                                          |   |   | 6,852   |   |   | 5,759  |   |   | 7,973 |   |
| **Cash                  Flows From Investing Activities**                                                           |   |   |    |   |   |   |   |   |   |   |
| Proceeds                  from sale of available for sale investment securities                                     |   |   |    |   |   |   |   |   | 925 |   |
| Proceeds                  from disposal of discontinued operations                                                  |   |   | 19,875  |   |   |   |   |   |   |   |
| Investment                  in unconsolidated trusts                                                                |   |   |    |   |   | (774   | )      |   |   |   |
| Investment                  in nonbank subsidiaries                                                                 |   |   |    |   |   | (285   | )      |   | (1,600 | ) |
| Investment                  in bank subsidiary                                                                      |   |   | (629    | )      |   | (581   | )      |   | (4,000 | ) |
| Payment                  of prior year accrued purchase price-Citizens Bancorp,                  Inc.               |   |   | (21,846 | )      |   |   |   |   |   |   |
| Purchase                  of Citizens National Bancshares, Inc.                                                     |   |   | (15,041 | )      |   |   |   |   |   |   |
| Purchase                  of Citizens Bank (Kentucky), Inc.                                                         |   |   | (29     | )      |   | (2     | )      |   | (14,588 | ) |
| Purchase                  of company-owned life insurance                                                           |   |   | (1,579  | )      |   |   |   |   |   |   |
| Net                  cash used in investing activities                                                              |   |   | (19,249 | )      |   | (1,642 | )      |   | (19,263 | ) |
| **Cash                  Flows From Financing Activities**                                                           |   |   |    |   |   |   |   |   |   |   |
| Proceeds                  from short-term borrowings                                                                |   |   | 15,000  |   |   |   |   |   |   |   |
| Repayment                  of short-term borrowings                                                                 |   |   | (15,000 | )      |   |   |   |   |   |   |
| Dividends                  paid                                                                                     |   |   | (9,553  | )      |   | (8,949 | )      |   | (8,879 | ) |
| Purchase                  of common stock                                                                           |   |   | (820    | )      |   | (571   | )      |   | (178 | ) |
| Shares                  issued under Employee Stock Purchase Plan                                                   |   |   | 223     |   |   | 187    |   |   | 93 |   |
| Stock                  options exercised                                                                            |   |   | 1,529   |   |   | 771    |   |   | 1,755 |   |
| Proceeds                  from long-term debt issued to unconsolidated trusts                                       |   |   |    |   |   | 25,774 |   |   |   |   |
| Net                  cash (used in) provided by financing activities                                                |   |   | (8,621  | )      |   | 17,212 |   |   | (7,209 | ) |
| Net                  (decrease) increase in cash and cash equivalents                                               |   |   | (21,018 | )      |   | 21,329 |   |   | (18,499 | ) |
| Cash                  and cash equivalents at beginning of year                                                     |   |   | 32,121  |   |   | 10,792 |   |   | 29,291 |   |
| Cash                  and cash equivalents at end of year                                                           |   | $      | 11,103  |   | $      | 32,121 |   | $ | 10,792 |   |

----

| **20.** | **Quarterly                  Financial Data (Unaudited)** |
|---------|-----------------------------------------------------------|

|                                                                      |   |                      |   |                     |   |                      |   |                     |   |
|---------------------------------------------------------------------------|--------|---------------------------|--------|--------------------------|--------|---------------------------|--------|--------------------------|--------|
| (In                  thousands, except per share data)                    |   |                      |   |                     |   |                      |   |                     |   |
| Quarters                  Ended 2006                                      |   | March                  31 |   | June                  30 |   | Sept.                  30 |   | Dec.                  31 |   |
| Interest                  income                                          |   | $                         | 20,883 |                     | $      | 21,669                    |   | $                        | 22,835 |   | $ | 26,953 |   |
| Interest                  expense                                         |   |                      | 8,567  |                     |   | 9,427                     |   |                     | 10,447 |   |   | 12,991 |   |
| Net                  interest income                                      |   |                      | 12,316 |                     |   | 12,242                    |   |                     | 12,388 |   |   | 13,962 |   |
| Provision                  for loan losses                                |   |                      | (34    | )                        |   | (46                       | )      |                     | 253    |   |   | 792 |   |
| Net                  interest income after provision for loan losses      |   |                      | 12,350 |                     |   | 12,288                    |   |                     | 12,135 |   |   | 13,170 |   |
| Noninterest                  income                                       |   |                      | 5,056  |                     |   | 4,991                     |   |                     | 5,015  |   |   | 5,397 |   |
| Noninterest                  expense                                      |   |                      | 12,507 |                     |   | 12,434                    |   |                     | 12,901 |   |   | 15,535 |   |
| Income                  from continuing operations before income taxes    |   |                      | 4,899  |                     |   | 4,845                     |   |                     | 4,249  |   |   | 3,032 |   |
| Income                  tax expense from continuing operations            |   |                      | 910    |                     |   | 967                       |   |                     | 966    |   |   | 517 |   |
| Income                  from continuing operations                        |   |                      | 3,989  |                     |   | 3,878                     |   |                     | 3,283  |   |   | 2,515 |   |
| Income                  from discontinued operations before income taxes1 |   |                      | 567    |                     |   | 599                       |   |                     | 713    |   |   | 9,963 |   |
| Income                  tax expense from discontinued operations2         |   |                      | 165    |                     |   | 171                       |   |                     | 250    |   |   | 3,549 |   |
| Income                  from discontinued operations                      |   |                      | 402    |                     |   | 428                       |   |                     | 463    |   |   | 6,414 |   |
| Net                  income                                               |   | $                         | 4,391  |                     | $      | 4,306                     |   | $                        | 3,746  |   | $ | 8,929 |   |
| Income                  from continuing operations - basic and diluted    |   | $                         | .54    |                     | $      | .52                       |   | $                        | .45    |   | $ | .32 |   |
| Income                  from discontinued operations - basic and diluted  |   |                      | .05    |                     |   | .06                       |   |                     | .06    |   |   | .81 |   |
| Net                  income per common share, basic and diluted           |   |                      | .59    |                     |   | .58                       |   |                     | .51    |   |   | 1.13 |   |
| Weighted                  average shares outstanding, basic               |   |                      | 7,385  |                     |   | 7,378                     |   |                     | 7,393  |   |   | 7,884 |   |
| Weighted                  average shares outstanding, diluted             |   |                      | 7,413  |                     |   | 7,400                     |   |                     | 7,412  |   |   | 7,904 |   |

|                                                                     |   |                      |   |                     |   |                      |   |                     |   |
|--------------------------------------------------------------------------|--------|---------------------------|--------|--------------------------|--------|---------------------------|--------|--------------------------|--------|
| (In                  thousands, except per share data)                   |   |                      |   |                     |   |                      |   |                     |   |
| Quarters                  Ended 2005                                     |   | March                  31 |   | June                  30 |   | Sept.                  30 |   | Dec.                  31 |   |
| Interest                  income                                         |   | $                         | 15,127 |                     | $      | 15,722                    |   | $                        | 16,369 |   | $ | 18,433 |   |
| Interest                  expense                                        |   |                      | 5,237  |                     |   | 5,616                     |   |                     | 6,260  |   |   | 7,296 |   |
| Net                  interest income                                     |   |                      | 9,890  |                     |   | 10,106                    |   |                     | 10,109 |   |   | 11,137 |   |
| Provision                  for loan losses                               |   |                      | (12    | )                        |   | 31                        |   |                     | 348    |   |   | 255 |   |
| Net                  interest income after provision for loan losses     |   |                      | 9,902  |                     |   | 10,075                    |   |                     | 9,761  |   |   | 10,882 |   |
| Noninterest                  income                                      |   |                      | 5,362  |                     |   | 4,984                     |   |                     | 4,852  |   |   | 4,669 |   |
| Noninterest                  expense                                     |   |                      | 10,547 |                     |   | 10,372                    |   |                     | 10,503 |   |   | 10,742 |   |
| Income                  from continuing operations before income taxes   |   |                      | 4,717  |                     |   | 4,687                     |   |                     | 4,110  |   |   | 4,809 |   |
| Income                  tax expense from continuing operations           |   |                      | 992    |                     |   | 1,131                     |   |                     | 699    |   |   | 969 |   |
| Income                  from continuing operations                       |   |                      | 3,725  |                     |   | 3,556                     |   |                     | 3,411  |   |   | 3,840 |   |
| Income                  from discontinued operations before income taxes |   |                      | 448    |                     |   | 440                       |   |                     | 656    |   |   | 179 |   |
| Income                  tax expense from discontinued operations         |   |                      | 117    |                     |   | 108                       |   |                     | 214    |   |   | 44 |   |
| Income                  from discontinued operations                     |   |                      | 331    |                     |   | 332                       |   |                     | 442    |   |   | 135 |   |
| Net                  income                                              |   | $                         | 4,056  |                     | $      | 3,888                     |   | $                        | 3,853  |   | $ | 3,975 |   |
| Income                  from continuing operations - basic               |   |  $                   | .55    |                     | $      | .52                       |   | $                        | .51    |   | $ | .55 |   |
| Income                  from discontinued operations - basic             |   |                      | .05    |                     |   | .05                       |   |                     | .06    |   |   | .02 |   |
| Net                  income per common share, basic                      |   |                      | .60    |                     |   | .57                       |   |                     | .57    |   |   | .57 |   |
| Income                  from continuing operations - diluted             |   |                      | .54    |                     |   | .52                       |   |                     | .50    |   |   | .55 |   |
| Income                  from discontinued operations - diluted           |   |                      | .05    |                     |   | .05                       |   |                     | .06    |   |   | .02 |   |
| Net                  income per common share, diluted                    |   |                      | .59    |                     |   | .57                       |   |                     | .56    |   |   | .57 |   |
| Weighted                  average shares outstanding, basic              |   |                      | 6,791  |                     |   | 6,781                     |   |                     | 6,786  |   |   | 6,963 |   |
| Weighted                  average shares outstanding, diluted            |   |                      | 6,839  |                     |   | 6,818                     |   |                     | 6,821  |   |   | 6,991 |   |

| **21.** | **Business                  Combination - Citizens National Bancshares,                  Inc.** |
|---------|-------------------------------------------------------------------------------------------------|

----

| (In                  thousands)                                              |   | October                  1, 2006 |    |
|------------------------------------------------------------------------------|--------|----------------------------------|---------|
|                                                                         |   |                             |    |
| **Assets**                                                                   |   |                             |    |   |
| Cash                  and equivalents                                        |   | $                                | 16,307  |   |
| Investment                  securities                                       |   |                             | 13,391  |   |
| Loans,                  net of unearned income and allowance for loan losses |   |                             | 119,659 |   |
| Premises                  and equipment, net                                 |   |                             | 3,424   |   |
| Goodwill                                                                     |   |                             | 14,570  |   |
| Core                  deposit intangible                                     |   |                             | 4,524   |   |
| Other                  assets                                                |   |                             | 4,407   |   |
| Total                  assets                                                |   | $                                | 176,282 |   |
|                                                                         |   |                             |    |   |
| **Liabilities**                                                              |   |                             |    |   |
| Deposits                                                                     |   | $                                | 139,441 |   |
| Short-term                  borrowings                                       |   |                             | 2,880   |   |
| Other                  liabilities                                           |   |                             | 3,724   |   |
| Total                  liabilities                                           |   |                             | 146,045 |   |
|                                                                         |   |                             |    |   |
| **Net                  Assets Acquired**                                     |   | $                                | 30,237  |   |
|                                                                         |   |                             |    |   |

| **22.** | **Goodwill                  and Intangible Assets** |
|---------|-----------------------------------------------------|

**Goodwill**

|                                                                           |   |   |   |   |   |
|--------------------------------------------------------------------------------|--------|--------|--------|--------|--------|
| (In                  thousands)                                                |   | 2006   |   | 2005   |   |
| Beginning                  of year                                             |   | $      | 28,437 |   | $      | 7,509 |   |
| Purchase                  price refinements of prior years’ acquisitions |   |   | 211    |   |   | 206 |   |
| Acquired                  goodwill                                             |   |   | 14,174 |   |   | 20,722 |   |
| End                  of year                                                   |   | $      | 42,822 |   | $      | 28,437 |   |

**Acquired        Intangible Assets**

|                                                                         |   |        |   |                    |   |
|------------------------------------------------------------------------------|--------|-------------|--------|-------------------------|--------|
|                                                                         |   | 2006        |   | 2005                    |   |
| Amortized                  Intangible Assets (In                  thousands) |   | GrossAmount |   | AccumulatedAmortization |   | GrossAmount |   | AccumulatedAmortization |   |
| Core                  deposit intangibles                                    |   | $           | 10,890 |                    | $      | 2,541 |   | $ | 6,112 |   | $ | 634 |   |
| Other                  customer relationship intangibles                     |   |        | 2,414  |                    |   | 1,008 |   |   | 2,414 |   |   | 621 |   |
| Total                                                                        |   | $           | 13,304 |                    | $      | 3,549 |   | $ | 8,526 |   | $ | 1,255 |   |

----

|                            |   |   |   |
|---------------------------------|--------|--------|--------|
| (In                  thousands) |   | Amount |   |
| 2007                            |   | $      | 2,475  |   |
| 2008                            |   |   | 1,880  |   |
| 2009                            |   |   | 1,425  |   |
| 2010                            |   |   | 1,070  |   |
| 2011                            |   |   | 899    |   |

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

Item        9A. Controls and        Procedures

**Evaluation        of Disclosure Controls and Procedures**

*Definition        of “Material Weakness” and of “Significant Deficiency.” *

*Non-Routine        Change; Situation Deemed by Management to Reflect a Significant Deficiency.        *

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|   | · | the                  amount (including estimated potential amounts), net of tax, that                  could                  have been accrued for the PTO policy represents only approximately                  5.0% of                  our 2006 net income; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the                  under-accrual in question is an isolated event in our accounting                  history;                  and |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the                  amount required under GAAP in 2006 for the PTO policy is not                  representative of the cost that will be accrued in future periods.                  Due to                  the facts that (i) upon adoption of the new PTO policy each of                  our                  employees was granted a start-up PTO balance of between one to                  two weeks                  and (ii) our employees in future periods will not be able to accumulate                  PTO days as quickly as was the case in 2006 due to the Carry Over                  Limitation, we anticipate that the level of accrual required for                  our PTO                  policy in future periods will not require a substantial increase                  beyond                  the amount that has been accrued and reflected in our year end                  financial                  statements. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Remediation        of Significant Deficiency. *

|   | · | Revise                  our procedures related to internal control over financial reporting                  with                  respect to any complex or non-routine change (including changes                  in                  compensation policies) to require the Chief Financial Officer or                  other                  senior financial reporting employee to document in writing the                  results of                  their evaluation of potential accounting changes and financial                  reporting                  changes that would occur from such complex or non-routine change. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Implement                  a monitoring system for the differences between drafts and final                  documentation relating to complex or non-routine changes to evaluate                  whether the accounting and financial reporting requirements have                  changed. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Increase                  communication by and among our senior management and financial                  reporting                  employees and other third parties relevant to the disclosure                  process. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Retain                  our procedures of ensuring that our Chief Financial Officer be                  made aware                  of and involved in any complex or non-routine contemplated change                  so that                  any potential tax, accounting and financial reporting issues may                  be                  evaluated. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Retain                  our procedure of encouraging our Chief Financial Officer and other                  senior                  financial reporting employees to contact outside financial experts                  and                  consultants, if deemed advisable, to discuss potential tax, accounting                  and/or financial reporting issues regarding a complex or non-routine                  contemplated change. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Conclusion*

----

**Management’s        Report on Internal Control Over Financial Reporting**

*Management        Responsibility. *

*General        Description of Internal Control over Financial Reporting. *

|   | · | Pertain                  to the maintenance of records that in reasonable detail accurately                  and                  fairly reflect the transactions and dispositions of Company                  assets; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Provide                  reasonable assurance that transactions are recorded as necessary                  to permit                  preparation of financial statements in accordance with generally                  accepted                  accounting principles, and that Company’s receipts and expenditures are                  being made only in accordance with the authorization of Company’s                  management and members of the Company’s Board of Directors;                  and |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Provide                  reasonable assurance regarding prevention or timely detection of                  unauthorized acquisitions, uses or dispositions of Company assets                  that                  could have a material effect on the Company’s financial                  statements. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Inherent        Limitations in Internal Control over Financial Reporting. *

*Management’s        Assessment of the Company’s Internal Control over Financial Reporting.*

*Auditor        Assessment. *

----

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

----

----

Item        9B. Other Information

Item        10. Directors, Executive Officers and Corporate        Governance

|                                |   | Positions                  and                | Years                  of Service |
|-------------------------------------|--------|-----------------------------------------------|-----------------------------------|
|                                |   | Offices                  With                 | With                  the         |
| Executive                  Officer1 | Age    | the                  Registrant               | Registrant                        |
| G.                  Anthony Busseni | 58     | President                  and CEO, Director2 | 22*                               |
|                                |   |                                               |                              |
| Allison                  B. Gordon  | 43     | Senior                  Vice President3       | 20*                               |

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

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

| 2 | Also                  a director of Farmers Bank, Citizens Jessamine, Farmers Georgetown,                  United                  Bank, Lawrenceburg Bank, First Citizens Bank, Citizens Northern,                  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

----

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 41        through 74:

Report        of Independent Registered Public Accounting Firm on        Financial Statements

Consolidated        Balance Sheets

Consolidated        Statements of Income

Consolidated        Statements of Comprehensive        Income

Consolidated        Statements of Changes in Shareholders’Equity

Consolidated        Statements of Cash Flows

Notes        to Consolidated Financial        Statements

| (a)2. | Financial                  Statement Schedules |
|-------|------------------------------------------------|

| (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, 2006). |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 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,                  2006, 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 Certifications Pursuant to 18 U.S.C.                  Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley                  Act                  of 2002 |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

SIGNATURES

|   | FARMERS                  CAPITAL BANK CORPORATION |                                                   |
|--------|---------------------------------------------------|--------------------------------------------------------|
|   |                                              |                                                   |   |
|   |                                              |                                                   |   |
|   | By:                                               |  /s/G.                Anthony Busseni             |   |
|   |                                              | G.                  Anthony Busseni                    |   |
|   |                                              | President                  and Chief Executive Officer |   |
|   |                                              |                                                   |   |
|   |                                              |                                                   |   |
|   | Date:                                             |  March                6, 2007                     |   |

|  /s/G.                Anthony Busseni     | President,                  Chief Executive Officer |  March                6, 2007 |
|------------------------------------------------|-----------------------------------------------------|------------------------------------|
| G.                  Anthony Busseni            | and                  Director (principal executive  |                               |
|                                           | officer                  of the Registrant)         |                               |
|                                           |                                                |                               |
| /s/ Frank                W. Sower, Jr.    | Chairman                                            |  3-6-07                       |
| Frank                  W. Sower, Jr.           |                                                |                               |
|                                           |                                                |                               |
| /s/ Frank                R. Hamilton, Jr. | Director                                            |  3-7-07                       |
| Frank                  R. Hamilton, Jr.        |                                                |                               |
|                                           |                                                |                               |
| /s/ Lloyd                C. Hillard, Jr.  | Director                                            |  3-5-07                       |
| Lloyd                  C. Hillard, Jr.         |                                                |                               |
|                                           |                                                |                               |
| /s/ Cecil                D. Bell, Jr.     | Director                                            |  3-2-07                       |
| Cecil                  D. Bell, Jr.            |                                                |                               |
|                                           |                                                |                               |
| /s/ Shelley Sweeney                  | Director                                            |  3-9-07                       |
| Shelley                  S. Sweeney            |                                                |                               |
|                                           |                                                |                               |
| /s/ Donald                J. Mullineaux   | Director                                            |  3/6/07                       |
| Dr.                  Donald J. Mullineaux      |                                                |                               |
|                                           |                                                |                               |
| /s/ Harold                G Mays          | Director                                            |  3-3-07                       |
| Harold                  G. Mays                |                                                |                               |
|                                           |                                                |                               |
| /s/                J.D. Sutterlin              | Director                                            |  3/2/07                       |
| Dr.                  John D. Sutterlin         |                                                |                               |
|                                           |                                                |                               |
| /s/ Michael                M. Sullivan    | Director                                            |  March                5, 2007 |
| Michael                  M. Sullivan           |                                                |                               |
|                                           |                                                |                               |
| /s/ J.                Barry Banker        | Director                                            |  3-5-07                       |
| J.                  Barry Banker               |                                                |                               |
|                                           |                                                |                               |
| /s/ Robert                Roach Jr.       | Director                                            |  March                6, 2007 |
| Robert                  Roach, Jr.             |                                                |                               |
|                                           |                                                |                               |
| /s/ Doug                Carpenter         | Senior                  Vice President, Secretary   |  3-6-07                       |
| C.                  Douglas Carpenter          | and                  CFO (principal financial and   |                               |
|                                           | accounting                  officer)                |                               |

----

INDEX        OF EXHIBITS

| Exhibit |                                                                                                                                                                                                   | Page   |
|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|    |                                                                                                                                                                                                   |   |
|    |                                                                                                                                                                                                   |   |
| 21      | Subsidiaries                  of the Registrant                                                                                                                                                        | 84     |
|    |                                                                                                                                                                                                   |   |
| 23      | Consent                  of Independent Registered Public                  Accounting Firm                                                                                                             | 86     |
|    |                                                                                                                                                                                                   |   |
| 31.1    | CEO                  Certification Pursuant to Section 302 of the                  Sarbanes-Oxley Act of 2002                                                                                          | 87     |
|    |                                                                                                                                                                                                   |   |
| 31.2    | CFO                  Certification Pursuant to Section 302 of the                  Sarbanes-Oxley Act of 2002                                                                                          | 88     |
|    |                                                                                                                                                                                                   |   |
| 32      | CEO                  and CFO Certifications Pursuant to 18 U.S.C.                  Section 1350, as AdoptedPursuant                  to Section 906 of the Sarbanes-Oxley Act of                  2002 | 89     |

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