UNITED STATES SECURITIES AND EXCHANGE
COMMISSION

Washington, D.C. 20549

FORM 10-QSB

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

For the quarterly period
ended September 30, 2004

OR

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

Commission File No:
000-49781

First Security Bancorp,
Inc.

(Name of small business issuer
in its charter)

|Kentucky                                                      |  | 61-1364206                         
|------------------------------------------------------------- |  | -----------------------------------
|                                                              |  |                                    
|(State of other jurisdiction ofincorporation or organization) |  | (I.R.S. EmployerIdentification No.)

| | 318 East Main Street, Lexington, Kentucky 40507 | 
| | ----------------------------------------------- | 
| |                                                 | 
| | (Address of principal executive offices)        | 

| | (859) 367-3700              | 
| | --------------------------- | 
| | (Issuers telephone number) | 

Check whether the issuer: (1) filed
all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the
past 12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]

State the number of shares
outstanding of each of the issuers classes of common equity, as of the latest
practicable date: 1,558,690 shares of common stock as of November 10, 2004.

Transitional Small Business
Disclosure format (check one): Yes [ ] No[X]

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FIRST SECURITY BANCORP, INC.

TABLE OF CONTENTS

PART I - FINANCIAL
INFORMATION

Item 1.  Financial
Statements 
Item 2.  Managements Discussion and Analysis or Plan of Operation
Item 3.  Controls and Procedures

PART II - OTHER INFORMATION
Item 6.  Exhibits

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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements

FIRST SECURITY BANCORP, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Amounts in thousands, except for per share data)

---

|                                                     |                              |                  |                             
|---------------------------------------------------- | ---------------------------- | ---------------- | ----------------------------
|                                                     | (Unaudited)September 30,2004 | December 31,2003 | (Unaudited)September 30,2003
|ASSETS                                               |                              |                  |                             
|Cash and due from banks                              |                              |                  | $                           
|Federal funds sold                                   |                              |                  |                             
|                                                     |                              |                  |                             
|Total cash and cash equivalent                       |                              |                  |                             
|Securities available-for-sale                        |                              |                  |                             
|Loans held for sale                                  |                              |                  |                             
|Loans, net of allowance of $1,796, $2,379 and $2,224 |                              |                  |                             
|Federal Home Loan Bank stock                         |                              |                  |                             
|Foreclosed assets                                    |                              |                  |                             
|Premises and equipment, net                          |                              |                  |                             
|Goodwill                                             |                              |                  |                             
|Other intangible assets                              |                              |                  |                             
|Accrued interest receivable and other assets         |                              |                  |                             
|                                                     |                              |                  |                             
|                                                     |                              |                  | $                           
|                                                     |                              |                  |                             
|                                                     |                              |                 
|                                                     |                              |                 
|LIABILITIES AND SHAREHOLDERS' EQUITY                 |                              |                 
|Liabilities                                          |                              |                 
|Deposits                                             |                              |                 
|Noninterest bearing                                  |                              |                  | $                           
|Interest bearing                                     |                              |                  |                             
|                                                     |                              |                  |                             
|Total deposits                                       |                              |                  |                             
|Federal funds purchased and repurchase agreements    |                              |                  |                             
|Federal Home Loan Bank advances                      |                              |                  |                             
|Note Payable                                         |                              |                  |                             
|Accrued interest payable and other liabilities       |                              |                  |                             
|                                                     |                              |                  |                             
|Total liabilities                                    |                              |                  |                             
|                                                     |                              |                 
|                                                     |                              |                 
|Commitments and contingent liabilities               |                              |                 
|Shareholders' equity                                 |                              |                 
|Common stock, no par value:  5,000,000 shares        |                              |                 
|authorized; September 30, 2004 and December 31, 2003 |                              |                 
|- 1,558,690 shares issued, September 30, 2003 -      |                              |                 
|1,482,246 shares issued                              |                              |                  |                             
|Additional paid-in capital                           |                              |                  |                             
|Retained earnings                                    |                              |                  |                             
|Accumulated other comprehensive income (loss)        |                              |                  |                             
|                                                     |                              |                  |                             
|Total shareholders' equity                           |                              |                  |                             
|                                                     |                              |                  |                             
|                                                     |                              |                  | $                           
|                                                     |                              |                  |                             
|                                                     |                              |                 

See Notes to Consolidated Condensed Financial Statements
Page 1 of 27

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FIRST SECURITY BANCORP, INC.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME (Unaudited)
For the Three and Nine Month Periods Ended September 30
(Amounts in thousands, except for per share data)

---

|                                                    |                    |                   |      |      
|--------------------------------------------------- | ------------------ | ----------------- | ---- | -----
|                                                    | Three Months Ended | Nine Months Ended
|                                                    | September 30,      | September 30,    
|                                                    | 2004               | 2003              | 2004 | 2003 
|Interest Income                                     |                    |                   |      |      
|Loans, including fees                               |                    |                   | $    | 2,232
|Taxable securities                                  |                    |                   |      | 382  
|Tax exempt securities                               |                    |                   |      | 7    
|Federal funds sold and other                        |                    |                   |      | 18   
|                                                    |                    |                   |      |      
|                                                    |                    |                   |      | 2,639
|                                                    |                    |                   |      |      
|Interest expense                                    |                    |                  
|Deposits                                            |                    |                   |      | 883  
|Federal funds purchased and repurchase agreements   |                    |                   |      | 19   
|Federal Home Loan Bank advances                     |                    |                   |      | 98   
|Note payable and other debt                         |                    |                   |      | 54   
|                                                    |                    |                   |      |      
|                                                    |                    |                   |      | 1,054
|                                                    |                    |                   |      |      
|Net interest income                                 |                    |                   |      | 1,585
|Provision for loan losses                           |                    |                   |      | 222  
|                                                    |                    |                   |      |      
|Net interest income after provision for loan losses |                    |                   |      | 1,363
|Noninterest income                                  |                    |                  
|Service charges on deposit accounts                 |                    |                   |      | 171  
|Net gains on sales of loans                         |                    |                   |      | 96   
|Net gains on sales of securities                    |                    |                   |      | 50   
|Net loss on sale of intangible assets               |                    |                   |      | (106 
|Other                                               |                    |                   |      | 44   
|                                                    |                    |                   |      |      
|                                                    |                    |                   |      | 255  
|                                                    |                    |                   |      |      
|Noninterest expense                                 |                    |                  
|Salaries and employee benefits                      |                    |                   |      | 753  
|Occupancy and equipment                             |                    |                   |      | 275  
|Data processing                                     |                    |                   |      | 126  
|Legal and professional fees                         |                    |                   |      | 138  
|Advertising                                         |                    |                   |      | 56   
|Other                                               |                    |                   |      | 281  
|                                                    |                    |                   |      |      
|                                                    |                    |                   |      | 1,629
|                                                    |                    |                   |      |      
|Income (loss) before income taxes                   |                    |                   |      | (11  
|Income tax expense (benefit)                        |                    |                   |      | (10  
|                                                    |                    |                   |      |      
|Net income (loss)                                   |                    |                   | $    | (1   
|                                                    |                    |                   |      |      
|Weighted average common shares outstanding          |                    |                  
|(shares in thousands):                              |                    |                  
|Basic                                               |                    |                   |      | 1,559
|Diluted                                             |                    |                   |      | 1,563
|Earnings per share                                  |                    |                  
|Basic                                               |                    |                   | $    | --   
|Diluted                                             |                    |                   | $    | --   

See Notes to
Consolidated Condensed Financial Statements
Page 2 of 27

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FIRST SECURITY BANCORP, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CHANGE IN SHAREHOLDERS' EQUITY (Unaudited)
(Share and dollar amounts in thousands)

---

|                                    |              |         |          |                               |                    |       
|----------------------------------- | ------------ | ------- | -------- | ----------------------------- | ------------------ | ------
|                                    | Common Stock | Paid-In | Retained | AccumulatedOtherComprehensive | TotalShareholders'
|                                    | Shares       | Amount  | Capital  | Earnings                      | Income             | Equity
|                                   
|Balance, January 1, 2004            |              |         |          | 1,559                         |                    | $     
|                                   
|Comprehensive Income:               |              |        
|Net income                          |              |         |          | --                            |                    |       
|                                   
|Change in unrealized gain (loss) on |              |        
|securities available for sale,      |              |        
|net of reclassification             |              |        
|and tax effects                     |              |         |          | --                            |                    |       
|                                    |              |         |          |                               |                    |       
|Total comprehensive income (loss)   |              |         |          |                               |                    |       
|                                    |              |         |          |                               |                    |       
|Balance, September 30, 2004         |              |         |          | 1,559                         |                    | $     
|                                    |              |         |          |                               |                    |       

See Notes to Consolidated Condensed Financial Statements
Page 3 of 27

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FIRST SECURITY BANCORP, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
For the Nine Month Periods Ended September 30,
(Dollar amounts in thousands, except for per share data)

---

|                                                              |      |     
|------------------------------------------------------------- | ---- | ----
|                                                              | 2004 | 2003
|Cash flows from operating activities                          |      |     
|Net income                                                    |      |     
|Adjustments to reconcile net income to net                    |      |     
|cash from operating activities:                               |      |     
|Provision for loan losses                                     |      |     
|Depreciation and amortization                                 |      |     
|Net amortization of securities                                |      |     
|Net realized gain on sale of securities                       |      |     
|Federal Home Loan Bank stock dividends                        |      |     
|Originations of loans held for sale                           |      |     
|Proceeds from sale of loans                                   |      |     
|Net gains on sales of loans                                   |      |     
|Net change in:                                                |      |     
|Accrued interest receivable                                   |      |     
|Other assets                                                  |      |     
|Accrued interest payable                                      |      |     
|Other liabilities                                             |      |     
|                                                              |      |     
|Net cash from operating activities                            |      |     
|                                                             
|Cash flows from investing activities                          |      |     
|Activity in available-for-sale securities:                    |      |     
|Maturities and principal repayments                           |      |     
|Sales                                                         |      |     
|Purchases                                                     |      |     
|Net change in loans                                           |      |     
|Proceeds of sale of goodwill and intangible assets            |      |     
|Loss on sale of goodwill and intangible assets                |      |     
|Net change in foreclosed assets                               |      |     
|Purchases of Federal Home Loan Bank stock                     |      |     
|Purchases of premises and equipment, net                      |      |     
|                                                              |      |     
|Net cash from investing activities                            |      |     
|                                                             
|Cash flows from financing activities                          |      |     
|Net change in deposits                                        |      |     
|Net change in repurchase agreements and short-term borrowings |      |     
|Repayments of Federal Home Loan Bank advances                 |      |     
|Proceeds from issuance of common stock                        |      |     
|                                                              |      |     
|Net cash from financing activities                            |      |     
|                                                              |      |     
|Net change in cash and cash equivalents                       |      |     
|Cash and cash equivalents at beginning of period              |      |     
|                                                              |      |     
|Cash and cash equivalents at end of period                    |      |     
|                                                              |      |     
|Supplemental cash flow information:                           |      |     
|Interest paid                                                 |      |     
|Income tax paid                                               |      |     

See Notes to Consolidated Condensed Financial Statements
Page 4 of 27

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FIRST SECURITY BANCORP, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited)
September 30, 2004

---

NOTE 1 - SUMMARY OF
 SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation: The
accompanying unaudited consolidated condensed financial statements of First Security
Bancorp, Inc. (the First Security) and its wholly-owned subsidiary First
Security Bank of Lexington, Inc. (FS Bank) have been prepared in accordance
with accounting principles generally accepted in the United States of America for interim
financial information and with the instructions of Form 10-QSB. Accordingly, they do not
include all of the information and footnotes required by accounting principles generally
accepted in the United States of America for complete financial statements. The
accompanying unaudited consolidated condensed financial statements should be read in
conjunction with the consolidated financial statements and notes thereto included in First
Securitys Form 10-KSB annual report for 2003 filed with the Securities and Exchange
Commission. In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included. The
consolidated condensed balance sheet of First Security as of December 31, 2003 has been
derived from the audited consolidated balance sheet of First Security. Where appropriate,
some items in the prior period financial statements have been reclassified to conform to
the current presentation. Unless otherwise indicated within the text, dollars are
presented in thousands except for per share data and all data is presented as of or for
the periods ended September 30, 2004 and 2003.

Accounting and Reporting Policies:
The accounting and reporting policies of First Security and FS Bank conform to accounting
principles generally accepted in the United States of America and to predominant practices
within the banking industry. The following summary of significant policies used in the
preparation of First Securitys financial statements should be read in light of a
more detailed discussion of all significant policies appearing in First Securitys
Form 10-KSB as of and for the period ended December 31, 2003.

Operating Segments: Internal
financial information is primarily recorded and aggregated in three lines of business,
retail banking, commercial banking and mortgage banking. While management monitors the
revenue streams of the various products and services, the identifiable segments are not
material and operations are managed and financial performance is evaluated on a
company-wide basis. Accordingly, all financial service operations are considered by
management to be aggregated within one reportable operating segment.

Operating Results: Operating results
for the nine month period ended September 30, 2004 are not necessarily indicative of the
results that may be expected for the year ended December 31, 2004.

Stock Compensation: Employee
compensation expense under stock options is reported using the intrinsic value method.
Stock-based compensation cost for options granted employees with an exercise price less
than the market price of the underlying common stock at the date of the grant if material,
is reflected in net income. No stock-based compensation cost for options granted employees
and directors with an exercise price equal to or greater than the market price of the
underlying common stock at the date of grant is reflected in net income.

The following table illustrates the
effect on net income and earnings per share if expense was measured for options granted
using the fair value recognition provisions of FASB Statement No. 123, Accounting for
Stock-Based Compensation. Amounts are in thousands, except for per share data.

|                                                 |                    |      |                   |     
|------------------------------------------------ | ------------------ | ---- | ----------------- | ----
|                                                 | Three Months Ended |      | Nine Months Ended |     
|                                                 | September 30       |      | September 30      |     
|                                                 | 2004               | 2003 | 2004              | 2003
|Net income (loss) as reported                    |                    |      | $                 | (1  
|Add or deduct:  Stock-based compensation         |                    |     
|expense determined under fair value based method |                    |      |                   | 6   
|                                                 |                    |      |                   |     
|Pro forma net income                             |                    |      | $                 | 5   
|                                                 |                    |      |                   |     
|Basic earnings per share as reported             |                    |      | $                 | --  
|Pro forma basic earnings per share               |                    |      | $                 | --  
|Diluted earnings per share as reported           |                    |      | $                 | --  
|Pro forma diluted earnings per share             |                    |      | $                 | --  

Page 5 of 27

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FIRST SECURITY BANCORP, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited)
September 30, 2004

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NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

For the quarters ended September 30, 2004 and
2003, the stock based compensation expense was negative (reduction in expense) because of forfeitures of options
occurring during those periods.

NOTE 2 - SECURITIES

The fair value of available-for-sale
securities and the related gross unrealized gains and losses recognized in accumulated
other comprehensive income were as follows as of the dates indicated:

|                                   |       |            |           
|---------------------------------- | ----- | ---------- | ----------
|                                   | Gross | Gross     
|                                   | Fair  | Unrealized | Unrealized
|                                   | Value | Gains      | Losses    
|September 30, 2004                 |       |            |           
|U.S. Government and federal agency |       |            | $         
|State and municipal                |       |            |           
|Mortgage-backed                    |       |            |           
|                                   |       |            |           
|Total                              |       |            | $         
|                                   |       |            |           
|December 31, 2003                  |       |           
|U.S. Government and federal agency |       |            | $         
|State and municipal                |       |            |           
|Mortgage-backed                    |       |            |           
|                                   |       |            |           
|Total                              |       |            | $         
|                                   |       |            |           
|September 30, 2003                 |       |           
|U.S. Government and federal agency |       |            | $         
|State and municipal                |       |            |           
|Mortgage-backed                    |       |            |           
|                                   |       |            |           
|Total                              |       |            | $         
|                                   |       |            |           

Securities with unrealized losses at
September 30, 2004, aggregated by investment category and length of time that individual
securities have been in a continuous unrealized loss position, are as follows:

|                          |                   |                     |       |            |       |           
|------------------------- | ----------------- | ------------------- | ----- | ---------- | ----- | ----------
|                          | 12 Months or Less | More than 12 Months | Total
|                          | Fair              | Unrealized          | Fair  | Unrealized | Fair  | Unrealized
|                          | Value             | Loss                | Value | Loss       | Value | Loss      
|Description of Securities |                   |                     |       |            |       |           
|U.S. Government and       |                   |                    
|federal agency            |                   |                     | $     | 8,495      |       | $         
|State and municipal       |                   |                     |       | --         |       |           
|Mortgage-backed           |                   |                     |       | 5,172      |       |           
|                          |                   |                     |       |            |       |           
|Total temporarily         |                   |                    
|impaired with stated      |                   |                    
|maturities                |                   |                     | $     | 13,667     |       | $         
|                          |                   |                     |       |            |       |           

Page 6 of 27

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FIRST SECURITY BANCORP, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited)
September 30, 2004

---

NOTE 2 - SECURITIES
(Continued)

Unrealized losses on securities have
not been recognized into income because the securities are of high credit quality,
management has the intent and ability to hold for the foreseeable future and the decline
in fair value is largely due to changes in market conditions. The fair value is expected
to recover as the securities approach their maturity date and/or market conditions
improve.

Sales of available-for-sale
securities were as follows for the nine-month period ended September 30, 2004, the year
ended December 31, 2003 and the nine-month period ended September 30, 2003:

|             |               |              |              
|------------ | ------------- | ------------ | -------------
|             | September 30, | December 31, | September 30,
|             | 2004          | 2003         | 2003         
|Proceeds     |               |              | $            
|Gross gains  |               |              |              
|Gross losses |               |              |              
|             |               |             

The fair value of debt securities and
carrying amount, if different, at September 30, 2004 by contractual maturity were as
follows. Securities not due at a single maturity date, primarily mortgage-backed
securities, are shown separately.

|                           |      
|-------------------------- | -----
|                           | Fair 
|                           | Value
|Due in one year or less    |      
|Due from one to five years |      
|Due from five to ten years |      
|Due after ten years        |      
|Mortgage-backed            |      
|                           |      
|Total                      |      
|                           |      

Securities pledged at September 30,
2004, December 31, 2003 and September 30, 2003 had carrying amounts of $13.9 million, $8.8
million and $4.2 million, respectively, and were pledged to secure public deposits and
repurchase agreements.

At September 30, 2004, December 31,
2003 and September 30, 2003, there were no holdings of securities of any one issuer, other
than the U.S. Government and its agencies, in an amount greater than 10% of
shareholders equity.

Page 7 of 27

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FIRST SECURITY BANCORP, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited)
September 30, 2004

---

NOTE 3 - LOANS

Loans were as follows as of the dates
indicated:

|                               |               |              |              
|------------------------------ | ------------- | ------------ | -------------
|                               | September 30, | December 31, | September 30,
|                               | 2004          |              | 2003         
|                               |               |              |              
|Commercial                     |               |              | $            
|Mortgage loans on real estate: |               |             
|Commercial                     |               |              |              
|Residential                    |               |              |              
|Construction                   |               |              |              
|Home equity                    |               |              |              
|Consumer                       |               |              |              
|Credit card                    |               |              |              
|                               |               |              |              
|Subtotal                       |               |              |              
|Less allowance for loan losses |               |              |              
|                               |               |              |              
|Loans, net                     |               |              | $            
|                               |               |              |              

Substantially all 1-4 single-family
first residential mortgage loans are pledged to the Federal Home Loan Bank as collateral
for advances.

Changes in the allowance for loan
losses were as follows for the nine-month period ended September 30, 2004, the year ended
December 31, 2003 and the nine-month period ended September 30, 2003:

|                          |               |              |              
|------------------------- | ------------- | ------------ | -------------
|                          | September 30, | December 31, | September 30,
|                          | 2004          |              | 2003         
|                          |               |              |              
|Beginning balance         |               |              | $            
|Loans charged-off         |               |              |              
|Recoveries                |               |              |              
|Provision for loan losses |               |              |              
|                          |               |              |              
|Ending balance            |               |              | $            
|                          |               |              |              
|                          |               |             

NOTE 4 - STOCK OPTIONS

Stock Award Plan
Options to buy stock are granted to
directors, officers and employees under First Securitys Stock Award Plan
(Stock Plan), which provides for issue of up to 200,000 options. Pursuant to
the Stock Plan, options may be issued which are defined as incentive stock options or as
non-qualified stock options. Incentive stock options are intended to qualify under the
provisions of Internal Revenue Code Section 422 (IRC), which include, among
other things, that the option price be not less than the fair value of the shares as of
the date of grant. Non-qualified stock options are those that do not meet the requirements
of the provisions of the IRC, and, accordingly, may contain terms that are different than
those in place for incentive stock options. The Stock Plan is accounted for in accordance
with Accounting Principles Board Opinion (APB) No. 25, Accounting for Stock Issued
to Employees, and related interpretations.

During the first quarter of 2004,
First Security awarded 26,350 options to employees and 19,000 to non-employee directors.
These options were granted at an exercise price of $17.15, which equaled the market price
for the stock as of the date of the grant.

Page 8 of 27

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FIRST SECURITY BANCORP, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited)
September 30, 2004

---

NOTE 4 - STOCK OPTIONS (Continued)

At September 30, 2004, a summary of
the options outstanding pursuant to the Stock Plan is as follows:

|                          |             |             |          |         
|------------------------- | ----------- | ----------- | -------- | --------
|                          | Outstanding | Exercisable
|                          | Weighted    |             | Weighted |         
|Range of                  |             | Average     |          | Average 
|Exercise                  |             | Exercise    |          | Exercise
|Prices                    |             |             | Number   |         
|                          |            
|$13.75-$15.50             |             |             |          | 18,250  
|$16.00-$22.00             |             |             |          | 105,050 
|                          |             |             |          |         
|Outstanding at period-end |             |             |          | 123,300 
|                          |             |             |          |         

Other Stock Options
In addition to the above, on December
1, 2003 First Security issued 20,000 options to its chief executive officer with an
exercise price of $14.00, which was below the market price of the shares at the date of
the grant. These options are non-qualified. The difference between the exercise price and
the market price will be recognized as compensation expense over the vesting period in
accordance with Accounting Principles Board Opinion (APB) No. 25, Accounting for
Stock Issued to Employees.

NOTE 5 - EARNINGS PER SHARE

The factors used in the earnings per
share computation for the three and nine month periods ended September 30, 2004 and 2003
were as follows:

|                                                    |                    |                   |      |      
|--------------------------------------------------- | ------------------ | ----------------- | ---- | -----
|                                                    | Three Months Ended | Nine Months Ended
|                                                    | September 30,      | September 30,    
|                                                    | 2004               | 2003              | 2004 | 2003 
|Basic                                               |                    |                   |      |      
|Net Income (loss)                                   |                    |                   | $    | (1   
|Weighted average common shares outstanding          |                    |                   |      | 1,559
|Basic earnings per common share                     |                    |                   | $    | --   
|                                                    |                    |                   |      |      
|Diluted                                             |                    |                  
|Net Income (loss)                                   |                    |                   | $    | (1   
|Weighted average common shares outstanding          |                    |                   |      | 1,559
|Add: Dilutive effects of assumed exercises of       |                    |                  
|stock warrants and options                          |                    |                   |      | 4    
|                                                    |                    |                   |      |      
|Average shares and dilutive potential common        |                    |                  
|shares                                              |                    |                   |      | 1,563
|                                                    |                    |                   |      |      
|Diluted earnings per common share                   |                    |                   | $    | --   
|                                                    |                    |                   |      |      
|Stock options outstanding for shares of common      |                    |                  
|stock that were not considered in computing diluted |                    |                  
|earnings per common share because they were         |                    |                  
|anti-dilutive as follows (shares in thousands):     |                    |                   |      | 100  
|                                                    |                    |                   |      |      

Page 9 of 27

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PART I -  FINANCAL
INFORMATION

Item 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following is a discussion of our
financial condition at September 30, 2004 and 2003, and our results of operations for the
three month and nine month periods ended September 30, 2004 and 2003. The purpose of this
discussion is to focus on information about our financial condition and results of
operations which is not otherwise apparent from the unaudited Consolidated Condensed
Financial Statements. You should read the following discussion and analysis along with our
unaudited Consolidated Condensed Financial Statements and the related notes included
elsewhere herein, and with the Form 10-KSB filed by First Security relating to financial
information as of and for the period ended December 31, 2003.

Forward-Looking Statements

First Security Bancorp, Inc. (the
First Security) may from time to time make written or oral statements,
including statements contained in this report, which may constitute forward-looking
statements within the meaning of Section 21E of the Securities Exchange Act of 1934 (the
Exchange Act). The words expect, anticipate,
intend, consider, plan, believe,
seek, should, estimate, and similar expressions are
intended to identify such forward-looking statements, but other statements may constitute
forward-looking statements. These statements are subject to various risks and
uncertainties. Such forward-looking statements are made based upon managements
belief as well as assumptions made by, and information currently available to, management
pursuant to safe harbor provisions of the Private Securities Litigation Reform
Act of 1995. First Securitys actual results may differ materially from the results
anticipated in forward-looking statements due to a variety of factors. Such factors are
described below and include, without limitation, (i) unanticipated deterioration in the
financial condition of borrowers resulting in significant increases in loan losses and
provisions for those losses, (ii) increased competition with other financial institutions,
(iii) lack of sustained growth in the economy in the Lexington, Kentucky area, (iv) rapid
fluctuations or unanticipated changes in interest rates, (v) the inability of our bank
subsidiary, First Security Bank of Lexington, Inc. (FS Bank) to satisfy
regulatory requirements for its expansion plans, and (vi) changes in the legislative and
regulatory environment. Many of such factors are beyond First Securitys ability to
control or predict, and readers are cautioned not to put undue reliance on such
forward-looking statements. First Security does not intend to update or reissue any
forward-looking statements contained in this report as a result of new information or
other circumstances that may become known to First Security.

General

First Security is a one-bank holding
company that conducts business through its wholly-owned subsidiary, FS Bank. First
Security was incorporated on February 11, 2000 and became the holding company of FS Bank
through an exchange of shares with FS Bank shareholders. FS Bank is a state chartered
commercial bank organized under the laws of the Commonwealth of Kentucky. FS Bank
commenced operations on November 17, 1997. FS Bank operates as a community bank
emphasizing personalized banking relationships with individuals and businesses located
within the Lexington, Kentucky metropolitan statistical area (MSA). The
Lexington Kentucky MSA is highly competitive with approximately 37 banks and thrift
institutions with offices located within this MSA. The majority of deposits in the MSA are
held by larger regional banking organizations with headquarters outside of the Lexington
market area and the state of Kentucky.

FS Bank offers a variety of products
and services through four full-service offices located in Lexington. The products and services offered to its customers include checking, savings
and time deposits, loans to individuals and businesses and safe deposit box rentals.
Operating revenues are derived principally from interest and fees on loans and interest
from investment securities that are all held as available for sale.

Prior to September 10, 2004, FS
Bank conducted mortgage banking operations under the name First Security Mortgage Company, at two leased
residential mortgage origination offices, one located at 190 W. Lowry Lane, in Lexington, and a second
located in Danville, Kentucky, approximately 45 miles southwest of Lexington.  On September 10, 2004,
we sold certain assets used in these mortgage banking operations (and transferred the two residential
mortgage origination offices) to First Mortgage Company, LLC, a limited liability company formed by

Page 10 of 27

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Brady Ratliff and Allen Haggard, both of whom were employed by FS Bank in its mortgage loan division.  We
had acquired the mortgage banking operations that were sold in the transaction in June 2002 from First
Mortgage Company, Inc., of which Mr. Ratliff was a principal.  Following the sale of this division, First
Security continues to offer residential mortgages to its customers through its offices and through referrals to
various mortgage companies, including First Mortgage Company, LLC.

Results of Operations

For the third quarter of 2004, First
Security reported a net loss of $1,000 as compared to a net profit of $249,000 for the
third quarter of 2003. The primary reasons for the decline in net income for the third
quarter of 2004 versus 2003 was an increase in the provision for loan losses from $50,000
to $222,000 and a loss of $106,000 on the sale of certain assets used in the mortgage loan
division of FS Bank.

For the nine-month period ended
September 30, 2004, net income totaled $403,000 as compared to $573,000 for the same
period ended September 30, 2003. The primary reasons for the decline in net income were
declines in gains on the sales of residential mortgage loans and securities and a loss on
the sale of certain assets used in the mortgage loan division. These declines in gains and
the loss on the sale offset reductions in interest expenses, the provision for loan losses
and noninterest expenses.

The following is a more detailed
discussion of results of our operations for the three month and nine month periods ended
September 30, 2004 and 2003.

Net Interest Income. Net interest
income represents the amount by which interest earned on various earning assets exceeds
interest paid on deposits and other interest-bearing liabilities and is the most
significant component of our earnings. A summary of the relevant information concerning
net interest income, spreads and margins is as follows (amounts in thousands):

| |                         |                   |      |     
| | ----------------------- | ----------------- | ---- | ----
| | Three Months Ended      | Nine Months Ended
| | September 30,           | September 30,    
| | 2004                    | 2003              | 2004 | 2003
| | Net Interest Income     |                   |      | $   
| |                        
| | Average Balances        |                   |     
| | Earning assets          |                   |      |     
| | Funding sources (1)     |                   |      |     
| |                        
| | Average yields or costs |                   |     
| | Loans                   |                   |      |     
| | Earning assets          |                   |      |     
| | Deposits                |                   |      |     
| | Funding sources         |                   |      |     
| |                        
| | Spread (2)              |                   |      |     
| | Margin (3, 4)           |                   |      |     

|1. |  | Funding sources, as used in this context,
includes externally obtained funding in the form of deposits, repurchase agreements, advances from the Federal Home
          Loan Bank and notes payable.
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2. |  | Net interest spread is the difference between the average yield on earning
          assets and the average cost of interest bearing funding sources
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------

|3. |  | The above calculations are before tax-equivalent adjustments.
|-- |  | -------------------------------------------------------------

|4. |  | Net interest margin is a calculation of the ratio of net interest income to
          average earning assets.
|-- |  | -------------------------------------------------------------------------------------------------------------

|5. |  | In the second quarter of 2004, we recorded a recovery of $95,754 of interest
          income from prior periods. This recovery is included in the above calculations.
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------

For the quarter ended September 30,
2004, we recorded net interest income of $1,585,000 as compared to $1,435,000 for the
comparable 2003 period. This improvement of $150,000 is attributable primarily to lower
interest expense on deposits. The cost of all funding sources declined by 41 basis points,
which is attributable to both older and higher cost certificates of deposit maturing and
being repriced and to a shifting in our deposit base from certificates of deposit to
interest bearing transaction accounts, principally, money market accounts, which have a
significantly lower cost than certificates of deposits. The yield on earning assets
increased by 1 basis point, which is attributable to our carrying significantly lower
balances of federal funds sold as a proportion of the total earning asset base.

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For the nine-month period ended
September 30, 2004, we recorded net interest income of $4,681,000 as compared to
$4,407,000 for the comparable 2003 period. The primary reason for this improvement is the
53 basis point decline in funding costs that exceeded the 30 basis point decline in the
yield on earning assets.

The improvement in net interest
income for both the quarter and year to date periods in 2004 was achieved through
improvement in spreads and margins, as opposed to growth in the amounts of earning assets
and funding sources, both of which declined.

Our yield on loans during the quarter
ended September 30, 2004 was 5.52%, as compared to 5.78% for the quarter ended June 30,
2004 and 6.08% for the quarter ended September 30, 2003. For the nine-month period ended
September 30, 2004, our yield on loans was 5.68%, as compared to 6.24% for the same period
in 2003. These declines in yields on loans are attributable to the following factors:

- Older fixed rate loans, originated at a point in time when interest rates were
substantially higher, are being repaid or maturing and being renewed at todays lower
interest rates.
- Competitive pressures in the market have increased, with other banks offering interest
rates on loans that are much lower than rates on some of our existing loans, thus causing
us to renegotiate the interest rates to lower levels to maintain the loan relationships.

These factors subsided late in the
second quarter as loan yields began to increase as a result of increases in the general
interest rate environment.

The banks prime rate was
increased three times during the quarter, on July 2, August 11 and September 22, and
we expect short term rates to continue to increase over the coming three quarters. These
increases contributed to a stabilizing of the yield on loans during the third quarter and
are expected to have a beneficial impact on the yield of the loan portfolio, as
approximately 65% of the banks loans are based on prime and are adjustable within a
thirty day period.

During the quarter ended September
30, 2004, our cost of deposits has also declined, from 2.05% to 2.00%, and the cost of all
funding declined from 2.16% to 2.10%. These declines reflect the implementation of a
strategic funding decision during the third quarter of 2004 to redesign and more
aggressively price our money market accounts so as to shift deposits from longer term
fixed rate certificates of deposit to our money market accounts. That strategy results in
both a lower cost of funds and a better matching of interest rate movements with our loan
portfolio, which is composed primarily of loans that are immediately repricable based on
changes in the prime rate.

Provision for Loan Losses. The
provision for loan losses represents a charge to earnings necessary to establish an
allowance for loan losses (ALL) that, in our managements evaluation,
should be adequate to provide coverage for probable and incurred loss on outstanding
loans. The provision for loan losses amounted to $222,000 and $50,000 for the quarters
ended September 30, 2004 and 2003, respectively. The provision for loan losses the nine
month periods ended September 30, 2004 and 2003 amounted to $297,000 and $519,000,
respectively.

The increase in the provision expense
during the third quarter relates primarily to a charge off of approximately $695,000 to a
single borrower that had filed for Chapter 11 Bankruptcy. See also the discussion of
nonperforming assets included elsewhere herein.

Based upon our managements
evaluation of the loan portfolio, our management believes the allowance for loan losses to
be adequate to absorb our estimate of probable and incurred losses existing in the loan
portfolio at the balance sheet date.  While the timing of the actual charge-off of loans for
which reserves have been established is uncertain, management believes that all inherent loan losses
have been adequately provided for in the Allowance.  These are forward-looking statements, and actual results could
differ because of several factors, including those identified in this discussion and in the
discussion of Cautionary Statements Regarding Forward-Looking Information.

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Noninterest Income. FS Banks
noninterest income is composed of several components, some of which vary significantly
between quarterly periods. The primary components of noninterest income are as follows:

- Service charges on deposit accounts are composed of various fees assessed on
customers account activity including overdraft fees and generally reflect FS
Banks growth in its deposits and customers.
- Net gains on the sale of loans includes income from origination fees and points on
residential loans made with the expectation that they will be later sold into the
secondary market, and from service release fees received on these loans from the
purchasers. All loans are sold whereby servicing rights transfer to the buyer. Generally,
mortgage origination fees increase in lower interest rate environments and decrease in
rising interest rate environments. As a result, mortgage origination fees may fluctuate
greatly in response to a changing rate environment.

Noninterest income for the three
month periods ended September 30, 2004 and 2003 is summarized as follows (dollars in
thousands):

|                                    |                     |            |       
|----------------------------------- | ------------------- | ---------- | ------
|                                    | Three months        |           
|                                    | ended September 30, | Net Change
|                                    | 2004                | 2003       | Amount
|Noninterest income:                 |                     |            |       
|Service charges on deposit accounts |                     |            | $     
|Net gains on the sale of loans      |                     |            |       
|Net gains on the sale of securities |                     |            |       
|Net loss on sale of assets          |                     |            |       
|Other noninterest income            |                     |            |       
|                                    |                     |            |       
|Total                               |                     |            | $     
|                                    |                     |            |       

Noninterest income for the nine month
periods ended September 30, 2004 and 2003 is summarized as follows (dollars in thousands):

|                                    |                     |            |       
|----------------------------------- | ------------------- | ---------- | ------
|                                    | Nine months         |           
|                                    | ended September 30, | Net Change
|                                    | 2004                | 2003       | Amount
|Noninterest income:                 |                     |            |       
|Service charges on deposit accounts |                     |            | $     
|Net gains on the sale of loans      |                     |            |       
|Net gains on the sale of securities |                     |            |       
|Net loss on sale of assets          |                     |            |       
|Other noninterest income            |                     |            |       
|                                    |                     |            |       
|Total                               |                     |            | $     
|                                    |                     |            |       

During 2003, a refinancing
boom existed in the United States, evidenced by record numbers of borrowers
refinancing their home loans in order to take advantage of the historically low long term
interest rates. That boom slowed during the fourth quarter of 2003, and remained so during
the first three quarters of 2004. This slowdown affected FS Bank in its mortgage lending
and sales of loans into the secondary market for both comparable periods, as shown in the
above tables. On September 10, 2004, FS Bank sold certain assets it used in its mortgage
loan origination efforts to First Mortgage Company, LLC, an entity formed by Brady Ratliff
and Allen Haggard, who were employed by FS Bank in its mortgage loan division. That sale
resulted in the $106,000 loss shown in the above table.

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For both the quarter and nine-month
period ended September 30, 2004, gains on the sale of securities were lower than in the
comparable periods in 2003. Interest rate increases beginning in early 2004 has caused the
values of our securities to decline, which has resulted in lower gains on sales as shown
in the above table.

Noninterest Expense. Noninterest
expense consists of salaries and employee benefits, equipment and occupancy expenses, and
other operating expenses.

The following is the makeup of our
noninterest expense for the three month periods ended September 30, 2004 and 2003 (dollars
in thousands):

|                               |                     |            |       
|------------------------------ | ------------------- | ---------- | ------
|                               | Three months        |           
|                               | ended September 30, | Net Change
|                               | 2004                | 2003       | Amount
|Noninterest expense:           |                     |            |       
|Salaries and employee benefits |                     |            | $     
|Occupancy and equipment        |                     |            |       
|Data processing                |                     |            |       
|Legal and professional fees    |                     |            |       
|Advertising                    |                     |            |       
|Other noninterest expense      |                     |            |       
|                               |                     |            |       
|Total                          |                     |            | $     
|                               |                     |            |       
|                               |                     |           

The following is the makeup of our
noninterest expense for the nine month periods ended September 30, 2004 and 2003 (dollars
in thousands):

|                               |                     |            |       
|------------------------------ | ------------------- | ---------- | ------
|                               | Nine months         |           
|                               | ended September 30, | Net Change
|                               | 2004                | 2003       | Amount
|Noninterest expense:           |                     |            |       
|Salaries and employee benefits |                     |            | $     
|Occupancy and equipment        |                     |            |       
|Data processing                |                     |            |       
|Legal and professional fees    |                     |            |       
|Advertising                    |                     |            |       
|Other noninterest expense      |                     |            |       
|                               |                     |            |       
|Total                          |                     |            | $     
|                               |                     |            |       

Expenses have decreased or increased
during the above periods due primarily to the following factors:

- The lower salaries and benefits expense for the quarter reflects a severance expense of
approximately $91,000 incurred in September, 2003. The lower salaries and benefits expense
for the none-month period reflects the lowered severance expense noted above, staffing
vacancies that existed during the first two quarters of 2004, efforts to control the level
of staffing through a more extensive use of part time employees and the elimination of
eleven positions brought about by the sale of assets to and assumption of employees by
First Mortgage Company, LLC, as discussed above.
- The decline in other noninterest expense for the quarter is the result of lowered expense
across a number of expense categories, including supplies ($19), customer accounts
charge-offs ($13), miscellaneous and other expenses ($30) and other accounts with smaller
changes. The decline in other noninterest expense for the nine-month period is primarily
attributable to a loss on the sale of foreclosed assets that incurred in the second
quarter of 2003 ($100) and lowered supplies expense ($50).
- The decline in legal and professional fees for the nine month period is attributable to
lower legal fees related to both strategic planning efforts and to problem loan
administration.

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Income Taxes. The effective income
tax expense rate for the quarter ended September 30, 2004 was 0.0%, as compared to 23.1%
for the quarter ended September 30, 2003. For the nine month periods ended September 30,
2004 and 2003, the effective income tax expense rates were 30.0% and 18.5%, respectively.
This difference in rates is attributable to the repositioning of our securities portfolio
that took place during 2003. The focus of that repositioning was to reduce the average
maturities of our portfolio in anticipation of increases in the general interest rates for
2004, and this strategy resulted in the sale of a substantial portion of our tax-exempt
investment securities. As a result, tax exempt income was substantially lower in 2004, as
compared to 2003, resulting in the higher effective income tax rate.

Financial Condition

During 2004, the total assets of the
Company declined. The primary reason for this decline is a strategic decision to use
excess federal funds sold to reduce the balances of certificates of deposit, which bear
interest at rates that are higher than the interest rates earned on federal funds sold.
Since December 31, 2003, federal funds sold has declined from $25.2 million to $7.2
million at September 30, 2004. The use of these excess funds has resulted in an
improvement in spreads and margins, discussed in the previous sections.

A comparative summary of the
components of average earnings assets before the deduction for the allowance for loan
losses is presented as follows (amounts in thousands):

|                                      |                    |                   |                   
|------------------------------------- | ------------------ | ----------------- | ------------------
|                                      | Quarter Ended      | Year Ended        | Quarter Ended     
|                                      | September 30, 2004 | December 31, 2003 | September 30, 2003
|Interest earning assets               |                    |                   |                   
|Loans (gross)                         |                    |                   | $                 
|Investment securities (1)             |                    |                   |                   
|Federal funds sold                    |                    |                   |                   
|                                      |                    |                   |                   
|Total                                 |                    |                   | $                 
|                                      |                    |                   |                   
|Total Average Assets                  |                    |                   | $                 
|                                      |                    |                   |                   
|Percentage of earning assets to total |                    |                  
|assets                                |                    |                   |                   
|                                      |                    |                  

1.       
          Includes available-for-sale securities and other securities.

Investment Securities. FS Banks
investment portfolio is classified as available-for-sale, meaning that any or all of the
securities may be sold to meet the business objectives of FS Bank. The portfolio consists
primarily of mortgage backed bonds, which constitute 57.4% of the portfolio, as compared
to 68.1% at December 31, 2003 and 61.9% at September 30, 2003. In managing the portfolio,
FS Bank seeks to maintain investment grade securities, at a reasonable yield, and with an
overall duration (average length of an investment) of no more than four years. At
September 30, 2004, the duration of the entire portfolio was approximately 3.2 years. By
maintaining a relatively short duration, FS Bank is better able to minimize loss of value in
a rising interest rate environment.

Loans: Loans, net of the allowance
for loan losses, declined by $1.7 million and $3.9 million during the three month and nine
month periods, respectively, ended September 30, 2004, and $5.9 million as compared to
September 30, 2003. The primary reasons for these declines have been increasing
competitive pressures in the local market, coupled with vacant lending officer positions
that have now been filled. The composition of the portfolio remains weighted in commercial
and commercial real estate loans, which accounted for approximately 69.1% of the total
gross balances at September 30, 2004, as compared to 68.8% at December 31, 2003 and 66.3%
at September 30, 2003.

The specific economic and credit
risks associated with our loan portfolio, include, but are not limited to, a general
downturn in the economy which could affect employment rates in our market area, general
real estate market deterioration, interest rate fluctuations, deteriorated or non-existent
collateral, title defects, inaccurate appraisals, financial deterioration of borrowers and
fraud.

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We attempt to reduce these economic
and credit risks by adherence to loan-to-value guidelines for collateralized loans, by
investigating the creditworthiness of the borrower and by monitoring the borrowers
financial position. Also, we establish and periodically review our lending policies and
procedures. Banking regulations limit our exposure by prohibiting loan relationships that
exceed 20% of FS Banks statutory capital in the case of loans that are not fully
secured by readily marketable or other permissible types of collateral, and further limit
the amount of loans that can be made to related parties.

We periodically analyze our loan
position with respect to our borrowers industries to determine if a concentration of
credit risk exists to any one or more industries. We have a significant credit exposure of
loans outstanding plus unfunded lines of credit to borrowers in the residential
construction industry and to owners of nonresidential buildings at September 30, 2004.
This exposure level is taken into consideration by management in its determination of the
adequacy of the allowance for loan losses. Based upon that determination, we believe that
we did not have any excessive exposure to any single industry which would warrant
additional allowance allocations.

FS Bank discontinues the accrual of
interest income when (1) there is a significant deterioration in the financial
condition of the borrower and full repayment of principal and interest is not expected or
(2) the principal or interest is more than 90 days past due, unless the loan is
both well-secured and in the process of collection.

Non-Performing Assets. Non-performing
assets are made up of loans that have been placed in a non-accrual status, loans that are
past due 90 days or greater, loans that have been classified as restructured and
repossessed assets. The following table sets forth the non-performing assets at the dates
indicated (amounts in thousands):

|                                  |                    |                   |                   
|--------------------------------- | ------------------ | ----------------- | ------------------
|                                  | September 30, 2004 | December 31, 2003 | September 30, 2003
|                                  |                    |                   |                   
|Non-accrual loans (1)             |                    |                   | $                 
|Restructured loans (2)            |                    |                   |                   
|Loans past due 90 days or greater |                    |                   |                   
|Repossessed assets                |                    |                   |                   
|                                  |                    |                   |                   
|Total                             |                    |                   | $                 
|                                  |                    |                   |                   

|1. |  | Included in non-accrual loans at September 30, 2004 are loans to a troubled
          franchise operator in the aggregate amount of $1.9 million that were previously
          reported as restructured.
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2. |  | The restructured loans appearing in the September 30, 2003 totals were later
          placed into the non-accrual status and appear as non-accrual loans at December
          31, 2003 and September 30, 2004.
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Allowance for Loan Losses (ALL). We
maintain the ALL at a level that our management deems appropriate to adequately cover the
probable and incurred loss in the loan portfolio. The following table sets forth the
balances in our allowance for loan losses and the percentage for total loans and
non-performing loans at the dates indicated (amounts in thousands):

|                                        |                    |                   |                   
|--------------------------------------- | ------------------ | ----------------- | ------------------
|                                        | September 30, 2004 | December 31, 2003 | September 30, 2003
|                                        |                    |                   |                   
|Allowance for loan losses               |                    |                   | $                 
|                                        |                    |                   |                   
|Total loans                             |                    |                   | $                 
|Percentage of allowance for loan losses |                    |                  
|to total loans                          |                    |                   |                   
|                                        |                    |                   |                   
|Non-performing assets                   |                    |                   | $                 
|Percentage of allowance for loan losses |                    |                  
|to non-performing assets                |                    |                   |                   

As of the above dates, our management
deemed the balances in the allowance for loan losses to be adequate. The judgments and
estimates associated with our ALL determination are described under Critical
Accounting Estimates below.

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Deposits and Other Borrowings. We had
approximately $170.7 million of deposits at September 30, 2004, as compared to $190.6
million at December 31, 2004 and $187.8 million at September 30, 2003. Our deposits
consist of noninterest and interest-bearing demand accounts, savings, money market and
time deposits.

The following table sets for the
components of our deposits as of the dates indicated (amounts in thousands):

|                                 |                    |                   |                   
|-------------------------------- | ------------------ | ----------------- | ------------------
|                                 | September 30, 2004 | December 31, 2003 | September 30, 2003
|                                 |                    |                   |                   
|Interest-bearing demand          |                    |                   | $                 
|Savings, money market and NOW    |                    |                   |                   
|Time deposits less than $100,000 |                    |                   |                   
|Time deposits $100,000 and over  |                    |                   |                   
|                                 |                    |                   |                   
|Total interest-bearing deposits  |                    |                   |                   
|Noninterest-bearing              |                    |                   |                   
|                                 |                    |                   |                   
|Total deposits                   |                    |                   | $                 
|                                 |                    |                   |                   

Total deposits declined by $2.8
million and $20.0 million, respectively, during the three month and nine month periods
ended September 30, 2004 and $17.1million as compared to September 30, 2003. The decline
is primarily in certificates of deposit, which declined by $15.6 million and $31.6
million, respectively, during the three month and nine month periods ended September 30,
2004 and $30.9 million as compared to September 30, 2003. These declines in certificates
of deposit reflect the funding strategies adopted by FS Bank in late 2003. As discussed
previously, our liquidity and funding plans include a decision to use federal funds
purchased to reduce our balances in certificates of deposit. The reason for this decision
is that the certificates of deposit have a higher interest cost than the earnings yield on
our federal funds sold. Therefore, the use of excess federal funds sold to reduce
certificates of deposit resulted in an improvement in our net interest income. The
balances of noninterest-bearing deposits remained essentially unchanged during the
quarter.

In addition to our deposits, we have
repurchase agreements which are essentially deposit equivalents collateralized by
securities. These agreements amounted to $8.3 million at September 30, 2004, $8.9 million
at December 31, 2003 and $3.7 million at September 30, 2003. Additionally, at
September 30, 2004, we had balances of $8.8 million in advances from the Federal Home
Loan Bank of Cincinnati compared to $12.5 million at December 31, 2003 and $13.1
million at September 30, 2003.

Note Payable. On December 30, 2003,
First Security entered into a credit agreement with another financial institution that
provides for a reducing revolving line of credit in the maximum amount of $6 million, of
which $5 million was drawn at inception and contributed to FS Bank to increase its capital
base. The related note is secured by 100% of the common shares of FS Bank and has a
maturity of December 31, 2006. The maximum amount available under the credit agreement
reduces to $5 million on December 31, 2004 and $4 million on December 31, 2005.

The credit agreement contains a
number of covenants relating to the operation of the Bank including the maintenance of a
minimum equity capital ratio, a maximum ratio of nonperforming assets to total loans, a
minimum return on average assets and the maintenance of a minimum dividend payment
capacity by the Bank. Covenants applicable to First Security include a prohibition of the
payment of dividends on its common stock. At September 30, 2004, First Security met all
requirements of the credit agreement.

Liquidity. Liquidity management is the process by which management attempts to ensure that
          adequate liquid funds are available to meet financial commitments on a timely
          basis. These commitments include withdrawals by depositors, funding credit
          obligations to borrowers, servicing long-term obligations, paying operating
          expenses, funding capital expenditures and maintaining reserve requirements.
          Liquidity is monitored closely by the Asset/Liability Management Committee of FS
          Bank, which monitors interest rates and liquidity risk while implementing our
          funding and balance sheet strategies.

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FS Bank has established a limited
number of alternative or secondary sources to provide additional liquidity and funding
sources when needed to support lending activity or other liquidity needs. These
alternative funding sources currently include unsecured federal funds lines of credit from
five correspondent banks aggregating approximately $23 million and a secured line of
credit with the Federal Home Loan Bank of Cincinnati, which allows FS Bank to borrow based
on the level of qualifying residential loans which serve as collateral for this type of
borrowing. Using these two sources, at September 30, 2004, FS Bank could borrow
approximately $25 million based on available lines.

The need for future borrowing
arrangements above current levels will be evaluated by management with consideration given
to the growth prospects of the loan portfolio, liquidity needs, costs of deposits, market
conditions and other factors. Short-term liquidity needs for periods of up to one year may
be met through federal funds lines of credit, borrowings and short-term Federal Home Loan
Bank advances. The Federal Home Loan Bank additionally offers advance programs of varying
maturities for terms beyond one year.

Capital Resources. At September 30,
2004, our stockholders equity amounted to $20.3 million, as compared to $20.1
million at December 31, 2003. The change in stockholders equity was attributable to
our net income for the nine month period ended September 30, 2004 of $403 thousand less
the net decrease in comprehensive income of $177 thousand attributable to the decrease in
fair value of our available-for-sale securities portfolio.

Critical Accounting
Estimates

The accounting principles we follow
and our methods of applying these principles conform with accounting principles generally
accepted in the United States and with general practices within the banking industry. In
connection with the application of those principles, we have made judgments and estimates
which, in the case of the determination of our allowance for loan losses (ALL), have been
critical to the determination of our financial position and results of operations.

Allowance for Loan Losses (ALL). To
evaluate the loan portfolio, management has established loan grading procedures. These
procedures establish a grade for each loan upon origination which is periodically
reassessed throughout the term of the loan. Grading categories include highest quality,
above average, average, low average, watch, substandard, doubtful, and loss. Loans graded
watch or worse also include loans severely past-due and those not accruing interest.
Specific reserve allocations are calculated for specific individual loans having been
graded watch, substandard, doubtful, and loss based on the specific estimated
collectability (and by reference, estimated inherent risk of loss) of each loan. The
aggregate of the estimated probable and incurred loss then becomes a portion of the
allowance for loan losses to be specifically allocated to that loan. These calculations
are referred to as specific allocations.

For loans not individually graded
watch, substandard, doubtful or loss, an estimated loss factor is calculated and applied
to each category, after reducing the category amounts for cash equivalent collateral held
by FS Bank (such as certificates of deposit issued by FS Bank and held as collateral) and
guaranties from the federal government (such as SBA guaranties). A general allowance
allocation is computed using totals of each loan grading category (as adjusted) multiplied
by an estimated loss factor applied to each grading category. The sum of the calculation
for each grading category represents the general allowance. These loss factors are
typically developed over time using actual loss experience adjusted for the various
factors discussed above.

The sum of the specific allocations
and the general allocation represents managements best estimate of the probable
incurred losses contained in the loan portfolio at the measurement date. Even though the
ALL is composed of two components, the entire ALL is available to absorb any credit
losses.

In assessing the adequacy of the ALL,
we also rely on an ongoing independent loan review process. We undertake this process both
to ascertain whether there are loans in the portfolio whose credit quality has weakened
over time and to assist in our overall evaluation of the risk characteristics of the
entire loan portfolio. Our loan review process includes the judgment of management, the
input from our independent loan reviewer, who is not an employee of FS Bank, and reviews
that may have been conducted by bank regulatory agencies as part of their usual
examination process.

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Management believes the allowance for
loan losses at September 30, 2004 was adequate. Although we believe we use the best
information available to make allowance provisions, future adjustments which could be
material may be necessary if the assumptions used to determine the allowance differ from
future loan portfolio performance.

Impact of Inflation

The Consolidated Financial Statements
and related consolidated financial data presented herein have been prepared in accordance
with generally accepted accounting principles and practices within the banking industry
which require the measurement of financial position and operating results in terms of
historical dollars without considering the changes in the relative purchasing power of
money over time due to inflation. Unlike most industrial companies, virtually all the
assets and liabilities of a financial institution are monetary in nature. As a result,
interest rates have a more significant impact on a financial institutions
performance than the effects of general levels of inflation.

Recent Accounting
Pronouncements

Since December 31, 2003, there have
been no new accounting pronouncements that would have a material effect on the financial
statements or practices of FS Bank.

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PART I. - FINANCIAL
INFORMATION

Item 3. - CONTROLS
AND PROCEDURES

Evaluation of Disclosure
Controls and Procedures

First Security maintains disclosure
controls and procedures, as defined in Rule 13a-15(e) promulgated under the Securities
Exchange Act of 1934 (the Exchange Act), that are designed to ensure that
information required to be disclosed by it in the reports that it files or submits under
the Exchange Act is recorded, processed, summarized and reported within the time periods
specified in the SECs rules and forms and that such information is accumulated and
communicated to First Securitys management, including its Chief Executive Officer
and Chief Financial Officer, as appropriate to allow timely decisions regarding required
disclosure. First Securitys management evaluated with the participation of its Chief
Executive Officer and Chief Financial Officer, the effectiveness of First Securitys
disclosure controls and procedures as of the end of the fiscal quarter covered by this
report. Based on the evaluation of these disclosure controls and procedures, the Chief
Executive Officer and Chief Financial Officer concluded that First Security Bancorps
disclosure controls and procedures were effective as of September 30, 2004.

Changes in Internal
Controls

There was no change in First
Securitys internal control over financial reporting identified during that
evaluation that occurred during First Securitys fiscal quarter ended September 30,
2004 that has materially affected, or is reasonably likely to materially affect, First
Securitys internal control over financial reporting.

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PART II - Other
Information

Item 6. ExhibitsThe exhibits listed
on the Exhibit Index of this form 10-QSB are filed or furnished as a part of this report.

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SIGNATURES

In accordance with the requirements
of the Exchange Act, the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

|                         |                                                                                                | 
|------------------------ | ---------------------------------------------------------------------------------------------- | 
|                         | First Security Bancorp, Inc.                                                                   | 
|                         |                                                                                                | 
|Date:  November 10, 2004 | /s/ R. Douglas Hutcherson
     R. Douglas HutchersonPresident and Chief Executive Officer      | 
|                         |                                                                                                | 
|                         |                                                                                                | 
|Date:  November 10, 2004 | /s/ John G. Sullivan
     John G. SullivanExecutive Vice-President and Chief Financial Officer | 

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EXHIBITS

Exhibit 11.   Statement regarding
computation of Per Share Earnings in the Notes to Consolidated Financial Statements in
Part 1 of this Report for such computation (see Note 5 Earnings Per Share).

Exhibit 31.   Certifications Pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.

Exhibit 32.1.   Certification of Principal Executive
Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.

Exhibit 32.2   Certification of
Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.

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