UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

                                QUARTERLY REPORT
                       PURSUANT TO SECTION 13 OR 15(D) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended June 30, 2005


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


          Kentucky                    0-14412                   61-1017851
-----------------------------  -----------------------  ------------------------
(State or other jurisdiction        (Commission               (IRS Employer
      of incorporation)             File Number)            Identification No.)


P.O. Box 309 Frankfort, KY                                        40602
----------------------------------------------           -----------------------
(Address of principal executive offices)                       (Zip Code)

       Registrant's telephone number, including area code - (502)-227-1668


                                 Not Applicable
   --------------------------------------------------------------------------
         (Former name or former address, if changed since last report.)



Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports)  and  (2)  has  been  subject  to such  filing
requirements for the past 90 days.

                                  Yes X No ____

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Rule 12b-2 of the Securities Exchange Act of 1934).

                                  Yes X No ____

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

                    Common stock, par value $0.125 per share
                 6,786,078 shares outstanding at August 5, 2005



<PAGE>


<TABLE>
<CAPTION>

                                TABLE OF CONTENTS

<S>                                                                                                                       <C>
PART I - FINANCIAL INFORMATION.............................................................................................3

   Item 1. Financial Statements............................................................................................3
     Unaudited Consolidated Balance Sheets.................................................................................3
     Unaudited Consolidated Statements of Income...........................................................................4
     Unaudited Consolidated Statements of Comprehensive Income.............................................................5
     Unaudited Consolidated Statements of Cash Flows.......................................................................6
     Unaudited Consolidated Statements of Changes in Shareholders' Equity..................................................7
     Notes to Unaudited Consolidated Financial Statements..................................................................8
   Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations.........................11
   Item 3.  Quantitative and Qualitative Disclosures About Market Risk....................................................27
   Item 4.  Controls and Procedures.......................................................................................28

PART II - OTHER  INFORMATION..............................................................................................28

   Item 1.  Legal Proceedings.............................................................................................28
   Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds...................................................28
   Item 4.  Submission of Matters to a Vote of Security Holders...........................................................28
   Item 6.  Exhibits......................................................................................................29
   SIGNATURES.............................................................................................................30
</TABLE>



<PAGE>



PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>

UNAUDITED CONSOLIDATED BALANCE SHEETS
------------------------------------------------------------------------------------------------------------------------------------
                                                                                             June 30,       December 31,
(In thousands, except share data)                                                                2005               2004
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                       <C>                <C>
ASSETS
Cash and cash equivalents:
   Cash and due from banks                                                                $    82,261        $    42,418
   Interest bearing deposits in other banks                                                     1,718              2,569
   Federal funds sold and securities purchased under agreements to resell                      28,133             34,273
------------------------------------------------------------------------------------------------------------------------------------
      Total cash and cash equivalents                                                         112,112             79,260
------------------------------------------------------------------------------------------------------------------------------------
Investment securities:
   Available for sale, amortized cost of $308,852 (2005) and $348,240 (2004)                  309,610            349,317
   Held to maturity, fair value of $18,307 (2005) and $20,555 (2004)                           17,843             19,803
------------------------------------------------------------------------------------------------------------------------------------
      Total investment securities                                                             327,453            369,120
------------------------------------------------------------------------------------------------------------------------------------
Loans, net of unearned income                                                                 899,385            876,705
Allowance for loan losses                                                                     (11,775)           (12,804)
------------------------------------------------------------------------------------------------------------------------------------
       Loans, net                                                                             887,610            863,901
------------------------------------------------------------------------------------------------------------------------------------
Premises and equipment, net                                                                    27,878             27,415
Company-owned life insurance                                                                   27,524             26,978
Goodwill                                                                                        8,927              8,722
Other intangibles, net                                                                          3,768              4,259
Other assets                                                                                   23,254             17,489
------------------------------------------------------------------------------------------------------------------------------------
      Total assets                                                                        $ 1,418,526        $ 1,397,144
------------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Deposits:
   Noninterest bearing                                                                    $   196,871        $   173,522
   Interest bearing                                                                           954,722            965,505
------------------------------------------------------------------------------------------------------------------------------------
      Total deposits                                                                        1,151,593          1,139,027
------------------------------------------------------------------------------------------------------------------------------------
Federal funds purchased and securities sold under agreements to repurchase                     67,091             59,758
Other short-term borrowings                                                                       393              1,791
Long-term debt                                                                                 52,245             53,158
Dividends payable                                                                               2,236              2,232
Other liabilities                                                                              10,495              9,728
------------------------------------------------------------------------------------------------------------------------------------
      Total liabilities                                                                     1,284,053          1,265,694
------------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY
Common stock, par value $.125 per share
   9,608,000 shares authorized; 8,244,933 and 8,234,423
   shares issued at June 30, 2005 and December 31, 2004, respectively                           1,031              1,029
Capital surplus                                                                                21,024             20,744
Retained earnings                                                                             153,452            149,985
Treasury stock, at cost; 1,465,755 and 1,450,055 shares
   at June 30, 2005 and December 31, 2004, respectively                                       (41,527)           (41,008)
Accumulated other comprehensive income                                                            493                700
------------------------------------------------------------------------------------------------------------------------------------
      Total shareholders' equity                                                              134,473            131,450
------------------------------------------------------------------------------------------------------------------------------------
      Total liabilities and shareholders' equity                                          $ 1,418,526        $ 1,397,144
------------------------------------------------------------------------------------------------------------------------------------

See accompanying notes to unaudited consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>

 UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
------------------------------------------------------------------------------------------------------------------------------------
                                                                         Three Months Ended                  Six Months Ended
                                                                                 June 30,                          June 30,
(In thousands, except per share data)                                    2005           2004               2005           2004
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                               <C>            <C>                <C>            <C>
INTEREST INCOME
Interest and fees on loans                                        $    14,289    $    11,802        $    27,992    $    23,531
Interest on investment securities:
   Taxable                                                              2,045          2,021              3,957          3,985
   Nontaxable                                                             963            985              1,944          1,931
Interest on deposits in other banks                                        22              8                 34             18
Interest of federal funds sold and securities purchased
    under agreements to resell                                            383             77                383            167
------------------------------------------------------------------------------------------------------------------------------------
      Total interest income                                            17,702         14,893             34,810         29,632
------------------------------------------------------------------------------------------------------------------------------------
INTEREST EXPENSE
Interest on deposits                                                    5,304          3,602             10,250          7,276
Interest on federal funds purchased and securities sold
    under agreements to repurchase                                        571            249              1,105            467
Interest on other borrowed funds                                          527            493              1,053            995
------------------------------------------------------------------------------------------------------------------------------------
      Total interest expense                                            6,402          4,344             12,408          8,738
------------------------------------------------------------------------------------------------------------------------------------
       Net interest income                                             11,300         10,549             22,402         20,894
------------------------------------------------------------------------------------------------------------------------------------
Provision for loan losses                                                 (17)           448                (64)           813
------------------------------------------------------------------------------------------------------------------------------------
       Net interest income after provision for loan losses             11,317         10,101             22,466         20,081
------------------------------------------------------------------------------------------------------------------------------------
NONINTEREST INCOME
Service charges and fees on deposits                                    2,524          2,089              4,783          3,983
Allotment processing fees                                                 645            201              1,298            400
Other service charges, commissions, and fees                              596            689              1,235          1,374
Data processing income                                                    394            381                734            715
Trust income                                                              427            414                823            828
Investment securities (losses) gains, net                                  (3)           (17)                (3)            65
Gains on sale of mortgage loans, net                                      221             71                409            115
Income from company-owned life insurance                                  340            362                571            767
Other                                                                      16             46                834             76
------------------------------------------------------------------------------------------------------------------------------------
      Total noninterest income                                          5,160          4,236             10,684          8,323
------------------------------------------------------------------------------------------------------------------------------------
NONINTEREST EXPENSE
Salaries and employee benefits                                          6,154          5,383             12,114         10,777
Occupancy expenses, net                                                   731            634              1,489          1,296
Equipment expenses                                                        681            541              1,364          1,105
Data processing and communications expense                              1,099            973              2,133          1,891
Bank franchise tax                                                        362            337                723            678
Correspondent bank fees                                                   276            252                498            440
Other                                                                   2,046          1,509              4,537          3,124
------------------------------------------------------------------------------------------------------------------------------------
      Total noninterest expense                                        11,349          9,629             22,858         19,311
------------------------------------------------------------------------------------------------------------------------------------
       Income before income taxes                                       5,128          4,708             10,292          9,093
------------------------------------------------------------------------------------------------------------------------------------
Income tax expense                                                      1,240            967              2,348          1,844
------------------------------------------------------------------------------------------------------------------------------------
       Net income                                                 $     3,888    $     3,741        $     7,944    $     7,249
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NET INCOME PER COMMON SHARE
   Basic                                                          $       .57    $       .56        $      1.17    $      1.08
   Diluted                                                                .57            .55               1.16           1.07
WEIGHTED AVERAGE SHARES OUTSTANDING
   Basic                                                                6,781          6,730              6,786          6,727
   Diluted                                                              6,818          6,778              6,829          6,780
------------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to unaudited consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>


UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
----------------------------------------------------------------------------------------------------------------------------
                                                                        Three Months Ended            Six Months Ended
                                                                              June 30,                     June 30,
 (In thousands)                                                        2005           2004           2005          2004
----------------------------------------------------------------------------------------------------------------------------
<S>                                                               <C>           <C>            <C>           <C>
NET INCOME                                                        $    3,888    $    3,741     $    7,944    $    7,249
Other comprehensive income:
   Unrealized holding gain (loss) on available for sale
   securities arising during the period, net of tax
   of $1,187, $2,633, $114, and $2,332, respectively                   2,205        (4,890)          (212)       (4,330)
Reclassification adjustment for prior period
   unrealized loss (gain) recognized during current period,
   net of tax of $22, $9, $3, and $27, respectively                       40           (16)             5           (51)
----------------------------------------------------------------------------------------------------------------------------
Other comprehensive income                                             2,245        (4,906)          (207)       (4,381)
----------------------------------------------------------------------------------------------------------------------------
Comprehensive Income                                              $    6,133    $   (1,165)    $    7,737    $    2,868
----------------------------------------------------------------------------------------------------------------------------
See accompanying notes to unaudited consolidated financial statements.
</TABLE>



<PAGE>
<TABLE>
<CAPTION>

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
------------------------------------------------------------------------------------------------------------------------------
Six months ended June 30, (In thousands)                                                              2005            2004
------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                          <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net income                                                                                $       7,944   $       7,249
   Adjustments to reconcile net income to net cash provided by operating activities:
       Depreciation and amortization                                                                 2,138           1,437
       Net amortization of investment security premiums and (discounts):
          Available for sale                                                                           218             928
          Held to maturity                                                                             (20)            (22)
       Provision for loan losses                                                                       (64)            813
       Noncash compensation expense                                                                                    138
       Mortgage loans originated for sale                                                          (16,884)         (9,629)
       Proceeds from sale of mortgage loans                                                         16,264           8,696
       Deferred income tax benefit                                                                    (414)           (490)
       Gains on sale of mortgage loans, net                                                           (409)           (115)
       Gain on sale of credit card portfolio                                                          (700)
       Gains on sale of premises and equipment, net                                                    (11)             (2)
       Loss (gain) on sale of available for sale investment securities, net                              3             (65)
       (Increase) decrease in accrued interest receivable                                             (194)            141
       Income from company-owned life insurance                                                       (546)           (757)
       Increase in other assets                                                                     (4,958)         (1,860)
       Increase (decrease) in accrued interest payable                                                 253             (65)
       Increase in other liabilities                                                                   225           1,349
------------------------------------------------------------------------------------------------------------------------------
        Net cash provided by operating activities                                                    2,845           7,746
------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
   Proceeds from maturities and calls of investment securities:
      Available for sale                                                                           122,888         169,136
      Held to maturity                                                                               1,980           2,140
   Proceeds from sale of available for sale investment securities                                    3,038          35,039
   Purchase of available for sale investment securities                                            (86,759)       (205,585)
   Loans originated for investment, net of principal collected                                     (21,916)        (36,587)
   Purchase of premises and equipment                                                               (2,222)         (1,454)
   Proceeds from sale of equipment                                                                     123               3
------------------------------------------------------------------------------------------------------------------------------
        Net cash provided by (used in) investing activities                                         17,132         (37,308)
------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
   Net increase (decrease) in deposits                                                              12,566         (65,741)
   Net increase in securities sold under agreements to repurchase                                    7,333          44,450
   Proceeds from long-term debt                                                                                      1,800
   Repayments of long-term debt                                                                       (914)         (4,612)
   Net increase (decrease) in other short-term borrowings                                           (1,397)          1,244
   Dividends paid                                                                                   (4,473)         (4,435)
   Purchase of common stock                                                                           (519)            (73)
   Shares issued under Employee Stock Purchase Plan                                                     99
   Stock options exercised                                                                             180             417
------------------------------------------------------------------------------------------------------------------------------
        Net cash provided by (used in) financing activities                                         12,875         (26,950)
------------------------------------------------------------------------------------------------------------------------------
        Net increase (decrease) in cash and cash equivalents                                        32,852         (56,512)
------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at beginning of year                                                      79,260         127,216
------------------------------------------------------------------------------------------------------------------------------
        Cash and cash equivalents at end of period                                          $      112,112   $      70,704
------------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURES
Cash paid during the period for:
   Interest                                                                                 $       12,155   $       8,803
   Income taxes                                                                                      1,000           1,450
Transfers from loans to repossessed assets                                                           2,341           2,954
Cash dividend declared and unpaid                                                                    2,236           2,221
------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to unaudited consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

------------------------------------------------------------------------------------------------------------------------------------
(In thousands, except per share data)                                                                   Accumulated
                                                                                                           Other           Total
Six months ended                      Common Stock         Capital    Retained     Treasury Stock      Comprehensive   Shareholders'
June 30, 2005 and 2004               Shares     Amount     Surplus    Earnings    Shares      Amount      Income          Equity
------------------------------------------------------------------------------------------------------------------------------------
<S>                                  <C>      <C>        <C>         <C>           <C>     <C>          <C>             <C>
  Balance at January 1, 2005         8,234    $ 1,029    $ 20,744    $ 149,985     1,450   $ (41,008)   $    700        $ 131,450
------------------------------------------------------------------------------------------------------------------------------------
Net income                                                               7,944                                              7,944
Other comprehensive income                                                                                  (207)            (207)
Cash dividends declared,
  $.66 per share                                                        (4,477)                                            (4,477)
Purchase of common stock                                                              16        (519)                        (519)
Stock options exercised,
  including related tax benefits         7          1         182                                                             183
Shares issued pursuant
  to Employee Stock Purchase plan        4          1          98                                                              99
------------------------------------------------------------------------------------------------------------------------------------
  Balance at June 30, 2005           8,245    $ 1,031    $ 21,024    $ 153,452     1,466   $ (41,527)    $    493        $ 134,473
------------------------------------------------------------------------------------------------------------------------------------


------------------------------------------------------------------------------------------------------------------------------------
  Balance at January 1, 2004         8,161    $ 1,020    $ 18,670    $ 145,489     1,445   $ (40,830)   $    2,122       $ 126,471
------------------------------------------------------------------------------------------------------------------------------------
Net income                                                               7,249                                               7,249
Other comprehensive income                                                                                  (4,381)         (4,381)
Cash dividends declared,
  $.66 per share                                                        (4,441)                                             (4,441)
Purchase of common stock                                                               2         (73)                          (73)
Stock options exercised,
  including related tax benefits        17          2         418                                                              420
Noncash compensation expense
  attributed to stock option grants                           138                                                              138
------------------------------------------------------------------------------------------------------------------------------------
  Balance at June 30, 2004           8,178    $ 1,022    $ 19,226    $ 148,297     1,447   $ (40,903)    $  (2,259)      $ 125,383
------------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to unaudited consolidated financial statements.
</TABLE>
<PAGE>



NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1.       BASIS OF PRESENTATION AND NATURE OF OPERATIONS

The consolidated  financial  statements  include the accounts of Farmers Capital
Bank  Corporation  (the  "Company"),   a  financial  holding  company,  and  its
wholly-owned  six bank and two active nonbank  subsidiaries.  Bank  subsidiaries
include  Farmers Bank & Capital Trust Co.  ("Farmers  Bank") in  Frankfort,  KY;
United  Bank & Trust  Co.  in  Versailles,  KY;  Lawrenceburg  National  Bank in
Harrodsburg,  KY; First  Citizens Bank in  Elizabethtown,  KY;  Farmers Bank and
Trust Company  ("Farmers  Georgetown") in Georgetown,  KY; and Kentucky  Banking
Centers,  Inc. in Glasgow, KY. The Company has two active nonbank  subsidiaries,
FCB Services,  Inc. and Kentucky General Holdings,  LLC. FCB Services, Inc. is a
data processing subsidiary located in Frankfort,  KY, which provides services to
the Company's banks as well as unaffiliated  banks.  Kentucky General  Holdings,
LLC holds a 50%  voting  interest  in KHL  Holdings,  LLC,  which is the  parent
company of Kentucky Home Life  Insurance  Company.  Leasing One  Corporation,  a
commercial  leasing  company,  and Farmers  Capital  Insurance  Corporation,  an
insurance  agency,  are wholly-owned  subsidiaries of Farmers Bank. Pro Mortgage
Partners,  LLC, a mortgage  brokerage company,  is a wholly-owned  subsidiary of
Farmers Georgetown.  All significant intercompany  transactions and balances are
eliminated in consolidation.

The  Company  provides  financial  services  through  its  27  locations  in  16
communities  throughout Central Kentucky to individual,  business,  agriculture,
government,   and  educational  customers.  Its  primary  deposit  products  are
checking,  savings, and term certificate accounts.  Its primary lending products
are residential mortgage, commercial lending and leasing, and installment loans.
Substantially  all loans and leases are secured by specific  items of collateral
including business assets,  consumer assets, and commercial and residential real
estate.  Commercial  loans and leases are  expected  to be repaid from cash flow
from operations of businesses. Farmers Bank has served as the general depository
for the Commonwealth of Kentucky for over 70 years and also provides  investment
and other  services to the  Commonwealth.  Other services  include,  but are not
limited to, cash management  services,  issuing letters of credit,  safe deposit
box rental, and providing funds transfer services.  Other financial instruments,
which  potentially  represent  concentrations  of credit risk,  include  deposit
accounts in other financial institutions and federal funds sold.

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

The  financial  information  presented as of any date other than December 31 has
been  prepared  from the books  and  records  without  audit.  The  accompanying
consolidated  financial  statements  have been prepared in  accordance  with the
instructions  to Form 10-Q and Rule 10-01 of  Regulation  S-X and do not include
all of the  information  and the  footnotes  required by  accounting  principles
generally accepted in the United States of America for complete  statements.  In
the opinion of  management,  all  adjustments,  consisting  of normal  recurring
adjustments,  necessary for a fair  presentation  of such financial  statements,
have been included.  The results of operations  for the interim  periods are not
necessarily indicative of the results to be expected for the full year.

For further  information,  refer to the  consolidated  financial  statements and
footnotes  thereto  included in the Company's Annual Report on Form 10-K for the
year ended December 31, 2004.

2.       RECLASSIFICATIONS

Certain   reclassifications   have  been  made  to  the  consolidated  financial
statements of prior periods to conform to the current period presentation. These
reclassifications  do not  affect net  income or total  shareholders'  equity as
previously reported.

3.       NET INCOME PER COMMON SHARE

Basic net income per common  share is  determined  by dividing net income by the
weighted average total number of shares of common stock outstanding. Diluted net
income  per  common  share is  determined  by  dividing  net income by the total
weighted  average number of shares of common stock  outstanding,  plus the total
weighted average number of shares that would be issued upon exercise of dilutive
stock options  assuming  proceeds are used to repurchase  shares pursuant to the
treasury stock method.  Net income per common share computations were as follows
at June 30, 2005 and 2004.

<TABLE>
<CAPTION>

--------------------------------------------------------------------------------------------
                                         Three Months Ended         Six Months Ended
                                              June 30,                  June 30,
(In thousands, except per share data)       2005         2004         2005         2004
--------------------------------------------------------------------------------------------

<S>                                   <C>          <C>          <C>          <C>
Net income, basic and diluted         $    3,888   $    3,741   $    7,944   $    7,249
--------------------------------------------------------------------------------------------

Average shares outstanding                 6,781        6,730        6,786        6,727
Effect of dilutive stock options              37           48           43           53
--------------------------------------------------------------------------------------------
Average diluted shares outstanding         6,818        6,778        6,829        6,780
--------------------------------------------------------------------------------------------


Net income per share, basic           $      .57   $      .56   $     1.17   $     1.08
Net income per share, diluted                .57          .55         1.16         1.07
--------------------------------------------------------------------------------------------
</TABLE>

4.       STOCK-BASED COMPENSATION

In 1997, the Company's Board of Directors  approved a nonqualified  stock option
plan (the "Plan") that  provides for granting of stock  options to key employees
and officers of the Company. The Plan was subsequently ratified by the Company's
shareholders  at its annual  shareholders'  meeting  held on May 12,  1998,  the
measurement  date of the options  granted  during  1997.  All stock  options are
awarded at a price equal to the fair market value of the Company's  common stock
at the date the options are granted.  The Company applies Accounting  Principles
Board ("APB") Opinion No. 25 and related  interpretations  in accounting for its
Plan.  Accordingly,  since  options were granted  during 1997 at the fair market
value of the  Company's  stock  on the  grant  date,  and the  measurement  date
occurred during 1998, the Company recognized noncash  compensation  expense over
the vesting  period of the options,  which term ended during 2004,  based on the
intrinsic  value  of the  stock  options  measured  on the  date of  shareholder
ratification of the Plan.

The Company granted 40,049 and 54,000  additional  options under the Plan during
2004  and  2000 in  which  there is no  compensation  expense  being  recognized
pursuant to APB No. 25. In addition,  the Company issued shares  pursuant to its
Employee Stock Purchase Plan ("ESPP") during each of the quarters beginning with
the  quarter  ended  September  30, 2004 and  recorded  no related  compensation
expense.  Had  compensation  expense been determined under the fair value method
described in the Financial  Accounting  Standards  Board  ("FASB")  Statement of
Financial  Accounting  Standards  ("SFAS") No. 123,  Accounting for  Stock-Based
Compensation,   as  amended  by  SFAS  No.  148,   Accounting  for   Stock-Based
Compensation-Transition  and Disclosure, the Company's net income and income per
common share would have been as shown in the following table.

<TABLE>
<CAPTION>

------------------------------------------------------------------------------------------------------------------------
                                                               Three Months Ended          Six Months Ended
                                                                    June 30,                   June 30,
(In thousands, except per share data)                             2005         2004          2005          2004
------------------------------------------------------------------------------------------------------------------------
<S>                                                          <C>         <C>           <C>           <C>
NET INCOME
  As reported                                                $    3,888  $    3,741    $    7,944    $    7,249
  Add:  Stock-based employee compensation expense
        included in reported net income, net of related
        tax effects                                                              45                          90
  Less: Stock-based compensation expense determined
        under fair value based method for all awards, net          (18)         (58)          (80)         (117)
        of related tax effects
------------------------------------------------------------------------------------------------------------------------
Proforma                                                     $    3,870  $    3,728    $    7,864    $    7,222
------------------------------------------------------------------------------------------------------------------------
NET INCOME PER COMMON SHARE
  Basic, as reported                                         $     .57   $      .56    $     1.17    $     1.08
  Basic, proforma                                                  .57          .55          1.16          1.07

  Diluted, as reported                                             .57          .55          1.16          1.07
  Diluted, proforma                                                .57          .55          1.15          1.07
------------------------------------------------------------------------------------------------------------------------
</TABLE>


On March 16, 2005 the Compensation Committee of the Company's Board of Directors
acted to approve an immediate  and full  acceleration  of the vesting on options
granted  during  2004.  As a result,  options to purchase  40,049  unvested  and
"out-of-the-money"  shares of the  Company's  common  stock  became  immediately
exercisable as of March 16, 2005.  The exercise  price of these options  remains
unchanged at $34.80 per share.  The closing  price of the  Company's  shares was
$34.50 on March  15,  2005.  None of the  accelerated  options  are  granted  to
directors or executive officers of the Company.

The  purpose  of the  accelerated  vesting  is to allow  the  Company  to reduce
anticipated  future  compensation  expense attributed to its stock option grants
pursuant to recently issued SFAS No. 123 (revised), "Share-Based Payment". Under
SFAS No. 123 (revised),  the Company will be required to recognize  compensation
expense in its income  statement  beginning  January 1, 2006 (in compliance with
SEC Release No.  33-8568) for awards  granted or modified on or after that date,
as well as recognizing  compensation expense for the portion of existing options
that vest January 1, 2006 or later. Since the options granted during 2004 had an
exercise  price in excess of the market  price on the date of  modification  and
there is no future vesting  requirement,  there will be no compensation  expense
recorded for these options in the current or future  periods.  This represents a
reduction in estimated future compensation expense of approximately  $31,000 and
$26,000 for the twelve  months ended  December 31, 2006 and 2007,  respectively.
The Company  anticipates  that it will record  compensation  expense pursuant to
SFAS No.  123  (revised)  for  unvested  options  from its 2000 grant and shares
issued under its ESPP.

5.       EMPLOYEE STOCK PURCHASE PLAN

The Company's 2004 ESPP was approved by its  shareholders  at the Company's 2004
annual meeting.  The purpose of the ESPP is to provide a means by which eligible
employees  may  purchase,  at a discount,  shares of common stock of the Company
through payroll withholding. The purchase price of the shares is equal to 85% of
their fair market value on specified  dates as defined in the plan. The ESPP was
effective  July 1, 2004.  There were 1,820 shares and 3,420 shares  issued under
the plan during the current  three and  six-month  periods  ended June 30, 2005.
Compensation  cost  related  to the ESPP  included  in the  proforma  net income
disclosure in the table in Note 4 above was $7,000 and $14,000 for the three and
six-month periods ended June 30, 2005, respectively.

6.       SUBSEQUENT EVENT - CITIZENS BANCORP, INC.

On July 1, 2005 the Company  announced  the signing of an agreement  and plan of
merger with  Citizens  Bancorp,  Inc.  ("Citizens")  whereby  Citizens  would be
acquired in a cash and stock transaction valued at $38.0 million.  Approximately
55% of the purchase price will be paid in cash and the remaining  amount will be
in the form of newly issued shares of the Company's  common stock.  In July 2005
the Company  issued $25.0  million of Trust  Preferred  Securities in connection
with this plan of merger.

Citizens is a bank holding company  headquartered  in Newport,  Kentucky and the
parent  corporation  of Citizens  Bank of  Northern  Kentucky,  Inc.  ("Citizens
Bank").   Pending  the  required  approvals  from  the  appropriate   regulatory
authorities  and subject to the  satisfaction of the conditions set forth in the
definitive  agreement,  this  transaction is expected to close during the fourth
quarter of 2005.  Citizens  Bank  operates  six offices  located in Campbell and
Kenton Counties in Kentucky. As of June 30, 2005, Citizens Bank had total assets
of $186 million,  total loans (net of unearned  income) of $150  million,  total
deposits of $163 million, and shareholders' equity of $16.3 million.

7.       SUBSEQUENT EVENT - TRUST PREFERRED SECURITIES AND SUBORDINATED NOTES

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

The Trusts used the proceeds  from the sale of preferred  securities to purchase
the  Company's  junior  subordinated  notes in amounts  and  bearing  terms that
parallel  the  amounts and terms of the  respective  preferred  securities.  The
subordinated  notes mature in 2035 and bear a floating  interest  rate  (current
three-month LIBOR plus 150 basis points in the case of the notes held by Trust I
and  current  three-month  LIBOR plus 165 basis  points in the case of the notes
held by  Trust  II).  Interest  on the  notes  is  payable  quarterly  beginning
September 30, 2005.

The subordinated notes are redeemable in whole or in part,  without penalty,  at
the Company's  option on or after September 30, 2010 and mature on September 30,
2035.  The notes are junior in right of payment of all present and future senior
indebtedness.

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

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

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

FORWARD-LOOKING STATEMENTS

This report contains  forward-looking  statements  under the Private  Securities
Litigation Reform Act of 1995 that involve risks and uncertainties. Although the
Company believes that the assumptions underlying the forward-looking  statements
contained herein are reasonable, any of the assumptions could be inaccurate, and
therefore,  there  can  be no  assurance  that  the  forward-looking  statements
included  herein will prove to be  accurate.  Factors  that could  cause  actual
results to differ from the results discussed in the  forward-looking  statements
include,  but are not limited to: economic  conditions  (both generally and more
specifically in the markets in which the Company and its subsidiaries  operate);
competition  for the  Company's  customers  from other  providers  of  financial
services; government legislation and regulation (which changes from time to time
and over which the Company has no control);  changes in interest rates; material
unforeseen  changes  in the  liquidity,  results  of  operations,  or  financial
condition of the Company's customers;  and other risks detailed in the Company's
filings with the Securities and Exchange Commission,  all of which are difficult
to predict and many of which are beyond the control of the Company.  The Company
expressly  disclaims  any intent or  obligation  to update  any  forward-looking
statements after the date hereof to conform such statements to actual results or
to changes in our opinions or expectations.

RESULTS OF OPERATIONS

                   SECOND QUARTER 2005 VS. SECOND QUARTER 2004
                   -------------------------------------------

The Company reported net income of $3.9 million, an increase of $147 thousand or
3.9% compared to $3.7 million for the same period in 2004. Basic and diluted net
income per share were $.57 for the current three months,  an increase of $.01 or
1.8% and $.02 or 3.6%, respectively compared to $.56 and $.55 in the same period
a year ago. The  operating  results  related to Citizens Bank  (Kentucky),  Inc.
("Citizens  Georgetown")  acquired  on  July  1,  2004  and  Financial  National
Electronic Transfer,  Inc. ("FiNET") acquired on October 8, 2004 are included in
the  financial   results   presented  for  the  current  quarter.   Since  these
acquisitions  occurred in the last half of 2004, there are no comparable results
for the prior  year  period.  Net  loans and  deposits  acquired  from  Citizens
Georgetown  on the date of  purchase  were  $50.1  million  and  $62.4  million,
respectively.  Net assets acquired from FiNET on the date of purchase, primarily
intangibles, were approximately $6.6 million.

The increase in net income for the three months ended June 30, 2005 is primarily
attributed to an increase in net interest  income and a lower provision for loan
losses offset by a higher effective federal income tax rate. Net interest income
for the current quarter was $11.3 million,  an increase of $751 thousand or 7.1%
compared to $10.5  during the same period a year  earlier.  The  increase in net
interest income in the quarterly comparison can be attributed to higher interest
income, primarily on loans, which offset the growth in interest expense.

The  provision  for  loans  losses  decreased  $465  thousand  or  103.8% in the
three-month  comparison.  The negative provision for loan losses of $17 thousand
for the current  three months is  attributed to a $454 thousand and $4.4 million
reduction in  nonperforming  loans in the current  three and  six-month  periods
ended June 30, 2005 and the sale of the Company's  credit card portfolio  during
the first six months of 2005.  Nonperforming  loans  include  nonaccrual  loans,
restructured  loans,  and loans  past due 90 days or more in which  interest  is
still accruing.  Nonperforming loans and credit card loans typically have larger
allowances due to their identified risk of loss characteristics.

Noninterest income increased $924 thousand or 21.8% in the quarterly comparison.
The  increase  in  noninterest  income  was  led  by an  increase  in  allotment
processing  fees of $444  thousand  or  220.9%  and is  attributed  to the FiNET
acquisition late during 2004. Other significant  increases in noninterest income
include service charges and fees on deposits of $435 thousand or 20.8% and gains
on the sale of mortgage  loans of $150 thousand or 211.3%.  Notable  declines in
noninterest income include income from bank owned life insurance of $22 thousand
or 6.1% due to lower  crediting  rates on the underlying  investments  and lower
service  charges,  commissions,  and fees of $93  thousand  or  13.5%.  Up until
recently,  the underlying  investments  related to the bank owned life insurance
have been repricing in a lower interest rate environment.

Noninterest expenses increased $1.7 million or 17.9% in the current three months
compared to the same period a year ago. These increases offset the $924 thousand
higher  amount of reported  noninterest  income.  The  increase  in  noninterest
expenses occurred across a broad range of line items and is generally attributed
to the  Company's  business  expansion  during  the last half of 2004.  The most
significant  increase  was  salaries  and  employee  benefits,  which  grew $771
thousand  or  14.3%  in the  comparison  as the  average  number  of  full  time
equivalent  employees  rose to 519 from 468.  Other  notable  increases  include
amortization  of  intangibles  of $246  thousand  and  auditing  expenses of $69
thousand  compared to the same period a year earlier.  The effective  income tax
rate  increased  to 24.2% from  20.5%,  resulting  in an  increase in income tax
expense of $273 thousand or 28.2%.

The  return on average  assets  ("ROA")  was 1.09% for the  current  quarter,  a
decrease of 6 basis  points  compared to 1.15%  reported  for the same period in
2004. The decrease in ROA was driven by a 21 basis point increase in noninterest
expenses as a percentage of average total assets and a 10 basis point decline in
net interest margin to 3.73% from 3.83%.  These amounts were partially offset by
a lower  provision  for loan  losses  amounting  to 14 basis  points  and higher
noninterest  income  totaling 15 basis  points.  Other  negative  effects on ROA
include  higher  income tax expense of 3 basis  points and the effect of a lower
earning asset ratio contributing 1 basis point. Return on average equity ("ROE")
was 11.80% for the second  quarter of 2005 compared to 11.93% in the same period
of 2004.  This  represents a decrease of 13 basis points and is  attributed to a
higher  average  equity  balance,  which grew at a faster pace than reported net
income.

NET INTEREST INCOME
-------------------

The trend of the general  interest rate  environment in the current three months
ended June 30, 2005  compared to the same period a year  earlier has been upward
primarily  as a result of  short-term  interest  rate  increases by the Board of
Governors  of the Federal  Reserve  System (the  "Fed").  The Fed has  increased
short-term  interest  rates by 225 basis points in nine equal  increments  of 25
basis points since June 30, 2004. The effects of these rate increases by the Fed
has  generally led to higher  average rates earned and paid on interest  earning
assets and interest  bearing  liabilities  with a faster increase in the average
rates   paid  on   interest   bearing   liabilities   due  to  their   repricing
characteristics.

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

The  Company's  tax  equivalent  ("TE") yield on earning  assets for the current
three  months was 5.8%,  an  increase  of 42 basis  points from 5.3% in the same
period a year ago. The cost of funds for the current  three months was 2.3%,  an
increase of 59 basis points  compared to 1.8% in the same period a year earlier.
A goal of the Company in the current  interest rate  environment  is to increase
earning assets while maintaining the current  relatively low interest rates paid
on interest  bearing  liabilities.  The Company  strives to accomplish this goal
while  providing  excellent  service to its customers and  maintaining  its core
deposit  base.  Maintaining  the  relatively  low  cost  of  funds  is  becoming
increasingly  difficult  due to the recent  rise in general  interest  rates and
competitive market forces. Average earning assets increased $105 million or 9.0%
to $1.3 billion in the quarterly  comparison,  helped in part to the acquisition
of Citizens  Georgetown  during the last half of 2004.  As a percentage of total
average assets,  earning assets decreased 59 basis points to 88.47% from 89.06%.
This decrease had the effect of reducing ROA by one basis point in the quarterly
comparison.

Interest income results from interest earned on earning assets,  which primarily
include loans and investment  securities.  Interest income is affected by volume
(average  balance),  composition of earning assets, and the related rates earned
on those assets.  Total interest income for the second quarter of 2005 was $17.7
million,  an  increase  of $2.8  million  or 18.9%  from the same  period in the
previous  year.  The growth in interest  income was mainly  attributed to higher
interest income on loans.  Interest income on loans increased mainly as a result
of higher  average loan balances  outstanding  resulting  from both the Citizens
Georgetown  acquisition and internally  generated loan growth. The Company's tax
equivalent  yield on earning assets for the current period was 5.8%, an increase
of 42 basis points compared to the same period a year ago.

Interest and fees on loans was $14.3 million, an increase of $2.5 million mainly
due to higher  average loan balances  outstanding  along with an increase in the
average  rate  earned.  Average  loans  increased  $105 million or 13.4% to $888
million in the comparison due to higher loan demand in what remains a relatively
low interest rate environment and, to a lesser extent, the loans acquired in the
Citizens  Georgetown  acquisition.  On  July  1,  2004,  the  Company  purchased
approximately  $50.1  million  in  loans  related  to  the  Citizens  Georgetown
acquisition. The tax equivalent yield on loans increased 39 basis points to 6.5%
from 6.1% in the quarterly  comparison.  Interest on taxable securities was $2.0
million,  relatively  unchanged in the comparison as a $16.4 million decrease in
the average  balance  outstanding was offset by a 26 basis point increase in the
average rate  earned.  Interest on  nontaxable  securities  was also  relatively
unchanged  at $963  thousand.  A $1.6  million  decline in the  average  balance
outstanding  coupled  with a 10 basis point  decrease in the average rate earned
resulted  in a decrease  in  interest  income on  nontaxable  securities  of $22
thousand  or  2.2%  in  the  comparison.  Interest  on  short-term  investments,
including  time  deposits in other banks,  federal  funds sold,  and  securities
purchased under agreements to resell, increased $320 thousand due to a 211 basis
point  increase  in the  average  rate earned to 3.1% from 1.0% and, to a lesser
extent, an increase in the average balance outstanding of $17.9 million or 51.7%
to $52.5  million  from  $34.6  million.  The  higher  average  rate  earned  on
short-term  investments  is closely  related to the increases in general  market
interest rates  resulting  from the Fed's increase of short-term  interest rates
over the last year.

Interest   expense   results  from  incurring   interest  on  interest   bearing
liabilities,  which include interest bearing  deposits,  federal funds purchased
and securities  sold under  agreements to repurchase,  and other borrowed funds.
Interest  expense  is  affected  by  volume,  composition  of  interest  bearing
liabilities,  and the related rates paid on those  liabilities.  Total  interest
expense was $6.4 million for second quarter of 2005, an increase of $2.1 million
or  47.4%  from the  same  period  in prior  year.  Interest  expense  increased
primarily as a result of higher average rates paid on interest bearing deposits,
with an increase in average balances  outstanding of certain deposit  categories
contributing to a smaller  degree.  The Company's cost of funds was 2.3% for the
second  quarter of 2005,  an increase of 59 basis points from 1.8% for the prior
year.  The  increase in cost of funds was led by a 180 basis  point  increase in
federal funds  purchased and  securities  sold under  agreements to  repurchase,
which  generally  reprice more quickly than other  interest  bearing  sources of
funds and correlates  with the increase in general  short-term  market  interest
rates.

Interest  expense on time  deposits,  the largest  component  of total  interest
expense,  increased  $1.2  million or 42.1% to $4.1  million.  The  increase was
driven mainly by a $97.6 million or 22.7% higher average balance  outstanding in
the  current  period  that  was  boosted  by the  promotion  of the  FlexSpender
certificate  of deposit  product  during the last half of 2004 and the effect of
the $62.4 million additional deposits from the Citizens Georgetown  acquisition.
In addition,  the average rate paid on time  deposits rose by 42 basis points to
3.1% from 2.7% a year earlier. Interest expense on savings deposits and interest
bearing  demand  deposits  increased $187 thousand or 45.1% and $295 thousand or
101.4%, respectively. These increases were due almost entirely to an increase in
the average  rates paid on savings and interest  bearing  demand  deposits of 37
basis points or 42.5% and 46 basis points or 93.9%,  respectively.  The increase
in average rates paid follows the trend of increasing  general short-term market
interest rates between the comparable periods.  The average outstanding balances
of savings and interest  bearing  demand  deposits grew $2.0 million or 1.0% and
$9.5 million or 4.0%, respectively.

The net  interest  margin (TE)  decreased  10 basis  points to 3.73%  during the
second  quarter of 2005  compared  to 3.83% in the second  quarter of 2004.  The
decrease in net  interest  margin is  primarily  attributed  to a 17 basis point
decrease in the spread between rates earned on earning assets and the rates paid
on interest  bearing  liabilities to 3.41% in the current  quarter from 3.58% in
the second quarter of 2004. The effect of noninterest  bearing  sources of funds
offset the 17 basis  point  lower  spread by 7 basis  points,  resulting  in the
decrease in net interest  margin.  The effect of noninterest  bearing sources of
funds on net interest margin typically increases in a rising rate environment.



<PAGE>

The  following  tables  present  an  analysis  of net  interest  income  for the
quarterly periods ended June 30.
<TABLE>
<CAPTION>

DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY:  INTEREST RATES AND INTEREST DIFFERENTIAL
-------------------------------------------------------------------------------------------------------------------------------
Quarter Ended June 30,                                          2005                                     2004
-------------------------------------------------------------------------------------------------------------------------------
                                                  Average                     Average        Average                 Average
(In thousands)                                    Balance        Interest        Rate        Balance     Interest       Rate
-------------------------------------------------------------------------------------------------------------------------------
<S>                                          <C>               <C>              <C>     <C>            <C>             <C>
EARNING ASSETS
Investment securities
  Taxable                                    $   236,035       $   2,045        3.48%   $   252,474    $   2,021       3.22%
  Nontaxable(1)                                   94,571           1,412        5.99         96,168        1,456       6.09
Time deposits with banks, federal
   funds sold and securities purchased
   under agreements to resell                     52,475             405        3.10         34,595           85        .99
Loans(1,2,3)                                     888,004          14,374        6.49        783,088       11,885       6.10
-------------------------------------------------------------------------------------------------------------------------------
   Total earning assets                        1,271,085       $  18,236        5.75%     1,166,325    $  15,447       5.33%
-------------------------------------------------------------------------------------------------------------------------------
Allowance for loan losses                        (12,402)                                   (11,383)
-------------------------------------------------------------------------------------------------------------------------------
   Total earning assets, net of
   allowance for loan losses                   1,258,683                                  1,154,942
-------------------------------------------------------------------------------------------------------------------------------
NONEARNING ASSETS
Cash and due from banks                           87,651                                     91,741
Premises and equipment, net                       27,452                                     24,242
Other assets                                      62,998                                     38,611
-------------------------------------------------------------------------------------------------------------------------------
   Total assets                              $ 1,436,784                                $ 1,309,536
-------------------------------------------------------------------------------------------------------------------------------
INTEREST BEARING LIABILITIES
Deposits
  Interest bearing demand                    $   246,320       $     586         .95%   $   236,795    $     291        .49%
  Savings                                        194,135             602        1.24        192,147          415        .87
  Time                                           528,062           4,116        3.13        430,452        2,896       2.71
Federal funds purchased and
   securities sold under agreements
   to repurchase                                  76,962             571        2.98         84,941          249       1.18
Other borrowed funds                              53,336             527        3.96         54,309          493       3.65
-------------------------------------------------------------------------------------------------------------------------------
   Total interest bearing liabilities          1,098,815       $   6,402        2.34%       998,644    $   4,344       1.75%
-------------------------------------------------------------------------------------------------------------------------------
NONINTEREST BEARING LIABILITIES
Commonwealth of Kentucky deposits                 46,502                                     41,075
Other demand deposits                            148,699                                    134,952
Other liabilities                                 10,643                                      8,734
-------------------------------------------------------------------------------------------------------------------------------
   Total liabilities                           1,304,659                                  1,183,405
-------------------------------------------------------------------------------------------------------------------------------
   Shareholders' equity                          132,125                                    126,131
-------------------------------------------------------------------------------------------------------------------------------
   Total liabilities and shareholders'
   equity                                    $ 1,436,784                                $ 1,309,536
-------------------------------------------------------------------------------------------------------------------------------
Net interest income                                               11,834                                  11,103
TE basis adjustment                                                 (534)                                   (554)
-------------------------------------------------------------------------------------------------------------------------------
   Net interest income                                         $  11,300                               $  10,549
-------------------------------------------------------------------------------------------------------------------------------
Net interest spread                                                             3.41%                                  3.58%
Impact of noninterest bearing sources
   of funds                                                                      .32                                    .25
-------------------------------------------------------------------------------------------------------------------------------
Net interest margin                                                             3.73%                                  3.83%
-------------------------------------------------------------------------------------------------------------------------------

(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 $621  thousand and $625 thousand in 2005 and 2004, respectively.
</TABLE>


<PAGE>
<TABLE>
<CAPTION>



ANALYSIS OF CHANGES IN NET INTEREST INCOME (TAX EQUIVALENT BASIS)
-----------------------------------------------------------------------------------------------------------------
(In thousands)                                                         Variance         Variance Attributed to
Quarter Ended June 30,                                             2005/2004(1)          Volume           Rate
-----------------------------------------------------------------------------------------------------------------
<S>                                                                 <C>            <C>           <C>
INTEREST INCOME
Taxable investment securities                                       $       24     $      (575)  $        599
Nontaxable investment securities(2)                                        (44)            (22)           (22)
Time deposits with banks, federal funds sold and
   securities purchased under agreements to resell                         320              62            258
Loans(2)                                                                 2,489           1,685            804
-----------------------------------------------------------------------------------------------------------------
    Total interest income                                                2,789           1,150          1,639
-----------------------------------------------------------------------------------------------------------------
INTEREST EXPENSE
Interest bearing demand deposits                                           295              12            283
Savings deposits                                                           187               4            183
Time deposits                                                            1,220             725            495
Federal funds purchased and securities sold under
   agreements to repurchase                                                322            (158)           480
Other borrowed funds                                                        34             (53)            87
-----------------------------------------------------------------------------------------------------------------
    Total interest expense                                               2,058             530          1,528
-----------------------------------------------------------------------------------------------------------------
Net interest income                                                 $      731     $       620   $        111
-----------------------------------------------------------------------------------------------------------------
Percentage change                                                        100.0%           84.8%          15.2%
-----------------------------------------------------------------------------------------------------------------

(1)The  changes  that 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%.
</TABLE>

NONINTEREST INCOME

Noninterest  income  totaled  $5.2  million for the second  quarter of 2005,  an
increase of $924 thousand or 21.8%  compared to $4.2 million for the same period
in the prior year.  Noninterest income represents 22.6% of total revenue for the
current  quarter,  an increase of 43 basis points from 22.1% for the same period
last year. The increase in noninterest income is due primarily to an increase in
allotment  processing fees of $444 thousand  attributed to the FiNET acquisition
during the fourth quarter of 2004,  higher  service  charges and fees on deposit
accounts of $435 thousand or 20.8%,  and an increase in net gains on the sale of
mortgage loans of $150 thousand. The increased net gains on the sale of mortgage
loans is attributed to higher mortgage loans originated for sale of $3.6 million
or 61.1% in the  comparison  and is mainly  attributed to the  operations of Pro
Mortgage  Partners,  a mortgage  company the Company  opened  during  2004.  The
increase in service  charges and fees on deposit  accounts is due mainly to fees
related to new deposit accounts resulting from the FiNET acquisition. Since this
is a recent  acquisition,  the  increase in service  charges and fees related to
these  deposit  accounts  is  expected  to level off once  there are  comparable
periods in the future.

Other service charges,  commissions,  and fees declined $93 thousand or 13.5% to
$596  thousand  from  $689  thousand  in  the  quarterly  comparison,   with  no
significant  decline in any single  category.  Income  from  company-owned  life
insurance  was $340  thousand,  a  decrease  of $22  thousand  or 6.1% from $362
thousand  in the second  quarter of 2004.  The  decline is  attributed  to lower
crediting rates on the underlying  investments.  Until recently,  the underlying
investments  related to the  company-owned  life  insurance  have been repricing
downward in a lower interest rate environment.

NONINTEREST EXPENSE

Total  noninterest  expenses  were $11.3 million for the three months ended June
30, 2005,  an increase of $1.7  million or 17.9%  compared to the same period in
2004. The increase in  noninterest  expenses are mainly a result of the Citizens
Georgetown and FiNET  acquisitions and the expansion of banking  operations into
the Lexington, Kentucky market, all of which occurred during the last six months
of 2004. The largest increase in noninterest  expenses was salaries and employee
benefits,  which  increased $771 thousand or 14.3% as the average number of full
time  equivalent  employees  rose  10.9%  to 519  from  468  in the  three-month
comparison.  A  significant  portion  of the  increase  in full time  equivalent
employees is attributed to the Citizens  Georgetown and FiNET  acquisitions  and
additional  employees at Pro  Mortgage  Partners.  Salaries and related  payroll
taxes  increased  $585  thousand  or  13.6%  to $4.9  million  due to  increased
personnel and normal salary increases.  Noncash  compensation expense related to
the Company's nonqualified stock option plan declined $68 thousand or 100.0% due
to the structure of the vesting schedule.  All options for which the Company had
previously recorded noncash  compensation expense became fully vested during the
fourth  quarter of 2004.  Therefore,  there is no further  noncash  compensation
expense recorded for these stock options.  Employee  benefit expenses  increased
$255  thousand  or 25.0% due mainly to  unusually  low health  care costs in the
prior year.

Occupancy  expense,  net of rental  income,  increased $97 thousand or 15.3% and
totaled $731 thousand at June 30, 2005. The increase was driven by the Company's
business  acquisitions  and expansion  during the final half of 2004.  Equipment
expenses were $681 thousand, an increase of $140 thousand or 25.9% that was also
driven by business  expansion.  Data processing and communications  expense rose
$126  thousand or 12.9% to $1.1  million  from $973  thousand.  The  increase is
attributed  to  larger  processing  volumes  in the  comparison  periods.  Other
noninterest  expenses increased $537 thousand or 35.6% to $2.0 million from $1.5
million.  Included in this increase is $123 thousand of amortization  expense of
core deposit intangibles and $123 thousand of customer relationship  intangibles
related to the Company's acquisition activity in which there is no corresponding
amount for the second  quarter of 2004.  Additionally,  there was an increase in
auditing  expenses of approximately $69 thousand in the current quarter compared
to the same  period  in 2004  attributed  to  Sarbanes-Oxley  compliance,  a $78
thousand  increase in net expenses  attributed to the Company's  foreclosed real
estate  properties,  and  increases in other  general  expenses  relating to the
Company's acquisitions and business expansion activity during 2004.

INCOME TAXES

Income tax expense for the second quarter of 2005 was $1.2 million,  an increase
of $273 thousand or 28.2% from the same period a year earlier. The effective tax
rate  increased 364 basis points to 24.2% from 20.5% in 2004.  The change in the
effective  tax rate is due to  increased  revenues  from  taxable  sources and a
decrease in revenue from nontaxable investment securities.

              FIRST SIX MONTHS OF 2005 VS. FIRST SIX MONTHS OF 2004
              -----------------------------------------------------

Net income for the six months ended June 30, 2005 was $7.9  million  compared to
net income of $7.2  million  for the same  period in 2004,  an  increase of $695
thousand or 9.6%. Basic and diluted net income per share was $1.17 and $1.16 for
the  current  six  months,  an  increase of $.09 on both a basic and diluted per
share basis compared to $1.08 and $1.07 for the prior year.  This  represents an
increase of 8.3% and 8.4% on a basic and diluted per share basis,  respectively.
The operating  results related to Citizens  Georgetown  acquired on July 1, 2004
and FiNET  acquired  on October 8, 2004 are  included in the  financial  results
presented for the current six-month period. Since these acquisitions occurred in
the last  half of 2004,  there are no  comparable  results  for the  prior  year
period. Net loans and deposits acquired from Citizens  Georgetown on the date of
purchase were $50.1 million and $62.4 million, respectively. Net assets acquired
from FiNET on the date of purchase,  primarily  intangibles,  were approximately
$6.6 million.

The  increase in net income for the six months  ended June 30, 2005 is primarily
attributed to an increase in net interest  income and a lower provision for loan
losses offset by a higher effective federal income tax rate. Net interest income
for the current  six months was $22.4  million,  an increase of $1.5  million or
7.2%  compared to $20.9 during the same period a year  earlier.  The increase in
net interest  income in the  quarterly  comparison  can be  attributed to higher
interest  income,  primarily  on loans,  which  offset  the  growth in  interest
expense, mainly on deposits.

The  provision  for  loans  losses  decreased  $877  thousand  or  107.9% in the
six-month comparison. The negative provision for loan losses of $64 thousand for
the current  period is attributed to a $4.4 million  reduction in  nonperforming
loans in the current  six-month  period  ended June 30, 2005 and the sale of the
Company's   credit  card  portfolio   during  the  first  six  months  of  2005.
Nonperforming loans include nonaccrual loans, restructured loans, and loans past
due 90 days or more in which interest is still accruing. Nonperforming loans and
credit card loans typically have larger  allowances due to their identified risk
of loss characteristics.

Noninterest income increased $2.4 million or 28.4% in the six-month  comparison.
The increase in noninterest  income was led by higher allotment  processing fees
of $898  thousand  or 224.5% and is  attributed  to the FiNET  acquisition  late
during 2004. Other significant  increases in noninterest  income include service
charges  and fees on deposits  of $800  thousand or 20.1%,  gains on the sale of
mortgage loans of $294 thousand or 255.7%,  and a one-time gain of $700 thousand
on the sale of the  Company's  $3.2  million  credit card  portfolio  during the
current six months. Under the sale agreement, the Company will continue to offer
its customers  credit cards via an agency  arrangement  with the purchaser.  All
existing  credit card  accounts on the purchase date  remained  active.  Notable
declines in noninterest  income include income from bank owned life insurance of
$196  thousand  or  25.6%  due  to  lower  crediting  rates  on  the  underlying
investments and lower service charges, commissions, and fees of $139 thousand or
10.1%. Up until recently,  the underlying  investments related to the bank owned
life insurance have been repricing in a lower interest rate environment.

Noninterest  expenses  increased $3.5 million or 18.4% in the current six months
compared to the same period a year ago. These increases  offset the $2.4 million
higher  amount of reported  noninterest  income.  The  increase  in  noninterest
expenses occurred across a broad range of line items and is generally attributed
to the  Company's  business  expansion  during  the last half of 2004.  The most
significant increase was salaries and employee benefits, which grew $1.3 million
or 12.4%  in the  comparison  as the  average  number  of full  time  equivalent
employees rose to 517 from 462. Other notable increases include  amortization of
intangibles of $491 thousand and auditing  expenses of $187 thousand compared to
the same period a year earlier. The effective income tax rate increased to 22.8%
from 20.3%,  resulting in an increase in income tax expense of $504  thousand or
27.3%.

ROA was 1.11% for the  current  six-month  period,  a decrease  of 1 basis point
compared to 1.12% reported for the same period in 2004. Significant factors that
positively  impacted ROA and their amount  include the lower  provision for loan
losses of 14 basis  points and higher  noninterest  income  relative  to average
assets of 21 basis  points.  Significant  factors that  negatively  impacted ROA
include  a lower net  interest  margin of 13 basis  points,  higher  noninterest
expenses relative to average assets of 22 basis points,  and higher income taxes
contributing  2 basis  points.  ROE was  12.16%  for the first six month of 2005
compared to 11.51% for the same period of 2004.  This  represents an increase of
65 basis  points and is  attributed  to a 67 basis point  increase in  financial
leverage to 10.9% from 10.3% combined with the increase in net income. Financial
leverage  represents the degree in which borrowed  funds,  as opposed to equity,
are used in the funding of assets.

NET INTEREST INCOME

The trend of the general  interest  rate  environment  in the current six months
ended June 30, 2005  compared to the same period a year  earlier has been upward
primarily as a result of short-term  interest rate increases by the Fed. The Fed
has  increased  short-term  interest  rates by 225 basis  points  in nine  equal
increments  of 25 basis points  since June 30,  2004.  The effects of these rate
increases by the Fed has generally  led to higher  average rates earned and paid
on  interest  earning  assets and  interest  bearing  liabilities  with a faster
increase in the average rates paid on interest bearing  liabilities due to their
repricing characteristics.

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

The Company's tax equivalent  yield on earning assets for the current six months
was 5.7%,  an  increase  of 30 basis  points from 5.4% in the same period a year
ago.  The cost of funds for the current  six months was 2.3%,  an increase of 49
basis points  compared to 1.8% in the same period a year earlier.  A goal of the
Company in the current  interest rate  environment is to increase earning assets
while  maintaining  the current  relatively  low interest rates paid on interest
bearing liabilities. The Company strives to accomplish this goal while providing
excellent  service to its  customers  and  maintaining  its core  deposit  base.
Maintaining  the  relatively low cost of funds is becoming more difficult due to
the recent rise in general interest rates and competitive market forces. Average
earning assets  increased $124 million or 10.8% to $1.3 billion in the six month
comparison,  helped in part to the acquisition of Citizens Georgetown during the
last half of 2004.  As a percentage  of total  average  assets,  earning  assets
decreased 9 basis points to 88.97% from 89.06%.

Interest income results from interest earned on earning assets,  which primarily
include loans and investment  securities.  Interest income is affected by volume
(average  balance),  composition of earning assets, and the related rates earned
on those  assets.  Total  interest  income  for the first six months of 2005 was
$34.8 million,  an increase of $5.2 million or 17.5% from the same period in the
previous  year.  The growth in interest  income was mainly  attributed to higher
interest  income on loans,  with an  increase  in the  average  rate earned also
contributing to the increase.  Interest  income on loans  increased  mainly as a
result of higher  average  loan  balances  outstanding  resulting  from both the
Citizens  Georgetown  acquisition  and  internally  generated  loan growth.  The
Company's  tax  equivalent  yield on earning  assets for the current  period was
5.7%, an increase of 30 basis points compared to the same period a year ago.

Interest  and fees on loans was $28.0  million,  an increase of $4.5  million or
19.0%  mainly due to higher  average  loan  balances  outstanding  along with an
increase in the average rate earned.  Average  loans  increased  $110 million or
14.2% to $884  million  in the  comparison  due to  higher  loan  demand in what
remains a relatively low interest rate environment and, to a lesser extent,  the
loans  acquired in the Citizens  Georgetown  acquisition.  On July 1, 2004,  the
Company purchased  approximately  $50.1 million in loans related to the Citizens
Georgetown  acquisition.  The tax equivalent  yield on loans  increased 27 basis
points  to 6.4% from  6.2% in the  six-month  comparison.  Interest  on  taxable
securities was $4.0 million, a decrease of $28 thousand or less than 1.0% in the
comparison as an $18.3 million  decrease in the average balance  outstanding was
offset by a 24 basis  point  increase in the average  rate  earned.  Interest on
nontaxable  securities was also relatively unchanged and totaled $2.0 million in
the  current  and  comparable   period  a  year  ago.   Interest  on  short-term
investments,  including  time deposits in other banks,  federal funds sold,  and
securities purchased under agreements to resell,  increased $732 thousand due to
a 168 basis point  increase in the average rate earned to 2.7% from 1.0% and, to
a lesser extent, an increase in the average balance outstanding of $31.4 million
or 83.2% to $69.2 million from $37.7 million.  The higher average rate earned on
short-term  investments  correlates to the increases in general market  interest
rates  resulting from the Fed's  increase of short-term  interest rates over the
last year.

Interest   expense   results  from  incurring   interest  on  interest   bearing
liabilities,  which include interest bearing  deposits,  federal funds purchased
and securities  sold under  agreements to repurchase,  and other borrowed funds.
Interest  expense  is  affected  by  volume,  composition  of  interest  bearing
liabilities,  and the related rates paid on those  liabilities.  Total  interest
expense  was $12.4  million  for first six months of 2005,  an  increase of $3.7
million  or 42.0%  from the same  period in the  prior  year.  Interest  expense
increased  primarily as a result of higher  average  rates paid  throughout  the
entire deposit  portfolio,  with an increase in average balances  outstanding of
certain deposit categories, particularly time deposits, contributing to a lesser
degree.  The Company's cost of funds was 2.3% for the six months ending June 30,
2005, an increase of 49 basis points from 1.8% for the prior year.  The increase
in  cost of  funds  was led by a 158  basis  point  increase  in  federal  funds
purchased and securities  sold under  agreements to repurchase,  which generally
reprice more quickly than other interest bearing sources of funds and correlates
with the increase in general short-term market interest rates.

Interest  expense on time  deposits,  the largest  component  of total  interest
expense,  increased  $2.1  million or 35.8% to $8.0  million.  The  increase was
driven mainly by a $98.5 million or 23.0% higher average balance  outstanding in
the  current  six-month  period  that  was  boosted  by  the  promotion  of  the
FlexSpender  certificate of deposit product during the last half of 2004 and the
effect of the $62.4 million  additional  deposits  from the Citizens  Georgetown
acquisition.  In addition,  the average rate paid on time deposits  increased 30
basis  points to 3.1% from 2.8% a year  earlier.  Interest  expense  on  savings
deposits and interest  bearing demand deposits  increased $323 thousand or 39.2%
and $549  thousand  or 95.8%,  respectively.  These  increases  were due  almost
entirely  to an  increase  in the  average  rates paid on savings  and  interest
bearing  demand  deposits  of 32 basis  points or 36.8%  and 42 basis  points or
85.7%, respectively.  The increase in average rates paid follows upward movement
in general short-term market interest rates between the comparable periods.  The
average  outstanding  balances of savings and interest  bearing demand  deposits
grew $3.2 million or 1.7% and $11.9 million or 5.0%, respectively.

The net interest margin (TE) decreased 13 basis points to 3.70% during the first
six months of 2005 compared to 3.83% in the same period of 2004. The decrease in
net interest  margin is primarily  attributed to a 19 basis point decline in the
spread  between  rates  earned on earning  assets and the rates paid on interest
bearing  liabilities to 3.39% in the current period from 3.58% in the comparable
period in 2004. The effect of noninterest bearing sources of funds offset the 19
basis point lower  spread by 6 basis  points,  resulting  in the decrease in net
interest  margin.  The  effect of  noninterest  bearing  sources of funds on net
interest margin typically increases in a rising rate environment.

<PAGE>

The following tables present an analysis of net interest income for the six
months ended June 30.

<TABLE>
<CAPTION>
DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY:  INTEREST RATES AND INTEREST DIFFERENTIAL
-----------------------------------------------------------------------------------------------------------------------------
Six Months Ended June 30,                                     2005                                      2004
-----------------------------------------------------------------------------------------------------------------------------
                                                  Average                   Average         Average                   Average
(In thousands)                                    Balance        Interest      Rate         Balance       Interest       Rate
-----------------------------------------------------------------------------------------------------------------------------
<S>                                         <C>             <C>               <C>      <C>           <C>                <C>
EARNING ASSETS
Investment securities
  Taxable                                    $   231,957    $      3,957      3.44%    $   250,214   $      3,985       3.20%
  Nontaxable(1)                                   95,082           2,851      6.05          94,121          2,854       6.10
Time deposits with banks, federal
   funds sold and securities purchased
   under agreements to resell                     69,153             917      2.67          37,737            185        .99
Loans(1,2,3)                                     883,769          28,163      6.43         773,642         23,703       6.16
-----------------------------------------------------------------------------------------------------------------------------
   Total earning assets                        1,279,961    $     35,888      5.65%      1,155,714   $     30,727       5.35%
-----------------------------------------------------------------------------------------------------------------------------
Allowance for loan losses                        (12,614)                                  (11,394)
-----------------------------------------------------------------------------------------------------------------------------
   Total earning assets, net of
   allowance for loan losses                   1,267,347                                 1,144,320
-----------------------------------------------------------------------------------------------------------------------------
NONEARNING ASSETS
Cash and due from banks                           82,283                                    92,817
Premises and equipment, net                       27,476                                    24,216
Other assets                                      61,554                                    36,268
-----------------------------------------------------------------------------------------------------------------------------
   Total assets                              $ 1,438,660                               $ 1,297,621
-----------------------------------------------------------------------------------------------------------------------------
INTEREST BEARING LIABILITIES
Deposits
  Interest bearing demand                    $   247,833    $      1,122       .91%    $   235,922   $        573        .49%
  Savings                                        194,001           1,147      1.19         190,787            824        .87
  Time                                           526,693           7,981      3.06         428,162          5,879       2.76
Federal funds purchased and
   securities sold under agreements
   to repurchase                                  81,599           1,105      2.73          81,684            467       1.15
Other borrowed funds                              55,091           1,053      3.85          54,679            995       3.66
-----------------------------------------------------------------------------------------------------------------------------
   Total interest bearing liabilities          1,105,217    $     12,408      2.26%        991,234   $      8,738       1.77%
-----------------------------------------------------------------------------------------------------------------------------
NONINTEREST BEARING LIABILITIES
Commonwealth of Kentucky deposits                 40,577                                    38,729
Other demand deposits                            150,608                                   133,889
Other liabilities                                 10,545                                     7,121
-----------------------------------------------------------------------------------------------------------------------------
   Total liabilities                           1,306,947                                 1,170,973
-----------------------------------------------------------------------------------------------------------------------------
   Shareholders' equity                          131,713                                   126,648
-----------------------------------------------------------------------------------------------------------------------------
   Total liabilities and shareholders'
   equity                                    $ 1,438,660                               $ 1,297,621
-----------------------------------------------------------------------------------------------------------------------------
Net interest income                                               23,480                                   21,989
TE basis adjustment                                               (1,078)                                  (1,095)
-----------------------------------------------------------------------------------------------------------------------------
   Net interest income                                      $     22,402                             $     20,894
-----------------------------------------------------------------------------------------------------------------------------
Net interest spread                                                           3.39%                                     3.58%
Impact of noninterest bearing sources
   of funds                                                                    .31                                       .25
-----------------------------------------------------------------------------------------------------------------------------
Net interest margin                                                           3.70%                                     3.83%
-----------------------------------------------------------------------------------------------------------------------------

(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 $1.2 million in each of the periods presented.
</TABLE>

<PAGE>
<TABLE>
<CAPTION>

ANALYSIS OF CHANGES IN NET INTEREST INCOME (TAX EQUIVALENT BASIS)
--------------------------------------------------------------------------------------------------------
(In thousands)                                                Variance           Variance Attributed to
Six Months Ended June 30,                                   2005/2004(1)         Volume            Rate
--------------------------------------------------------------------------------------------------------
<S>                                                       <C>             <C>              <C>
INTEREST INCOME
Taxable investment securities                             $       (28)    $     (606)      $     578
Nontaxable investment securities(2)                                (3)            51             (54)
Time deposits with banks, federal funds sold and
   securities purchased under agreements to resell                732            241             491
Loans(2)                                                        4,460          3,410           1,050
--------------------------------------------------------------------------------------------------------
    Total interest income                                       5,161          3,096           2,065
--------------------------------------------------------------------------------------------------------
INTEREST EXPENSE
Interest bearing demand deposits                                  549             30             519
Savings deposits                                                  323             14             309
Time deposits                                                   2,102          1,428             674
Federal funds purchased and securities sold under
   agreements to repurchase                                       638             (2)            640
Other borrowed funds                                               58              7              51
--------------------------------------------------------------------------------------------------------
    Total interest expense                                      3,670          1,477           2,193
--------------------------------------------------------------------------------------------------------
Net interest income                                       $      1,491    $    1,619       $    (128)
--------------------------------------------------------------------------------------------------------
Percentage change                                               100.0%         108.6%           (8.6)%
--------------------------------------------------------------------------------------------------------

(1)The changes that 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%.
</TABLE>

NONINTEREST INCOME
------------------

Noninterest  income  totaled  $10.7 million for the first six months of 2005, an
increase of $2.4  million or 28.4%  compared to $8.3 million for the same period
in the prior year.  Noninterest income represents 23.5% of total revenue for the
current  six months,  an  increase  of 155 basis  points from 21.9% for the same
period last year.  The  increase in  noninterest  income is due  primarily to an
increase in allotment  processing fees of $898 thousand  attributed to the FiNET
acquisition  late  during  2004,  higher  service  charges  and fees on  deposit
accounts of $800 thousand or 20.1%,  and an increase in net gains on the sale of
mortgage loans of $294 thousand. The increased net gains on the sale of mortgage
loans is attributed to higher mortgage loans originated for sale of $7.3 million
or 75.3% in the  comparison  and is mainly  attributed to the  operations of Pro
Mortgage  Partners,  a mortgage  company the Company  opened  during  2004.  The
increase in service  charges and fees on deposit  accounts is due mainly to fees
related to new deposit accounts  resulting from the FiNET acquisition during the
fourth  quarter of 2004.  Since this is a recent  acquisition,  the  increase in
service charges and fees related to these deposit  accounts is expected to level
off once there are comparable periods in the future.

Other service charges,  commissions, and fees declined $139 thousand or 10.1% to
$1.2  million  from $1.4  million  in the  six-month  comparison.  The  decrease
occurred  over  many  categories,  with no  significant  decline  in any  single
category. Income from company-owned life insurance was $571 thousand, a decrease
of $196 thousand or 25.6% from $767  thousand in the prior year.  The decline is
attributed  to  lower  crediting  rates  on the  underlying  investments.  Until
recently, the underlying investments related to the company-owned life insurance
have been repricing downward in a lower interest rate environment.

NONINTEREST EXPENSE
-------------------

Total noninterest  expenses were $22.9 million for the six months ended June 30,
2005, an increase of $3.5 million or 18.4%  compared to the same period in 2004.
The  increase  in  noninterest  expenses  are  mainly a result  of the  Citizens
Georgetown and FiNET  acquisitions and the expansion of banking  operations into
the Lexington, Kentucky market, all of which occurred during the last six months
of 2004. The largest increase in noninterest  expenses was salaries and employee
benefits,  which rose $1.3  million or 12.4% as the average  number of full time
equivalent   employees  increased  11.9%  to  517  from  462  in  the  six-month
comparison.  A  significant  portion  of the  increase  in full time  equivalent
employees is attributed to the Citizens  Georgetown and FiNET  acquisitions  and
additional  employees at Pro  Mortgage  Partners.  Salaries and related  payroll
taxes increased $1.3 million or 15.9% to $9.8 million due to increased personnel
and  normal  salary  increases.  Noncash  compensation  expense  related  to the
Company's nonqualified stock option plan declined $138 thousand or 100.0% due to
the  structure  of the vesting  schedule.  All options for which the Company had
previously recorded noncash  compensation expense became fully vested during the
fourth  quarter of 2004.  Therefore,  there is no further  noncash  compensation
expense recorded for these stock options.  Employee  benefit expenses  increased
$132 thousand or 6.1% due mainly to higher health care costs.

Occupancy  expense,  net of rental  income,  increased $193 thousand or 14.9% to
$1.5 million for the six months ended June 30, 2005.  The increase was driven by
the Company's business acquisitions and expansion during the final half of 2004.
Equipment expenses were $1.4 million, an increase of $259 thousand or 23.4% that
was also  driven by  business  expansion.  Data  processing  and  communications
expense  rose $242  thousand or 12.8% to $2.1  million  from $1.9  million.  The
increase is mainly  attributed to higher  processing  volumes in the  comparison
periods.  Other  noninterest  expenses  increased  $1.4 million or 45.2% to $4.5
million  from $3.1  million.  Included  in this  increase  is $245  thousand  of
amortization  expense of core deposit  intangibles and $246 thousand of customer
relationship  intangibles related to the Company's acquisition activity in which
there is no corresponding amount for the six-month period of 2004. Additionally,
there was an increase in auditing expenses of approximately $187 thousand in the
current  six-month  period  compared  to the same period in 2004  attributed  to
Sarbanes-Oxley  compliance,  a $243 thousand increase in net expenses attributed
to the  Company's  foreclosed  real estate  properties,  and  increases in other
general expenses relating to the Company's  acquisitions and business  expansion
activity  during 2004. The increase in net expenses  attributed to the Company's
foreclosed   real  estate   properties  is  unusually   high  since  there  were
approximately  $100 thousand in gains reported in the  comparable  period a year
earlier.

INCOME TAXES
------------

Income  tax  expense  for the first  six  months  of 2005 was $2.3  million,  an
increase  of $504  thousand or 27.3% from the same  period a year  earlier.  The
effective tax rate  increased 253 basis points to 22.8% from 20.3% in 2004.  The
increase in the  effective  tax rate is due to increased  revenues  from taxable
sources and a decrease in revenue from nontaxable investment securities.

FINANCIAL CONDITION

Total assets were $1.4 billion on June 30, 2005, an increase of $21.4 million or
1.5% from the prior  year-end.  The  growth in assets  was the result of a $32.9
million or 41.4% increase in cash and cash equivalents,  a $23.7 million or 2.7%
increase in net loans,  and a $6.5  million or 7.6%  increase  in other  assets,
partially  offset by a decline  in  investment  securities  of $41.7  million or
11.3%.  The $6.5 million  higher other assets total is due mainly to an increase
in other real  estate  owned of $5.9  million or 158.0%.  The  increase in total
assets correlates to additional net funding sources,  primarily $12.6 million or
1.1% in  additional  deposits,  $7.3 million or 12.3%  increase in federal funds
purchased and securities sold under  agreements to repurchase,  offset by a $2.3
million or 4.2% decrease in other  borrowed  funds.  The increase in deposits is
mainly due to higher noninterest  bearing deposits of $23.3 million or 13.5% and
is related  primarily to deposit activity of the  Commonwealth of Kentucky.  The
higher  noninterest  bearing  deposit  totals  was  partially  offset by a $10.8
million or 1.1% decline in interest bearing deposits. Total shareholders' equity
increased  $3.0 million or 2.3% due mainly to net income of $7.9 million  offset
by dividends paid to shareholders of $4.5 million.

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

On an average basis,  total assets were $1.4 billion for the first six months of
2005, an increase of $91.1 million or 6.8% from year-end 2004.  Average  earning
assets,  primarily loans and securities,  were $1.3 billion at June 30, 2005, an
increase of $79.2 million or 6.6% from year-end  2004.  Average  earning  assets
represent 88.9% of total average assets for the six-month  period ended June 30,
2005, a decrease of 13 basis points compared to 89.1% for year-end 2004.

LOANS
-----

Loans,  net of  unearned  income,  totaled  $899  million at June 30,  2005,  an
increase of $22.7 million or 2.6% from year-end  2004.  The  composition  of the
loan portfolio is summarized in the table below.

--------------------------------------------------------------------------------
                                          June 30, 2005        December 31, 2004
(Dollars in thousands)                   Amount        %         Amount       %
--------------------------------------------------------------------------------

Commercial, financial,
   and agriculture                    $   135,804    15.1%   $   134,016   15.3%
Real estate - construction                 67,588     7.5         63,156    7.2
Real estate mortgage - residential        318,464    35.4        313,711   35.8
Real estate mortgage farmland and
   other commercial enterprises           274,313    30.5        251,094   28.6
Installment                                64,666     7.2         75,271    8.6
Lease financing                            38,550     4.3         39,457    4.5
--------------------------------------------------------------------------------
   Total                              $   899,385   100.0%   $   876,705  100.0%
--------------------------------------------------------------------------------

On average,  loans  represented  69.0% of earning  assets during the current six
month period compared to 68.2% for year-end 2004. As loan demand fluctuates, the
available  funds are  reallocated  between  loans and  lower  earning  temporary
investments  or investment  securities,  which  typically  involve a decrease in
credit risk and lower yields.

ALLOWANCE FOR LOAN LOSSES
-------------------------

The  allowance for loan losses was $11.8 million at June 30, 2005, a decrease of
$1.0 million or 8.0% from the prior year-end.  The allowance for loan losses was
1.31% of loans net of unearned  income at June 30,  2005, a decrease of nine and
15 basis  points from 1.40% and 1.46% at March 31, 2005 and  December  31, 2004,
respectively.  The provision for loan losses  decreased  $465 thousand or 103.8%
and $877 thousand or 107.9% in the current  three-month  and six-month  periods,
respectively,  compared to the same  periods in 2004. A negative  provision  for
loans  losses of $17  thousand  and $64  thousand in the  current  three and six
months  periods  resulted  from a $454  thousand and $4.4  million  reduction in
nonperforming  loans in the current three and  six-month  periods ended June 30,
2005.  Additionally,  the Company sold its $3.2 million credit card portfolio in
the current six-month period. These factors contributed to a lower allowance for
loans losses at June 30, 2005.  Nonperforming  loans include  nonaccrual  loans,
restructured  loans,  and loans  past due 90 days or more in which  interest  is
still accruing.  Nonperforming loans and credit card loans typically have larger
allowances due to their identified risk of loss characteristics.

The  Company  had net  charge-offs  of $621  thousand  and $966  thousand in the
current three and six months of 2005, respectively,  compared to net charge-offs
of $324 thousand and $687 thousand in the same periods of 2004.  Annualized  net
charge-offs  represent  .28% and .22% of  average  net  loans  for three and six
months ended June 30, 2005,  respectively compared to .32% at year-end 2004. The
allowance for loan losses as a percentage of nonperforming  loans totaled 209.0%
and 203.9% at June 30, 2005 and  December  31,  2004,  respectively.  Management
continues to emphasize  collection  efforts and  evaluation  of risks within the
loan portfolio.

NONPERFORMING ASSETS
--------------------

Nonperforming  assets for the Company include  nonperforming  loans,  other real
estate owned, and other foreclosed  assets.  Nonperforming  assets totaled $15.4
million at June 30,  2005,  an increase of $1.6  million or 11.3% from the prior
year-end.  Nonperforming  loans totaled $5.6 million at June 30, 2005 a decrease
of $4.4 million or 43.8% compared to $10.0 million at year-end 2004. The decline
in nonperforming  loans was driven primarily by two extensions of credit secured
by real  estate.  One  involves a balance  of  approximately  $1.3  million to a
financially trouble builder secured by multifamily  residential real estate, the
other relates to  approximately  $1.4 million secured by commercial real estate.
The  underlying  collateral  securing  the  credit to the  financially  troubled
builder was  transferred  to the Company  through  foreclosure  during the first
quarter of 2005. The $1.4 million commercial real estate credit was collected in
the first  quarter of 2005.  Nonperforming  loans  represent .6% of loans net of
unearned  income at June 30,  2005,  a  decrease  of 51 basis  points  from 1.1%
compared to year-end 2004.

Other real estate owned was $9.6 million at June 30, 2005.  This  represents  an
increase of $5.9 million or 158.0%  compared to $3.7  million at year-end  2004.
The increase is attributed mainly to the transfer of $6.3 million of residential
real  estate  to the  Company  through  foreclosure  related  to the  previously
disclosed financially troubled builder.

TEMPORARY INVESTMENTS
---------------------

Temporary  investments  consist of interest  bearing deposits in other banks and
federal funds sold and  securities  purchased  under  agreements to resell.  The
Company  uses these funds in the  management  of  liquidity  and  interest  rate
sensitivity.  At June 30, 2005,  temporary  investments  were $29.9  million,  a
decrease of $7.0 million or 19.0%  compared to $36.8  million at year-end  2004.
Temporary  investments  averaged  $69.2  million  during the first six months of
2005, an increase of $28.6 million or 70.6% from year-end  2004. The increase is
primarily a result of the Company's net funding position, which was driven by an
increase  in  average  interest  bearing  deposits  of  $76.0  million  or 8.5%.
Temporary  investments  are  reallocated  as loan  demand  and other  investment
alternatives present the opportunity.

INVESTMENT SECURITIES
---------------------

The investment  securities  portfolio is comprised  primarily of U.S. Government
agency  securities,  mortgage-backed  securities,  and tax-exempt  securities of
states and political subdivisions. Total investment securities were $328 million
on June 30, 2005, a decrease of $41.7 million or 11.3% from year-end 2004.

Total  investment  securities  averaged  $327 million for the current  six-month
period,  a decrease  of $14.2  million or 4.2% from the  average  2004  year-end
balance.  The decrease in average  investment  securities  was driven by a $35.1
million net decline in mortgage-backed securities, which was partially offset by
net additional  purchases of U.S.  Government agency securities  averaging $23.1
million during the current  six-month  period.  The Company had a net unrealized
gain on available  for sale  investment  securities of $758 thousand at June 30,
2005, a decrease of $319 thousand or 29.6%  compared to $1.1 million at year-end
2004.  The  decrease in the current  six-month  period is due  primarily  to the
impact of changing  economic  conditions,  including  an increase in  short-term
market  interest rates that have  generally  lowered the value of the investment
portfolio at the end of the current  period.  As overall  market  interest rates
have drifted higher in the current period,  the portfolio has declined in value.
Market  values of fixed rate  investments  are  inversely  related to changes in
market interest rates.

COMPANY-OWNED LIFE INSURANCE
----------------------------

Company-owned life insurance totaled $27.5 million at June 30, 2005, an increase
of $546  thousand  or 2.0% from $27.0  million at  year-end  2004.  Income  from
company-owned  life  insurance was $340 thousand and $571 thousand for the three
and six months ended June 30, 2005, respectively.  This represents a decrease of
$22  thousand  or 6.1% and $196  thousand  or 25.6% in the three  and  six-month
comparisons.  The  decline  is due to lower  crediting  rates on the  underlying
investments.   Until  recently,   the  underlying  investments  related  to  the
company-owned  life insurance  have been repricing  downward in a lower interest
rate environment.

DEPOSITS
--------

The  Company's  primary  source  of  funding  for  its  lending  and  investment
activities results from its customer deposits,  which consist of noninterest and
interest bearing demand,  savings, and time deposits. On June 30, 2005, deposits
totaled $1.2 billion,  an increase of $12.6 million or 1.1% from year-end  2004.
The  growth  in  deposits  was due to a  $23.3  million  or  13.5%  increase  in
noninterest bearing deposits partially offset by a $10.8 million or 1.1% decline
in interest bearing  deposits.  The increase in noninterest  bearing deposits is
attributed  to $26.8  million  higher  balance  related to the  Commonwealth  of
Kentucky.  Excluding the Commonwealth of Kentucky deposits,  noninterest bearing
deposits  decreased $3.4 million or 2.2% in the comparison.  The net decrease in
interest bearing deposits include higher time deposits of $14.3 million or 2.8%,
offset by lower  savings  deposit  balances  of $18.2  million or 9.0% and lower
interest  bearing  demand  deposits of $6.9 million or 2.8%.  Time deposits grew
primarily  as  a  result  of a  net  additional  $22.4  million  of  FlexSpender
certificate  of deposit  accounts  opened  during the six months  ended June 30,
2005.  The Company  anticipates  that the growth of  FlexSpender  accounts  will
diminish  since  marketing  efforts to sell this  product have been scaled back.
Average  total  deposits  were $1.2 billion for the first six months of 2005, an
increase of $87.2  million or 8.1% compared to the average for the twelve months
ended  December 31, 2004.  Net  increases in average  deposits  were  consistent
throughout most of the deposit portfolio as follows:  noninterest bearing demand
of $11.2  million  or 6.2%;  interest  bearing  demand of $5.7  million or 2.4%;
savings  accounts of $2.9 million or 1.5%; and time deposits of $67.4 million or
14.7%.  The increase in time deposits is attributed to the growth in FlexSpender
certificate of deposits, which were introduced during 2004.

BORROWED FUNDS
--------------

Borrowed  funds  totaled  $120  million at June 30,  2005,  an  increase of $5.0
million or 4.4% from $115 million at year-end  2004. The increase was made up of
a $5.9 million or 9.6% increase in short-term  borrowings  partially offset by a
decline  of $914  thousand  or  1.7%  in  long-term  borrowings.  Federal  funds
purchased  and  securities  sold  under   agreements  to  repurchase   increased
short-term  borrowings  by $7.3 million or 12.3%.  This  increase was  partially
offset by the repayment of short-term Federal Home Loan Bank ("FHLB") borrowings
of $1.0 million.  The increase in federal funds  purchased and  securities  sold
under  agreements to repurchase is mainly due to higher balances  related to the
Commonwealth  of  Kentucky  and,  to a lesser  extent,  increased  correspondent
banking  activity.  The  $914  thousand  decrease  in  long-term  borrowings  is
primarily  attributed  to  repayments  of  borrowed  funds from the FHLB.  Total
borrowed  funds  averaged $137 million,  a decrease of $1.2 million or less than
1.0% from $138 million at year-end 2004.

LIQUIDITY

The Parent  Company's  primary use of cash consists of dividend  payments to its
common shareholders,  purchases of its common stock, corporate acquisitions, and
other  general  operating  purposes.  Liquidity  of the Parent  Company  depends
primarily  on the  receipt  of  dividends  from its  subsidiary  banks  and cash
balances  maintained.  As of June 30,  2005  combined  retained  earnings of the
subsidiary banks were $52.1 million, of which $5.0 million was available for the
payment of dividends to the Parent Company without obtaining prior approval from
bank regulatory agencies. As a practical matter,  payment of future dividends is
also  subject to the  maintenance  of  capital  ratio  requirements.  Management
expects that in the aggregate,  its  subsidiary  banks will continue to have the
ability to pay dividends in order to provide funds to the Parent  Company during
the remainder of 2005 sufficient to meet its liquidity needs. The Parent Company
had cash  balances of $9.2  million at June 30, 2005, a decrease of $1.6 million
or 14.9% from $10.8 million at year-end 2004. The $1.6 million  decrease in cash
at the Parent  Company is due primarily to $4.5 million in dividends paid to the
Company's  shareholders and for the payment of general operating  expenses.  The
Company  received  approximately  $3.8 million in dividends  from its affiliated
banks,  which partially offset cash outflows for dividend payments and operating
expenses.

The  Company's  objective  as it  relates  to  liquidity  is to ensure  that the
subsidiary  banks have funds  available to meet deposit  withdrawals  and credit
demands without unduly penalizing  profitability.  In order to maintain a proper
level of liquidity, the subsidiary banks have several sources of funds available
on a daily basis that can be used for liquidity purposes. Those sources of funds
include the  subsidiary  banks' core  deposits,  consisting of both business and
nonbusiness deposits; cash flow generated by repayment of principal and interest
on loans and investment securities; FHLB borrowings; and federal funds purchased
and  securities  sold under  agreements  to  repurchase.  While  maturities  and
scheduled  amortization  of loans and  investment  securities  are  generally  a
predictable  source of funds,  deposit  outflows  and mortgage  prepayments  are
influenced  significantly by general interest rates,  economic  conditions,  and
competition  in  our  local  markets.  As of  June  30,  2005  the  Company  had
approximately  $162 million in additional  borrowing capacity under various FHLB
and federal funds borrowing  agreements  with  unaffiliated  entities.  However,
there is no guarantee  that these sources of funds will continue to be available
to the Company,  or that current  borrowings  can be refinanced  upon  maturity,
although the Company is not aware of any events or uncertainties that are likely
to cause a decrease in our liquidity from these sources.

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

Liquid assets consist of cash, cash  equivalents,  and securities  available for
sale. At June 30, 2005,  such assets  totaled $422  million,  a decrease of $6.9
million or 1.6% from year-end  2004. The decrease in liquid assets is attributed
to the overall funding  position of the Company.  Net cash provided by operating
activities  was $2.8  million in the first six months of 2005, a decline of $4.9
million or 63.3%  compared $7.7 million for the same period a year earlier.  The
decrease in net cash provided by operating  activities in the comparable periods
is attributed to an increase in other  assets,  primarily a $5.9 million  higher
balance of other real estate owned.  Net cash  provided by investing  activities
was $17.1 million in the current  six-month period compared to $37.3 million net
use of cash in the same period  last year.  This  represents  an increase in net
cash  provided  by  investing  activities  of  $54.4  million  in the  six-month
comparable periods.  The most significant items include $40.4 million higher net
cash flows  provided by  investment  securities  activities  and a $14.7 million
decrease from loans originated for investment,  net of principal  collected that
positively  affected cash flow.  Net cash provided by financing  activities  was
$12.9  million for the six months ended June 30, 2005  compared to $27.0 million
net cash used in the same six-month  period a year earlier.  This  represents an
increase in cash flows of $39.8 million in the  comparison and is related mainly
to $78.3 million  attributed to increased  deposit activity  partially offset by
$37.1 million related to lower federal funds purchased and securities sold under
agreements to repurchase activity in the comparable periods.

Commitments  to  extend  credit  are  considered  in  addressing  the  Company's
liquidity  management.   The  Company  does  not  expect  these  commitments  to
significantly effect the liquidity position in future periods.

CAPITAL RESOURCES

Shareholders'  equity was $134  million on June 30,  2005.  This  represents  an
increase of $3.0 million or 2.3% from year-end 2004 due mainly to an increase in
retained  earnings of $3.5  million or 2.3%.  Retained  earnings  increased as a
result of $7.9 million in net income offset by $4.5 million,  or $.66 per share,
in dividends  declared during the current six-month  period.  The Company issued
seven  thousand and four thousand  shares of common stock during the current six
months pursuant to its  nonqualified  stock option plan and ESPP,  respectively.
The issuance of these shares  increased  shareholders'  equity by $282 thousand.
The Company purchased approximately 16 thousand shares of its outstanding common
stock at a total cost of $519 thousand during the current year to date period of
2005.

Accumulated other  comprehensive  income,  consisting of net unrealized  holding
losses on available for sale  securities (net of tax), was $493 thousand at June
30, 2005, a decrease of $207 thousand from  year-end  2004.  The decrease is due
primarily to the impact of changing economic  conditions,  including an increase
in short-term market interest rates that have generally lowered the value of the
investment  portfolio at the end of the current period.  As overall market rates
have drifted higher in the current period,  the portfolio has declined in value.
Market  values of fixed rate  investments  are  inversely  related to changes in
market interest rates.

Consistent with the objective of operating a sound financial  organization,  the
Company's goal is to maintain  capital ratios well above the regulatory  minimum
requirements.  The Company's  capital ratios as of June 30, 2004, the regulatory
minimums and the regulatory standard for a "well capitalized" institution are as
follows.


                        Farmers Capital        Regulatory            Well
                       Bank Corporation          Minimum          Capitalized
-------------------------------------------------------------------------------
Tier 1 risk based            12.64%               4.00%              6.00%
Total risk based             13.86%               8.00%             10.00%
Leverage                      8.52%               4.00%              5.00%

As of June 30, 2005, all of the Company's subsidiary banks were in excess of the
well-capitalized  regulatory  ratio  requirements as calculated under guidelines
established by federal banking agencies.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

At June 30, 2005, the model  indicated that if rates were to gradually  increase
by 150 basis points during the calendar year,  then net interest  income and net
income would increase .42% and .89%,  respectively  for the year ending December
31, 2005. The model  indicated  that if rates were to gradually  decrease by 150
basis points over the same period, then net interest income and net income would
decrease 2.0% and 4.5%, respectively.

In the current low interest rate environment, it is not practical or possible to
reduce certain  deposit rates by the same magnitude as rates on earning  assets.
The average  rate paid on some of the  Company's  deposits  is below 1.5%.  This
situation  magnifies the model's  predicted  results when modeling a decrease in
interest rates, as earning assets with higher yields have more of an opportunity
to reprice at lower rates than lower-rate deposits.

ITEM 4.  CONTROLS AND PROCEDURES

The  Registrant's  Chief  Executive  Officer and Chief  Financial  Officer  have
reviewed and evaluated the effectiveness of the Registrant's disclosure controls
and  procedures  as of the end of the period  covered by this  report,  and have
concluded that the Registrant's disclosure controls and procedures were adequate
and effective to ensure that all material  information  required to be disclosed
in this annual report has been made known to them in a timely fashion.

There were no significant  changes in the Registrant's  internal  controls or in
other factors that could  significantly  affect these controls subsequent to the
date of the Chief Executive Officer and Chief Financial Officers evaluation, nor
were there any material  weaknesses in the controls  which  required  corrective
action.

PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

As of June 30, 2005,  there were various  pending legal actions and  proceedings
against  the Company  arising  from the normal  course of business  and in which
claims  for  damages  are  asserted.  Management,  after  discussion  with legal
counsel,  believes  that these  actions are without  merit and that the ultimate
liability  resulting from these legal actions and proceedings,  if any, will not
have a  material  effect  upon  the  consolidated  financial  statements  of the
Company.

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table provides  information with respect to shares of common stock
repurchased by the Company during the quarter ended June 30, 2005.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
                                                                             Total Number of Shares        Maximum Number of
                                                                              Purchased as Part of      Shares that May Yet Be
                                     Total Number of       Average Price       Publicly Announced         Purchased Under the
              Period                 Shares Purchased      Paid per Share      Plans or Programs           Plans or Programs
--------------------------------------------------------------------------------------------------------------------------------
<S>                                      <C>                  <C>                    <C>                         <C>
April 1, 2005 to April 30, 2005          10,400               $  33.07               10,400                      185,708
--------------------------------------------------------------------------------------------------------------------------------
May 1, 2005 to May 31, 2005               5,000                  32.40                5,000                      180,708
--------------------------------------------------------------------------------------------------------------------------------
June 1, 2005 to June 30, 2005                                                                                    180,708
--------------------------------------------------------------------------------------------------------------------------------
    Total                                15,400               $  32.85               15,400
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>

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

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The annual meeting of shareholders  was held May 10, 2005. The matters that were
voted upon included the election of four directors for  three-year  terms ending
in 2008 or until their successors have been elected and qualified.

The outcome of the voting was as follows:

ELECTION OF DIRECTORS
NAME                            FOR        AGAINST      WITHHELD     ABSTAINED
--------------------------------------------------------------------------------
G. Anthony Busseni            5,739,076         0        85,048        22,751
Shelley S. Sweeney            5,801,173         0        22,951        22,751
Michael M. Sullivan           5,687,591         0       136,533        22,751
Frank R. Hamilton, Jr.        5,799,773         0        24,351        22,751
--------------------------------------------------------------------------------


Listed below are the names of each director whose term of office continued after
the meeting.

Frank W. Sower, Jr.                         Lloyd C. Hillard, Jr.
J. Barry Banker                             Harold G. Mays
Dr. John D. Sutterlin                       Robert Roach, Jr.
Dr. Donald J. Mullineaux                    Cecil D. Bell, Jr.

In addition to the directors above, Dr. John P. Stewart,  Chairman Emeritus,  E.
Bruce  Dungan,  and  Charles T.  Mitchell  serve as advisory  directors  for the
Company.


ITEM 6.  EXHIBITS

         List of Exhibits
         ----------------

     3i.  Amended and Restated Articles of Incorporation of Farmers Capital Bank
          Corporation  (incorporated  by reference  to Quarterly  Report on Form
          10-Q for the quarterly period ended June 30, 1998).

     3ii. Amended  and  Restated  By-Laws of Farmers  Capital  Bank  Corporation
          (incorporated  by  reference  to  Annual  Report  of Form 10-K for the
          fiscal year ended December 31, 1997.

     3iia Amendments   to   By-Laws   of  Farmers   Capital   Bank   Corporation
          (incorporated  by reference  to Quarterly  Report of Form 10-Q for the
          quarterly period ended March 31, 2003).

     31.1 CEO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of
          2002 (page 31)

     31.2 CFO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of
          2002 (page 32)

     32   CEO & CFO Certifications Pursuant to Section 906 of the Sarbanes-Oxley
          Act of 2002 (page 33)






<PAGE>





SIGNATURES

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



  Date:  August 8, 2005       /s/ G. Anthony Busseni
        -------------------   -------------------------------------------------
                                  G. Anthony Busseni,
                                  President and CEO
                                  (Principal Executive Officer)


  Date:  8-8-05               /s/ Doug Carpenter
        -------------------   -------------------------------------------------
                                  C. Douglas Carpenter,
                                  Vice President, Secretary, and CFO
                                  (Principal Financial and Accounting Officer)