**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**

|   |                                                                  |   |
|--------|-----------------------------------------------------------------------|--------|
|   | **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) |   |

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

----

| **PART                I - FINANCIAL INFORMATION**                                                                                 |   |
|-----------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                              |   |
| Item                1. Financial Statements                                                                                       |   |
| 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 | 12     |
|                                                                                                                              |   |
| Item                3. Quantitative and Qualitative Disclosures About                Market Risk                                  | 24     |
|                                                                                                                              |   |
| Item                4. Controls and                Procedures                                                                     | 24     |
|                                                                                                                              |   |
| **PART                II - OTHER INFORMATION**                                                                                    | 25     |
|                                                                                                                              |   |
| Item                1. Legal Proceedings                                                                                          | 25     |
|                                                                                                                              |   |
| Item                2. Unregistered Sales of Equity Securities                and Use of Proceeds                                 | 25     |
|                                                                                                                              |   |
| Item                6. Exhibits                                                                                                   | 26     |
|                                                                                                                              |   |
| SIGNATURES                                                                                                                        | 27     |

----

**PART I - FINANCIAL INFORMATION**

**Item 1. Financial Statements**

**Unaudited Consolidated Balance Sheets**

|                                                                                                     |   | March                31, |      | December                31,  |   |
|----------------------------------------------------------------------------------------------------------|--------|--------------------------|-----------|-----------------------------------|--------|
| (In thousands, except share data)                                                    |   | 2007                |      | 2006                         |   |
| **Assets**                                                                                               |   |                     |      |                              |   |   |   |
| Cash                and cash equivalents:                                                                |   |                     |      |                              |   |   |   |
| Cash                and due from banks                                                                   |   | $                        | 94,721    |                              | $      | 115,640 |   |
| Interest                bearing deposits in other banks                                                  |   |                     | 1,857     |                              |   | 1,783 |   |
| Federal                funds sold and securities purchased under agreements to                resell     |   |                     | 107,658   |                              |   | 39,405 |   |
| Total                cash and cash equivalents                                                           |   |                     | 204,236   |                              |   | 156,828 |   |
| Investment                securities:                                                                    |   |                     |      |                              |   |   |   |
| Available                for sale, amortized cost of $333,104 (2007) and $328,499                (2006)  |   |                     | 331,738   |                              |   | 326,485 |   |
| Held                to maturity, fair value of $7,357 (2007) and $7,849 (2006)                           |   |                     | 7,312     |                              |   | 7,788 |   |
| Total                investment securities                                                               |   |                     | 339,050   |                              |   | 334,273 |   |
| Loans,                net of unearned income                                                             |   |                     | 1,222,543 |                              |   | 1,197,836 |   |
| Allowance                for loan losses                                                                 |   |                     | (11,284   | )                                 |   | (11,999 | ) |
| Loans,                net                                                                                |   |                     | 1,211,259 |                              |   | 1,185,837 |   |
| Premises                and equipment, net                                                               |   |                     | 38,829    |                              |   | 37,775 |   |
| Company-owned                life insurance                                                              |   |                     | 33,263    |                              |   | 32,929 |   |
| Goodwill                                                                                                 |   |                     | 52,445    |                              |   | 42,822 |   |
| Other                intangibles, net                                                                    |   |                     | 12,087    |                              |   | 9,755 |   |
| Other                assets                                                                              |   |                     | 23,585    |                              |   | 24,147 |   |
| Total                assets                                                                              |   | $                        | 1,914,754 |                              | $      | 1,824,366 |   |
| **Liabilities**                                                                                          |   |                     |      |                              |   |   |   |
| Deposits:                                                                                                |   |                     |      |                              |   |   |   |
| Noninterest                bearing                                                                       |   | $                        | 223,446   |                              | $      | 242,938 |   |
| Interest                bearing                                                                          |   |                     | 1,247,309 |                              |   | 1,211,882 |   |
| Total                deposits                                                                            |   |                     | 1,470,755 |                              |   | 1,454,820 |   |
| Federal                funds purchased and securities sold under agreements to                repurchase |   |                     | 144,981   |                              |   | 67,941 |   |
| Other                short-term borrowings                                                               |   |                     | 8,341     |                              |   | 8,777 |   |
| Subordinated                notes payable to unconsolidated trusts                                       |   |                     | 25,774    |                              |   | 25,774 |   |
| Long-term                debt                                                                            |   |                     | 62,020    |                              |   | 62,218 |   |
| Dividends                payable                                                                         |   |                     | 2,606     |                              |   | 3,472 |   |
| Other                liabilities                                                                         |   |                     | 19,730    |                              |   | 22,923 |   |
| Total                liabilities                                                                         |   |                     | 1,734,207 |                              |   | 1,645,925 |   |
| **Shareholders’                Equity**                                                            |   |                     |      |                              |   |   |   |
| Common                stock, par value $.125 per share                                                   |   |                     |      |                              |   |   |   |
| 9,608,000                shares authorized; 9,395,645 and 9,388,900                                      |   |                     |      |                              |   |   |   |
| shares                issued at March 31, 2007 and December 31, 2006,                respectively        |   |                     | 1,174     |                              |   | 1,174 |   |
| Capital                surplus                                                                           |   |                     | 56,868    |                              |   | 56,679 |   |
| Retained                earnings                                                                         |   |                     | 169,390   |                              |   | 167,387 |   |
| Treasury                stock, at cost; 1,511,948 and 1,493,448 shares                                   |   |                     |      |                              |   |   |   |
| at                March 31, 2007 and December 31, 2006, respectively                                     |   |                     | (42,971   | )                                 |   | (42,399 | ) |
| Accumulated                other comprehensive loss                                                      |   |                     | (3,914    | )                                 |   | (4,400 | ) |
| Total                shareholders’ equity                                                          |   |                     | 180,547   |                              |   | 178,441 |   |
| Total                liabilities and shareholders’ equity                                          |   | $                        | 1,914,754 |                              | $      | 1,824,366 |   |

----

**Unaudited      Consolidated Statements of      Income**

|                                                                                                                 |   | Three                Months Ended |   |
|----------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------|--------|
|                                                                                                                 |   | March                31,          |   |
| (In                thousands, except per share data)                                                                 |   | 2007                         |   | 2006  |   |
| **Interest                Income**                                                                                   |   |                              |   |   |   |   |   |
| Interest                and fees on loans                                                                            |   | $                                 | 22,537 |   | $ | 17,166 |   |
| Interest                on investment securities:                                                                    |   |                              |   |   |   |   |   |
| Taxable                                                                                                              |   |                              | 2,624  |   |   | 2,385 |   |
| Nontaxable                                                                                                           |   |                              | 857    |   |   | 943 |   |
| Interest                on deposits in other banks                                                                   |   |                              | 14     |   |   | 12 |   |
| Interest                of federal funds sold and securities purchased under agreements to                resell     |   |                              | 1,370  |   |   | 377 |   |
| Total                interest income                                                                                 |   |                              | 27,402 |   |   | 20,883 |   |
| **Interest                Expense**                                                                                  |   |                              |   |   |   |  |   |
| Interest                on deposits                                                                                  |   |                              | 10,951 |   |   | 6,750 |   |
| Interest                on federal funds purchased and securities sold under agreements to                repurchase |   |                              | 1,113  |   |   | 912 |   |
| Interest                on other borrowed funds                                                                      |   |                              | 795    |   |   | 511 |   |
| Interest                on subordinated notes payable to unconsolidated trusts                                       |   |                              | 448    |   |   | 394 |   |
| Total                interest expense                                                                                |   |                              | 13,307 |   |   | 8,567 |   |
| Net                interest income                                                                                   |   |                              | 14,095 |   |   | 12,316 |   |
| Provision                for loan losses                                                                             |   |                              | (496   | ) |   | (34 | ) |
| Net                interest income after provision for loan losses                                                   |   |                              | 14,591 |   |   | 12,350 |   |
| **Noninterest                Income**                                                                                |   |                              |        |   |   |  |   |
| Service                charges and fees on deposits                                                                  |   |                              | 2,856  |   |   | 2,095 |   |
| Allotment                processing fees                                                                             |   |                              | 957    |   |   | 697 |   |
| Other                service charges, commissions, and fees                                                          |   |                              | 621    |   |   | 693 |   |
| Data                processing income                                                                                |   |                              | 277    |   |   | 425 |   |
| Trust                income                                                                                          |   |                              | 488    |   |   | 452 |   |
| Gains                on sale of mortgage loans, net                                                                  |   |                              | 117    |   |   | 179 |   |
| Income                from company-owned life insurance                                                              |   |                              | 347    |   |   | 359 |   |
| Other                                                                                                                |   |                              | 4      |   |   | 156 |   |
| Total                noninterest income                                                                              |   |                              | 5,667  |   |   | 5,056 |   |
| **Noninterest                Expense**                                                                               |   |                              |        |   |   |  |   |
| Salaries                and employee benefits                                                                        |   |                              | 7,510  |   |   | 6,879 |   |
| Occupancy                expenses, net                                                                               |   |                              | 1,066  |   |   | 928 |   |
| Equipment                expenses                                                                                    |   |                              | 781    |   |   | 716 |   |
| Data                processing and communication expenses                                                            |   |                              | 1,155  |   |   | 1,155 |   |
| Bank                franchise tax                                                                                    |   |                              | 514    |   |   | 438 |   |
| Correspondent                bank fees                                                                               |   |                              | 159    |   |   | 168 |   |
| Amortization                of intangibles                                                                           |   |                              | 818    |   |   | 446 |   |
| Other                                                                                                                |   |                              | 2,335  |   |   | 1,777 |   |
| Total                noninterest expense                                                                             |   |                              | 14,338 |   |   | 12,507 |   |
| Income                from continuing operations before income taxes                                                 |   |                              | 5,920  |   |   | 4,899 |   |
| Income                tax expense from continuing operations                                                         |   |                              | 1,310  |   |   | 910 |   |
| Income                from continuing operations                                                                     |   |                              | 4,610  |   |   | 3,989 |   |
| Income                from discontinued operations before income tax expense                                         |   |                              |   |   |   | 567 |   |
| Income                tax expense from discontinued operations                                                       |   |                              |   |   |   | 165 |   |
| Income                from discontinued operations                                                                   |   |                              |   |   |   | 402 |   |
| Net                income                                                                                            |   | $                                 | 4,610  |   | $ | 4,391 |   |
| **Net                Income Per Common Share**                                                                       |   |                              |   |   |   |   |   |
| Income                from continuing operations - basic and diluted                                                 |   | $                                 | .58    |   | $ | .54 |   |
| Income                from discontinued operations - basic and diluted                                               |   |                              |   |   |   | .05 |   |
| Net                income per common share - basic and diluted                                                       |   | $                                 | .58    |   | $ | .59 |   |
| **Weighted                Average Shares Outstanding**                                                               |   |                              |   |   |   |   |   |
| Basic                                                                                                                |   |                              | 7,893  |   |   | 7,385 |   |
| Diluted                                                                                                              |   |                              | 7,908  |   |   | 7,413 |   |

----

**Unaudited      Consolidated Statements of Comprehensive      Income**

|                                                                                                                                                                                                              |   | Three                Months Ended |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------|--------|
|                                                                                                                                                                                                              |   | March                31,          |   |
| (In                thousands)                                                                                                                                                                                     |   | 2007                         |   | 2006  |   |
| **Net                Income**                                                                                                                                                                                     |   | $                                 | 4,610  |   | $ | 4,391 |   |
| Other                comprehensive income (loss):                                                                                                                                                                 |   |                              |   |   |   |   |   |
| Unrealized                net holding gain (loss) on available for sale securities arising                during                the period, net of tax of $227 and $(648), respectively                           |   |                              | 421    |   |   | (1,203 | ) |
| Amortization                of net actuarial loss, transition obligation, and prior service costs                attributed to the Company’s postretirement benefit plans, net of tax of                $35 |   |                              | 65     |   |   |   |   |
| Other                comprehensive income (loss)                                                                                                                                                                  |   |                              | 486    |   |   | (1,203 | ) |
| **Comprehensive                Income**                                                                                                                                                                           |   | $                                 | 5,096  |   | $ | 3,188 |   |

----

**Unaudited      Consolidated Statements of Cash      Flows**

| Three                months ended March 31, (In thousands)                                                      |   | 2007  |         | 2006  |   |
|-----------------------------------------------------------------------------------------------------------------|--------|------------|--------------|------------|--------|
| **Cash                Flows from Operating Activities**                                                         |   |       |         |       |   |   |   |
| Net                income                                                                                       |   | $          | 4,610        |       | $      | 4,391 |   |
| Adjustments                to reconcile net income to net cash provided by operating                activities: |   |       |         |       |   |   |   |
| Depreciation                and amortization                                                                    |   |       | 1,789        |       |   | 1,323 |   |
| Net                amortization of investment security premiums and                (discounts):                 |   |       |         |       |   |  |   |
| Available                for sale                                                                               |   |       | (337         | )          |   | (17 | ) |
| Held                to maturity                                                                                 |   |       |         |       |   | (6 | ) |
| Provision                for loan losses                                                                        |   |       | (496         | )          |   | (34 | ) |
| Noncash                compensation expense                                                                     |   |       | 17           |       |   | 34 |   |
| Mortgage                loans originated for sale                                                               |   |       | (6,007       | )          |   | (8,065 | ) |
| Proceeds                from sale of mortgage loans                                                             |   |       | 4,384        |       |   | 7,704 |   |
| Deferred                income tax expense                                                                      |   |       | 2,466        |       |   | 1,268 |   |
| Gains                on sale of mortgage loans, net                                                             |   |       | (117         | )          |   | (179 | ) |
| Loss                on sale of premises and equipment, net                                                      |   |       | 105          |       |   |   |   |
| Decrease                in accrued interest receivable                                                          |   |       | 278          |       |   | 106 |   |
| Income                from company-owned life insurance                                                         |   |       | (334         | )          |   | (346 | ) |
| Decrease                (increase) in other assets                                                              |   |       | 1,230        |       |   | (936 | ) |
| Increase                in accrued interest payable                                                             |   |       | 12           |       |   | 108 |   |
| Decrease                in other liabilities                                                                    |   |       | (6,806       | )          |   | (887 | ) |
| Net                cash provided by discontinued operating activities                                           |   |       |    |       |   | 567 |   |
| Net                cash provided by operating activities                                                        |   |       | 794          |       |   | 5,031 |   |
| **Cash                Flows from Investing Activities**                                                         |   |       |         |       |   |   |   |
| Proceeds                from maturities and calls of investment securities:                                     |   |       |         |       |   |   |   |
| Available                for sale                                                                               |   |       | 98,529       |       |   | 10,946 |   |
| Held                to maturity                                                                                 |   |       | 476          |       |   | 1,710 |   |
| Proceeds                from sale of available for sale investment securities                                   |   |       | 667          |       |   | 664 |   |
| Purchase                of available for sale investment securities                                             |   |       | (103,464     | )          |   | (7,190 | ) |
| Loans                originated for investment, net of principal collected                                      |   |       | (23,186      | )          |   | (23,373 | ) |
| Payment                of prior year accrued purchase price-Citizens Bancorp,                Inc.               |   |       |         |       |   | (21,846 | ) |
| Purchase                of PNC Military Allotment operations, net of cash acquired                              |   |       | (1,876       | )          |   |   |   |
| Purchase                price refinements of previous acquisitions                                              |   |       | (27          | )          |   | (28 | ) |
| Additions                to mortgage servicing rights, net                                                      |   |       | (15          | )          |   | (41 | ) |
| Purchase                of premises and equipment                                                               |   |       | (2,285       | )          |   | (1,220 | ) |
| Proceeds                from sale of equipment                                                                  |   |       | 198          |       |   |  |   |
| Net                cash provided by discontinued investing activities                                           |   |       |    |       |   | 13,817 |   |
| Net                cash used in investing activities                                                            |   |       | (30,983      | )          |   | (26,561 | ) |
| **Cash                Flows from Financing Activities**                                                         |   |       |         |       |   |   |   |
| Net                increase in deposits                                                                         |   |       | 5,065        |       |   | 8,848 |   |
| Net                increase in securities sold under agreements to repurchase                                   |   |       | 77,040       |       |   | 8,371 |   |
| Proceeds                from other long-term debt                                                               |   |       | 5,000        |       |   |  |   |
| Repayments                of long-term debt                                                                     |   |       | (5,198       | )          |   | (496 | ) |
| Net                decrease in other short-term borrowings                                                      |   |       | (436         | )          |   | (635 | ) |
| Dividends                paid                                                                                   |   |       | (3,473       | )          |   | (2,245 | ) |
| Purchase                of common stock                                                                         |   |       | (572         | )          |   | (328 | ) |
| Shares                issued under Employee Stock Purchase Plan                                                 |   |       | 68           |       |   | 59 |   |
| Stock                options exercised                                                                          |   |       | 103          |       |   | 58 |   |
| Net                cash used in discontinued financing activities                                               |   |       |         |       |   | (5,274 | ) |
| Net                cash provided by financing activities                                                        |   |       | 77,597       |       |   | 8,358 |   |
| Net                increase (decrease) in cash and cash equivalents                                             |   |       | 47,408       |       |   | (13,172 | ) |
| Less:                net increase in cash and cash equivalents of discontinued                operations        |   |       |         |       |   | (9,110 | ) |
| Net                increase (decrease) in cash and cash equivalents from continuing                operations   |   |       | 47,408       |       |   | (22,282 | ) |
| Cash                and cash equivalents from continuing activities at beginning of                year         |   |       | 156,828      |       |   | 131,018 |   |
| Cash                and cash equivalents from continuing activities at end of                period             |   | $          | 204,236      |       | $      | 108,736 |   |
| **Supplemental                Disclosures**                                                                     |   |       |         |       |   |   |   |
| Cash                paid during the period for:                                                                 |   |       |         |       |   |   |   |
| Interest                                                                                                        |   | $          | 13,590       |       | $      | 9,328 |   |
| Income                taxes                                                                                     |   |       | 3,700        |       |   | 800 |   |
| Transfers                from loans to repossessed assets                                                       |   |       | 136          |       |   | 201 |   |
| Cash                dividend declared and unpaid                                                                |   |       | 2,606        |       |   | 2,432 |   |

----

**Unaudited      Consolidated Statements of Changes in      Shareholders’ Equity**

| (In                thousands, except per share data)                   |   |                        |   |    |   |     |   | Accumulated                   |   |          |   |
|------------------------------------------------------------------------|--------|-----------------------------|--------|---------|--------|----------|--------|-------------------------------|--------|---------------|--------|
|                                                                   |   |                        |   |    |   |     |   |                          |   | Other         |   | Total |   |
| Three                months ended                                      |   | Common                Stock |   | Capital |   | Retained |   | Treasury                Stock |   | Comprehensive |   | Shareholders’ |   |
| March                31, 2007 and 2006                                 |   | Shares                      |   | Amount  |   | Surplus  |   | Earnings                      |   | Shares        |   | Amount |   | Income |   | Equity |   |
| Balance                at January 1, 2007                              |   |                        | 9,388  |    | $      | 1,174    |   | $                             | 56,679 |          | $      | 167,387 |   |   | 1,493 |   | $ | (42,399 | ) | $ | (4,400 | ) | $ | 178,441 |   |
| Net                income                                              |   |                        |   |    |   |     |   |                          |   |          |   | 4,610 |   |   |   |   |   |   |   |   |   |   |   | 4,610 |   |
| Other                comprehensive income                              |   |                        |   |    |   |     |   |                          |   |          |   |   |   |   |   |   |   |   |   |   | 486 |   |   | 486 |   |
| Cash                dividends declared, $.33 per share                 |   |                        |   |    |   |     |   |                          |   |          |   | (2,607 | ) |   |   |   |   |   |   |   |   |   |   | (2,607 | ) |
| Purchase                of common stock                                |   |                        |   |    |   |     |   |                          |   |          |   |   |   |   | 18 |   |   | (572 | ) |   |   |   |   | (572 | ) |
| Stock                options exercised                                 |   |                        | 4      |    |   |          |   |                          | 104    |          |   |   |   |   |   |   |   |   |   |   |   |   |   | 104 |   |
| Shares                issued pursuant to Employee Stock Purchase Plan  |   |                        | 3      |    |   |          |   |                          | 68     |          |   |   |   |   |   |   |   |   |   |   |   |   |   | 68 |   |
| Stock-based                compensation                                |   |                        |   |    |   |     |   |                          | 17     |          |   |   |   |   |   |   |   |   |   |   |   |   |   | 17 |   |
| Balance                at March 31, 2007                               |   |                        | 9,395  |    | $      | 1,174    |   | $                             | 56,868 |          | $      | 169,390 |   |   | 1,511 |   | $ | (42,971 | ) | $ | (3,914 | ) | $ | 180,547 |   |
|                                                                   |   |                        |   |    |   |     |   |                          |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                   |   |                        |   |    |   |     |   |                          |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                   |   |                        |   |    |   |     |   |                          |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance                at January 1, 2006                              |   |                        | 8,856  |    | $      | 1,107    |   | $                             | 39,829 |          | $      | 156,796 |   |   | 1,467 |   | $ | (41,579 | ) | $ | (1,917 | ) | $ | 154,236 |   |
| Net                income                                              |   |                        |   |    |   |     |   |                          |   |          |   | 4,391 |   |   |   |   |   |   |   |   |   |   |   | 4,391 |   |
| Other                comprehensive loss                                |   |                        |   |    |   |     |   |                          |   |          |   |   |   |   |   |   |   |   |   |   | (1,203 | ) |   | (1,203 | ) |
| Cash                dividends declared, $.33 per share                 |   |                        |   |    |   |     |   |                          |   |          |   | (2,433 | ) |   |   |   |   |   |   |   |   |   |   | (2,433 | ) |
| Purchase                of common stock                                |   |                        |   |    |   |     |   |                          |   |          |   |   |   |   | 10 |   |   | (328 | ) |   |   |   |   | (328 | ) |
| Stock                options exercised, including related tax benefits |   |                        | 2      |    |   | 1        |   |                          | 57     |          |   |   |   |   |   |   |   |   |   |   |   |   |   | 58 |   |
| Shares                issued pursuant to Employee Stock Purchase Plan  |   |                        | 2      |    |   |          |   |                          | 59     |          |   |   |   |   |   |   |   |   |   |   |   |   |   | 59 |   |
| Stock-based                compensation                                |   |                        |   |    |   |     |   |                          | 42     |          |   |   |   |   |   |   |   |   |   |   |   |   |   | 42 |   |
| Balance                at March 31, 2006                               |   |                        | 8,860  |    | $      | 1,108    |   | $                             | 39,987 |          | $      | 158,754 |   |   | 1,477 |   | $ | (41,907 | ) | $ | (3,120 | ) | $ | 154,822 |   |

----

**Notes      to Unaudited Consolidated Financial      Statements**

| 1. | **Basis                of Presentation and Nature of                Operations** |
|----|----------------------------------------------------------------------------------|

----

|  2. |  **Discontinued              Operations** |
|----------|------------------------------------------------|

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

| 3. | **Reclassifications** |
|----|-----------------------|

| 4. | **Recently                Issued Accounting                Standards** |
|----|------------------------------------------------------------------------|

*"Accounting      for Certain Hybrid Financial Instruments”*

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

*Fair      Value Measurements*

----

*The      Fair Value Option for Financial Assets and Financial      Liabilities*

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

| 5. | **Net                Income Per Common Share** |
|----|------------------------------------------------|

|                                                                            |   | Three                Months EndedMarch                31, |   |
|---------------------------------------------------------------------------------|--------|-----------------------------------------------------------|--------|
| (In                thousands, except per share data)                            |   | 2007                                                 |   | 2006  |   |
|                                                                            |   |                                                      |   |   |   |
| Net                income, basic and diluted                                    |   | $                                                         | 4,610  |   | $ | 4,391 |   |
|                                                                            |   |                                                      |   |   |   |   |   |
| Average                shares outstanding                                       |   |                                                      | 7,893  |   |   | 7,385 |   |
| Effect                of dilutive stock options                                 |   |                                                      | 15     |   |   | 28 |   |
| Average                diluted shares outstanding                               |   |                                                      | 7,908  |   |   | 7,413 |   |
|                                                                            |   |                                                      |   |   |   |   |   |
| Net                income per share, basic and diluted                          |   | $                                                         | .58    |   | $ | .59 |   |
|                                                                            |   |                                                      |   |   |   |   |   |
|                                                                            |   |                                                      |   |   |   |   |   |
| **Continuing                Operations**                                        |   |                                                      |   |   |   |   |   |
|                                                                            |   |                                                      |   |   |   |   |   |
| Income                from continuing operations, basic and diluted             |   | $                                                         | 4,610  |   | $ | 3,989 |   |
| Income                per share from continuing operations, basic and diluted   |   |                                                      | .58    |   |   | .54 |   |
|                                                                            |   |                                                      |   |   |   |   |   |
|                                                                            |   |                                                      |   |   |   |   |   |
| **Discontinued                Operations**                                      |   |                                                      |   |   |   |   |   |
|                                                                            |   |                                                      |   |   |   |   |   |
| Income                from discontinued operations, basic and diluted           |   |                                                      |   |   | $ | 402 |   |
| Income                per share from discontinued operations, basic and diluted |   |                                                      |   |   |   | .05 |   |
|                                                                            |   |                                                      |   |   |   |   |   |

----

**6.      Business Combination - Military Allotment Operation, PNC Bank, National      Association**

| (In                thousands)           |   | January                12, 2007 |   |
|-----------------------------------------|--------|---------------------------------|--------|
|                                    |   |                            |   |
| **Assets**                              |   |                            |   |   |
| Cash                                    |   | $                               | 10,870 |   |
| Customer                list intangible |   |                            | 1,275  |   |
| Core                deposit intangible  |   |                            | 1,874  |   |
| Goodwill                                |   |                            | 9,575  |   |
| Total                Assets             |   | $                               | 23,594 |   |
|                                    |   |                            |   |   |
| **Liabilities**                         |   |                            |   |   |
| Deposits                                |   | $                               | 10,870 |   |
|                                    |   |                            |   |   |
| **Net                Assets Acquired**  |   | $                               | 12,724 |   |
|                                    |   |                            |   |   |

----

**Item      2. Management’s Discussion and Analysis of Financial Condition and Results of      Operations**** **

**FORWARD-LOOKING      STATEMENTS**

**DISCONTINUED      OPERATIONS**

*“Accounting      for the Impairment or Disposal of Long-Lived Assets”*
*Unless      otherwise noted, this Management’s Discussion and Analysis of Financial      Condition and Results of Operations relate only to the Company’s continuing      operations.*

----

**RESULTS      OF OPERATIONS**

**First Quarter 2007 vs. First Quarter 2006**

----

**Net Interest Income**

----

----

----

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

| Quarter                Ended March 31,                                                                                                        |   | 2007           |                     | 2006           |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------|--------------------------|----------------|--------|
|  (In                thousands)                                                                                                           |   | AverageBalance |                     |  Interest |   | AverageRate |   | AverageBalance |   |  Interest4 |   | AverageRate |   |
| **Earning                Assets**                                                                                                             |   |           |                     |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Investment                securities                                                                                                          |   |           |                     |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Taxable                                                                                                                                       |   | $              | 222,203                  |           | $      | 2,624 |   |   | 4.79 | % | $ | 238,406 |   | $ | 2,385 |   |   | 4.06 | % |
| Nontaxable1                                                                                                                                   |   |           | 89,940                   |           |   | 1,227 |   |   | 5.53 |   |   | 93,555 |   |   | 1,368 |   |   | 5.93 |   |
| Time                deposits with banks, federal funds sold and securities purchased                under                agreements to resell |   |           | 112,403                  |           |   | 1,384 |   |   | 4.99 |   |   | 45,528 |   |   | 389 |   |   | 3.47 |   |
| Loans1,2,3                                                                                                                                    |   |           | 1,199,064                |           |   | 22,753 |   |   | 7.70 |   |   | 970,199 |   |   | 17,272 |   |   | 7.22 |   |
| Total                earning assets                                                                                                           |   |           | 1,623,610                |           | $      | 27,988 |   |   | 6.99 | % |   | 1,347,688 |   | $ | 21,414 |   |   | 6.44 | % |
| Allowance                for loan losses                                                                                                      |   |           | (11,983                  | )              |   |   |   |   |   |   |   | (11,234 | ) |   |   |   |   |   |   |
| Total                earning assets, net of                                                                                                   |   |           |                     |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| allowance                for loan losses                                                                                                      |   |           | 1,611,627                |           |   |   |   |   |   |   |   | 1,336,454 |   |   |   |   |   |   |   |
| **Nonearning                Assets**                                                                                                          |   |           |                     |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash                and due from banks                                                                                                        |   |           | 78,028                   |           |   |   |   |   |   |   |   | 79,929 |   |   |   |   |   |   |   |
| Premises                and equipment, net                                                                                                    |   |           | 38,497                   |           |   |   |   |   |   |   |   | 29,001 |   |   |   |   |   |   |   |
| Other                assets                                                                                                                   |   |           | 116,199                  |           |   |   |   |   |   |   |   | 90,162 |   |   |   |   |   |   |   |
| Assets                of discontinued operations                                                                                              |   |           |                     |           |   |   |   |   |   |   |   | 142,141 |   |   |   |   |   |   |   |
| Total                assets                                                                                                                   |   | $              | 1,844,351                |           |   |   |   |   |   |   | $ | 1,677,687 |   |   |   |   |   |   |   |
| **Interest                Bearing Liabilities**                                                                                               |   |           |                     |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                                                                                                                      |   |           |                     |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest                bearing demand                                                                                                        |   | $              | 267,487                  |           | $      | 1,033 |   |   | 1.57 | % | $ | 269,202 |   | $ | 922 |   |   | 1.39 | % |
| Savings                                                                                                                                       |   |           | 246,212                  |           |   | 1,402 |   |   | 2.31 |   |   | 212,510 |   |   | 975 |   |   | 1.86 |   |
| Time                                                                                                                                          |   |           | 726,591                  |           |   | 8,516 |   |   | 4.75 |   |   | 532,585 |   |   | 4,853 |   |   | 3.70 |   |
| Federal                funds purchased and securities sold under agreements to                repurchase                                      |   |           | 96,111                   |           |   | 1,113 |   |   | 4.70 |   |   | 78,829 |   |   | 912 |   |   | 4.69 |   |
| Other                borrowed funds                                                                                                           |   |           | 95,987                   |           |   | 1,243 |   |   | 5.25 |   |   | 75,667 |   |   | 905 |   |   | 4.85 |   |
| Total                interest bearing liabilities                                                                                             |   |           | 1,432,388                |           | $      | 13,307 |   |   | 3.77 | % |   | 1,168,793 |   | $ | 8,567 |   |   | 2.97 | % |
| **Noninterest                Bearing Liabilities**                                                                                            |   |           |                     |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commonwealth                of Kentucky deposits                                                                                              |   |           | 36,537                   |           |   |   |   |   |   |   |   | 36,525 |   |   |   |   |   |   |   |
| Other                demand deposits                                                                                                          |   |           | 175,527                  |           |   |   |   |   |   |   |   | 154,746 |   |   |   |   |   |   |   |
| Other                liabilities                                                                                                              |   |           | 21,783                   |           |   |   |   |   |   |   |   | 19,832 |   |   |   |   |   |   |   |
| Liabilities                of discontinued operations                                                                                         |   |           |      |           |   |   |   |   |   |   |   | 143,577 |   |   |   |   |   |   |   |
| Total                liabilities                                                                                                              |   |           | 1,666,235                |           |   |   |   |   |   |   |   | 1,523,473 |   |   |   |   |   |   |   |
| Shareholders’                equity                                                                                                     |   |           | 178,116                  |           |   |   |   |   |   |   |   | 154,214 |   |   |   |   |   |   |   |
| Total                liabilities and shareholders’                                                                                      |   |           |                     |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| equity                                                                                                                                        |   | $              | 1,844,351                |           |   |   |   |   |   |   | $ | 1,677,687 |   |   |   |   |   |   |   |
| Net                interest income                                                                                                            |   |           |                     |           |   | 14,681 |   |   |   |   |   |   |   |   | 12,847 |   |   |   |   |
| TE                basis adjustment                                                                                                            |   |           |                     |           |   | (586 | ) |   |   |   |   |   |   |   | (531 | ) |   |   |   |
| Net                interest income                                                                                                            |   |           |                     |           | $      | 14,095 |   |   |   |   |   |   |   | $ | 12,316 |   |   |   |   |
| Net                interest spread                                                                                                            |   |           |                     |           |   |   |   |   | 3.22 | % |   |   |   |   |   |   |   | 3.47 | % |
| Impact                of noninterest bearing sources                                                                                          |   |           |                     |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| of                funds                                                                                                                       |   |           |                     |           |   |   |   |   | .45 |   |   |   |   |   |   |   |   | .39 |   |
| Net                interest margin                                                                                                            |   |           |                     |           |   |   |   |   | 3.67 | % |   |   |   |   |   |   |   | 3.86 | % |

----

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

| (In                thousands)                                                                                                                 |   | Variance     |   |                              Variance Attributed to |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------|--------|----------------------------------------------------------------------------------------------------------------------|--------|
| Quarter                Ended March 31,                                                                                                        |   | 2007/20061,3 |   | Volume                                                                                                               |   | Rate |   |
|                                                                                                                                          |   |         |   |                                                                                                                 |   |   |   |
| **Interest                Income**                                                                                                            |   |         |   |                                                                                                                 |   |   |   |   |   |   |
| Taxable                investment securities                                                                                                  |   | $            | 239    |                                                                                                                 | $      | (889 | ) | $ | 1,128 |   |
| Nontaxable                investment securities2                                                                                              |   |         | (141   | )                                                                                                                    |   | (51 | ) |   | (90 | ) |
| Time                deposits with banks, federal funds sold and securities purchased                under                agreements to resell |   |         | 995    |                                                                                                                 |   | 766 |   |   | 229 |   |
| Loans2                                                                                                                                        |   |         | 5,481  |                                                                                                                 |   | 4,276 |   |   | 1,205 |   |
| Total                interest income                                                                                                          |   |         | 6,574  |                                                                                                                 |   | 4,102 |   |   | 2,472 |   |
| **Interest                Expense**                                                                                                           |   |         |   |                                                                                                                 |   |   |   |   |   |   |
| Interest                bearing demand deposits                                                                                               |   |         | 111    |                                                                                                                 |   | (41 | ) |   | 152 |   |
| Savings                deposits                                                                                                               |   |         | 427    |                                                                                                                 |   | 169 |   |   | 258 |   |
| Time                deposits                                                                                                                  |   |         | 3,663  |                                                                                                                 |   | 2,059 |   |   | 1,604 |   |
| Federal                funds purchased and securities sold under agreements to                repurchase                                      |   |         | 201    |                                                                                                                 |   | 199 |   |   | 2 |   |
| Other                borrowed funds                                                                                                           |   |         | 338    |                                                                                                                 |   | 259 |   |   | 79 |   |
| Total                interest expense                                                                                                         |   |         | 4,740  |                                                                                                                 |   | 2,645 |   |   | 2,095 |   |
| Net                interest income                                                                                                            |   | $            | 1,834  |                                                                                                                 |   | 1,457 |   | $ | 377 |   |
| Percentage                change                                                                                                              |   |         | 100.0  | %                                                                                                                    |   | 79.4 | % |   | 20.6 | % |

**Noninterest Income**

----

**Noninterest Expense**

**Income Taxes**

**Income      From Discontinued Operations**

----

**FINANCIAL      CONDITION**

**Loans**

|                                                                          |   | March                31, 2007 |      | December                31, 2006 |   |
|-------------------------------------------------------------------------------|--------|-------------------------------|-----------|----------------------------------|--------|
| (Dollars                in thousands)                                         |   | Amount                        |      | %                           |   | Amount |   | %  |   |
|                                                                          |   |                          |      |                             |   |   |   |   |   |
| Commercial,                financial, and agriculture                         |   | $                             | 172,269   |                             |   | 14.1 | % | $ | 197,613 |   |   | 16.5 | % |
| Real                estate - construction                                     |   |                          | 211,234   |                             |   | 17.3 |   |   | 176,779 |   |   | 14.7 |   |
| Real                estate mortgage - residential                             |   |                          | 387,912   |                             |   | 31.7 |   |   | 381,081 |   |   | 31.8 |   |
| Real                estate mortgage farmland and other commercial enterprises |   |                          | 362,827   |                             |   | 29.7 |   |   | 351,793 |   |   | 29.4 |   |
| Installment                                                                   |   |                          | 55,092    |                             |   | 4.5 |   |   | 57,116 |   |   | 4.8 |   |
| Lease                financing                                                |   |                          | 33,209    |                             |   | 2.7 |   |   | 33,454 |   |   | 2.8 |   |
| Total                                                                         |   | $                             | 1,222,543 |                             |   | 100.0 | % | $ | 1,197,836 |   |   | 100.0 | % |

----

**Allowance      for Loan Losses**

**Nonperforming Assets**

**Temporary Investments**

**Investment Securities**

----

**Company-owned      Life Insurance**

**Deposits**

**Borrowed Funds**

**LIQUIDITY**

----

----

**CAPITAL      RESOURCES**

|                             |   | Farmers                Capital  |   | Regulatory |   |
|----------------------------------|--------|---------------------------------|--------|------------|--------|
|                             |   | Bank                Corporation |   | Minimum    |   |
| Tier                1 risk based |   |                            | 11.08  | %          |   | 4.00 | % |
| Total                risk based  |   |                            | 11.94  | %          |   | 8.00 | % |
| Leverage                         |   |                            | 8.15   | %          |   | 4.00 | % |

** **

**Item**** 3.  Quantitative      and Qualitative Disclosures About Market Risk**

**Item      4. Controls and      Procedures**

----

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

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

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

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

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

**PART      II - OTHER INFORMATION**

**Item      1. Legal Proceedings**

**Item      2. Unregistered Sales of Equity Securities and Use      of Proceeds**

|                                                 |   |                                            |   |                                        |   |                                                                                                           |   |                                                                                                         |   |
|------------------------------------------------------|--------|-------------------------------------------------|--------|---------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------|--------|
| Period                                               |   | Total                Number of Shares Purchased |   | Average                Price Paid per Share |   | Total                Number of Shares Purchased as Part of Publicly Announced Plans or                Programs |   | Maximum                Number of Shares that May Yet Be Purchased Under the Plans or                Programs |   |
| January                1, 2007 to January 31, 2007   |   |                                            |   |                                        |   |                                                                                                           |   |                                                                                                         |   |   |   | 153,015 |   |
| February                1, 2007 to February 28, 2007 |   |                                            | 8,000  |                                        | $      | 31.45                                                                                                          |   |                                                                                                         | 8,000  |   |   | 145,015 |   |
| March                1, 2007 to March 31, 2007       |   |                                            | 10,500 |                                        |   | 30.49                                                                                                          |   |                                                                                                         | 10,500 |   |   | 134,515 |   |
| Total                                                |   |                                            | 18,500 |                                        | $      | 30.91                                                                                                          |   |                                                                                                         | 18,500 |   |   |   |   |

----

**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, 2006). |
|   |                            |   |
|   | 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 |
|   |                            |   |
|   | 31.2                            | CFO                Certification Pursuant to Section 302 of the                Sarbanes-Oxley Act of 2002 |
|   |                            |   |
|   | 32                              | CEO&CFO                Certifications Pursuant to Section                906 of the Sarbanes-Oxley Act of 2002 |
|   |                            |   |

----

**SIGNATURES**

| Date:  | * May              7, 2007* |   |  */s/              G. Anthony Busseni*                 |
|--------|----------------------------------|--------|-------------------------------------------------------------|
|   |                             |   | G.                Anthony Busseni,                          |
|   |                             |   | President                and CEO                            |
|   |                             |   | (Principal                Executive Officer)                |
|   |                             |   |                                                        |
| Date:  | * 5-7-07*                   |   |  */s/              C Douglas Carpenter*                |
|   |                             |   | C.                Douglas Carpenter,                        |
|   |                             |   | Senior                Vice President, Secretary, and CFO    |
|   |                             |   | (Principal                Financial and Accounting Officer) |

----