|   |                                                   |   |
|--------|--------------------------------------------------------|--------|
|   | 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 Operations                                                                | 4      |
| Unaudited Consolidated Statements of Comprehensive Income (Loss)                                               | 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 | 23     |
|                                                                                                           |   |
| Item 3.  Quantitative and Qualitative Disclosures About Market Risk                                  | 44     |
|                                                                                                           |   |
| Item 4.  Controls and Procedures                                                                     | 45     |
|                                                                                                           |   |
| PART II - OTHER INFORMATION                                                                                    |   |
|                                                                                                           |   |
| Item 1.  Legal Proceedings                                                                           | 45     |
|                                                                                                           |   |
| Item 1A. Risk Factors                                                                                          | 45     |
|                                                                                                           |   |
| Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds                                 | 45     |
|                                                                                                           |   |
| Item 6.  Exhibits                                                                                    | 46     |
|                                                                                                           |   |
| SIGNATURES                                                                                                     | 48     |

----

Item 1. Financial Statements

Unaudited Consolidated Balance Sheets

|                                                                                                                                                                                       |   | June 30, |      |   | December 31, |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------|-----------|--------|--------------|--------|
| (In thousands, except share data)                                                                                                                                      |   | 2010     |      |   | 2009         |   |
| Assets                                                                                                                                                                                     |   |     |      |   |         |   |
| Cash and cash equivalents:                                                                                                                                                                 |   |     |      |   |         |   |
| Cash and due from banks                                                                                                                                                                    |   | $        | 32,962    |   |         | $      | 35,841 |   |
| Interest bearing deposits in other banks                                                                                                                                                   |   |     | 159,692   |   |         |   | 175,926 |   |
| Federal funds sold and securities purchased under agreements to resell                                                                                                                     |   |     | 2,576     |   |         |   | 6,569 |   |
| Total cash and cash equivalents                                                                                                                                                            |   |     | 195,230   |   |         |   | 218,336 |   |
| Investment securities:                                                                                                                                                                     |   |     |      |   |         |   |   |   |
| Available for sale, amortized cost of $522,790 (2010) and $537,873 (2009)                                                                                                                  |   |     | 535,260   |   |         |   | 547,873 |   |
| Held to maturity, fair value of $933 (2010) and $922 (2009)                                                                                                                                |   |     | 975       |   |         |   | 975 |   |
| Total investment securities                                                                                                                                                                |   |     | 536,235   |   |         |   | 548,848 |   |
| Loans, net of unearned income                                                                                                                                                              |   |     | 1,237,933 |   |         |   | 1,271,942 |   |
| Allowance for loan losses                                                                                                                                                                  |   |     | (25,824   | )      |         |   | (23,364 | ) |
| Loans, net                                                                                                                                                                                 |   |     | 1,212,109 |   |         |   | 1,248,578 |   |
| Premises and equipment, net                                                                                                                                                                |   |     | 40,694    |   |         |   | 39,121 |   |
| Company-owned life insurance                                                                                                                                                               |   |     | 28,597    |   |         |   | 36,626 |   |
| Other intangibles, net                                                                                                                                                                     |   |     | 4,270     |   |         |   | 4,989 |   |
| Other real estate owned                                                                                                                                                                    |   |     | 27,562    |   |         |   | 31,232 |   |
| Other assets                                                                                                                                                                               |   |     | 48,040    |   |         |   | 43,832 |   |
| Total assets                                                                                                                                                                               |   | $        | 2,092,737 |   |         | $      | 2,171,562 |   |
| Liabilities                                                                                                                                                                                |   |     |      |   |         |   |   |   |
| Deposits:                                                                                                                                                                                  |   |     |      |   |         |   |   |   |
| Noninterest bearing                                                                                                                                                                        |   | $        | 205,512   |   |         | $      | 214,518 |   |
| Interest bearing                                                                                                                                                                           |   |     | 1,318,386 |   |         |   | 1,418,915 |   |
| Total deposits                                                                                                                                                                             |   |     | 1,523,898 |   |         |   | 1,633,433 |   |
| Federal funds purchased and other short-term borrowings                                                                                                                                    |   |     | 76,967    |   |         |   | 47,215 |   |
| Securities sold under agreements to repurchase and other long-term borrowings                                                                                                              |   |     | 262,574   |   |         |   | 267,962 |   |
| Subordinated notes payable to unconsolidated trusts                                                                                                                                        |   |     | 48,970    |   |         |   | 48,970 |   |
| Dividends payable                                                                                                                                                                          |   |     | 188       |   |         |   | 925 |   |
| Other liabilities                                                                                                                                                                          |   |     | 27,046    |   |         |   | 25,830 |   |
| Total liabilities                                                                                                                                                                          |   |     | 1,939,643 |   |         |   | 2,024,335 |   |
| Shareholders’ Equity                                                                                                                                                                 |   |     |      |   |         |   |   |   |
| Preferred stock, no par value1,000,000 shares authorized; 30,000 Series A shares issued and outstanding at June 30, 2010 and December 31, 2009; Liquidation preference of $30,000          |   |     | 28,530    |   |         |   | 28,348 |   |
| Common stock, par value $.125 per share14,608,000 shares authorized;  7,392,502 and 7,378,605 shares issued and outstanding at June 30, 2010 and December 31, 2009, respectively |   |     | 924       |   |         |   | 922 |   |
| Capital surplus                                                                                                                                                                            |   |     | 50,583    |   |         |   | 50,476 |   |
| Retained earnings                                                                                                                                                                          |   |     | 67,471    |   |         |   | 63,617 |   |
| Accumulated other comprehensive income                                                                                                                                                     |   |     | 5,586     |   |         |   | 3,864 |   |
| Total shareholders’ equity                                                                                                                                                           |   |     | 153,094   |   |         |   | 147,227 |   |
| Total liabilities and shareholders’ equity                                                                                                                                           |   | $        | 2,092,737 |   |         | $      | 2,171,562 |   |

----

Unaudited Consolidated Statements of Operations

|                                                                                      |   | Three Months Ended |   |   | Six Months Ended |   |
|-------------------------------------------------------------------------------------------|--------|--------------------|--------|--------|------------------|--------|
|                                                                                      |   | June 30,           |   |   | June 30,         |   |
| (In thousands, except per share data)                                                     |   | 2010               |   |   | 2009             |   |   | 2010 |   |   | 2009 |   |
| Interest Income                                                                           |   |               |   |   |             |   |   |   |   |   |   |   |
| Interest and fees on loans                                                                |   | $                  | 17,977 |   |             | $      | 19,388 |   |   | $ | 35,719 |   |   | $ | 39,336 |   |
| Interest on investment securities:                                                        |   |               |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Taxable                                                                                   |   |               | 4,683  |   |             |   | 5,057 |   |   |   | 9,382 |   |   |   | 10,540 |   |
| Nontaxable                                                                                |   |               | 750    |   |             |   | 949 |   |   |   | 1,607 |   |   |   | 1,768 |   |
| Interest on deposits in other banks                                                       |   |               | 63     |   |             |   | 74 |   |   |   | 145 |   |   |   | 147 |   |
| Interest of federal funds sold and securities purchased under agreements to resell        |   |               | 2      |   |             |   | 11 |   |   |   | 4 |   |   |   | 17 |   |
| Total interest income                                                                     |   |               | 23,475 |   |             |   | 25,479 |   |   |   | 46,857 |   |   |   | 51,808 |   |
| Interest Expense                                                                          |   |               |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Interest on deposits                                                                      |   |               | 5,995  |   |             |   | 8,575 |   |   |   | 12,697 |   |   |   | 17,155 |   |
| Interest on federal funds purchased and other short-term borrowings                       |   |               | 81     |   |             |   | 121 |   |   |   | 173 |   |   |   | 237 |   |
| Interest on securities sold under agreements to repurchase and other long-term borrowings |   |               | 2,616  |   |             |   | 2,813 |   |   |   | 5,253 |   |   |   | 5,628 |   |
| Interest on subordinated notes payable to unconsolidated trusts                           |   |               | 506    |   |             |   | 567 |   |   |   | 1,007 |   |   |   | 1,146 |   |
| Total interest expense                                                                    |   |               | 9,198  |   |             |   | 12,076 |   |   |   | 19,130 |   |   |   | 24,166 |   |
| Net interest income                                                                       |   |               | 14,277 |   |             |   | 13,403 |   |   |   | 27,727 |   |   |   | 27,642 |   |
| Provision for loan losses                                                                 |   |               | 5,490  |   |             |   | 5,940 |   |   |   | 7,416 |   |   |   | 7,616 |   |
| Net interest income after provision for loan losses                                       |   |               | 8,787  |   |             |   | 7,463 |   |   |   | 20,311 |   |   |   | 20,026 |   |
| Noninterest Income                                                                        |   |               |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Service charges and fees on deposits                                                      |   |               | 2,392  |   |             |   | 2,336 |   |   |   | 4,536 |   |   |   | 4,522 |   |
| Allotment processing fees                                                                 |   |               | 1,421  |   |             |   | 1,375 |   |   |   | 2,789 |   |   |   | 2,647 |   |
| Other service charges, commissions, and fees                                              |   |               | 1,219  |   |             |   | 1,110 |   |   |   | 2,340 |   |   |   | 2,157 |   |
| Data processing income                                                                    |   |               | 380    |   |             |   | 372 |   |   |   | 727 |   |   |   | 661 |   |
| Trust income                                                                              |   |               | 401    |   |             |   | 602 |   |   |   | 829 |   |   |   | 1,037 |   |
| Investment securities gains, net                                                          |   |               | 3,367  |   |             |   | 1,304 |   |   |   | 4,979 |   |   |   | 2,058 |   |
| Gains on sale of mortgage loans, net                                                      |   |               | 222    |   |             |   | 345 |   |   |   | 343 |   |   |   | 691 |   |
| Income from company-owned life insurance                                                  |   |               | 260    |   |             |   | 333 |   |   |   | 553 |   |   |   | 658 |   |
| Other                                                                                     |   |               | 207    |   |             |   | 48 |   |   |   | 263 |   |   |   | 119 |   |
| Total noninterest income                                                                  |   |               | 9,869  |   |             |   | 7,825 |   |   |   | 17,359 |   |   |   | 14,550 |   |
| Noninterest Expense                                                                       |   |               |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Salaries and employee benefits                                                            |   |               | 6,762  |   |             |   | 7,352 |   |   |   | 13,858 |   |   |   | 14,876 |   |
| Occupancy expenses, net                                                                   |   |               | 1,188  |   |             |   | 1,394 |   |   |   | 2,467 |   |   |   | 2,717 |   |
| Equipment expenses                                                                        |   |               | 651    |   |             |   | 770 |   |   |   | 1,312 |   |   |   | 1,525 |   |
| Data processing and communication expenses                                                |   |               | 1,425  |   |             |   | 1,390 |   |   |   | 2,868 |   |   |   | 2,836 |   |
| Bank franchise tax                                                                        |   |               | 627    |   |             |   | 565 |   |   |   | 1,244 |   |   |   | 1,122 |   |
| Deposit insurance expense                                                                 |   |               | 1,095  |   |             |   | 1,709 |   |   |   | 2,201 |   |   |   | 2,161 |   |
| Correspondent bank fees                                                                   |   |               | 219    |   |             |   | 298 |   |   |   | 412 |   |   |   | 601 |   |
| Amortization of intangibles                                                               |   |               | 360    |   |             |   | 488 |   |   |   | 719 |   |   |   | 976 |   |
| Other real estate expenses, net                                                           |   |               | 992    |   |             |   | 226 |   |   |   | 2,664 |   |   |   | 421 |   |
| Other                                                                                     |   |               | 1,886  |   |             |   | 1,971 |   |   |   | 3,957 |   |   |   | 4,040 |   |
| Total noninterest expense                                                                 |   |               | 15,205 |   |             |   | 16,163 |   |   |   | 31,702 |   |   |   | 31,275 |   |
| Income (loss) before income taxes                                                         |   |               | 3,451  |   |             |   | (875 | ) |   |   | 5,968 |   |   |   | 3,301 |   |
| Income tax expense (benefit)                                                              |   |               | 610    |   |             |   | (74 | ) |   |   | 1,182 |   |   |   | 797 |   |
| Net income (loss)                                                                         |   |               | 2,841  |   |             |   | (801 | ) |   |   | 4,786 |   |   |   | 2,504 |   |
| Dividends and accretion on preferred shares                                               |   |               | (466   | )      |             |   | (462 | ) |   |   | (932 | ) |   |   | (876 | ) |
| Net income (loss) available to common shareholders                                        |   | $                  | 2,375  |   |             | $      | (1,263 | ) |   | $ | 3,854 |   |   | $ | 1,628 |   |
| Per Common Share                                                                          |   |               |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Net income (loss), basic and diluted                                                      |   | $                  | .32    |   |             | $      | (.17 | ) |   | $ | .52 |   |   | $ | .22 |   |
| Cash dividends declared                                                                   |   |               | N/A    |   |             |   | .25 |   |   |   | N/A |   |   |   | .50 |   |
| Weighted Average Common Shares Outstanding                                                |   |               |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Basic and diluted                                                                         |   |               | 7,384  |   |             |   | 7,363 |   |   |   | 7,382 |   |   |   | 7,360 |   |

----

Unaudited Consolidated Statements of Comprehensive Income (Loss)

|                                                                                                                                                      |   | Three Months Ended |   |   | Six Months Ended |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|--------|--------|------------------|--------|
|                                                                                                                                                      |   | June 30,           |   |   | June 30,         |   |
| (In thousands)                                                                                                                                            |   | 2010               |   |   | 2009             |   |   | 2010 |   |   | 2009 |   |
| Net Income (Loss)                                                                                                                                         |   | $                  | 2,841  |   |             | $      | (801 | ) |   | $ | 4,786 |   |   | $ | 2,504 |   |
| Other comprehensive income (loss):                                                                                                                        |   |               |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Net unrealized holding gain (loss) on available for sale securities arising during the period, net of tax of $1,998, $422, $2,315, and $114, respectively |   |               | 3,710  |   |             |   | 784 |   |   |   | 4,300 |   |   |   | (211 | ) |
|                                                                                                                                                      |   |               |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Reclassification adjustment for prior period unrealized gain recognized during current period, net of tax of $1,278, $669, $1,452, and $954, respectively |   |               | (2,374 | )      |             |   | (1,242 | ) |   |   | (2,696 | ) |   |   | (1,772 | ) |
|                                                                                                                                                      |   |               |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Change in unfunded portion of postretirement benefit obligation, net of tax of $31, $39, $63, and $78, respectively                                       |   |               | 59     |   |             |   | 72 |   |   |   | 118 |   |   |   | 144 |   |
| Other comprehensive income (loss)                                                                                                                         |   |               | 1,395  |   |             |   | (386 | ) |   |   | 1,722 |   |   |   | (1,839 | ) |
| Comprehensive Income (Loss)                                                                                                                               |   | $                  | 4,236  |   |             | $      | (1,187 | ) |   | $ | 6,508 |   |   | $ | 665 |   |

----

Unaudited Consolidated Statements of Cash Flows

| Six months ended June 30, (In thousands)                                              |   | 2010   |         |   | 2009   |   |
|---------------------------------------------------------------------------------------|--------|--------|--------------|--------|--------|--------|
| Cash Flows from Operating Activities                                                  |   |   |         |   |   |   |
| Net income                                                                            |   | $      | 4,786        |   |   | $      | 2,504 |   |
| Adjustments to reconcile net income to net cash provided by operating activities:     |   |   |         |   |   |   |   |   |
| Depreciation and amortization                                                         |   |   | 2,631        |   |   |   | 3,216 |   |
| Net amortization of investment security premiums and (discounts):                     |   |   |         |   |   |   |   |   |
| Available for sale                                                                    |   |   | 763          |   |   |   | 139 |   |
| Held to maturity                                                                      |   |   |         |   |   |   | (1 | ) |
| Provision for loan losses                                                             |   |   | 7,416        |   |   |   | 7,616 |   |
| Noncash compensation expense                                                          |   |   | 30           |   |   |   | 26 |   |
| Mortgage loans originated for sale                                                    |   |   | (13,946      | )      |   |   | (30,747 | ) |
| Proceeds from sale of mortgage loans                                                  |   |   | 15,107       |   |   |   | 28,728 |   |
| Deferred income tax expense                                                           |   |   | 1,723        |   |   |   | 1,706 |   |
| Gain on sale of mortgage loans, net                                                   |   |   | (343         | )      |   |   | (691 | ) |
| (Gain) loss on disposal of premises and equipment, net                                |   |   | (15          | )      |   |   | 55 |   |
| Loss on sale and write downs of other real estate                                     |   |   | 2,066        |   |   |   | 140 |   |
| Gain on sale of available for sale investment securities, net                         |   |   | (4,979       | )      |   |   | (2,058 | ) |
| Decrease in accrued interest receivable                                               |   |   | 1,340        |   |   |   | 1,515 |   |
| Income from company-owned life insurance                                              |   |   | (538         | )      |   |   | (609 | ) |
| (Increase) decrease in other assets                                                   |   |   | (7,626       | )      |   |   | 2,911 |   |
| Decrease in accrued interest payable                                                  |   |   | (822         | )      |   |   | (153 | ) |
| (Decrease) increase in other liabilities                                              |   |   | (202         | )      |   |   | 1,798 |   |
| Net cash provided by operating activities                                             |   |   | 7,391        |   |   |   | 16,095 |   |
| Cash Flows from Investing Activities                                                  |   |   |         |   |   |   |   |   |
| Proceeds from maturities and calls of investment securities:                          |   |   |         |   |   |   |   |   |
| Available for sale                                                                    |   |   | 108,805      |   |   |   | 93,139 |   |
| Held to maturity                                                                      |   |   |         |   |   |   | 250 |   |
| Proceeds from sale of available for sale investment securities                        |   |   | 158,289      |   |   |   | 109,236 |   |
| Purchase of available for sale investment securities                                  |   |   | (245,375     | )      |   |   | (219,947 | ) |
| Purchase of restricted stock investments                                              |   |   | (331         | )      |   |   | (176 | ) |
| Loans originated for investment, net of principal collected                           |   |   | 20,350       |   |   |   | (8,165 | )   |
| Proceeds from surrender of company-owned life insurance                               |   |   | 8,567        |   |   |   |   |   |
| Purchase of premises and equipment                                                    |   |   | (3,418       | )      |   |   | (1,250 | ) |
| Proceeds from sale of other real estate                                               |   |   | 9,165        |   |   |   | 834 |   |
| Proceeds from sale of equipment                                                       |   |   | 30           |   |   |   | 29 |   |
| Net cash provided by (used in) investing activities                                   |   |   | 56,082       |   |   |   | (26,050 | ) |
| Cash Flows from Financing Activities                                                  |   |   |         |   |   |   |   |   |
| Net (decrease) increase in deposits                                                   |   |   | (109,535     | )      |   |   | 44,150 |   |
| Net increase in federal funds purchased and other short-term borrowings               |   |   | 29,752       |   |   |   | 28,369 |   |
| Repayments of securities sold under agreements to repurchase and other long-term debt |   |   | (5,388       | )      |   |   | (5,899 | ) |
| Proceeds from issuance of preferred stock, net of issue costs                         |   |   |         |   |   |   | 29,961 |   |
| Dividends paid, common and preferred                                                  |   |   | (1,487       | )      |   |   | (4,792 | ) |
| Shares issued under Employee Stock Purchase Plan                                      |   |   | 79           |   |   |   | 122 |   |
| Net cash (used in) provided by financing activities                                   |   |   | (86,579      | )      |   |   | 91,911 |   |
| Net (decrease) increase in cash and cash equivalents                                  |   |   | (23,106      | )      |   |   | 81,956 |   |
| Cash and cash equivalents at beginning of year                                        |   |   | 218,336      |   |   |   | 190,775 |   |
| Cash and cash equivalents at end of period                                            |   | $      | 195,230      |   |   | $      | 272,731 |   |
| Supplemental Disclosures                                                              |   |   |         |   |   |   |   |   |
| Cash paid during the period for:                                                      |   |   |         |   |   |   |   |   |
| Interest                                                                              |   | $      |  19,952 |   |   | $      |  24,319 |   |
| Income taxes                                                                          |   |   | 189          |   |   |   | 2,450 |   |
| Transfers from loans to other real estate                                             |   |   | 7,885        |   |   |   | 5,023 |   |
| Transfers from premises to repossessed assets                                         |   |   |         |   |   |   | 1,506 |   |
| Cash dividends payable, common and preferred                                          |   |   | 188          |   |   |   | 2,028 |   |

----

Unaudited Consolidated Statements of Changes in Shareholders’ Equity

| (In thousands, except per share data)                                   |   |      |   |   |         |   |   |    |   |   |     |   |   | Accumulated   |   |   |                |   |
|-------------------------------------------------------------------------|--------|-----------|--------|--------|--------------|--------|--------|---------|--------|--------|----------|--------|--------|---------------|--------|--------|---------------------|--------|
|                                                                    |   |      |   |   |         |   |   |    |   |   |     |   |   | Other         |   |   | Total               |   |
| Six months ended                                                        |   | Preferred |   |   | Common Stock |   |   | Capital |   |   | Retained |   |   | Comprehensive |   |   | Shareholders’ |   |
| June 30, 2010 and 2009                                                  |   | Stock     |   |   | Shares       |   |   | Amount  |   |   | Surplus  |   |   | Earnings      |   |   | Income (Loss)       |   |   | Equity |   |
| Balance at January 1, 2010                                              |   | $         | 28,348 |   |         |   | 7,379  |    |   | $      | 922      |   |   | $             | 50,476 |   |                | $      | 63,617 |   |   | $ | 3,864 |   |   | $ | 147,227 |   |
| Net income                                                              |   |      |   |   |         |   |   |    |   |   |     |   |   |          |   |   |                |   | 4,786 |   |   |   |   |   |   |   | 4,786 |   |
| Other comprehensive income                                              |   |      |   |   |         |   |   |    |   |   |     |   |   |          |   |   |                |   |   |   |   |   | 1,722 |   |   |   | 1,722 |   |
| Preferred stock dividends                                               |   |      |   |   |         |   |   |    |   |   |     |   |   |          |   |   |                |   | (750 | ) |   |   |   |   |   |   | (750 | ) |
| Preferred stock discount accretion                                      |   |      | 182    |   |         |   |   |    |   |   |     |   |   |          |   |   |                |   | (182 | ) |   |   |   |   |   |   |   |   |
| Shares issued pursuant to Employee Stock Purchase Plan                  |   |      |   |   |         |   | 14     |    |   |   | 2        |   |   |          | 77     |   |                |   |   |   |   |   |   |   |   |   | 79 |   |
| Noncash compensation expense attributed to Employee Stock Purchase Plan |   |      |   |   |         |   |   |    |   |   |     |   |   |          | 30     |   |                |   |   |   |   |   |   |   |   |   | 30 |   |
| Balance at June 30, 2010                                                |   | $         | 28,530 |   |         |   | 7,393  |    |   | $      | 924      |   |   | $             | 50,583 |   |                | $      | 67,471 |   |   | $ | 5,586 |   |   | $ | 153,094 |   |
|                                                                    |   |      |   |   |         |   |   |    |   |   |     |   |   |          |   |   |                |   |   |   |   |   |   |   |   |   |   |   |

|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |    |    |   |   |
|-------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|---------|---------|--------|--------|
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |    |    |   |   |
| Balance at January 1, 2009                                              |   |   |   |   |   | 7,357  |   |   | $      | 920    |   |   | $      | 48,222 |   |   | $      | 116,419 |    |   | $      | 2,735 |   |   | $ | 168,296 |   |
| Issuance of 30,000 shares of Series A preferred stock                   |   | $      | 28,009 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |    |    |   |   |   |   |   |   |   | 28,009 |   |
| Issuance of common stock warrant                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 1,952  |   |   |    |    |   |   |   |   |   |   |   | 1,952 |   |
| Net income                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |    | 2,504   |   |   |   |   |   |   |   | 2,504 |   |
| Other comprehensive loss                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |    |    |   |   |   | (1,839 | ) |   |   | (1,839 | ) |
| Cash dividends declared-common, $.50 per share                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |    | (3,680  | )      |   |   |   |   |   |   | (3,680 | ) |
| Preferred stock dividends                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |    | (713    | )      |   |   |   |   |   |   | (713 | ) |
| Preferred stock discount accretion                                      |   |   | 162    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |    | (162    | )      |   |   |   |   |   |   |   |   |
| Shares issued pursuant to Employee Stock Purchase Plan                  |   |   |   |   |   |   | 10     |   |   |   | 1      |   |   |   | 121    |   |   |    |    |   |   |   |   |   |   |   | 122 |   |
| Noncash compensation expense attributed to Employee Stock Purchase Plan |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 26     |   |   |    |    |   |   |   |   |   |   |   | 26 |   |
| Balance at June 30, 2009                                                |   | $      | 28,171 |   |   |   | 7,367  |   |   | $      | 921    |   |   | $      | 50,321 |   |   | $       | 114,368 |   |   | $ | 896 |   |   | $ | 194,677 |   |

----

Notes to Unaudited Consolidated Financial Statement

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

----

| 2. | Reclassifications |
|----|-------------------|

| 3. | Recently Issued But Not Yet Effective Accounting Standards |
|----|------------------------------------------------------------|

|   | · | A reporting entity to disclose separately the amounts of significant transfers in and out of Level 1 and Level 2 fair value measurements and describe the reasons for the transfers; and |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | In the reconciliation for fair value measurements using significant unobservable inputs, a reporting entity should present separately information about purchases, sales, issuances, and settlements. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | For purposes of reporting fair value measurement for each class of assets and liabilities, a reporting entity needs to use judgment in determining the appropriate classes of assets and liabilities; and |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | A reporting entity should provide disclosures about the valuation techniques and inputs used to measure fair value for both recurring and nonrecurring fair value measurements. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4. | Adoption of New Accounting Standards |
|----|--------------------------------------|

----

|                                                                  |   | Three Months EndedJune 30, |   |   | Six Months EndedJune 30, |   |
|-----------------------------------------------------------------------|--------|----------------------------|--------|--------|--------------------------|--------|
| (In thousands, except per share data)                                 |   | 2010                       |   |   | 2009                     |   |   | 2010 |   |   | 2009 |   |
|                                                                  |   |                       |   |   |                     |   |   |   |   |   |   |   |
| Net  income (loss), basic and diluted                       |   | $                          | 2,841  |   |                     | $      | (801 | ) |   | $ | 4,786 |   |   | $ | 2,504 |   |
| Preferred stock dividends and discount accretion                      |   |                       | (466   | )      |                     |   | (462 | ) |   |   | (932 | ) |   |   | (876 | ) |
| Net income (loss) available to common shareholders, basic and diluted |   | $                          | 2,375  |   |                     | $      | (1,263 | ) |   | $ | 3,854 |   |   | $ | 1,628 |   |
|                                                                  |   |                       |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
|                                                                  |   |                       |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Average common shares outstanding, basic and diluted                  |   |                       | 7,384  |   |                     |   | 7,363 |   |   |   | 7,382 |   |   |   | 7,360 |   |
|                                                                  |   |                       |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Net income (loss) per common share, basic and diluted                 |   | $                          | .32    |   |                     | $      | (.17 | ) |   | $ | .52 |   |   | $ | .22 |   |

----

|   | Level 1: | Quoted prices for identical assets or liabilities in active markets that the entity has the ability to access at the measurement date. |
|--------|----------|----------------------------------------------------------------------------------------------------------------------------------------|

|   | Level 2: | Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. |
|--------|----------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Level 3: | Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing the asset or liability. |
|--------|----------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | U.S. Treasury securities are priced using dealer quotes from active market makers and real-time trading systems. |
|--------|--------|------------------------------------------------------------------------------------------------------------------|

|   | · | Marketable equity securities are priced utilizing real-time data feeds from active market exchanges for identical securities. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------|

|   | · | Government-sponsored agency debt securities, obligations of states and political subdivisions, corporate bonds, and other similar investment securities are priced with available market information through processes using benchmark yields, matrix pricing, prepayment speeds, cash flows, live trading data, and market spreads sourced from new issues, dealer quotes, and trade prices, among others sources. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                     |   |       |    |   | Fair Value Measurements Using                                 |
|--------------------------------------------------------------------------|--------|------------|---------|--------|---------------------------------------------------------------|
| (In thousands)   Available For Sale Investment Securities |   | Fair Value |    |   | Quoted Prices in Active Markets for Identical Assets(Level 1) |   |   | Significant Other Observable Inputs(Level 2) |   | Significant Unobservable Inputs(Level 3) |
|                                                                     |   |       |    |   |                                                          |   |   |   |   |   |
| June 30, 2010                                                            |   |       |    |   |                                                          |   |   |   |   |   |
| U.S. Treasury securities                                                 |   | $          | 1,064   |   |                                                          | $ | 1,064 |   |   |   |   |   |
| Obligations of U.S. government-sponsored entities                        |   |       | 135,873 |   |                                                          |   |   |   |   | $ | 135,873 |   |   |
| Obligations of states and political subdivisions                         |   |       | 84,741  |   |                                                          |   |   |   |   |   | 84,741 |   |   |
| Mortgage-backed securities – residential                           |   |       | 307,300 |   |                                                          |   |   |   |   |   | 307,300 |   |   |
| Money market mutual funds                                                |   |       | 15      |   |                                                          |   | 15 |   |   |   |   |   |   |
| Corporate debt securities                                                |   |       | 6,267   |   |                                                          |   |   |   |   |   | 6,267 |   |   |
| Total                                                                    |   | $          | 535,260 |   |                                                          | $ | 1,079 |   |   | $ | 534,181 |   | $0 |

----

|                                                                     |   |       |    |   | Fair Value Measurements Using                                 |
|--------------------------------------------------------------------------|--------|------------|---------|--------|---------------------------------------------------------------|
| (In thousands)   Available For Sale Investment Securities |   | Fair Value |    |   | Quoted Prices in Active Markets for Identical Assets(Level 1) |   |   | Significant Other Observable Inputs(Level 2) |   | Significant Unobservable Inputs(Level 3) |
|                                                                     |   |       |    |   |                                                          |   |   |   |   |   |
| December 31, 2009                                                        |   |       |    |   |                                                          |   |   |   |   |   |
| U.S. Treasury securities                                                 |   | $          | 3,002   |   |                                                          | $ | 3,002 |   |   |   |   |   |
| Obligations of U.S. government-sponsored entities                        |   |       | 90,752  |   |                                                          |   |   |   |   | $ | 90,752 |   |   |
| Obligations of states and political subdivisions                         |   |       | 108,958 |   |                                                          |   |   |   |   |   | 108,958 |   |   |
| Mortgage-backed securities – residential                           |   |       | 325,519 |   |                                                          |   |   |   |   |   | 325,519 |   |   |
| Money market mutual funds                                                |   |       | 910     |   |                                                          |   | 910 |   |   |   |   |   |   |
| Corporate debt securities                                                |   |       | 18,732  |   |                                                          |   |   |   |   |   | 18,732 |   |   |
|      Total                                      |   | $          | 547,873 |   |                                                          | $ | 3,912 |   |   | $ | 543,961 |   | $0 |

----

|                                                           |   |       |   | Fair Value Measurements Using                                 |                                         |
|----------------------------------------------------------------|--------|------------|--------|---------------------------------------------------------------|----------------------------------------------|
| (In thousands)  Description                          |   | Fair Value |   | Quoted Prices in Active Markets for Identical Assets(Level 1) | Significant Other Observable Inputs(Level 2) |   | Significant Unobservable Inputs(Level 3) |   |
| June 30, 2010                                                  |   |       |   |                                                          |                                         |   |   |   |
| Impaired Loans                                                 |   |       |   |                                                          |                                         |   |   |   |
| Real estate-construction                                       |   | $          | 9,065  |                                                          |                                         |   |   | $ | 9,065 |   |
| Real estate mortgage-residential                               |   |       | 5,947  |                                                          |                                         |   |   |   | 5,947 |   |
| Real estate mortgage-farmland and other commercial enterprises |   |       | 6,763  |                                                          |                                         |   |   |   | 6,763 |   |
| Other                                                          |   |       | 85     |                                                          |                                         |   |   |   | 85 |   |
| Total Impaired Loans                                           |   | $          | 21,860 |                                                          |                                         |   |   | $ | 21,860 |   |
|                                                           |   |       |   |                                                          |                                         |   |   |   |   |   |
| OREO                                                           |   |       | 5,472  |                                                          |                                         |   |   |   | 5,472 |   |
| Total                                                          |   | $          | 27,332 |                                                          |                                         |   |   | $ | 27,332 |   |
|                                                           |   |       |   |                                                          |                                         |   |   |   |   |   |
| December 31, 2009                                              |   |       |   |                                                          |                                         |   |   |   |   |   |
| Impaired Loans                                                 |   | $          | 54,961 |                                                          |                                         |   |   | $ | 54,961 |   |
| OREO                                                           |   |       | 11,140 |                                                          |                                         |   |   |   | 11,140 |   |
| Total                                                          |   | $          | 66,101 |                                                          |                                         |   |   | $ | 66,101 |   |

|                |   | Three Months EndedJune 30, |   |   | Six Months EndedJune 30, |   |
|---------------------|--------|----------------------------|--------|--------|--------------------------|--------|
| (In thousands)      |   | 2010                       |   |   | 2009                     |   |   | 2010 |   |   | 2009 |   |
| Impairment charges: |   |                       |   |   |                     |   |   |   |   |   |   |   |
| Impaired Loans      |   | $                          | 883    |   |                     | $      | 3,433 |   |   | $ | 1,693 |   |   | $ | 3,750 |   |
| OREO                |   |                       | 558    |   |                     |   |   |   |   |   | 1,501 |   |   |   | 91 |   |
| Total               |   | $                          | 1,441  |   |                     | $      | 3,433 |   |   | $ | 3,194 |   |   | $ | 3,841 |   |

----

----

|                                                                          |   |                 |      |   |              |   |
|-------------------------------------------------------------------------------|--------|----------------------|-----------|--------|-------------------|--------|
|                                                                          |   | June 30, 2010        |      |   | December 31, 2009 |   |
| (In thousands)                                                                |   | Carrying Amount |      |   | FairValue         |   |   | CarryingAmount |   |   | FairValue |   |
| Assets                                                                        |   |                 |      |   |              |   |   |   |   |   |   |   |
| Cash and cash equivalents                                                     |   | $                    | 195,230   |   |              | $      | 195,230 |   |   | $ | 218,336 |   |   | $ | 218,336 |   |
| Investment securities:                                                        |   |                 |      |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Available for sale                                                            |   |                 | 535,260   |   |              |   | 535,260 |   |   |   | 547,873 |   |   |   | 547,873 |   |
| Held to maturity                                                              |   |                 | 975       |   |              |   | 933 |   |   |   | 975 |   |   |   | 922 |   |
| FHLB and similar stock                                                        |   |                 | 9,479     |   |              |   | N/A |   |   |   | 9,148 |   |   |   | N/A |   |
| Loans, net                                                                    |   |                 | 1,212,109 |   |              |   | 1,207,058 |   |   |   | 1,248,578 |   |   |   | 1,246,151 |   |
| Accrued interest receivable                                                   |   |                 | 8,041     |   |              |   | 8,041 |   |   |   | 9,381 |   |   |   | 9,381 |   |
|                                                                          |   |                 |      |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities                                                                   |   |                 |      |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                                                      |   |                 | 1,523,898 |   |              |   | 1,532,246 |   |   |   | 1,633,433 |   |   |   | 1,640,933 |   |
| Federal funds purchased and other short-term borrowings                       |   |                 | 76,967    |   |              |   | 76,967 |   |   |   | 47,215 |   |   |   | 47,215 |   |
| Securities sold under agreements to repurchase and other long-term borrowings |   |                 | 262,574   |   |              |   | 283,560 |   |   |   | 267,962 |   |   |   | 285,093 |   |
| Subordinated notes payable to unconsolidated trusts                           |   |                 | 48,970    |   |              |   | 25,638 |   |   |   | 48,970 |   |   |   | 28,528 |   |
| Accrued interest payable                                                      |   |                 | 3,863     |   |              |   | 3,863 |   |   |   | 4,685 |   |   |   | 4,685 |   |

|                                              |   |                |      |   |                  |   |   |                   |   |   |                |   |
|---------------------------------------------------|--------|---------------------|-----------|--------|-----------------------|--------|--------|------------------------|--------|--------|---------------------|--------|
| June 30, 2010 (In thousands)                      |   | Amortized Cost |      |   | GrossUnrealized Gains |   |   | GrossUnrealized Losses |   |   | EstimatedFair Value |   |
| Available For Sale                                |   |                |      |   |                  |   |   |                   |   |   |                |   |
| Obligations of U.S. government-sponsored entities |   | $                   | 135,376   |   |                  | $      | 508    |                   |   | $      |  11            |   |   | $ | 135,873 |   |
| Obligations of states and political subdivisions  |   |                | 82,946    |   |                  |   | 2,123  |                   |   |   | 328                 |   |   |   | 84,741 |   |
| Mortgage-backed securities – residential    |   |                | 295,958   |   |                  |   | 11,401 |                   |   |   | 59                  |   |   |   | 307,300 |   |
| U.S. Treasury securities                          |   |                | 1,060     |   |                  |   | 4      |                   |   |   |                |   |   |   | 1,064 |   |
| Money market mutual funds                         |   |                | 15        |   |                  |   |   |                   |   |   |                |   |   |   | 15 |   |
| Corporate debt securities                         |   |                | 7,435     |   |                  |   |   |                   |   |   | 1,168               |   |   |   | 6,267 |   |
| Total securities – available for sale       |   | $                   | 522,790   |   |                  | $      | 14,036 |                   |   | $      | 1,566               |   |   | $ | 535,260 |   |
| Held To Maturity                                  |   |                |      |   |                  |   |   |                   |   |   |                |   |   |   |   |   |
| Obligations of states and political subdivisions  |   | $                   |  975 |   |                  | $      | 0      |                   |   | $      |  42            |   |   | $ |  933 |   |

----

|                                              |   |           |    |   |                  |   |   |                   |   |   |                      |   |
|---------------------------------------------------|--------|----------------|---------|--------|-----------------------|--------|--------|------------------------|--------|--------|---------------------------|--------|
| December 31, 2009 (In thousands)                  |   | Amortized Cost |    |   | GrossUnrealized Gains |   |   | GrossUnrealized Losses |   |   | Estimated Fair Value |   |
| Available For Sale                                |   |           |    |   |                  |   |   |                   |   |   |                      |   |
| Obligations of U.S. government-sponsored entities |   | $              | 90,889  |   |                  | $      | 162    |                   |   | $      | 299                       |   |   | $ | 90,752 |   |
| Obligations of states and political subdivisions  |   |           | 107,190 |   |                  |   | 2,423  |                   |   |   | 655                       |   |   |   | 108,958 |   |
| Mortgage-backed securities – residential    |   |           | 315,546 |   |                  |   | 10,446 |                   |   |   | 473                       |   |   |   | 325,519 |   |
| U.S. Treasury securities                          |   |           | 2,997   |   |                  |   | 5      |                   |   |   |                      |   |   |   | 3,002 |   |
| Money market mutual funds                         |   |           | 910     |   |                  |   |   |                   |   |   |                      |   |   |   | 910 |   |
| Corporate debt securities                         |   |           | 20,341  |   |                  |   | 195    |                   |   |   | 1,804                     |   |   |   | 18,732 |   |
| Total securities – available for sale       |   | $              | 537,873 |   |                  | $      | 13,231 |                   |   | $      | 3,231                     |   |   | $ | 547,873 |   |
| Held To Maturity                                  |   |           |    |   |                  |   |   |                   |   |   |                      |   |   |   |   |   |
| Obligations of states and political subdivisions  |   | $              | 975     |   |                  | $      | 0      |                   |   | $      | 53                        |   |   | $ | 922 |   |

|                                   |   |                |    |   |                      |   |
|----------------------------------------|--------|---------------------|---------|--------|---------------------------|--------|
|                                   |   | Available For Sale  |    |   | Held To Maturity          |   |
| June 30, 2010 (In thousands)           |   | Amortized Cost |    |   | Estimated Fair Value |   |   | Amortized Cost |   |   | Estimated Fair Value |   |
| Due in one year or less                |   | $                   | 14,388  |   |                      | $      | 14,436 |   |   |   |   |   |   |   |
| Due after one year through five years  |   |                | 98,882  |   |                      |   | 99,556 |   |   |   |   |   |   |   |
| Due after five years through ten years |   |                | 71,221  |   |                      |   | 72,297 |   |   |   |   |   |   |   |
| Due after ten years                    |   |                | 42,341  |   |                      |   | 41,671 |   |   | $ | 975 |   |   | $ | 933 |   |
| Mortgage-backed securities-residential |   |                | 295,958 |   |                      |   | 307,300 |   |   |   |   |   |   |   |   |   |
| Total                                  |   | $                   | 522,790 |   |                      | $      | 535,260 |   |   | $ | 975 |   |   | $ | 933 |   |

|                                                                      |   | Three Months Ended |    |   | Six Months Ended |   |
|---------------------------------------------------------------------------|--------|--------------------|---------|--------|------------------|--------|
|                                                                      |   | June 30,           |    |   | June 30,         |   |
| (In thousands)                                                            |   | 2010               |    |   | 2009             |   |   | 2010 |   |   | 2009 |   |
|                                                                      |   |               |    |   |             |   |   |   |   |   |   |   |
| Gross realized gains                                                      |   | $                  | 3,641   |   |             | $      | 1,328 |   |   | $ | 5,253 |   |   | $ | 2,101 |   |
| Gross realized losses                                                     |   |               | 274     |   |             |   | 24 |   |   |   | 274 |   |   |   | 43 |   |
| Net realized gains                                                        |   | $                  | 3,367   |   |             | $      | 1,304 |   |   | $ | 4,979 |   |   | $ | 2,058 |   |
|                                                                      |   |               |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Proceeds from sales and calls of available for sale investment securities |   | $                  | 145,444 |   |             | $      | 84,712 |   |   | $ | 241,725 |   |   | $ | 170,977 |   |

----

|                                              |   |                |   |   |              |   |   |       |   |
|---------------------------------------------------|--------|---------------------|--------|--------|-------------------|--------|--------|------------|--------|
|                                              |   | Less than 12 Months |   |   | 12 Months or More |   |   | Total      |   |
|  June 30, 2010 (In thousands)                |   | Fair Value          |   |   | UnrealizedLosses  |   |   | Fair Value |   |   | UnrealizedLosses |   |   | Fair Value |   |   | UnrealizedLosses |   |
| Obligations of U.S. government-sponsored entities |   | $                   | 6,857  |   |              | $      | 11     |       |   |   |   |   |   |   |   | $ | 6,857 |   |   | $ | 11 |   |
| Obligations of states and political subdivisions  |   |                | 13,192 |   |              |   | 282    |       |   | $ | 4,261 |   |   | $ |  88 |   |   |   | 17,453 |   |   |   | 370 |   |
| Mortgage-backed securities – residential    |   |                | 22,130 |   |              |   | 59     |       |   |   |   |   |   |   |   |   |   |   | 22,130 |   |   |   | 59 |   |
| Corporate debt securities                         |   |                |   |   |              |   |   |       |   |   | 4,650 |   |   |   | 1,168 |   |   |   | 4,650 |   |   |   | 1,168 |   |
| Total                                             |   | $                   | 42,179 |   |              | $      | 352    |       |   | $ | 8,911 |   |   | $ | 1,256 |   |   | $ | 51,090 |   |   | $ | 1,608 |   |

|                                              |   |                |    |   |              |   |   |       |   |
|---------------------------------------------------|--------|---------------------|---------|--------|-------------------|--------|--------|------------|--------|
|                                              |   | Less than 12 Months |    |   | 12 Months or More |   |   | Total      |   |
|  December 31, 2009 (In thousands)            |   | Fair Value          |    |   | UnrealizedLosses  |   |   | Fair Value |   |   | UnrealizedLosses |   |   | Fair Value |   |   | UnrealizedLosses |   |
| Obligations of U.S. government-sponsored entities |   | $                   | 39,445  |   |              | $      | 299    |       |   |   |   |   |   |   |   | $ | 39,445 |   |   | $ | 299 |   |
| Obligations of states and political subdivisions  |   |                | 22,795  |   |              |   | 552    |       |   | $ | 3,605 |   |   | $ | 156 |   |   |   | 26,400 |   |   |   | 708 |   |
| Mortgage-backed securities – residential    |   |                | 41,120  |   |              |   | 473    |       |   |   |   |   |   |   |   |   |   |   | 41,120 |   |   |   | 473 |   |
| Corporate debt securities                         |   |                |    |   |              |   |   |       |   |   | 11,710 |   |   |   | 1,804 |   |   |   | 11,710 |   |   |   | 1,804 |   |
| Total                                             |   | $                   | 103,360 |   |              | $      | 1,324  |       |   | $ | 15,315 |   |   | $ | 1,960 |   |   | $ | 118,675 |   |   | $ | 3,284 |   |

----

|   8. |   | Loans |
|-----------|--------|-------|

|                                                             |   | June 30, 2010 |      |   | December 31, 2009 |   |
|------------------------------------------------------------------|--------|--------------------|-----------|--------|------------------------|--------|
| (Dollars in thousands)                                           |   | Amount             |      |   | Amount                 |   |
|                                                             |   |               |      |   |                   |   |
| Commercial, financial, and agriculture                           |   | $                  | 108,693   |   |                   | $      | 114,687 |   |
| Real estate – construction                                 |   |               | 186,429   |   |                   |   | 211,725 |   |
| Real estate mortgage – residential                         |   |               | 473,132   |   |                   |   | 473,644 |   |
| Real estate mortgage - farmland and other commercial enterprises |   |               | 417,913   |   |                   |   | 411,309 |   |
| Installment                                                      |   |               | 31,975    |   |                   |   | 36,280 |   |
| Lease financing                                                  |   |               | 19,791    |   |                   |   | 24,297 |   |
| Total                                                       |   | $                  | 1,237,933 |   |                   | $      | 1,271,942 |   |

| (Dollars in thousands)     |   | June 30, 2010 |   |   | June 30, 2009 |   |
|----------------------------|--------|--------------------|--------|--------|--------------------|--------|
|                       |   |               |   |   |               |   |
| Balance, beginning of year |   | $                  | 23,364 |   |               | $      | 16,828 |   |
| Provision for loan losses  |   |               | 7,416  |   |               |   | 7,616 |   |
| Recoveries                 |   |               | 313    |   |               |   | 229 |   |
| Loans charged off          |   |               | (5,269 | )      |               |   | (3,355 | ) |
| Balance, end of period     |   | $                  | 25,824 |   |               | $      | 21,318 |   |

| (Dollars in thousands)                                     |   | June 30, 2010 |         |   | December 31, 2009 |   |
|------------------------------------------------------------|--------|--------------------|--------------|--------|------------------------|--------|
|                                                       |   |               |         |   |                   |   |
| Impaired loans with no allocated allowance for loan losses |   | $                  | 60,448       |   |                   | $      | 47,746 |   |
| Impaired loans with allocated allowance for loan losses    |   |               | 68,225       |   |                   |   | 60,723 |   |
| Total impaired loans                                       |   | $                  | 128,673      |   |                   | $      | 108,469 |   |
|                                                       |   |               |         |   |                   |   |   |   |
| Allowance for loan losses related to impaired loans        |   | $                  | 6,489        |   |                   | $      | 7,374 |   |
| Average impaired loans                                     |   |               | 123,578      |   |                   |   | 70,845 |   |
|                                                       |   |               |         |   |                   |   |   |   |
| Nonaccrual loans                                           |   | $                  | 59,370       |   |                   | $      |  56,630 |   |
| Restructured loans                                         |   |               | 38,220       |   |                   |   | 17,911 |   |
| Loans past due 90 days or more and still accruing          |   |               | 1,279        |   |                   |   | 1,807 |   |
| Total nonperforming loans                                  |   | $                  |  98,869 |   |                   | $      | 76,348 |   |

----

|                |   | June 30, 2010       |   |   | December 31, 2009 |   |
|---------------------|--------|---------------------|--------|--------|-------------------|--------|
|                |   | Tier 1 Capital |   |   | TotalCapital      |   |   | Tier 1Leverage |   |   | Tier 1 Capital |   |   | TotalCapital |   |   | Tier 1Leverage |   |
| Consolidated        |   |                | 14.76  | %      |              |   | 16.02 | % |   |   | 8.82 | % |   |   | 13.95 | % |   |   | 15.20 | % |   |   | 8.15 | % |
| Farmers Bank        |   |                | 14.51  |   |              |   | 15.78 |   |   |   | 7.98 |   |   |   | 13.22 |   |   |   | 14.48 |   |   |   | 7.05 |   |
| United Bank         |   |                | 12.85  |   |              |   | 14.12 |   |   |   | 8.06 |   |   |   | 12.49 |   |   |   | 13.75 |   |   |   | 7.35 |   |
| First Citizens Bank |   |                | 13.56  |   |              |   | 14.32 |   |   |   | 8.69 |   |   |   | 12.02 |   |   |   | 13.75 |   |   |   | 7.96 |   |
| Citizens Northern   |   |                | 10.63  |   |              |   | 11.89 |   |   |   | 7.20 |   |   |   | 9.70 |   |   |   | 10.95 |   |   |   | 6.23 |   |

| ·   | utilize its financial and managerial resources to assist its subsidiary banks in addressing weaknesses identified at their most recent examinations and achieving and maintaining compliance with any regulatory supervisory actions respecting the subsidiary banks; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | not pay any new salaries, bonuses, management fees or make any other payments to insiders without prior approval of the FRB St. Louis and the KDFI; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | not incur additional debt or purchase or redeem any stock without the prior written approval of the FRB St. Louis and the KDFI; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------|

| ·   | submit to the FRB St. Louis and the KDFI an acceptable plan detailing the source and timing of funds for meeting the Company’s debt service requirements and other parent company expenses for 2010 and 2011; and |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | within thirty days of the end of each calendar quarter submit to the FRB St. Louis and the KDFI parent company financial statements along with a status report on compliance with the provisions of the Memorandum. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | adopt, implement and adhere to a plan to reduce its risk position in each asset (loan) in excess of $750,000 which is delinquent or classified “Substandard” in its most recent examination, which plan must establish target dollar levels to which Farmers Bank will use best efforts to reduce delinquencies and classified assets at stated intervals and provide for monthly progress reports to the Farmers Bank board of directors; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | not extend additional credit for any borrower already obligated to the Bank on any extension of credit that has either been (a) charged off (or classified “Loss” by regulators or in a subsequent review by the bank’s consultants or a regulatory body) as long as such credit remains uncollected, or (b) classified as “Substandard” or “Doubtful” and is uncollected, except in cases where the Farmers Bank board of directors approves such extension of credit as in the best interest of Farmers Bank; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | submit to the FRB St. Louis and KDFI a written three-year strategic plan adopted by the Farmers Bank board of directors addressing mission statement, economic issues of the industries and markets served, strengths and weaknesses, strategies to improve earnings, staff training, financial goals, and identification of new lines of business and new types of lending; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | address underwriting and credit administration concerns raised by regulators in their most recent examination; |
|--------------------|----------------------------------------------------------------------------------------------------------------|

| ·   | address and monitor weaknesses regarding specific construction and development loans identified by regulators in their most recent examination; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | formulate and implement a written profit plan consistent with Farmers Bank’s loan, investment and funds management policies and including realistic and comprehensive budgets and review |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|    | processes, which profit plan is submitted to the FRB St. Louis and KDFI for review and comment; and |
|--------------|-----------------------------------------------------------------------------------------------------|

| ·   | if at the end of any quarter Farmers Bank’s Tier 1 leverage ratio is less than 8.0%, within thirty days it must submit to the FRB St. Louis and KDFI a plan for implementation of the capital accounts of Farmers Bank or other measures to bring the ratio to the required 8.0% level. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | continue to retain qualified management, assessed on its ability to comply with the Order, operate United Bank in a safe and sound manner, comply with applicable laws, rules and regulations, and restore United Bank to a safe and sound condition; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | not add directors or senior executive officers without prior approval of the FDIC and KDFI; |
|--------------------|---------------------------------------------------------------------------------------------|

| ·   | comply with certain disclosure guidelines in connection with selling any securities by United Bank to raise capital.  The Company and United Bank do not have current plans to sell securities of United Bank to raise capital; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | charge off any asset (loan) which was classified as a “Loss” by the FDIC and KDFI in their most recent examination; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------|

| ·   | not extend additional credit for any borrower obligated on any extension of credit that has been charged off (or classified as a “Loss” in the most recent examination), so long as the credit remains uncollected; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | not extend additional credit for any borrower whose loan or other credit has been classified “Substandard” or “Doubtful” (or is listed as “Special Mention” by regulators in the most recent exam), and is uncollected, unless United Bank’s board of directors makes special determinations that extending such credit is in United Bank’s best interest; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | adopt, implement and adhere to a plan to reduce its risk position in each borrower relationship in excess of $1,000,000 which is more than thirty days delinquent or classified as “Substandard” or “Doubtful” by regulators in the most recent examination.  Such plan is required to be submitted to the FDIC and KDFI and include a prohibition on extending credit to pay interest absent specific board determinations that such is in United Bank’s best interest, establish target levels to which United Bank shall reduce delinquencies and classified assets within given time permits and provide for monthly reporting to United Bank’s board of directors on progress of the plan; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | continue its practice of maintaining a written contingency funding plan which must be submitted to the FDIC and KDFI and on each Friday United Bank must submit to the FDIC and KDFI a liquidity analysis report; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | not declare or pay dividends to the parent company without the prior written consent of the FDIC and KDFI; |
|--------------------|------------------------------------------------------------------------------------------------------------|

| ·   | prior to submission of its quarterly call reports, have its board of directors review its allowance for loan and lease losses (“ALLL”), provide an adequate ALLL and accurately report the ALLL; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | continue its practice of adopting, implementing and adhering to a written profit plan and comprehensive budget for 2009 and 2010 and each year the Order is in effect, which must be submitted to the FDIC and KDFI for review and comment and include realistic and comprehensive budgets and review processes by both management and United Bank’s board of directors; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | formulate, adopt and implement a plan to manage concentrations of credit that were identified by regulators in their most recent examination, which must provide for procedures for measurement and monitoring of concentrations of credit and a limit on concentrations commensurate with United Bank’s capital position, safe and sound banking practices and overall risk profile; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | eliminate and correct all violations of laws, rules and regulations identified by the regulators in their most recent examination; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------|

| ·   | continue its practice of having procedures for managing its sensitivity to interest rate risk, which must implement recommendations of the regulators and be submitted to the FDIC and KDFI; and |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the board of directors maintain a program to provide for monitoring United Bank’s compliance with the Order and on a quarterly basis United Bank’s directors are required to sign a progress report to be furnished to the FDIC and KDFI detailing actions taken by United Bank to secure compliance with the Order. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

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

| §   | The improvement in net income in the comparison is due to a combination of an increase in net interest income, a decrease in the provision for loan losses, an increase in net securities gains, and lower overall noninterest expenses. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Net interest income increased $874 thousand or 6.5% due mainly to a decrease in interest expense on deposits of $2.6 million or 30.1%. Net interest margin was 3.12% in the current quarter, an increase of 27 basis points from 2.85% in the second quarter a year ago. Net interest spread was 2.91%, an increase of 30 basis points compared to 2.61%. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | The provision for loan losses decreased $450 thousand or 7.6% in the current quarter compared to a year earlier. The provision for loan losses began to increase significantly during the second quarter of 2009 as the level of nonperforming and impaired loans moved sharply upward. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Noninterest income increased $2.0 million or 26.1% mainly due to a $2.1 million or 158% increase in net gains on the sale of investment securities. Other notable increases in noninterest income line items include non-deposit service charges of $109 thousand or 9.8%, service charges and fees on deposit accounts of $56 thousand or 2.4%, and allotment processing fees of $46 thousand or 3.3%. Decreases in noninterest |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | income line items include trust income of $201 thousand or 33.4%, net gains on the sale of mortgage loans of $123 thousand or 35.7%, and income from company-owned life insurance of $73 thousand or 21.9%. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Noninterest expenses decreased $958 thousand or 5.9% as improvements were made in a variety of areas. Decreases in noninterest expense categories include deposit insurance expense of $614 thousand or 35.9%, salaries and employee benefits of $590 thousand or 8.0%, occupancy expense of $206 thousand or 14.8%, equipment expenses of $119 thousand or 15.5%, and intangible amortization of $128 thousand or 26.2%. Partially offsetting these lower noninterest expenses was a $766 thousand increase in expenses related to foreclosed real estate. Deposit insurance expense included $1.1 million related to a special assessment during the second quarter of 2009 by the FDIC as part of its plan to replenish the Deposit Insurance Fund. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Income tax expense was $610 thousand in the second quarter of 2010 compared to a tax benefit of $74 thousand for the same period in 2009. The effective income tax rate was 17.7% in the current quarter. The income tax benefit recorded in the second quarter of 2009 was driven by the $875 thousand net loss before income taxes. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Return on average assets (“ROA”) and equity (“ROE”) was .53% and 7.51%, respectively, for the current quarter compared to -.14% and -1.62% for the same quarter a year ago. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| Quarter Ended June 30,                                                                                                                  |   | 2010           |          |   | 2009     |   |
|-----------------------------------------------------------------------------------------------------------------------------------------|--------|----------------|---------------|--------|----------|--------|
|  (In thousands)                                                                                                                    |   | AverageBalance |          |   | Interest |   |   | AverageRate |   |   | AverageBalance |   |   | Interest |   |   | AverageRate |   |
| Earning Assets                                                                                                                          |   |           |          |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Investment securities                                                                                                                   |   |           |          |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Taxable                                                                                                                                 |   | $              | 466,901       |   |     | $      | 4,683 |   |   |   | 4.02 | % |   | $ | 429,124 |   |   | $ | 5,057 |   |   |   | 4.73 | % |
| Nontaxable1                                                                                                                             |   |           | 85,852        |   |     |   | 1,098 |   |   |   | 5.13 |   |   |   | 102,456 |   |   |   | 1,378 |   |   |   | 5.39 |   |
| Time deposits with banks, federal funds sold and securities purchased under agreements to resell                                        |   |           | 106,754       |   |     |   | 65 |   |   |   | .24 |   |   |   | 130,324 |   |   |   | 85 |   |   |   | .26 |   |
| Loans1,2,3                                                                                                                              |   |           | 1,250,667     |   |     |   | 18,206 |   |   |   | 5.84 |   |   |   | 1,319,377 |   |   |   | 19,600 |   |   |   | 5.96 |   |
| Total earning assets                                                                                                                    |   |           | 1,910,174     |   |     | $      | 24,052 |   |   |   | 5.05 | % |   |   | 1,981,281 |   |   | $ | 26,120 |   |   |   | 5.29 | % |
| Allowance for loan losses                                                                                                               |   |           | (23,774       | )      |     |   |   |   |   |   |   |   |   |   | (17,408 | ) |   |   |   |   |   |   |   |   |
| Total earning assets, net of allowance for loan losses                                                                                  |   |           | 1,886,400     |   |     |   |   |   |   |   |   |   |   |   | 1,963,873 |   |   |   |   |   |   |   |   |   |
| Nonearning Assets                                                                                                                       |   |           |          |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash and due from banks                                                                                                                 |   |           | 82,766        |   |     |   |   |   |   |   |   |   |   |   | 101,294 |   |   |   |   |   |   |   |   |   |
| Premises and equipment, net                                                                                                             |   |           | 38,825        |   |     |   |   |   |   |   |   |   |   |   | 41,449 |   |   |   |   |   |   |   |   |   |
| Other assets                                                                                                                            |   |           | 141,949       |   |     |   |   |   |   |   |   |   |   |   | 161,613 |   |   |   |   |   |   |   |   |   |
| Total assets                                                                                                                            |   | $              | 2,149,940     |   |     |   |   |   |   |   |   |   |   | $ | 2,268,229 |   |   |   |   |   |   |   |   |   |
| Interest Bearing Liabilities                                                                                                            |   |           |          |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                                                                                                                |   |           |          |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest bearing demand                                                                                                                 |   | $              | 261,118       |   |     | $      | 125 |   |   |   | .19 | % |   | $ | 253,952 |   |   | $ | 236 |   |   |   | .37 | % |
| Savings                                                                                                                                 |   |           | 271,475       |   |     |   | 431 |   |   |   | .64 |   |   |   | 258,814 |   |   |   | 492 |   |   |   | .76 |   |
| Time                                                                                                                                    |   |           | 838,957       |   |     |   | 5,439 |   |   |   | 2.60 |   |   |   | 896,176 |   |   |   | 7,847 |   |   |   | 3.51 |   |
| Federal funds purchased and other short-term borrowings                                                                                 |   |           | 41,461        |   |     |   | 81 |   |   |   | .78 |   |   |   | 65,675 |   |   |   | 121 |   |   |   | .74 |   |
| Securities sold under agreements to     repurchase and other long-term     borrowings |   |           |  311,621 |   |     |   |  3,122 |   |   |   |  4.02 |   |   |   |  333,416 |   |   |   |  3,380 |   |   |   |  4.07 |   |
| Total interest bearing liabilities                                                                                                      |   |           | 1,724,632     |   |     | $      | 9,198 |   |   |   | 2.14 | % |   |   | 1,808,033 |   |   | $ | 12,076 |   |   |   | 2.68 | % |
| Noninterest Bearing Liabilities                                                                                                         |   |           |          |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commonwealth of Kentucky deposits                                                                                                       |   |           | 1,599         |   |     |   |   |   |   |   |   |   |   |   | 41,282 |   |   |   |   |   |   |   |   |   |
| Other demand deposits                                                                                                                   |   |           | 211,007       |   |     |   |   |   |   |   |   |   |   |   | 184,363 |   |   |   |   |   |   |   |   |   |
| Other liabilities                                                                                                                       |   |           | 60,894        |   |     |   |   |   |   |   |   |   |   |   | 36,561 |   |   |   |   |   |   |   |   |   |
| Total liabilities                                                                                                                       |   |           | 1,998,132     |   |     |   |   |   |   |   |   |   |   |   | 2,070,239 |   |   |   |   |   |   |   |   |   |
| Shareholders’ equity                                                                                                              |   |           | 151,808       |   |     |   |   |   |   |   |   |   |   |   | 197,990 |   |   |   |   |   |   |   |   |   |
| Total liabilities and shareholders’ equity                                                                                        |   | $              | 2,149,940     |   |     |   |   |   |   |   |   |   |   | $ | 2,268,229 |   |   |   |   |   |   |   |   |   |
| Net interest income                                                                                                                     |   |           |          |   |     |   | 14,854 |   |   |   |   |   |   |   |   |   |   |   | 14,044 |   |   |   |   |   |
| TE basis adjustment                                                                                                                     |   |           |          |   |     |   | (577 | ) |   |   |   |   |   |   |   |   |   |   | (641 | ) |   |   |   |   |
| Net interest income                                                                                                                     |   |           |          |   |     | $      | 14,277 |   |   |   |   |   |   |   |   |   |   | $ | 13,403 |   |   |   |   |   |
| Net interest spread                                                                                                                     |   |           |          |   |     |   |   |   |   |   | 2.91 | % |   |   |   |   |   |   |   |   |   |   | 2.61 | % |
| Impact of noninterest bearing sources of funds                                                                                          |   |           |          |   |     |   |   |   |   |   | .21 |   |   |   |   |   |   |   |   |   |   |   | .24 |   |
| Net interest margin                                                                                                                     |   |           |          |   |     |   |   |   |   |   | 3.12 | % |   |   |   |   |   |   |   |   |   |   | 2.85 | % |

----

| (In thousands)                                                                                                   |   | Variance |      |          | Variance Attributed to |   |
|------------------------------------------------------------------------------------------------------------------|--------|----------|-----------|---------------|------------------------|--------|
| Quarter Ended June 30,                                                                                           |   |     | 2010/2009 | 1             |                   | Volume |   |   | Rate |   |
|                                                                                                             |   |     |      |          |                   |   |   |   |   |   |
| Interest Income                                                                                                  |   |     |      |          |                   |   |   |   |   |   |
| Taxable investment securities                                                                                    |   | $        | (374      | )   |                   | $      | 2,115 |   |   | $ | (2,489 | )   |
| Nontaxable investment securities2                                                                                |   |     | (280      | )   |                   |   | (216 | )   |   |   | (64 | )   |
| Time deposits with banks, federal funds sold and securities purchased under agreements to resell                 |   |     | (20       | )   |                   |   | (14 | )   |   |   | (6 | )   |
| Loans2                                                                                                           |   |     | (1,394    | )   |                   |   | (1,005 | )  |   |   | (389 | )   |
| Total interest income                                                                                            |   |     | (2,068    | )   |                   |   | 880 |   |   |   | (2,948 | )   |
| Interest Expense                                                                                                 |   |     |      |          |                   |   |   |   |   |   |   |   |
| Interest bearing demand deposits                                                                                 |   |     | (111      | )   |                   |   | 45 |   |   |   | (156 | )   |
| Savings deposits                                                                                                 |   |     | (61       | )   |                   |   | 132 |   |   |   | (193 | )   |
| Time deposits                                                                                                    |   |     | (2,408    | )   |                   |   | (476 | )   |   |   | (1,932 | )   |
| Federal funds purchased and other short-term borrowings                                                          |   |     | (40       | )   |                   |   | (80 | )   |   |   | 40 |   |
| Securities sold under agreements to repurchase and      other long-term borrowings |   |     | (258      | )        |                   |   | (217 | )   |   |   | (41 | )   |
| Total interest expense                                                                                           |   |     | (2,878    | )   |                   |   | (596 | )   |   |   | (2,282 | )   |
| Net interest income                                                                                              |   | $        | 810       |          |                   | $      | 1,476 |   |   | $ | (666 | )  |
| Percentage change                                                                                                |   |     | 100.0     | %             |                   |   | 182.2 | % |   |   | (82.2 | )% |

----

----

| §   | The $2.3 million or $.30 per common share increase in net income for the first six months of 2010 compared to the first six months of 2009 is attributed mainly to higher net gains on the sale of investment securities. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Noninterest income increased $2.8 million or 19.3% due primarily to a $2.9 million or 142% increase in net gains on the sale of investment securities. Other favorable increases included non-deposit service charges of $183 thousand or 8.5% and allotment processing fees of $142 thousand or 5.4%. Decreases in noninterest income line items include net gains on the sale of mortgage loans of $348 thousand or 50.4%, trust income of $208 thousand or 20.1%, and income from company-owned life insurance of $105 thousand or 16.0%. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | The provision for loan losses decreased $200 thousand or 2.6% in the current six months compared to a year earlier. The provision for loan losses has remained at elevated levels due to increases in nonperforming and impaired loans. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Net interest margin was 3.03% for the first six months of 2010, an increase of 9 basis points from 2.94% in the same period a year ago. Net interest spread was 2.84%, up 16 basis points compared to 2.68%. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Although improvements are being made in a significant number of noninterest expense categories, overall noninterest expenses increased $427 thousand or 1.4% driven by a $2.2 million increase related to foreclosed real estate. Decreases in noninterest expense categories include salaries and employee benefits of $1.0 million or 6.8%, intangible amortization of $257 thousand or 26.3%, occupancy expense of $250 thousand or 9.2%, and equipment expenses of $213 thousand or 14.0%. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Income tax expense increased $385 thousand or 48.3% in the comparison and reflects an increase in taxable income. The effective income tax rate was 19.8% for the current six months compared to 24.1% for the same period a year earlier. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | ROA and ROE was .45% and 6.39%, respectively, for the current six months compared to .22% and 2.57% for the period a year ago. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------|

----

----

| Six Months Ended June 30,                                                                                                                           |   | 2010           |          |   | 2009     |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------|---------------|--------|----------|--------|
|  (In thousands)                                                                                                                                |   | AverageBalance |          |   | Interest |   |   | AverageRate |   |   | AverageBalance |   |   | Interest |   |   | AverageRate |   |
| Earning Assets                                                                                                                                      |   |           |          |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Investment securities                                                                                                                               |   |           |          |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Taxable                                                                                                                                             |   | $              | 450,992       |   |     | $      | 9,382 |   |   |   | 4.20 | % |   | $ | 430,457 |   |   | $ | 10,540 |   |   |   | 4.94 | % |
| Nontaxable1                                                                                                                                         |   |           | 90,426        |   |     |   | 2,350 |   |   |   | 5.24 |   |   |   | 95,155 |   |   |   | 2,566 |   |   |   | 5.44 |   |
| Time deposits with banks, federal funds sold and securities purchased under agreements to resell                                                    |   |           | 129,593       |   |     |   | 149 |   |   |   | .23 |   |   |   | 137,860 |   |   |   | 164 |   |   |   | .24 |   |
| Loans1,2,3                                                                                                                                          |   |           | 1,257,453     |   |     |   | 36,181 |   |   |   | 5.80 |   |   |   | 1,317,491 |   |   |   | 39,742 |   |   |   | 6.08 |   |
| Total earning assets                                                                                                                                |   |           | 1,928,464     |   |     | $      | 48,062 |   |   |   | 5.03 | % |   |   | 1,980,963 |   |   | $ | 53,012 |   |   |   | 5.40 | % |
| Allowance for loan losses                                                                                                                           |   |           | (23,742       | )      |     |   |   |   |   |   |   |   |   |   | (17,134 | ) |   |   |   |   |   |   |   |   |
| Total earning assets, net of allowance for loan losses                                                                                              |   |           | 1,904,722     |   |     |   |   |   |   |   |   |   |   |   | 1,963,829 |   |   |   |   |   |   |   |   |   |
| Nonearning Assets                                                                                                                                   |   |           |          |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash and due from banks                                                                                                                             |   |           | 88,231        |   |     |   |   |   |   |   |   |   |   |   | 79,793 |   |   |   |   |   |   |   |   |   |
| Premises and equipment, net                                                                                                                         |   |           | 38,820        |   |     |   |   |   |   |   |   |   |   |   | 42,177 |   |   |   |   |   |   |   |   |   |
| Other assets                                                                                                                                        |   |           | 137,041       |   |     |   |   |   |   |   |   |   |   |   | 161,222 |   |   |   |   |   |   |   |   |   |
| Total assets                                                                                                                                        |   | $              | 2,168,814     |   |     |   |   |   |   |   |   |   |   | $ | 2,247,021 |   |   |   |   |   |   |   |   |   |
| Interest Bearing Liabilities                                                                                                                        |   |           |          |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                                                                                                                            |   |           |          |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest bearing demand                                                                                                                             |   | $              | 266,800       |   |     | $      | 269 |   |   |   | .20 | % |   | $ | 254,757 |   |   | $ | 434 |   |   |   | .34 | % |
| Savings                                                                                                                                             |   |           | 268,278       |   |     |   | 892 |   |   |   | .67 |   |   |   | 255,412 |   |   |   | 973 |   |   |   | .77 |   |
| Time                                                                                                                                                |   |           | 867,363       |   |     |   | 11,536 |   |   |   | 2.68 |   |   |   | 880,717 |   |   |   | 15,748 |   |   |   | 3.61 |   |
| Federal funds purchased and other short-term borrowings                                                                                             |   |           | 45,337        |   |     |   | 173 |   |   |   | .77 |   |   |   | 67,998 |   |   |   | 237 |   |   |   | .70 |   |
| Securities sold under agreements to      repurchase and other long-term      borrowings |   |           |  313,843 |   |     |   |  6,260 |   |   |   |  4.02 |   |   |   |  334,482 |   |   |   |  6,774 |   |   |   |  4.08 |   |
| Total interest bearing liabilities                                                                                                                  |   |           | 1,761,621     |   |     | $      | 19,130 |   |   |   | 2.19 | % |   |   | 1,793,366 |   |   | $ | 24,166 |   |   |   | 2.72 | % |
| Noninterest Bearing Liabilities                                                                                                                     |   |           |          |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commonwealth of Kentucky deposits                                                                                                                   |   |           | 2,184         |   |     |   |   |   |   |   |   |   |   |   | 37,735 |   |   |   |   |   |   |   |   |   |
| Other demand deposits                                                                                                                               |   |           | 207,081       |   |     |   |   |   |   |   |   |   |   |   | 184,670 |   |   |   |   |   |   |   |   |   |
| Other liabilities                                                                                                                                   |   |           | 46,946        |   |     |   |   |   |   |   |   |   |   |   | 34,670 |   |   |   |   |   |   |   |   |   |
| Total liabilities                                                                                                                                   |   |           | 2,017,832     |   |     |   |   |   |   |   |   |   |   |   | 2,050,441 |   |   |   |   |   |   |   |   |   |
| Shareholders’ equity                                                                                                                          |   |           | 150,982       |   |     |   |   |   |   |   |   |   |   |   | 196,580 |   |   |   |   |   |   |   |   |   |
| Total liabilities and shareholders’ equity                                                                                                    |   | $              | 2,168,814     |   |     |   |   |   |   |   |   |   |   | $ | 2,247,021 |   |   |   |   |   |   |   |   |   |
| Net interest income                                                                                                                                 |   |           |          |   |     |   | 28,932 |   |   |   |   |   |   |   |   |   |   |   | 28,846 |   |   |   |   |   |
| TE basis adjustment                                                                                                                                 |   |           |          |   |     |   | (1,205 | ) |   |   |   |   |   |   |   |   |   |   | (1,204 | ) |   |   |   |   |
| Net interest income                                                                                                                                 |   |           |          |   |     | $      | 27,727 |   |   |   |   |   |   |   |   |   |   | $ | 27,642 |   |   |   |   |   |
| Net interest spread                                                                                                                                 |   |           |          |   |     |   |   |   |   |   | 2.84 | % |   |   |   |   |   |   |   |   |   |   | 2.68 | % |
| Impact of noninterest bearing sources of funds                                                                                                      |   |           |          |   |     |   |   |   |   |   | .19 |   |   |   |   |   |   |   |   |   |   |   | .26 |   |
| Net interest margin                                                                                                                                 |   |           |          |   |     |   |   |   |   |   | 3.03 | % |   |   |   |   |   |   |   |   |   |   | 2.94 | % |

----

| (In thousands)                                                                                   |   | Variance |      |          | Variance Attributed to |   |
|--------------------------------------------------------------------------------------------------|--------|----------|-----------|---------------|------------------------|--------|
| Six Months Ended June 30,                                                                        |   |     | 2010/2009 | 1             |                   | Volume |   |   | Rate |   |
|                                                                                             |   |     |      |          |                   |   |   |   |   |   |
| Interest Income                                                                                  |   |     |      |          |                   |   |   |   |   |   |
| Taxable investment securities                                                                    |   | $        | (1,158    | )   |                   | $      | 1,259 |   |   | $ | (2,417 | ) |
| Nontaxable investment securities2                                                                |   |     | (216      | )   |                   |   | (124 | )  |   |   | (92 | ) |
| Time deposits with banks, federal funds sold and securities purchased under agreements to resell |   |     | (15       | )   |                   |   | (9 | )  |   |   | (6 | ) |
| Loans2                                                                                           |   |     | (3,561    | )   |                   |   | (1,771 | ) |   |   | (1,790 | ) |
| Total interest income                                                                            |   |     | (4,950    | )   |                   |   | (645 | )  |   |   | (4,305 | ) |
| Interest Expense                                                                                 |   |     |      |          |                   |   |   |   |   |   |   |   |
| Interest bearing demand deposits                                                                 |   |     | (165      | )   |                   |   | 57 |   |   |   | (222 | ) |
| Savings deposits                                                                                 |   |     | (81       | )   |                   |   | 120 |   |   |   | (201 | ) |
| Time deposits                                                                                    |   |     | (4,212    | )   |                   |   | (234 | )  |   |   | (3,978 | ) |
| Federal funds purchased and other short-term borrowings                                          |   |     | (64       | )   |                   |   | (123 | )    |   |   | 59 |   |
| Securities sold under agreements to repurchase and other long-term borrowings                    |   |     | (514      | )   |                   |   | (415 | )  |   |   | (99 | ) |
| Total interest expense                                                                           |   |     | (5,036    | )   |                   |   | (595 | )  |   |   | (4,441 | ) |
| Net interest income                                                                              |   | $        | 86        |          |                   | $      | (50 | ) |   | $ | 136 |   |
| Percentage change                                                                                |   |     | 100.0     | %             |                   |   | (58.1 | %) |   |   | 158.1 | % |

----

----

----

|                                                             |   | June 30, 2010 |      |   | December 31, 2009 |   |
|------------------------------------------------------------------|--------|---------------|-----------|--------|-------------------|--------|
| (Dollars in thousands)                                           |   | Amount        |      |   | %                 |   |   | Amount |   |   | % |   |
|                                                             |   |          |      |   |              |   |   |   |   |   |   |   |
| Commercial, financial, and agriculture                           |   | $             | 108,693   |   |              |   | 8.8 | % |   | $ | 114,687 |   |   |   | 9.0 | % |
| Real estate – construction                                 |   |          | 186,429   |   |              |   | 15.1 |   |   |   | 211,725 |   |   |   | 16.7 |   |
| Real estate mortgage – residential                         |   |          | 473,132   |   |              |   | 38.2 |   |   |   | 473,644 |   |   |   | 37.2 |   |
| Real estate mortgage - farmland and other commercial enterprises |   |          | 417,913   |   |              |   | 33.7 |   |   |   | 411,309 |   |   |   | 32.3 |   |
| Installment                                                      |   |          | 31,975    |   |              |   | 2.6 |   |   |   | 36,280 |   |   |   | 2.9 |   |
| Lease financing                                                  |   |          | 19,791    |   |              |   | 1.6 |   |   |   | 24,297 |   |   |   | 1.9 |   |
| Total                                                       |   | $             | 1,237,933 |   |              |   | 100.0 | % |   | $ | 1,271,942 |   |   |   | 100.0 | % |

----

----

| (In thousands)                                                             |   | June 30, 2010 |   |   | December 31,2009 |   |   | Change |   |   | %      |   |
|----------------------------------------------------------------------------|--------|--------------------|--------|--------|------------------|--------|--------|--------|--------|--------|--------|--------|
|                                                                       |   |               |   |   |             |   |   |   |   |   |   |   |
| Nonaccrual loans                                                           |   | $                  | 59,370 |   |             | $      | 56,630 |   |   | $      | 2,740  |   |   |   | 4.8 | % |
| Restructured loans                                                         |   |               | 38,220 |   |             |   | 17,911 |   |   |   | 20,309 |   |   |   | 113.4 |   |
| Loans 90 days or more past due and still accruing                          |   |               | 1,279  |   |             |   | 1,807  |   |   |   | (528   | )      |   |   | (29.2 | )   |
| Total nonperforming loans                                                  |   | $                  | 98,869 |   |             | $      | 76,348 |   |   | $      | 22,521 |   |   |   | 29.5 | % |
|                                                                       |   |               |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Ratio of total nonperforming loans to total loans (net of unearned income) |   |               | 8.0    | %      |             |   | 6.0    | %      |   |   |   |   |   |   |   |   |

----

|                |   | End of Period |      |   | Average          |   |
|---------------------|--------|---------------|-----------|--------|------------------|--------|
| (In thousands)      |   | June 30,2010  |      |   | December 31,2009 |   |   | Difference |   |   | (Six Months)June 30,2010 |   |   | (Twelve Months)December 31,2009 |   |   | Difference |   |
| Noninterest Bearing |   |          |      |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commonwealth        |   | $             | 231       |   |             | $      | 13,463 |   |   | $ | (13,232 | ) |   | $ | 2,184 |   |   | $ | 34,992 |   |   | $ | (32,808 | ) |
| Other               |   |          | 205,281   |   |             |   | 201,055 |   |   |   | 4,226 |   |   |   | 207,081 |   |   |   | 191,656 |   |   |   | 15,425 |   |
| Total               |   | $             | 205,512   |   |             | $      | 214,518 |   |   | $ | (9,006 | ) |   | $ | 209,265 |   |   | $ | 226,648 |   |   | $ | (17,383 | ) |
|                |   |          |      |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest Bearing    |   |          |      |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Demand              |   | $             | 248,982   |   |             | $      | 255,133 |   |   | $ | (6,151 | ) |   | $ | 266,800 |   |   | $ | 247,235 |   |   | $ | 19,565 |   |
| Savings             |   |          | 268,198   |   |             |   | 258,804 |   |   |   | 9,394 |   |   |   | 268,278 |   |   |   | 256,063 |   |   |   | 12,215 |   |
| Time                |   |          | 801,206   |   |             |   | 904,978 |   |   |   | (103,772 | ) |   |   | 867,363 |   |   |   | 902,066 |   |   |   | (34,703 | ) |
| Total               |   | $             | 1,318,386 |   |             | $      | 1,418,915 |   |   | $ | (100,529 | ) |   | $ | 1,402,441 |   |   | $ | 1,405,364 |   |   | $ | (2,923 | ) |
|                |   |          |      |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Deposits      |   | $             | 1,523,898 |   |             | $      | 1,633,433 |   |   | $ | (109,535 | ) |   | $ | 1,611,706 |   |   | $ | 1,632,012 |   |   | $ | (20,306 | ) |

----

----

|              |   |                            |   |   |              |   |
|-------------------|--------|---------------------------------|--------|--------|-------------------|--------|
|              |   | Farmers CapitalBank Corporation |   |   | RegulatoryMinimum |   |
| Tier 1 risk-based |   |                            | 14.76  | %      |              |   | 4.00 | % |
| Total risk-based  |   |                            | 16.02  |   |              |   | 8.00 |   |
| Leverage          |   |                            | 8.82   |   |              |   | 4.00 |   |

----

| ·   | utilize its financial and managerial resources to assist its subsidiary banks in addressing weaknesses identified at their most recent examinations and achieving and maintaining compliance with any regulatory supervisory actions respecting the subsidiary banks; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | not pay any new salaries, bonuses, management fees or make any other payments to insiders without prior approval of the FRB St. Louis and the KDFI; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | not incur additional debt or purchase or redeem any stock without the prior written approval of the FRB St. Louis and the KDFI; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------|

| ·   | submit to the FRB St. Louis and the KDFI an acceptable plan detailing the source and timing of funds for meeting the Company’s debt service requirements and other parent company expenses for 2010 and 2011; and |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | within thirty days of the end of each calendar quarter submit to the FRB St. Louis and the KDFI parent company financial statements along with a status report on compliance with the provisions of the Memorandum. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

1

|                |   | Tier 1 Leverage Capital Ratio |   |   | Total Risk-Based Capital Ratio |   |
|---------------------|--------|-------------------------------|--------|--------|--------------------------------|--------|
|                |   |                          |   |   |                           |   |
| Farmers Bank        |   |                          | 7.98   | %      |                           |   | 15.78 | % |
| United Bank         |   |                          | 8.06   |   |                           |   | 14.12 |   |
| First Citizens Bank |   |                          | 8.69   |   |                           |   | 14.32 |   |
| Citizens Northern   |   |                          | 7.20   |   |                           |   | 11.89 |   |

|  1 | The Leverage Ratio is computed by dividing a bank’s Tier 1 Capital, as defined by regulation, by its total quarterly average assets. |
|---------|--------------------------------------------------------------------------------------------------------------------------------------------|

|   | The Risk-Based Ratio is computed by dividing a bank’s Total Capital, as defined by regulation, by a risk-weighted sum of the bank's assets, with the risk weighting determined by general standards established by regulation.  The safest assets (e.g., government obligations) are assigned a weighting of 0% with riskier assets receiving higher ratings (e.g., ordinary commercial loans are assigned a weighting of 100%). |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | adopt, implement and adhere to a plan to reduce its risk position in each asset (loan) in excess of $750,000 which is delinquent or classified “Substandard” in its most recent examination, which plan must establish target dollar levels to which Farmers Bank will use best efforts to reduce delinquencies and classified assets at stated intervals and provide for monthly progress reports to the Farmers Bank board of directors; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | not extend additional credit for any borrower already obligated to the Bank on any extension of credit that has either been (a) charged off (or classified “Loss” by regulators or in a subsequent review by the bank’s consultants or a regulatory body) as long as such credit remains uncollected, |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|    | or (b) classified as “Substandard” or “Doubtful” and is uncollected, except in cases where the Farmers Bank board of directors approves such extension of credit as in the best interest of Farmers Bank; |
|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | submit to the FRB St. Louis and KDFI a written three-year strategic plan adopted by the Farmers Bank board of directors addressing mission statement, economic issues of the industries and markets served, strengths and weaknesses, strategies to improve earnings, staff training, financial goals, and identification of new lines of business and new types of lending; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | address underwriting and credit administration concerns raised by regulators in their most recent examination; |
|--------------------|----------------------------------------------------------------------------------------------------------------|

| ·   | address and monitor weaknesses regarding specific construction and development loans identified by regulators in their most recent examination; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | formulate and implement a written profit plan consistent with Farmers Bank’s loan, investment and funds management policies and including realistic and comprehensive budgets and review processes, which profit plan is submitted to the FRB St. Louis and KDFI for review and comment; and |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | if at the end of any quarter Farmers Bank’s Tier 1 leverage ratio is less than 8.0%, within thirty days it must submit to the FRB St. Louis and KDFI a plan for implementation of the capital accounts of Farmers Bank or other measures to bring the ratio to the required 8.0% level. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | continue to retain qualified management, assessed on its ability to comply with the Order, operate United Bank in a safe and sound manner, comply with applicable laws, rules and regulations, and restore United Bank to a safe and sound condition; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | not add directors or senior executive officers without prior approval of the FDIC and KDFI; |
|--------------------|---------------------------------------------------------------------------------------------|

| ·   | comply with certain disclosure guidelines in connection with selling any securities by United Bank to raise capital.  The Company and United Bank do not have current plans to sell securities of United Bank to raise capital; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | charge off any asset (loan) which was classified as a “Loss” by the FDIC and KDFI in their most recent examination; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------|

| ·   | not extend additional credit for any borrower obligated on any extension of credit that has been charged off (or classified as a “Loss” in the most recent examination), so long as the credit remains uncollected; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | not extend additional credit for any borrower whose loan or other credit has been classified “Substandard” or “Doubtful” (or is listed as “Special Mention” by regulators in the most recent exam), and is uncollected, unless United Bank’s board of directors makes special determinations that extending such credit is in United Bank’s best interest; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | adopt, implement and adhere to a plan to reduce its risk position in each borrower relationship in excess of $1,000,000 which is more than thirty days delinquent or classified as “Substandard” or “Doubtful” by regulators in the most recent examination.  Such plan is required to be submitted to the FDIC and KDFI and include a prohibition on extending credit to pay interest absent specific board determinations that such is in United Bank’s best interest, establish target levels to which  |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|    | United Bank shall reduce delinquencies and classified assets within given time permits and provide for monthly reporting to United Bank’s board of directors on progress of the plan; |
|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | continue its practice of maintaining a written contingency funding plan which must be submitted to the FDIC and KDFI and on each Friday United Bank must submit to the FDIC and KDFI a liquidity analysis report; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | not declare or pay dividends to the parent company without the prior written consent of the FDIC and KDFI; |
|--------------------|------------------------------------------------------------------------------------------------------------|

| ·   | prior to submission of its quarterly call reports, have its board of directors review its allowance for loan and lease losses (“ALLL”), provide an adequate ALLL and accurately report the ALLL; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | continue its practice of adopting, implementing and adhering to a written profit plan and comprehensive budget for 2009 and 2010 and each year the Order is in effect, which must be submitted to the FDIC and KDFI for review and comment and include realistic and comprehensive budgets and review processes by both management and United Bank’s board of directors; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | formulate, adopt and implement a plan to manage concentrations of credit that were identified by regulators in their most recent examination, which must provide for procedures for measurement and monitoring of concentrations of credit and a limit on concentrations commensurate with United Bank’s capital position, safe and sound banking practices and overall risk profile; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | eliminate and correct all violations of laws, rules and regulations identified by the regulators in their most recent examination; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------|

| ·   | continue its practice of having procedures for managing its sensitivity to interest rate risk, which must implement recommendations of the regulators and be submitted to the FDIC and KDFI; and |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the board of directors maintain a program to provide for monitoring United Bank’s compliance with the Order and on a quarterly basis United Bank’s directors are required to sign a progress report to be furnished to the FDIC and KDFI detailing actions taken by United Bank to secure compliance with the Order. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

----

Item 4.  Controls and Procedures

PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

Item 1A.  Risk Factors

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

----

----

Item 6.  Exhibits

| 3.1    | 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, the Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2003, and Current Report on Form 8-K dated January 13, 2009). |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                             |
| 3.2    | Amended and Restated Bylaws of Farmers Capital Bank Corporation (incorporated by reference to Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2009).                                                                                                                                  |
|   |                                                                                                                                                                                                                                                                                                             |
| 4.1*   | Junior Subordinated Indenture, dated as of July 21, 2005, between Farmers Capital Bank Corporation and Wilmington Trust Company, as Trustee, relating to unsecured junior subordinated deferrable interest notes that mature in 2035.                                                                            |
|   |                                                                                                                                                                                                                                                                                                             |
| 4.2*   | Amended and Restated Trust Agreement, dated as of July 21, 2005, among Farmers Capital Bank Corporation, as Depositor, Wilmington Trust Company, as Property and Delaware Trustee, the Administrative Trustees (as named therein), and the Holders (as defined therein).*                                        |
|   |                                                                                                                                                                                                                                                                                                             |
| 4.3*   | Guarantee Agreement, dated as of July 21, 2005, between Farmers Capital Bank Corporation, as Guarantor, and Wilmington Trust Company, as Guarantee Trustee.*                                                                                                                                                     |
|   |                                                                                                                                                                                                                                                                                                             |
| 4.4*   | Junior Subordinated Indenture, dated as of July 26, 2005, between Farmers Capital Bank Corporation and Wilmington Trust Company, as Trustee, relating to unsecured junior subordinated deferrable interest notes that mature in 2035.*                                                                           |
|   |                                                                                                                                                                                                                                                                                                             |
| 4.5*   | Amended and Restated Trust Agreement, dated as of July 26, 2005, among Farmers Capital Bank Corporation, as Depositor, Wilmington Trust Company, as Property and Delaware Trustee, the Administrative Trustees (as named therein), and the Holders (as defined therein).*                                        |
|   |                                                                                                                                                                                                                                                                                                             |
| 4.6*   | Guarantee Agreement, dated as of July 26, 2005, between Farmers Capital Bank Corporation, as Guarantor, and Wilmington Trust Company, as Guarantee Trustee.*                                                                                                                                                     |
|   |                                                                                                                                                                                                                                                                                                             |
| 4.7*   | Indenture, dated as of August 14, 2007 between Farmers Capital Bank Corporation, as Issuer, and Wilmington Trust Company, as Trustee, relating to fixed/floating rate junior subordinated debt due 2037.*                                                                                                        |
|   |                                                                                                                                                                                                                                                                                                             |
| 4.8*   | Amended and Restated Declaration of Trust, dated as of August 14, 2007, by Farmers Capital Bank Corporation, as Sponsor, Wilmington Trust Company, as Delaware and Institutional Trustee, the Administrative Trustees (as named therein), and the Holders (as defined therein).*                                 |
|   |                                                                                                                                                                                                                                                                                                             |
| 4.9*   | Guarantee Agreement, dated as of August 14, 2007, between Farmers Capital Bank Corporation, as Guarantor, and Wilmington Trust Company, as Guarantee Trustee.*                                                                                                                                                   |
|   |                                                                                                                                                                                                                                                                                                             |
| 4.10   | Form of Certificate for Fixed Rate Cumulative Perpetual Preferred Stock, Series A(incorporated by reference to the Current Report on Form 8-K dated January 13, 2009).                                                                                                                                           |
|   |                                                                                                                                                                                                                                                                                                             |
| 4.11   | Warrant for Purchase of Shares of Common Stock(incorporated by reference to the Current Report on Form 8-K dated January 13, 2009).                                                                                                                                                                              |
|   |                                                                                                                                                                                                                                                                                                             |
| 10.1   | Agreement and Plan of Merger, Dated July 1, 2005, as Amended, by and among Citizens Bancorp, Inc., Citizens Acquisition Subsidiary Corp, and Farmers Capital Bank Corporation(incorporated by reference to Appendix A of Registration Statement filed on Form S-4 on October 11, 2005).                          |

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| 10.2   | Amended and Restated Plan of Merger of Citizens National Bancshares, Inc. with and into FCBC Acquisition Subsidiary, LLC (incorporated by reference to Appendix A of Proxy Statement for Special Meeting of Shareholders of Citizens National Bancshares, Inc. and Prospectus in connection with an offer of up to 600,000 shares of its common stock of Farmers Capital Bank Corporation filed on Form 424B3 on August 7, 2006). |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.3   | Stock Purchase Agreement Dated June 1, 2006 by and among Farmers Capital Bank Corporation, Kentucky Banking Centers, Inc. and Citizens First Corporation (incorporated by reference to Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2008).                                                                                                                                                          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                              |
| 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 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                             |

|   | * Exhibit not included pursuant to Item 601(b)(4)(iii) and (v) of Regulation S-K. The Company will provide a copy of such exhibit to the Securities and Exchange Commission upon request. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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SIGNATURES

| Date:  |   8/3/10 |   |   /s/ Lloyd C. Hillard, Jr.        |
|--------|--------------------|--------|----------------------------------------------|
|   |               |   | Lloyd C. Hillard, Jr.                        |
|   |               |   | President and CEO                            |
|   |               |   | (Principal Executive Officer)                |
|   |               |   |                                         |
| Date:  |   8-5-10 |   |   /s/ Doug Carpenter                    |
|   |               |   | C. Douglas Carpenter                         |
|   |               |   | Senior Vice President, Secretary, and CFO    |
|   |               |   | (Principal Financial and Accounting Officer) |

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