**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**Washington,      D.C. 20549**

**FORM      10-Q**

**QUARTERLY      REPORT**

**Pursuant      to Section 13 OR 15(d) of**

**The      Securities Exchange Act of 1934**

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

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

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

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

----

| **PART                I – FINANCIAL INFORMATION**                                                                                      |   |
|----------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                         |   |
| Item                1. Financial Statements                                                                                                  |   |
| Unaudited                Consolidated Balance Sheets                                                                                         | 3      |
| Unaudited                Consolidated Statements of                Income                                                                    | 4      |
| Unaudited                Consolidated Statements of                Comprehensive Income                                                      | 5      |
| Unaudited                Consolidated Statements of Cash                Flows                                                                | 6      |
| Unaudited                Consolidated Statements of Changes in                Shareholders’ Equity                                     | 8      |
| Notes                to Unaudited Consolidated Financial                Statements                                                           | 9      |
|                                                                                                                                         |   |
| Item                2.  Management’s Discussion and Analysis of                Financial Condition and Results of Operations | 13     |
|                                                                                                                                         |   |
| Item                3.  Quantitative and Qualitative                Disclosures About Market Risk                                  | 31     |
|                                                                                                                                         |   |
| Item                4.  Controls and                Procedures                                                                     | 32     |
|                                                                                                                                         |   |
| **PART                II - OTHER INFORMATION**                                                                                               |   |
|                                                                                                                                         |   |
| Item                1.  Legal Proceedings                                                                                          | 33     |
|                                                                                                                                         |   |
| Item                2.  Unregistered Sales of Equity                Securities and Use of Proceeds                                 | 33     |
|                                                                                                                                         |   |
| Item                6.  Exhibits                                                                                                   | 33     |
|                                                                                                                                         |   |
| SIGNATURES                                                                                                                                   | 34     |

----

**PART I – FINANCIAL INFORMATION**

**Item 1. Financial Statements**

**Unaudited Consolidated Balance Sheets**

|                                                                                                                                                                                                                                                       |   | September                30, |      |   | December                31, |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------|-----------|--------|-----------------------------|--------|
| (In thousands, except share data)                                                                                                                                                                                                      |   | 2007                         |      |   | 2006                        |   |
| **Assets**                                                                                                                                                                                                                                                 |   |                         |      |   |                        |   |
| Cash                and cash equivalents:                                                                                                                                                                                                                  |   |                         |      |   |                        |   |
| Cash                and due from banks                                                                                                                                                                                                                     |   | $                            | 95,097    |   |                        | $      | 115,640 |   |
| Interest                bearing deposits in other banks                                                                                                                                                                                                    |   |                         | 2,070     |   |                        |   | 1,783 |   |
| Federal                funds sold and securities purchased under agreements to                resell                                                                                                                                                       |   |                         | 57,050    |   |                        |   | 39,405 |   |
| Total                cash and cash equivalents                                                                                                                                                                                                             |   |                         | 154,217   |   |                        |   | 156,828 |   |
| Investment                securities:                                                                                                                                                                                                                      |   |                         |      |   |                        |   |   |   |
| Available                for sale, amortized cost of $308,158 (2007) and $328,499                (2006)                                                                                                                                                    |   |                         | 307,460   |   |                        |   | 326,485 |   |
| Held                to maturity, fair value of $5,492 (2007) and $7,849 (2006)                                                                                                                                                                             |   |                         | 5,469     |   |                        |   | 7,788 |   |
| Total                investment securities                                                                                                                                                                                                                 |   |                         | 312,929   |   |                        |   | 334,273 |   |
| Loans,                net of unearned income                                                                                                                                                                                                               |   |                         | 1,265,689 |   |                        |   | 1,197,836 |   |
| Allowance                for loan losses                                                                                                                                                                                                                   |   |                         | (11,461   | )      |                        |   | (11,999 | ) |
| Loans,                net                                                                                                                                                                                                                                  |   |                         | 1,254,228 |   |                        |   | 1,185,837 |   |
| Premises                and equipment, net                                                                                                                                                                                                                 |   |                         | 38,710    |   |                        |   | 37,775 |   |
| Company-owned                life insurance                                                                                                                                                                                                                |   |                         | 33,864    |   |                        |   | 32,929 |   |
| Goodwill                                                                                                                                                                                                                                                   |   |                         | 52,407    |   |                        |   | 42,822 |   |
| Other                intangibles, net                                                                                                                                                                                                                      |   |                         | 10,391    |   |                        |   | 9,755 |   |
| Other                assets                                                                                                                                                                                                                                |   |                         | 25,716    |   |                        |   | 24,147 |   |
| Total                assets                                                                                                                                                                                                                                |   | $                            | 1,882,462 |   |                        | $      | 1,824,366 |   |
| **Liabilities**                                                                                                                                                                                                                                            |   |                         |      |   |                        |   |   |   |
| Deposits:                                                                                                                                                                                                                                                  |   |                         |      |   |                        |   |   |   |
| Noninterest                bearing                                                                                                                                                                                                                         |   | $                            | 239,552   |   |                        | $      | 242,938 |   |
| Interest                bearing                                                                                                                                                                                                                            |   |                         | 1,246,948 |   |                        |   | 1,211,882 |   |
| Total                deposits                                                                                                                                                                                                                              |   |                         | 1,486,500 |   |                        |   | 1,454,820 |   |
| Federal                funds purchased and securities sold under agreements to                repurchase                                                                                                                                                   |   |                         | 74,425    |   |                        |   | 67,941 |   |
| Other                short-term borrowings                                                                                                                                                                                                                 |   |                         | 779       |   |                        |   | 8,777 |   |
| Subordinated                notes payable to unconsolidated trusts                                                                                                                                                                                         |   |                         | 48,970    |   |                        |   | 25,774 |   |
| Long-term                debt                                                                                                                                                                                                                              |   |                         | 78,515    |   |                        |   | 62,218 |   |
| Dividends                payable                                                                                                                                                                                                                           |   |                         | 2,433     |   |                        |   | 3,472 |   |
| Other                liabilities                                                                                                                                                                                                                           |   |                         | 22,183    |   |                        |   | 22,923 |   |
| Total                liabilities                                                                                                                                                                                                                           |   |                         | 1,713,805 |   |                        |   | 1,645,925 |   |
| **Shareholders’                Equity**                                                                                                                                                                                                              |   |                         |      |   |                        |   |   |   |
| Preferred                stock, no par value; 1,000,000 shares authorized; none                issued                                                                                                                                                      |   |                         |      |   |                        |   |   |   |
| Common                stock, par value $.125 per share9,608,000                shares authorized;  7,382,260 and 7,895,452 shares issued and                outstanding at September 30, 2007 and December 31, 2006,                respectively |   |                         | 923       |   |                        |   | 988 |   |
| Capital                surplus                                                                                                                                                                                                                             |   |                         | 48,100    |   |                        |   | 53,201 |   |
| Retained                earnings                                                                                                                                                                                                                           |   |                         | 122,986   |   |                        |   | 128,652 |   |
| Accumulated                other comprehensive loss                                                                                                                                                                                                        |   |                         | (3,352    | )      |                        |   | (4,400 | ) |
| Total                shareholders’ equity                                                                                                                                                                                                            |   |                         | 168,657   |   |                        |   | 178,441 |   |
| Total                liabilities and shareholders’ equity                                                                                                                                                                                            |   | $                            | 1,882,462 |   |                        | $      | 1,824,366 |   |

----

**Unaudited      Consolidated Statements of      Income**

|                                                                                                                 |   | Three                Months Ended |   |   | Nine                Months Ended |   |
|----------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------|--------|--------|----------------------------------|--------|
|                                                                                                                 |   | September                30,      |   |   | September                30,     |   |
| (In                thousands, except per share data)                                                                 |   | 2007                              |   |   | 2006                             |   |   | 2007 |   |   | 2006 |   |
| **Interest                Income**                                                                                   |   |                              |   |   |                             |   |   |   |   |   |   |   |
| Interest                and fees on loans                                                                            |   | $                                 | 24,402 |   |                             | $      | 19,446 |   |   | $ | 71,154 |   |   | $ | 54,839 |   |
| Interest                on investment securities:                                                                    |   |                              |   |   |                             |   |   |   |   |   |   |   |   |   |   |   |
| Taxable                                                                                                              |   |                              | 2,721  |   |                             |   | 2,005 |   |   |   | 8,242 |   |   |   | 6,556 |   |
| Nontaxable                                                                                                           |   |                              | 826    |   |                             |   | 895 |   |   |   | 2,527 |   |   |   | 2,758 |   |
| Interest                on deposits in other banks                                                                   |   |                              | 18     |   |                             |   | 14 |   |   |   | 47 |   |   |   | 39 |   |
| Interest                of federal funds sold and securities purchased under agreements to                resell     |   |                              | 527    |   |                             |   | 475 |   |   |   | 2,437 |   |   |   | 1,196 |   |
| Total                interest income                                                                                 |   |                              | 28,494 |   |                             |   | 22,835 |   |   |   | 84,407 |   |   |   | 65,388 |   |
| **Interest                Expense**                                                                                  |   |                              |   |   |                             |   |   |   |   |   |   |   |   |   |   |   |
| Interest                on deposits                                                                                  |   |                              | 11,478 |   |                             |   | 8,133 |   |   |   | 33,683 |   |   |   | 22,219 |   |
| Interest                on federal funds purchased and securities sold under agreements to                repurchase |   |                              | 990    |   |                             |   | 1,212 |   |   |   | 3,292 |   |   |   | 3,206 |   |
| Interest                on other borrowed funds                                                                      |   |                              | 742    |   |                             |   | 636 |   |   |   | 2,301 |   |   |   | 1,727 |   |
| Interest                on subordinated notes payable to unconsolidated trusts                                       |   |                              | 662    |   |                             |   | 466 |   |   |   | 1,564 |   |   |   | 1,290 |   |
| Total                interest expense                                                                                |   |                              | 13,872 |   |                             |   | 10,447 |   |   |   | 40,840 |   |   |   | 28,442 |   |
| Net                interest income                                                                                   |   |                              | 14,622 |   |                             |   | 12,388 |   |   |   | 43,567 |   |   |   | 36,946 |   |
| Provision                for loan losses                                                                             |   |                              | 595    |   |                             |   | 253 |   |   |   | 429 |   |   |   | 172 |   |
| Net                interest income after provision for loan losses                                                   |   |                              | 14,027 |   |                             |   | 12,135 |   |   |   | 43,138 |   |   |   | 36,774 |   |
| **Noninterest                Income**                                                                                |   |                              |   |   |                             |   |   |   |   |   |   |   |   |   |   |   |
| Service                charges and fees on deposits                                                                  |   |                              | 3,041  |   |                             |   | 2,317 |   |   |   | 8,932 |   |   |   | 6,639 |   |
| Allotment                processing fees                                                                             |   |                              | 1,114  |   |                             |   | 621 |   |   |   | 3,239 |   |   |   | 1,957 |   |
| Other                service charges, commissions, and fees                                                          |   |                              | 653    |   |                             |   | 618 |   |   |   | 1,899 |   |   |   | 1,958 |   |
| Data                processing income                                                                                |   |                              | 283    |   |                             |   | 439 |   |   |   | 867 |   |   |   | 1,323 |   |
| Trust                income                                                                                          |   |                              | 516    |   |                             |   | 456 |   |   |   | 1,489 |   |   |   | 1,374 |   |
| Investment                securities losses, net                                                                     |   |                              |   |   |                             |   |   |   |   |   |   |   |   |   | (195 | ) |
| Gains                on sale of mortgage loans, net                                                                  |   |                              | 141    |   |                             |   | 96 |   |   |   | 433 |   |   |   | 464 |   |
| Income                from company-owned life insurance                                                              |   |                              | 304    |   |                             |   | 320 |   |   |   | 972 |   |   |   | 1,003 |   |
| Other                                                                                                                |   |                              | 67     |   |                             |   | 148 |   |   |   | 63 |   |   |   | 539 |   |
| Total                noninterest income                                                                              |   |                              | 6,119  |   |                             |   | 5,015 |   |   |   | 17,894 |   |   |   | 15,062 |   |
| **Noninterest                Expense**                                                                               |   |                              |   |   |                             |   |   |   |   |   |   |   |   |   |   |   |
| Salaries                and employee benefits                                                                        |   |                              | 7,536  |   |                             |   | 6,780 |   |   |   | 22,665 |   |   |   | 20,238 |   |
| Occupancy                expenses, net                                                                               |   |                              | 1,055  |   |                             |   | 866 |   |   |   | 3,144 |   |   |   | 2,629 |   |
| Equipment                expenses                                                                                    |   |                              | 851    |   |                             |   | 651 |   |   |   | 2,393 |   |   |   | 2,077 |   |
| Data                processing and communication expenses                                                            |   |                              | 1,242  |   |                             |   | 1,309 |   |   |   | 3,548 |   |   |   | 3,773 |   |
| Bank                franchise tax                                                                                    |   |                              | 528    |   |                             |   | 449 |   |   |   | 1,567 |   |   |   | 1,331 |   |
| Correspondent                bank fees                                                                               |   |                              | 194    |   |                             |   | 177 |   |   |   | 539 |   |   |   | 515 |   |
| Amortization                of intangibles                                                                           |   |                              | 848    |   |                             |   | 432 |   |   |   | 2,514 |   |   |   | 1,325 |   |
| Other                                                                                                                |   |                              | 2,102  |   |                             |   | 2,237 |   |   |   | 6,633 |   |   |   | 5,954 |   |
| Total                noninterest expense                                                                             |   |                              | 14,356 |   |                             |   | 12,901 |   |   |   | 43,003 |   |   |   | 37,842 |   |
| Income                from continuing operations before income taxes                                                 |   |                              | 5,790  |   |                             |   | 4,249 |   |   |   | 18,029 |   |   |   | 13,994 |   |
| Income                tax expense from continuing operations                                                         |   |                              | 1,633  |   |                             |   | 966 |   |   |   | 4,350 |   |   |   | 2,844 |   |
| Income                from continuing operations                                                                     |   |                              | 4,157  |   |                             |   | 3,283 |   |   |   | 13,679 |   |   |   | 11,150 |   |
| Income                from discontinued operations before income tax expense                                         |   |                              |   |   |                             |   | 713 |   |   |   |   |   |   |   | 1,878 |   |
| Income                tax expense from discontinued operations                                                       |   |                              |   |   |                             |   | 250 |   |   |   |   |   |   |   | 585 |   |
| Income                from discontinued operations                                                                   |   |                              |   |   |                             |   | 463 |   |   |   |   |   |   |   | 1,293 |   |
| Net                income                                                                                            |   | $                                 | 4,157  |   |                             | $      | 3,746 |   |   | $ | 13,679 |   |   | $ | 12,443 |   |
| **Net                Income Per Common Share**                                                                       |   |                              |   |   |                             |   |   |   |   |   |   |   |   |   |   |   |
| Income                from continuing operations – basic and diluted                                           |   | $                                 | .54    |   |                             | $      | .45 |   |   | $ | 1.75 |   |   | $ | 1.51 |   |
| Income                from discontinued operations – basic and diluted                                         |   |                              |   |   |                             |   | .06 |   |   |   |   |   |   |   | .17 |   |
| Net                income per common share – basic and diluted                                                 |   |                              | .54    |   |                             |   | .51 |   |   |   | 1.75 |   |   |   | 1.68 |   |
| **Weighted                Average Shares Outstanding**                                                               |   |                              |   |   |                             |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                                                                |   |                              | 7,672  |   |                             |   | 7,393 |   |   |   | 7,816 |   |   |   | 7,385 |   |
| Diluted                                                                                                              |   |                              | 7,672  |   |                             |   | 7,412 |   |   |   | 7,816 |   |   |   | 7,404 |   |

----

**Unaudited      Consolidated Statements of Comprehensive      Income**

|                                                                                                                                                                                                                                                |   | Three                Months Ended  |   |   | Nine                Months Ended  |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------|--------|--------|----------------------------------------|--------|
|                                                                                                                                                                                                                                                |   | September                30,            |   |   | September                30,           |   |
| (In                thousands)                                                                                                                                                                                                                       |   | 2007                                    |   |   | 2006                                   |   |   | 2007 |   |   | 2006 |   |
| **Net                Income**                                                                                                                                                                                                                       |   | $                                       | 4,157  |   |                                   | $      | 3,746 |   |   | $ | 13,679 |   |   | $ | 12,443 |   |
| Other                comprehensive income:                                                                                                                                                                                                          |   |                                    |   |   |                                   |   |   |   |   |   |   |   |   |   |   |   |
| Net                unrealized holding gain on available for sale securities arising                during                the period, net of tax of $1,340, $1,691, $456, and $267,                respectively                                      |   |                                    | 2,488  |   |                                   |   | 3,140 |   |   |   | 846 |   |   |   | 495 |   |
|                                                                                                                                                                                                                                                |   |                                    |   |   |                                   |   |   |   |   |   |   |   |   |   |   |   |
| Reclassification                adjustment for prior period unrealized loss recognized during current                period, net of tax of $5 and $22, respectively                                                                                 |   |                                    |   |   |                                   |   |   |   |   |   | 10 |   |   |   | 40 |   |
|                                                                                                                                                                                                                                                |   |                                    |   |   |                                   |   |   |   |   |   |   |   |   |   |   |   |
| Amortization                of net actuarial loss, transition obligation, and prior service costs                attributed to the Company’s postretirement benefit  plans, net                of tax of $35 and $104, respectively |   |                                    | 64     |   |                                   |   |   |   |   |   | 192 |   |   |   |   |   |
| Other                comprehensive income                                                                                                                                                                                                           |   |                                    | 2,552  |   |                                   |   | 3,140 |   |   |   | 1,048 |   |   |   | 535 |   |
| **Comprehensive                Income**                                                                                                                                                                                                             |   | $                                       | 6,709  |   |                                   | $      | 6,886 |   |   | $ | 14,727 |   |   | $ | 12,978 |   |

----

**Unaudited      Consolidated Statements of Cash      Flows**

| Nine                months ended September 30, (In thousands)                                                   |   | 2007   |     |   | 2006   |   |
|-----------------------------------------------------------------------------------------------------------------|--------|--------|----------|--------|--------|--------|
| **Cash                Flows from Operating Activities**                                                         |   |   |     |   |   |   |
| Net                income                                                                                       |   | $      | 13,679   |   |   | $      | 12,443 |   |
| Adjustments                to reconcile net income to net cash provided by operating                activities: |   |   |     |   |   |   |   |   |
| Depreciation                and amortization                                                                    |   |   | 5,532    |   |   |   | 4,036 |   |
| Net                amortization of investment security premiums and                (discounts):                 |   |   |     |   |   |   |   |   |
| Available                for sale                                                                               |   |   | (799     | )      |   |   | (53 | ) |
| Held                to maturity                                                                                 |   |   | 1        |   |   |   | (18 | ) |
| Provision                for loan losses                                                                        |   |   | 429      |   |   |   | 172 |   |
| Noncash                compensation expense                                                                     |   |   | 42       |   |   |   | 102 |   |
| Mortgage                loans originated for sale                                                               |   |   | (16,960  | )      |   |   | (24,419 | ) |
| Proceeds                from sale of mortgage loans                                                             |   |   | 16,359   |   |   |   | 22,020 |   |
| Deferred                income tax expense (benefit)                                                            |   |   | 3,096    |   |   |   | 1,566 |   |
| Gains                on sale of mortgage loans, net                                                             |   |   | (433     | )      |   |   | (464 | ) |
| Loss                (gain) on sale of premises and equipment, net                                               |   |   | 104      |   |   |   | (93 | ) |
| Loss                on sale of available for sale investment securities, net                                    |   |   |     |   |   |   | 195 |   |
| Increase                in accrued interest receivable                                                          |   |   | (1,613   | )      |   |   | (1,377 | ) |
| Income                from company-owned life insurance                                                         |   |   | (935     | )      |   |   | (973 | ) |
| Decrease                in other assets                                                                         |   |   | 712      |   |   |   | 2,303 |   |
| Increase                in accrued interest payable                                                             |   |   | 1,074    |   |   |   | 886 |   |
| (Decrease)                increase in other liabilities                                                         |   |   | (5,218   | )      |   |   | 968 |   |
| Net                cash provided by discontinued operating activities                                           |   |   |     |   |   |   | 1,343 |   |
| Net                cash provided by operating activities                                                        |   |   | 15,070   |   |   |   | 18,637 |   |
| **Cash                Flows from Investing Activities**                                                         |   |   |     |   |   |   |   |   |
| Proceeds                from maturities and calls of investment securities:                                     |   |   |     |   |   |   |   |   |
| Available                for sale                                                                               |   |   | 246,282  |   |   |   | 76,093 |   |
| Held                to maturity                                                                                 |   |   | 2,318    |   |   |   | 3,740 |   |
| Proceeds                from sale of available for sale investment securities                                   |   |   | 21,007   |   |   |   | 19,122 |   |
| Purchase                of available for sale investment securities                                             |   |   | (246,149 | )      |   |   | (45,709 | ) |
| Loans                originated for investment, net of principal collected                                      |   |   | (67,786  | )      |   |   | (90,737 | ) |
| Payment                of prior year accrued purchase price-Citizens Bancorp,                Inc.               |   |   |     |   |   |   | (21,846 | ) |
| Purchase                of PNC Military Allotment operations, net of cash acquired                              |   |   | (1,916   | )      |   |   |   |   |
| Purchase                price refinements of previous acquisitions                                              |   |   | 51       |   |   |   | 211 |   |
| Investment                in unconsolidated trust                                                               |   |   | (696     | )      |   |   |   |   |
| Additions                to mortgage servicing rights, net                                                      |   |   | (62      | )      |   |   | (41 | ) |
| Purchase                of premises and equipment                                                               |   |   | (4,241   | )      |   |   | (7,006 | ) |
| Proceeds                from sale of equipment                                                                  |   |   | 315      |   |   |   | 476 |   |
| Net                cash provided by discontinued investing activities                                           |   |   |     |   |   |   | 14,225 |   |
| Net                cash used in investing activities                                                            |   |   | (50,877  | )      |   |   | (51,472 | ) |
| **Cash                Flows from Financing Activities**                                                         |   |   |     |   |   |   |   |   |
| Net                increase in deposits                                                                         |   |   | 20,810   |   |   |   | 44,178 |   |
| Net                increase in securities sold under agreements to repurchase                                   |   |   | 6,484    |   |   |   | 2,975 |   |
| Proceeds                from long-term debt issued to unconsolidated trusts                                     |   |   | 23,196   |   |   |   |   |   |
| Proceeds                from other long-term debt                                                               |   |   | 26,000   |   |   |   | 11,198 |   |
| Repayments                of long-term debt                                                                     |   |   | (9,703   | )      |   |   | (10,276 | ) |
| Net                (decrease) increase in other short-term borrowings                                           |   |   | (7,998   | )      |   |   | 23,008 |   |
| Dividends                paid                                                                                   |   |   | (8,685   | )      |   |   | (7,112 | ) |
| Purchase                of common stock                                                                         |   |   | (18,649  | )      |   |   | (715 | ) |
| Shares                issued under Employee Stock Purchase Plan                                                 |   |   | 195      |   |   |   | 173 |   |
| Stock                options exercised                                                                          |   |   | 1,546    |   |   |   | 927 |   |
| Net                cash used in discontinued financing activities                                               |   |   |     |   |   |   | (5,123 | ) |
| Net                cash provided by financing activities                                                        |   |   | 33,196   |   |   |   | 59,233 |   |
| Net                (decrease) increase in cash and cash equivalents                                             |   |   | (2,611   | )      |   |   | 26,398 |   |
| Less:                net increase in cash and cash equivalents of discontinued                operations        |   |   |     |   |   |   | (10,445 | ) |
| Net                (decrease) increase in cash and cash equivalents from continuing                operations   |   |   | (2,611   | )      |   |   | 15,953 |   |
| Cash                and cash equivalents from continuing activities at beginning of                year         |   |   | 156,828  |   |   |   | 131,018 |   |
| Cash                and cash equivalents from continuing activities at end of                period             |   | $      | 154,217  |   |   | $      | 146,971 |   |
| (table                continues on next page)                                                                   |   |

----

| **Supplemental                Disclosures**               |   |   |   |   |   |   |
|-----------------------------------------------------------|--------|--------|--------|--------|--------|--------|
| Cash                paid during the period for:           |   |   |   |   |   |   |
| Interest                                                  |   | $      | 39,766 |   |   | $      | 30,484 |   |
| Income                taxes                               |   |   | 8,800  |   |   |   | 4,050 |   |
| Transfers                from loans to repossessed assets |   |   | 1,263  |   |   |   | 1,184 |   |
| Cash                dividend declared and unpaid          |   |   | 2,433  |   |   |   | 2,442 |   |

----

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

| (In                thousands, except per share data)                                                                          |   |                        |   |   |    |   |   |     | Accumulated |   |          |   |   |
|-------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|--------|--------|---------|--------|--------|----------|-------------|--------|---------------|--------|--------|
|                                                                                                                          |   |                        |   |   |    |   |   |     |        |   | Other         |   |   | Total |   |
| Nine                months ended                                                                                              |   | Common                Stock |   |   | Capital |   |   | Retained |        |   | Comprehensive |   |   | Shareholders’ |   |
| September                30, 2007 and 2006                                                                                    |   | Shares                      |   |   | Amount  |   |   | Surplus  |        |   | Earnings      |   |   | Loss |   |   | Equity |   |
| Balance                at January 1, 2007                                                                                     |   |                        | 7,895  |   |    | $      | 988    |     |        | $      | 53,201        |   |   | $ | 128,652 |   |   | $ | (4,400 | ) |   | $ | 178,441 |   |
| Net                income                                                                                                     |   |                        |   |   |    |   |   |     |        |   |          |   |   |   | 13,679 |   |   |   |   |   |   |   | 13,679 |   |
| Other                comprehensive income                                                                                     |   |                        |   |   |    |   |   |     |        |   |          |   |   |   |   |   |   |   | 1,048 |   |   |   | 1,048 |   |
| Cash                dividends declared, $.99 per share                                                                        |   |                        |   |   |    |   |   |     |        |   |          |   |   |   | (7,646 | ) |   |   |   |   |   |   | (7,646 | ) |
| Purchase                of common stock                                                                                       |   |                        | (584   | )      |    |   | (73    | )        |        |   | (6,877        | )      |   |   | (11,699 | ) |   |   |   |   |   |   | (18,649 | ) |
| Stock                options exercised, including related tax benefits                                                        |   |                        | 63     |   |    |   | 7      |     |        |   | 1,540         |   |   |   |   |   |   |   |   |   |   |   | 1,547 |   |
| Shares                issued pursuant to Employee Stock Purchase Plan                                                         |   |                        | 8      |   |    |   | 1      |     |        |   | 194           |   |   |   |   |   |   |   |   |   |   |   | 195 |   |
| Noncash                compensation expense attributed to stock option and Employee Stock                Purchase Plan grants |   |                        |   |   |    |   |   |     |        |   | 42            |   |   |   |   |   |   |   |   |   |   |   | 42 |   |
| Balance                at September 30, 2007                                                                                  |   |                        | 7,382  |   |    | $      | 923    |     |        | $      | 48,100        |   |   | $ | 122,986 |   |   | $ | (3,352 | ) |   | $ | 168,657 |   |
|                                                                                                                          |   |                        |   |   |    |   |   |     |        |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                          |   |                        |   |   |    |   |   |     |        |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                          |   |                        |   |   |    |   |   |     |        |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance                at January 1, 2006                                                                                     |   |                        | 7,389  |   |    | $      | 924    |     |        | $      | 36,468        |   |   | $ | 118,761 |   |   | $ | (1,917 | ) |   | $ | 154,236 |   |
| Net                income                                                                                                     |   |                        |   |   |    |   |   |     |        |   |          |   |   |   | 12,443 |   |   |   |   |   |   |   | 12,443 |   |
| Other                comprehensive income                                                                                     |   |                        |   |   |    |   |   |     |        |   |          |   |   |   |   |   |   |   | 535 |   |   |   | 535 |   |
| Cash                dividends declared, $.99 per share                                                                        |   |                        |   |   |    |   |   |     |        |   |          |   |   |   | (7,310 | ) |   |   |   |   |   |   | (7,310 | ) |
| Purchase                of common stock                                                                                       |   |                        | (23    | )      |    |   | (3     | )        |        |   | (103          | )      |   |   | (609 | ) |   |   |   |   |   |   | (715 | ) |
| Stock                options exercised, including related tax benefits                                                        |   |                        | 37     |   |    |   | 4      |     |        |   | 929           |   |   |   |   |   |   |   |   |   |   |   | 933 |   |
| Shares                issued pursuant to Employee Stock Purchase Plan                                                         |   |                        | 6      |   |    |   | 1      |     |        |   | 172           |   |   |   |   |   |   |   |   |   |   |   | 173 |   |
| Noncash                compensation expense attributed to stock option and Employee Stock                Purchase Plan grants |   |                        |   |   |    |   |   |     |        |   | 125           |   |   |   |   |   |   |   |   |   |   |   | 125 |   |
| Balance                at September 30, 2006                                                                                  |   |                        | 7,409  |   |    | $      | 926    |     |        | $      | 37,591        |   |   | $ | 123,285 |   |   | $ | (1,382 | ) |   | $ | 160,420 |   |

----

**Notes      to Unaudited Consolidated Financial      Statements**

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

----

**2.           Discontinued      Operations**

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

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

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

*"Accounting      for Certain Hybrid Financial Instruments”*

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

*Fair Value      Measurements*

----

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

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

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

|                                                                            |   | Three                Months EndedSeptember                30, |   |   | Nine                Months EndedSeptember                30, |   |
|---------------------------------------------------------------------------------|--------|---------------------------------------------------------------|--------|--------|--------------------------------------------------------------|--------|
| (In                thousands, except per share data)                            |   | 2007                                                          |   |   | 2006                                                         |   |   | 2007 |   |   | 2006 |   |
|                                                                            |   |                                                          |   |   |                                                         |   |   |   |   |   |   |   |
| Net                income, basic and diluted                                    |   | $                                                             | 4,157  |   |                                                         | $      | 3,746 |   |   | $ | 13,679 |   |   | $ | 12,443 |   |
|                                                                            |   |                                                          |   |   |                                                         |   |   |   |   |   |   |   |   |   |   |   |
| Average                shares outstanding                                       |   |                                                          | 7,672  |   |                                                         |   | 7,393 |   |   |   | 7,816 |   |   |   | 7,385 |   |
| Effect                of dilutive stock options                                 |   |                                                          |   |   |                                                         |   | 19 |   |   |   |   |   |   |   | 19 |   |
| Average                diluted shares outstanding                               |   |                                                          | 7,672  |   |                                                         |   | 7,412 |   |   |   | 7,816 |   |   |   | 7,404 |   |
|                                                                            |   |                                                          |   |   |                                                         |   |   |   |   |   |   |   |   |   |   |   |
|                                                                            |   |                                                          |   |   |                                                         |   |   |   |   |   |   |   |   |   |   |   |
| Net                income per share, basic and diluted                          |   | $                                                             | .54    |   |                                                         | $      | .51 |   |   | $ | 1.75 |   |   | $ | 1.68 |   |
|                                                                            |   |                                                          |   |   |                                                         |   |   |   |   |   |   |   |   |   |   |   |
|                                                                            |   |                                                          |   |   |                                                         |   |   |   |   |   |   |   |   |   |   |   |
| **Continuing                Operations**                                        |   |                                                          |   |   |                                                         |   |   |   |   |   |   |   |   |   |   |   |
| Income                from continuing operations, basic and diluted             |   | $                                                             | 4,157  |   |                                                         | $      | 3,283 |   |   | $ | 13,679 |   |   | $ | 11,150 |   |
|                                                                            |   |                                                          |   |   |                                                         |   |   |   |   |   |   |   |   |   |   |   |
| Income                per share from continuing operations, basic and diluted   |   | $                                                             | .54    |   |                                                         | $      | .45 |   |   | $ | 1.75 |   |   | $ | 1.51 |   |
|                                                                            |   |                                                          |   |   |                                                         |   |   |   |   |   |   |   |   |   |   |   |
|                                                                            |   |                                                          |   |   |                                                         |   |   |   |   |   |   |   |   |   |   |   |
| **Discontinued                Operations**                                      |   |                                                          |   |   |                                                         |   |   |   |   |   |   |   |   |   |   |   |
| Income                from discontinued operations, basic and diluted           |   |                                                          |   |   |                                                         | $      | 463 |   |   |   |   |   |   | $ | 1,293 |   |
|                                                                            |   |                                                          |   |   |                                                         |   |   |   |   |   |   |   |   |   |   |   |
| Income                per share from discontinued operations, basic and diluted |   |                                                          |   |   |                                                         | $      | .06 |   |   |   |   |   |   | $ | .17 |   |

----

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

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

**7.           Share      Repurchase and Trust Preferred Securities Transaction**

----

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

**FORWARD-LOOKING      STATEMENTS**

**DISCONTINUED      OPERATIONS**

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

**RESULTS      OF OPERATIONS**

**Third Quarter 2007 Compared      to Third Quarter 2006**

----

----

**Net Interest Income**

----

----

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

| Quarter                Ended September 30,                                                                                                    |   | 2007           |      |   | 2006      |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------|-----------|--------|-----------|--------|
|  (In                thousands)                                                                                                           |   | AverageBalance |      |   | Interest4 |   |   | AverageRate |   |   | AverageBalance |   |   | Interest4 |   |   | AverageRate |   |
| **Earning                Assets**                                                                                                             |   |           |      |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Investment                securities                                                                                                          |   |           |      |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Taxable                                                                                                                                       |   | $              | 220,135   |   |      | $      | 2,721 |   |   |   | 4.90 | % |   | $ | 186,769 |   |   | $ | 2,005 |   |   |   | 4.26 | % |
| Nontaxable1                                                                                                                                   |   |           | 87,746    |   |      |   | 1,179 |   |   |   | 5.33 |   |   |   | 89,434 |   |   |   | 1,329 |   |   |   | 5.90 |   |
| Time                deposits with banks, federal funds sold and securities purchased                under                agreements to resell |   |           | 42,788    |   |      |   | 545 |   |   |   | 5.05 |   |   |   | 65,403 |   |   |   | 489 |   |   |   | 2.97 |   |
| Loans1,2,3                                                                                                                                    |   |           | 1,264,490 |   |      |   | 24,622 |   |   |   | 7.73 |   |   |   | 1,038,458 |   |   |   | 19,547 |   |   |   | 7.47 |   |
| Total                earning assets                                                                                                           |   |           | 1,615,159 |   |      | $      | 29,067 |   |   |   | 7.14 | % |   |   | 1,380,064 |   |   | $ | 23,370 |   |   |   | 6.72 | % |
| Allowance                for loan losses                                                                                                      |   |           | (11,239   | )      |      |   |   |   |   |   |   |   |   |   | (10,602 | ) |   |   |   |   |   |   |   |   |
| Total                earning assets, net of allowance for loan losses                                                                         |   |           | 1,603,920 |   |      |   |   |   |   |   |   |   |   |   | 1,369,462 |   |   |   |   |   |   |   |   |   |
| **Nonearning                Assets**                                                                                                          |   |           |      |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash                and due from banks                                                                                                        |   |           | 75,762    |   |      |   |   |   |   |   |   |   |   |   | 69,615 |   |   |   |   |   |   |   |   |   |
| Premises                and equipment, net                                                                                                    |   |           | 39,041    |   |      |   |   |   |   |   |   |   |   |   | 31,581 |   |   |   |   |   |   |   |   |   |
| Other                assets                                                                                                                   |   |           | 123,845   |   |      |   |   |   |   |   |   |   |   |   | 86,669 |   |   |   |   |   |   |   |   |   |
| Assets                of discontinued operations                                                                                              |   |           |      |   |      |   |   |   |   |   |   |   |   |   | 141,479 |   |   |   |   |   |   |   |   |   |
| Total                assets                                                                                                                   |   | $              | 1,842,568 |   |      |   |   |   |   |   |   |   |   | $ | 1,698,806 |   |   |   |   |   |   |   |   |   |
| **Interest                Bearing Liabilities**                                                                                               |   |           |      |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                                                                                                                      |   |           |      |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest                bearing demand                                                                                                        |   | $              | 249,231   |   |      | $      | 881 |   |   |   | 1.40 | % |   | $ | 245,623 |   |   | $ | 883 |   |   |   | 1.43 | % |
| Savings                                                                                                                                       |   |           | 239,744   |   |      |   | 1,329 |   |   |   | 2.20 |   |   |   | 196,897 |   |   |   | 1,028 |   |   |   | 2.07 |   |
| Time                                                                                                                                          |   |           | 757,294   |   |      |   | 9,268 |   |   |   | 4.86 |   |   |   | 576,626 |   |   |   | 6,222 |   |   |   | 4.28 |   |
| Federal                funds purchased and securities sold under agreements to                repurchase                                      |   |           | 84,446    |   |      |   | 990 |   |   |   | 4.65 |   |   |   | 101,489 |   |   |   | 1,212 |   |   |   | 4.74 |   |
| Other                borrowed funds                                                                                                           |   |           | 105,494   |   |      |   | 1,404 |   |   |   | 5.28 |   |   |   | 83,901 |   |   |   | 1,102 |   |   |   | 5.21 |   |
| Total                interest bearing liabilities                                                                                             |   |           | 1,436,209 |   |      | $      | 13,872 |   |   |   | 3.83 | % |   |   | 1,204,536 |   |   | $ | 10,447 |   |   |   | 3.44 | % |
| **Noninterest                Bearing Liabilities**                                                                                            |   |           |      |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commonwealth                of Kentucky deposits                                                                                              |   |           | 32,324    |   |      |   |   |   |   |   |   |   |   |   | 34,459 |   |   |   |   |   |   |   |   |   |
| Other                demand deposits                                                                                                          |   |           | 175,827   |   |      |   |   |   |   |   |   |   |   |   | 146,724 |   |   |   |   |   |   |   |   |   |
| Other                liabilities                                                                                                              |   |           | 23,240    |   |      |   |   |   |   |   |   |   |   |   | 13,461 |   |   |   |   |   |   |   |   |   |
| Liabilities                of discontinued operations                                                                                         |   |           |      |   |      |   |   |   |   |   |   |   |   |   | 142,979 |   |   |   |   |   |   |   |   |   |
| Total                liabilities                                                                                                              |   |           | 1,667,600 |   |      |   |   |   |   |   |   |   |   |   | 1,542,159 |   |   |   |   |   |   |   |   |   |
| Shareholders’                equity                                                                                                     |   |           | 174,968   |   |      |   |   |   |   |   |   |   |   |   | 156,647 |   |   |   |   |   |   |   |   |   |
| Total                liabilities and shareholders’ equity                                                                               |   | $              | 1,842,568 |   |      |   |   |   |   |   |   |   |   | $ | 1,698,806 |   |   |   |   |   |   |   |   |   |
| Net                interest income                                                                                                            |   |           |      |   |      |   | 15,195 |   |   |   |   |   |   |   |   |   |   |   | 12,923 |   |   |   |   |   |
| TE                basis adjustment                                                                                                            |   |           |      |   |      |   | (573 | ) |   |   |   |   |   |   |   |   |   |   | (535 | ) |   |   |   |   |
| Net                interest income                                                                                                            |   |           |      |   |      | $      | 14,622 |   |   |   |   |   |   |   |   |   |   | $ | 12,388 |   |   |   |   |   |
| Net                interest spread                                                                                                            |   |           |      |   |      |   |   |   |   |   | 3.31 | % |   |   |   |   |   |   |   |   |   |   | 3.28 | % |
| Impact                of noninterest bearing sources of funds                                                                                 |   |           |      |   |      |   |   |   |   |   | .42 |   |   |   |   |   |   |   |   |   |   |   | .44 |   |
| Net                interest margin                                                                                                            |   |           |      |   |      |   |   |   |   |   | 3.73 | % |   |   |   |   |   |   |   |   |   |   | 3.72 | % |

----

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

| (In                thousands)                                                                                                                 |   | Variance     |   |   | Variance                Attributed to |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------|--------|--------|---------------------------------------|--------|
| Quarter                Ended September 30,                                                                                                    |   | 2007/20061,3 |   |   | Volume                                |   |   | Rate |   |
|                                                                                                                                          |   |         |   |   |                                  |   |   |   |   |
| **Interest                Income**                                                                                                            |   |         |   |   |                                  |   |   |   |   |
| Taxable                investment securities                                                                                                  |   | $            | 716    |   |                                  | $      | 389 |   |   | $ | 327 |   |
| Nontaxable                investment securities2                                                                                              |   |         | (150   | )      |                                  |   | (25 | ) |   |   | (125 | ) |
| Time                deposits with banks, federal funds sold and securities purchased                under                agreements to resell |   |         | 56     |   |                                  |   | (881 | ) |   |   | 937 |   |
| Loans2                                                                                                                                        |   |         | 5,075  |   |                                  |   | 4,375 |   |   |   | 700 |   |
| Total                interest income                                                                                                          |   |         | 5,697  |   |                                  |   | 3,858 |   |   |   | 1,839 |   |
| **Interest                Expense**                                                                                                           |   |         |   |   |                                  |   |   |   |   |   |   |   |
| Interest                bearing demand deposits                                                                                               |   |         | (2     | )      |                                  |   | 60 |   |   |   | (62 | ) |
| Savings                deposits                                                                                                               |   |         | 301    |   |                                  |   | 234 |   |   |   | 67 |   |
| Time                deposits                                                                                                                  |   |         | 3,046  |   |                                  |   | 2,126 |   |   |   | 920 |   |
| Federal                funds purchased and securities sold under agreements to                repurchase                                      |   |         | (222   | )      |                                  |   | (200 | ) |   |   | (22 | ) |
| Other                borrowed funds                                                                                                           |   |         | 302    |   |                                  |   | 287 |   |   |   | 15 |   |
| Total                interest expense                                                                                                         |   |         | 3,425  |   |                                  |   | 2,507 |   |   |   | 918 |   |
| Net                interest income                                                                                                            |   | $            | 2,272  |   |                                  |   | 1,351 |   |   | $ | 921 |   |
| Percentage                change                                                                                                              |   |         | 100.0  | %      |                                  |   | 59.5 | % |   |   | 40.5 | % |

**Noninterest Income**

----

**Noninterest Expense**

**Income Taxes**

**Income      From Discontinued Operations**

**First      Nine Months of 2007 Compared to First Nine Months of      2006**

----

----

**Net      Interest Income**

----

----

----

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

| Nine                Months Ended September 30,                                                                                                |   | 2007           |      |   | 2006      |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------|-----------|--------|-----------|--------|
|  (In                thousands)                                                                                                           |   | AverageBalance |      |   | Interest4 |   |   | AverageRate |   |   | AverageBalance |   |   | Interest4 |   |   | AverageRate |   |
| **Earning                Assets**                                                                                                             |   |           |      |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Investment                securities                                                                                                          |   |           |      |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Taxable                                                                                                                                       |   | $              | 226,292   |   |      | $      | 8,242 |   |   |   | 4.87 | % |   | $ | 210,978 |   |   | $ | 6,556 |   |   |   | 4.15 | % |
| Nontaxable1                                                                                                                                   |   |           | 88,838    |   |      |   | 3,611 |   |   |   | 5.43 |   |   |   | 91,504 |   |   |   | 3,988 |   |   |   | 5.83 |   |
| Time                deposits with banks, federal funds sold and securities purchased                under                agreements to resell |   |           | 68,388    |   |      |   | 2,484 |   |   |   | 4.86 |   |   |   | 51,113 |   |   |   | 1,235 |   |   |   | 3.23 |   |
| Loans1,2,3                                                                                                                                    |   |           | 1,240,029 |   |      |   | 71,810 |   |   |   | 7.74 |   |   |   | 1,005,865 |   |   |   | 55,202 |   |   |   | 7.34 |   |
| Total                earning assets                                                                                                           |   |           | 1,623,547 |   |      | $      | 86,147 |   |   |   | 7.09 | % |   |   | 1,359,460 |   |   | $ | 66,981 |   |   |   | 6.59 | % |
| Allowance                for loan losses                                                                                                      |   |           | (11,511   | )      |      |   |   |   |   |   |   |   |   |   | (10,930 | ) |   |   |   |   |   |   |   |   |
| Total                earning assets, net of allowance for loan losses                                                                         |   |           | 1,612,036 |   |      |   |   |   |   |   |   |   |   |   | 1,348,530 |   |   |   |   |   |   |   |   |   |
| **Nonearning                Assets**                                                                                                          |   |           |      |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash                and due from banks                                                                                                        |   |           | 80,020    |   |      |   |   |   |   |   |   |   |   |   | 78,047 |   |   |   |   |   |   |   |   |   |
| Premises                and equipment, net                                                                                                    |   |           | 38,939    |   |      |   |   |   |   |   |   |   |   |   | 30,376 |   |   |   |   |   |   |   |   |   |
| Other                assets                                                                                                                   |   |           | 113,833   |   |      |   |   |   |   |   |   |   |   |   | 86,136 |   |   |   |   |   |   |   |   |   |
| Assets                of discontinued operations                                                                                              |   |           |      |   |      |   |   |   |   |   |   |   |   |   | 141,708 |   |   |   |   |   |   |   |   |   |
| Total                assets                                                                                                                   |   | $              | 1,844,828 |   |      |   |   |   |   |   |   |   |   | $ | 1,684,797 |   |   |   |   |   |   |   |   |   |
| **Interest                Bearing Liabilities**                                                                                               |   |           |      |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                                                                                                                      |   |           |      |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest                bearing demand                                                                                                        |   | $              | 258,164   |   |      | $      | 2,832 |   |   |   | 1.47 | % |   | $ | 259,045 |   |   | $ | 2,728 |   |   |   | 1.41 | % |
| Savings                                                                                                                                       |   |           | 243,572   |   |      |   | 4,117 |   |   |   | 2.26 |   |   |   | 205,253 |   |   |   | 3,015 |   |   |   | 1.96 |   |
| Time                                                                                                                                          |   |           | 742,674   |   |      |   | 26,734 |   |   |   | 4.81 |   |   |   | 554,419 |   |   |   | 16,476 |   |   |   | 3.97 |   |
| Federal                funds purchased and securities sold under agreements to                repurchase                                      |   |           | 94,284    |   |      |   | 3,292 |   |   |   | 4.67 |   |   |   | 90,069 |   |   |   | 3,206 |   |   |   | 4.76 |   |
| Other                borrowed funds                                                                                                           |   |           | 98,504    |   |      |   | 3,865 |   |   |   | 5.25 |   |   |   | 80,085 |   |   |   | 3,017 |   |   |   | 5.04 |   |
| Total                interest bearing liabilities                                                                                             |   |           | 1,437,198 |   |      | $      | 40,840 |   |   |   | 3.80 | % |   |   | 1,188,871 |   |   | $ | 28,442 |   |   |   | 3.20 | % |
| **Noninterest                Bearing Liabilities**                                                                                            |   |           |      |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commonwealth                of Kentucky deposits                                                                                              |   |           | 37,889    |   |      |   |   |   |   |   |   |   |   |   | 39,004 |   |   |   |   |   |   |   |   |   |
| Other                demand deposits                                                                                                          |   |           | 175,562   |   |      |   |   |   |   |   |   |   |   |   | 150,086 |   |   |   |   |   |   |   |   |   |
| Other                liabilities                                                                                                              |   |           | 15,859    |   |      |   |   |   |   |   |   |   |   |   | 8,593 |   |   |   |   |   |   |   |   |   |
| Liabilities                of discontinued operations                                                                                         |   |           |      |   |      |   |   |   |   |   |   |   |   |   | 143,109 |   |   |   |   |   |   |   |   |   |
| Total                liabilities                                                                                                              |   |           | 1,666,508 |   |      |   |   |   |   |   |   |   |   |   | 1,529,663 |   |   |   |   |   |   |   |   |   |
| Shareholders’                equity                                                                                                     |   |           | 178,320   |   |      |   |   |   |   |   |   |   |   |   | 155,134 |   |   |   |   |   |   |   |   |   |
| Total                liabilities and shareholders’ equity                                                                               |   | $              | 1,844,828 |   |      |   |   |   |   |   |   |   |   | $ | 1,684,797 |   |   |   |   |   |   |   |   |   |
| Net                interest income                                                                                                            |   |           |      |   |      |   | 45,307 |   |   |   |   |   |   |   |   |   |   |   | 38,539 |   |   |   |   |   |
| TE                basis adjustment                                                                                                            |   |           |      |   |      |   | (1,740 | ) |   |   |   |   |   |   |   |   |   |   | (1,593 | ) |   |   |   |   |
| Net                interest income                                                                                                            |   |           |      |   |      | $      | 43,567 |   |   |   |   |   |   |   |   |   |   | $ | 36,946 |   |   |   |   |   |
| Net                interest spread                                                                                                            |   |           |      |   |      |   |   |   |   |   | 3.29 | % |   |   |   |   |   |   |   |   |   |   | 3.39 | % |
| Impact                of noninterest bearing sources of funds                                                                                 |   |           |      |   |      |   |   |   |   |   | .44 |   |   |   |   |   |   |   |   |   |   |   | .40 |   |
| Net                interest margin                                                                                                            |   |           |      |   |      |   |   |   |   |   | 3.73 | % |   |   |   |   |   |   |   |   |   |   | 3.79 | % |

----

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

| (In                thousands)                                                                                                                 |   | Variance     |   |   | Variance                Attributed to |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------|--------|--------|---------------------------------------|--------|
| Nine                Months Ended September 30,                                                                                                |   | 2007/20061,3 |   |   | Volume                                |   |   | Rate |   |
|                                                                                                                                          |   |         |   |   |                                  |   |   |   |   |
| **Interest                Income**                                                                                                            |   |         |   |   |                                  |   |   |   |   |
| Taxable                investment securities                                                                                                  |   | $            | 1,686  |   |                                  | $      | 498 |   |   | $ | 1,188 |   |
| Nontaxable                investment securities2                                                                                              |   |         | (377   | )      |                                  |   | (112 | ) |   |   | (265 | ) |
| Time                deposits with banks, federal funds sold and securities purchased                under                agreements to resell |   |         | 1,249  |   |                                  |   | 501 |   |   |   | 748 |   |
| Loans2                                                                                                                                        |   |         | 16,608 |   |                                  |   | 13,458 |   |   |   | 3,150 |   |
| Total                interest income                                                                                                          |   |         | 19,166 |   |                                  |   | 14,345 |   |   |   | 4,821 |   |
| **Interest                Expense**                                                                                                           |   |         |   |   |                                  |   |   |   |   |   |   |   |
| Interest                bearing demand deposits                                                                                               |   |         | 104    |   |                                  |   | (15 | ) |   |   | 119 |   |
| Savings                deposits                                                                                                               |   |         | 1,102  |   |                                  |   | 605 |   |   |   | 497 |   |
| Time                deposits                                                                                                                  |   |         | 10,258 |   |                                  |   | 6,320 |   |   |   | 3,938 |   |
| Federal                funds purchased and securities sold under agreements to                repurchase                                      |   |         | 86     |   |                                  |   | 177 |   |   |   | (91 | ) |
| Other                borrowed funds                                                                                                           |   |         | 848    |   |                                  |   | 718 |   |   |   | 130 |   |
| Total                interest expense                                                                                                         |   |         | 12,398 |   |                                  |   | 7,805 |   |   |   | 4,593 |   |
| Net                interest income                                                                                                            |   | $            | 6,768  |   |                                  | $      | 6,540 |   |   | $ | 228 |   |
| Percentage                change                                                                                                              |   |         | 100.0  | %      |                                  |   | 96.6 | % |   |   | 3.4 | % |

**Noninterest      Income**

----

**Noninterest      Expense**

**Income      Taxes**

**Income      From Discontinued Operations**

----

**FINANCIAL      CONDITION**

**Loans**

|                                                                          |   |                             September 30, 2007 |      |   |                            December 31, 2006 |   |
|-------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------|-----------|--------|-----------------------------------------------------------------------------------------------------|--------|
| (Dollars                in thousands)                                         |   | Amount                                                                                                     |      |   | %                                                                                                   |   |   | Amount |   |   | % |   |
|                                                                          |   |                                                                                                       |      |   |                                                                                                |   |   |   |   |   |   |   |
| Commercial,                financial, and agriculture                         |   | $                                                                                                          | 152,106   |   |                                                                                                |   | 12.0 | % |   | $ | 197,613 |   |   |   | 16.5 | % |
| Real                estate - construction                                     |   |                                                                                                       | 231,030   |   |                                                                                                |   | 18.3 |   |   |   | 176,779 |   |   |   | 14.7 |   |
| Real                estate mortgage - residential                             |   |                                                                                                       | 406,287   |   |                                                                                                |   | 32.1 |   |   |   | 381,081 |   |   |   | 31.8 |   |
| Real                estate mortgage farmland and other commercial enterprises |   |                                                                                                       | 393,280   |   |                                                                                                |   | 31.1 |   |   |   | 351,793 |   |   |   | 29.4 |   |
| Installment                                                                   |   |                                                                                                       | 52,345    |   |                                                                                                |   | 4.1 |   |   |   | 57,116 |   |   |   | 4.8 |   |
| Lease                financing                                                |   |                                                                                                       | 30,641    |   |                                                                                                |   | 2.4 |   |   |   | 33,454 |   |   |   | 2.8 |   |
| Total                                                                         |   | $                                                                                                          | 1,265,689 |   |                                                                                                |   | 100.0 | % |   | $ | 1,197,836 |   |   |   | 100.0 | % |

----

**Nonperforming Assets**

**Allowance      for Loan Losses**

**Temporary Investments**

**Investment Securities**

----

**Company-owned      Life Insurance**

**Deposits**

**Borrowed Funds**

**LIQUIDITY**

----

----

**CAPITAL      RESOURCES**

|                             | Farmers                Capital    | Regulatory |
|----------------------------------|-----------------------------------|------------|
|                             | Bank                Corporation   | Minimum    |
| Tier                1 risk based | 11.76%                            | 4.00%      |
| Total                risk based  | 12.62%                            | 8.00%      |
| Leverage                         |                   8.81% | 4.00%      |

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

----

**Item      4.  Controls and      Procedures**

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

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

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

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

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

----

**PART      II - OTHER INFORMATION**

**Item      1.  Legal Proceedings**

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

| Period                                                 |   | Total                Number of Shares Purchased |    |   | Average                Price Paid per Share |   |   | Total                Number of Shares Purchased as Part of Publicly Announced Plans or                Programs |   |   | Maximum                Number of Shares that May Yet Be Purchased Under the Plans or                Programs |    |
|--------------------------------------------------------|--------|-------------------------------------------------|---------|--------|---------------------------------------------|--------|--------|----------------------------------------------------------------------------------------------------------------|--------|--------|--------------------------------------------------------------------------------------------------------------|---------|
| July                1, 2007 to July 31, 2007           |   |                                            |    |   |                                        |   |   |                                                                                                           |   |   |                                                                                                         | 688,221 |   |
| August                1, 2007 to August 31, 2007       |   |                                            | 559,006 |   |                                        | $      | 32.00  |                                                                                                           |   |   | 559,006                                                                                                      |    |   |   | 129,215 |   |
| September                1, 2007 to September 30, 2007 |   |                                            | 1,244   |   |                                        |   | 29.48  |                                                                                                           |   |   |                    1,244                                                                      |    |   |   | 127,971 |   |
| Total                                                  |   |                                            | 560,250 |   |                                        | $      | 31.99  |                                                                                                           |   |   | 560,250                                                                                                      |    |   |   |   |   |

**Item      6.  Exhibits**

| List                of Exhibits |
|---------------------------------|
|                            |   |
| 3i.                             | Amended                and Restated Articles of Incorporation of Farmers Capital Bank Corporation                (incorporated by reference to Quarterly Report on Form 10-Q for the                quarterly period ended June 30, 2006). |
|                            |   |
| 3ii.                            | Amended                and Restated By-Laws of Farmers Capital Bank Corporation (incorporated                by                reference to Annual Report of Form 10-K for the fiscal year ended                December                31, 1997). |
|                            |   |
| 3iia                            | Amendments                to By-Laws of Farmers Capital Bank Corporation (incorporated by reference                to Quarterly Report of Form 10-Q for the quarterly period ended March                31,                2003). |
|                            |   |
| 31.1                            | CEO                Certification Pursuant to Section 302 of                the Sarbanes-Oxley Act of 2002 |
|                            |   |
| 31.2                            | CFO                Certification Pursuant to Section 302 of                the Sarbanes-Oxley Act of 2002 |
|                            |   |
| 32                              | CEO&CFO                Certifications Pursuant to                Section 906 of the Sarbanes-Oxley Act of 2002 |
|                            |   |

----

**SIGNATURES**

| Date:  |  *November              2, 2007*           |   | * /s/              G. Anthony Busseni*                 |
|--------|-------------------------------------------------|--------|-------------------------------------------------------------|
|   |                                            |   | G.                Anthony Busseni,                          |
|   |                                            |   | President                and CEO                            |
|   |                                            |   | (Principal                Executive Officer)                |
|   |                                            |   |                                                        |
| Date:  | *                  11-2-07* |   | * /s/              Doug Carpenter*                     |
|   |                                            |   | C.                Douglas Carpenter,                        |
|   |                                            |   | Senior                Vice President, Secretary, and CFO    |
|   |                                            |   | (Principal                Financial and Accounting Officer) |

----