UNITED STATES
     SECURITIES AND EXCHANGE COMMISSION
           Washington, D.C.  20549
                  FORM 10-K

(Mark One)
[ X ]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999
                     or
[    ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________________ to
___________________

Commission File Number:  33-96358

BOURBON BANCSHARES, INC.
(Exact name of registrant as specified in its charter)

Kentucky                           61-0993464
(State or other jurisdiction of    (I.R.S. Employer Identification No.)
incorporation or organization)

P.O. Box 157, Paris, Kentucky           40362-0157
(Address of principal executive offices)     (Zip Code)

Registrant's telephone number, including area code:
(606)987-1795

Securities registered pursuant to Section 12(b) of the Act:
None

Securities registered pursuant to Section 12(g) of the Act:
None

Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.       Yes
X     No _____

Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained
herein, and will not be contained, to the best of
registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K.     [  X  ]

Aggregate market value of voting stock held by non-
affiliates as of March 15, 2000 was approximately $55.1
million.  For purposes of this calculation, it is assumed
that directors, executive officers and beneficial owners of
more than 5% of the registrant's outstanding voting stock
are affiliates.

Number of shares of Common Stock outstanding as of March 15,
2000:  2,817,731.

<PAGE>

PART I

Item 1.  Business

General

Bourbon Bancshares, Inc. ("Company" or "Bourbon") is a
Kentucky corporation organized in 1981 and a bank and
savings and loan holding company registered under the Bank
Holding Company Act of 1956, as amended ("BHCA") and the
Home Owners Loan Act of 1933, as amended ("HOLA").

On August 13, 1999, Kentucky Bank acquired the Wilmore,
Kentucky branch of National City Bank.  Included in the
purchase were $9.0 million in net deposits and $353 thousand
in fixed assets.  The net deposits assumed exceeded the cash
received by $287 thousand.

The Company conducts business through one banking
subsidiary, Kentucky Bank.  Kentucky Bank is a commercial
bank and trust company organized under the laws of Kentucky.
Kentucky Bank has its main office in Paris (Bourbon County),
Kentucky, additional offices in Paris, North Middletown
(Bourbon County), Winchester (Clark County), Georgetown
(Scott County), Versailles (Woodford County), Nicholasville
(Jessamine County), Wilmore (Jessamine County), Kentucky and
a loan production office in Cynthiana (Harrison County),
Kentucky.  The deposits of Kentucky Bank are insured up to
prescribed limits by the Bank Insurance Fund ("BIF") and the
Savings Association Insurance Fund ("SAIF"), both of the
Federal Deposit Insurance Corporation ("FDIC").  Kentucky
Bank is engaged in general full-service commercial and
consumer banking.  Kentucky Bank makes commercial,
agricultural and real estate loans to its commercial
customers, with emphasis on small-to-medium-sized
industrial, service and agricultural businesses.  Kentucky
Bank makes residential mortgage, installment and other loans
to its individual and other non-commercial customers.
Kentucky Bank also offers its customers the opportunity to
obtain a credit card.  Kentucky Bank offers its customers a
variety of other services, including checking, savings, club
and money market accounts, certificates of deposits, safe
deposit facilities and other consumer-oriented financial
services.  Recently, Kentucky Bank has made Internet banking
available to its customers at www.kybank.com.   Through its
trust department, Kentucky Bank provides primarily personal
trust and agency services (including management agency
services) and, to a lesser extent, corporate trust services
(including the management of corporate pension and profits
sharing plans).

Competition

The Company and its subsidiary face vigorous competition
from a number of sources, including other bank holding
companies and commercial banks, consumer finance companies,
thrift institutions, other financial institutions and
financial intermediaries.  In addition to commercial banks,
savings and loan associations, savings banks and credit
unions actively compete to provide a wide variety of banking
services.  Mortgage banking firms, finance companies,
insurance companies, brokerage companies, financial
affiliates of industrial companies and government agencies
provide additional competition for loans and for many other
financial services.  The subsidiary also currently competes
for interest-bearing funds with a number of other financial
intermediaries, including brokerage firms and mutual funds,
which offer a diverse range of investment alternatives.

<PAGE>

Supervision and Regulation

As a bank holding company, the Company is subject to the
regulation and supervision of the Federal Reserve Board.
The Company's subsidiary is subject to supervision and
regulation by applicable state and federal banking agencies,
including the Federal Reserve Board, the Federal Deposit
Insurance Corporation and the Kentucky Department of
Financial Institutions.  The subsidiary is also subject to
various requirements and restrictions under federal and
state law, including requirements to maintain reserves
against deposits, restrictions on the types and amounts of
loans that may be granted and the interest that may be
charged thereon, and limitations on the types of investments
that may be made and the types of services that may be
offered.  Various consumer laws and regulations also affect
the operations of the subsidiary.  In addition to the impact
of regulation, the subsidiary is affected significantly by
the actions of the Federal Reserve Board as it attempts to
control the money supply and credit availability in order to
influence the economy.

There are a number of obligations and restrictions imposed
on bank holding companies and their depository institution
subsidiaries by federal law and regulatory policy that are
designed to reduce potential loss exposure to the depositors
of such depository institutions and to the FDIC insurance
funds in the event the depository institution becomes in
danger of default or is in default.  For example, under a
policy of the Federal Reserve Board with respect to bank
holding company operations, a bank holding company is
required to serve as a source of financial strength to its
subsidiary depository institutions and commit resources to
support such institutions in circumstances where it might
not do so absent such policy.  In addition, the "cross-
guarantee" provisions of federal law require insured
depository institutions under common control to reimburse
the FDIC for any loss suffered or reasonably anticipated as
a result of the default of a commonly controlled insured
depository institution or for any assistance provided by the
FDIC to a commonly controlled insured depository institution
in danger of default.

The federal banking agencies have broad powers under current
federal law to take prompt corrective action to resolve
problems of insured depository institutions.  The extent of
these powers depends upon whether the institutions in
question are "well capitalized", "adequately capitalized",
"undercapitalized", "significantly undercapitalized" or
"critically undercapitalized", as such terms are defined
under uniform regulation defining such capital levels issued
by each of the federal banking agencies.

There are various legal and regulatory limits on the extent
to which the Company's subsidiary bank may pay dividends or
otherwise supply funds to the Company.  In addition, federal
and state regulatory agencies also have the authority to
prevent a bank or bank holding company from paying a
dividend or engaging in any other activity that, in the
opinion of the agency, would constitute an unsafe or unsound
practice.

There have been a number of legislative and regulatory
proposals that would have an impact on the operation of bank
holding companies and their banks.  It is impossible to
predict whether or in what form these proposals may be
adopted in the future and, if adopted, what their effect
will be on the Company.

Beginning January 1, 2001, a new accounting standard will
require all derivatives to be recorded at fair value.
Unless designated as hedges, changes in these fair values
will be recorded in the income statement.  Fair value
changes involving hedges will generally be recorded by
offsetting gains and losses on the hedge and on the hedged
item, even if the fair value of the hedged item is not
otherwise recorded.  This is not expected to have a material
effect, but the effect will depend on derivative holdings
when this standard applies.

<PAGE>

The recently adopted Gramm-Leach-Bliley Act of 1999
eliminates restrictions imposed by the Glass-Steagall
Financial Services Law, adopted in the 1930s, which
prevented banking, insurance and securities firms from fully
entering each other's businesses.  While it is still
uncertain what the impact of this legislation will be, it is
likely to result in further consolidation in the financial
services industry.  In addition, removal of these barriers
will likely increase the number of entities providing
banking services, thereby increasing competition.

Employees

At December 31, 1999, the number of full time equivalent
employees of the Company was 149.

Item 2.  Properties

The  main banking office of Kentucky Bank, which also serves
as  the  principal office of Kentucky Bank,  is  located  at
Fourth and Main Streets, Paris, Kentucky 40361. In addition,
Kentucky  Bank serves customer needs at 10 other  locations.
All  locations, except for the Cynthiana office (which is  a
loan  production  office), offer a  full  range  of  banking
services.  Kentucky Bank owns all of the properties at which
it  conducts  its  business, except the  location  in  Scott
County  at  Paris Pike, which is leased.  The  Company  owns
approximately 63,000 square feet of office space and  leases
approximately  2,000  square  feet  of  office  space,  with
aggregate   annual  lease  payments  of  approximately   $15
thousand in 1999.

Note  5  to  the Company's consolidated financial statements
included  in  this  report contains  additional  information
relating to amounts invested in premises and equipment.


Item 3.  Legal Proceedings

The Company and its subsidiary are from time to time
involved in routine legal proceedings occurring in the
ordinary course of business that, in the aggregate,
management believes will not have a material impact on the
Company's financial condition and results of operation.

Item 4.  Submission of Matters to a Vote of Security Holders

Not Applicable.

<PAGE>

PART II

Item 5.  Market for Common Equity and Related Stockholder
Matters

The Company's Common Stock is not listed on any national
securities exchange nor is it quoted on the NASDAQ system.
However, it is listed on the OTC Bulletin Board under the
symbol "BBON".  Trading in the Common Stock has been
infrequent, with two regional retail brokerage firms making
the market.  On June 8, 1999, the stockholders approved a
two-for-one stock split effective July 15, 1999.  All shares
and per share amounts have been retroactively restated to
reflect the split.  The following table sets forth the high
and low sales prices of the Common Stock and the dividends
declared thereon, for the periods indicated below:

                     High           Low         Dividend

     1999 Quarter 4 $26.00         $24.00         $.11
          Quarter 3  24.00          22.00          .11
          Quarter 2  22.50          20.50          .11
          Quarter 1  21.00          20.00          .11

     1998 Quarter 4  20.12          20.50          .10
          Quarter 3  21.00          20.00          .10
          Quarter 2  20.00          18.25          .10
          Quarter 1  18.25          15.50          .10

As of December 31, 1999 the Company had 2,802,471
shares of Common Stock outstanding and approximately 442
holders of record of its Common Stock.

During 1999, 7,695 shares of unregistered stock were issued
to employees and directors.  This stock was issued through
the exercise of stock options or employee gifts.  In
accordance with Rule 701 promulgated under the Securities
Act of 1933, all shares of Common Stock were issued upon the
exercise of stock options issued prior to the Company
becoming subject to the reporting requirements of Section 13
or 15(d) of the Securities Exchange Act of 1934.  The
following shares were issued during 1999:

                                         Aggregate
          Date Issued         Shares   Consideration

     March 10, 1999            1,220          $ 9,460
     March 18, 1999              200            1,725
     May 12, 1999                580            4,600
     June 8, 1999              5,200           34,350
     July 31, 1999               400            4,050
     October 31, 1999             95             gift

          Total                7,695

<PAGE>

Item 6.  Selected Financial Data

The following selected financial data should be read in
conjunction with the Company's Consolidated Financial
Statements and the accompanying notes presented elsewhere
herein.  On June 8, 1999, the stockholders approved a two-
for-one stock split effective July 15, 1999.  All shares and
per share amounts have been retroactively restated to
reflect the split.

                                    At or For the Year Ended December 31
(dollars in thousands, except per share amounts)
                                1999      1998      1997      1996      1995
CONDENSED STATEMENT OF INCOME:
Total Interest Income        $ 23,453  $ 21,983  $ 20,962  $ 19,425  $ 19,658
Total Interest Expense         10,547    10,666    10,415     9,839    10,426
Net Interest Income            12,906    11,317    10,547     9,586     9,232
Provision for Losses              700       700       493       402       396
Net Interest Income After
 Provision for Losses          12,206    10,617    10,054     9,184     8,836
Noninterest Income              3,386     3,073     2,390     2,284     2,053
Noninterest Expense             9,422     8,514     7,888     7,715     7,684
Income Before Income
 Tax Expense                    6,170     5,176     4,556     3,753     3,205
Income Tax Expense              1,720     1,372     1,148       866       717
Net Income                      4,450     3,804     3,408     2,887     2,488

SHARE DATA:
Basic Earnings per Share (EPS)   1.59      1.36      1.22      1.02      0.87
Diluted EPS                      1.55      1.33      1.20      1.00      0.86
Cash Dividends Declared          0.44      0.40      0.36      0.32      0.30
Book Value                      11.32     10.46      9.58      8.72      8.08
Average Common Shares-Basic     2,803     2,801     2,792     2,849     2,860
Average Common Shares-Diluted   2,868     2,862     2,844     2,887     2,916

SELECTED BALANCE SHEET DATA:
Loans, net including held
 for sale                     238,998   210,108   182,839   157,564   153,201
Investment Securities          70,623    72,353    81,703    92,540    92,639
Total Assets                  347,479   308,705   290,655   272,453   269,431
Deposits                      274,566   258,740   241,325   231,071   213,348
Securities sold under
 agreements to repurchase
 and other borrowings          11,858    11,248     9,458     4,160    11,791
Federal Home Loan Bank
 advances                      26,592     6,954    10,236    10,534    19,071
Stockholders' Equity           31,720    29,372    26,716    24,633    23,167

PERFORMANCE RATIOS:
(Average Balances)
Return on Assets                 1.39%     1.31%     1.23%     1.10%     0.94%
Return on Stockholders' Equity  14.57%    13.57%    13.43%    12.06%    11.36%
Net Interest Margin (1)          4.46%     4.27%     4.18%     4.02%     3.80%
Equity to Assets (at period end) 9.13%     9.51%     9.19%     9.04%     8.60%

SELECTED STATISTICAL DATA:
Dividend Payout Ratio           27.73%    29.49%    29.49%    31.57%    32.93%
Number of Employees (at
 period end)                      149       144       145       137       125

ALLOWANCE COVERAGE RATIOS:
Allowance to Total Loans         1.28%     1.28%     1.25%     1.32%     1.20%
Net Charge-offs as a
 Percentage of
 Average Loans                   0.15%     0.15%     0.16%     0.10%     0.12%

 (1) Tax equivalent

<PAGE>

Item 7.  Management's Discussion and Analysis

The following discussion and analysis of financial condition
and results of operations should be read in conjunction with
the Consolidated Financial Statements and accompanying notes
included as Exhibit 13.  When necessary, reclassifications
have been made to prior years' data throughout the following
discussion and analysis for purposes of comparability with
1999 data.  On June 8, 1999, the stockholders approved a two-
for-one stock split effective July 15, 1999.  All shares and
per share amounts have been retroactively restated to
reflect the split.

Summary

Net income for the year ended December 31, 1999 was $4.5
million, or $1.59 per common share compared to $3.8 million,
or $1.36 for 1998 and $3.4 million, or $1.22 for 1997.
Earnings per share assuming dilution were $1.55, $1.33 and
$1.20 for 1999, 1998 and 1997, respectively.  During 1999,
net income increased $646 thousand, up 17%.  Net interest
income increased 14% and the loan loss provision remained
relatively constant, while other income and other expenses
increased 10%.  For 1998, net income increased over $395
thousand, nearly 12%.  Increases in net interest income of
over 7% and other income of 28% were offset by increases in
other expenses of over 7% and the provision for loan losses
of 42%.  The increase in the loan loss provision was mainly
attributable to the 15% growth in loans.

Return on average equity was 14.6% in 1999 compared to 13.6%
in 1998 and 13.4% in 1997.  Return on average assets was
1.39% in 1999 compared to 1.31% in 1998 and 1.23% in 1997.

Non-performing loans as of a percentage of loans (including
held for sale) were 0.31%, 0.50% and 0.26% as of December
31, 1999, 1998 and 1997, respectively.  With emphasis on
loan growth and through management's concerted effort on
loan quality, these ratios have remained well below peer
groups over the last three years.

During 1996, the federal thrift charters of Kentucky Savings
Bank, FSB and Jessamine were terminated and both entities
became branches of Kentucky Bank.  Financial statements have
been adjusted to reflect this change.

<PAGE>

RESULTS OF OPERATIONS

Net Interest Income

Net interest income, the largest source of revenue, on a tax
equivalent basis increased from $10.9 million in 1997 to
$11.7 million in 1998 to $13.2 million in 1999.  The taxable
equivalent adjustment (which is net of the effect of the non-
deductible portion of interest expense) is based on a
Federal income tax rate of 34%.

Average earning assets and interest bearing liabilities both
increased from 1998 to 1999.  The increase in earning assets
of $24 million offset with a decline of 18 basis points in
the tax equivalent yield have resulted in tax equivalent
interest income increasing $1.5 million.  Average loans
increased $28 million along with a 25 basis point drop in
the yield, resulting in the loan income increasing $2
million.  Average interest bearing liabilities increased $20
million coupled with a 42 basis point decline in the yield
caused the interest on liabilities to decline $119 thousand.
The $488 thousand decline in deposit interest is a result of
average deposits increasing $12 million and the
corresponding yield dropping 47 basis points.

For 1998, average earning assets and interest bearing
liabilities increased.  The $12 million increase in average
earning assets, and maintenance of the same tax equivalent
yield resulted in tax equivalent interest income increasing
over $1 million.  Average loans increasing over $22 million
with a 14 basis point decline in yield along with an over
$10 million decline in investment securities and an 8 basis
point decline caused the yield on earning assets to remain
constant.  The increase of $10 million in deposits along
with an 8 basis point decline in yield accounted for the
change in liabilities.

The accompanying analysis of changes in net interest income
in the following table shows the relationships of the volume
and rate portions of these increases in 1999 and 1998.
Changes in interest income and expenses due to both rate and
volume are allocated on a pro rata basis.

<PAGE>
<TABLE>
<CAPTION>

                                   1999 vs. 1998                       1998 vs. 1997
                          Increase (Decrease) Due to Change in  Increase (Decrease) Due to Change in
                            Volume      Rate      Net Change    Volume      Rate      Net Change

<S>                         <C>         <C>         <C>         <C>         <C>         <C>
INTEREST INCOME
Loans                       $ 2,419     $ (462)     $ 1,957     $ 1,961     $ (233)     $ 1,728
Investment Securities          (135)      (263)        (398)       (647)      (118)        (765)
Federal Funds Sold and
 Securities Purchased under
 Agreements to Resell           (69)       (18)         (87)         75          1           76
Deposits with Banks              (1)        (1)          (2)        (18)         1          (17)
  Total Interest Income       2,214       (744)       1,470       1,371       (349)       1,022
INTEREST EXPENSE
Deposits
Demand                          793       (833)         (40)        305        (18)         287
Savings                          23        (69)         (46)         (3)       (13)         (16)
Negotiable Certificates of
 Deposit and Other
 Time Deposits                  255       (657)        (402)         75        (38)          37
Securities sold under
 agreements to
 repurchase and
 other borrowings               142        (24)         118           6          0            6
Federal Home Loan
 Bank advances                  262        (11)         251         (71)         8          (63)
  Total Interest Expense      1,475     (1,594)        (119)        312        (61)         251
    Net Interest Income         739        850        1,589       1,059       (288)         771

</TABLE>
<PAGE>
<TABLE>
<CAPTION>

Average Consolidated Balance Sheets and Net Interest Analysis (dollars in thousands)
                                                            1999                         1998                         1997
                                               Average             Average  Average             Average  Average             Average
                                               Balance    Interest  Rate    Balance    Interest  Rate    Balance    Interest  Rate
                                               <C>        <C>       <C>     <C>        <C>       <C>     <C>        <C>       <C>
ASSETS
Interest-Earning Assets
Securities Held to Maturity
 State and Municipal obligations               $ 16,360   $   945   5.78%   $ 16,371   $   971   5.93%   $ 16,027   $   976   6.09%
Securities Available for Sale (1)
 U.S. Treasury and Federal Agency Securities     47,887     2,725   5.69%     50,902     3,108   6.11%     63,057     3,919   6.22%
 State and Municipal obligations                  3,642       182   5.00%      3,917       197   5.03%      3,943       198   5.02%
 Other Securities                                 4,943       278   5.62%      3,931       252   6.41%      2,803       200   7.14%
  Total Securities Available for Sale            56,472     3,185   5.64%     58,750     3,557   6.05%     69,803     4,317   6.18%
 Total Investment Securities                     72,832     4,130   5.67%     75,121     4,528   6.03%     85,830     5,293   6.17%
Tax Equivalent Adjustment                                     340   0.47%                  345   0.46%                  345   0.40%
Tax Equivalent Total                                        4,470   6.14%                4,873   6.49%                5,638   6.57%
Federal Funds Sold and Agreements to Repurchase   2,999       149   4.97%      4,372       236   5.40%      2,979       160   5.37%
Interest-Bearing Deposits with Banks                124         6   4.84%        152         8   5.26%        500        25   5.00%
Loans, Net of Deferred Loan Fees (2)
 Commercial                                      26,530     2,306   8.69%     23,150     2,093   9.04%     20,035     1,828   9.12%
 Real Estate Mortgage                           175,429    14,946   8.52%    154,764    13,525   8.74%    137,079    12,194   8.90%
 Installment                                     19,350     1,916   9.90%     15,268     1,593  10.43%     14,014     1,461  10.43%
  Total Loans                                   221,309    19,168   8.66%    193,182    17,211   8.91%    171,128    15,483   9.05%
Total Interest-Earning Assets                   297,264    23,793   8.00%    272,827    22,328   8.18%    260,437    21,306   8.18%
Allowance for Loan Losses                        (2,969)                      (2,550)                      (2,261)
Cash and Due From Banks                          12,899                        9,225                        7,510
Premises and Equipment                            6,952                        6,187                        5,475
Other Assets                                      6,091                        5,793                        5,565
 Total Assets                                   320,237                      291,482                      276,726

LIABILITIES
Interest-Bearing Deposits
 Negotiable Order of Withdrawal ("NOW")
  and Money Market Investment Accounts           70,263     2,159   3.07%     63,413     2,199   3.47%     54,626     1,912   3.50%
 Savings                                         13,533       269   1.99%     12,679       315   2.48%     12,786       331   2.59%
 Certificates of Deposit and Other Deposits     139,381     6,872   4.93%    134,893     7,274   5.39%    133,509     7,237   5.42%
  Total Interest-Bearing Deposits               223,177     9,300   4.17%    210,985     9,788   4.64%    200,921     9,480   4.72%
Securities sold under agreements
 to repurchase and other borrowings               8,332       389   4.67%      5,222       271   5.19%      5,100       265   5.20%
Federal Home Loan Bank advances                  14,499       858   5.92%     10,067       607   6.03%     11,247       670   5.96%
Total Interest-Bearing Liabilities              246,008    10,547   4.29%    226,274    10,666   4.71%    217,268    10,415   4.79%
Noninterest-Bearing Earning Demand Deposits      40,715                       34,487                       31,566
Other Liabilities                                 2,963                        2,693                        2,513
Total Liabilities                               289,686                      263,454                      251,347
STOCKHOLDERS' EQUITY                             30,551                       28,028                       25,379
Total Liabilities and Shareholders' Equity      320,237                      291,482                      276,726
Average Equity to Average Total Assets             9.54%                        9.62%                        9.17%
Net Interest Income                                        12,906                       11,317                       10,546
Net Interest Income (tax equivalent) (3)                   13,246                       11,662                       10,891
Net Interest Spread (tax equivalent) (3)                            3.72%                        3.47%                        3.39%
Net Interest Margin (tax equivalnet) (3)                            4.46%                        4.27%                        4.18%

</TABLE>
[FN]
(1)  Averages computed at amortized cost.
(2)  Includes loans on a nonaccrual status.
(3)  Tax equivalent difference represents the tax equivalent
      adjustment detailed above.

<PAGE>

Noninterest Income and Expenses

Noninterest income was $3.4 million in 1999 compared to $3.1
million in 1998 and $2.4 million in 1997.  In 1999
securities gains were $1 thousand compared to $41 thousand
gains in 1998 and $14 thousand gains in 1997.  Typically, U.
S. Treasury securities are sold before maturity when
additional interest yields can be realized.  Other types of
investment securities are generally not sold.  In addition,
gains on loans sold were $351 thousand, $440 thousand and
$72 thousand in 1999, 1998 and 1997, respectively.  During
1999, the volume of mortgage loans held for sale declined.
This decline along with rising rates account for the drop in
loan gains during the year.  In 1998, management increased
its focus on mortgage banking and this focus along with the
increased volume of loans sold in a declining rate
environment resulted in the increased gain on loans sold.
Loans held for sale are generally sold after closing to
Federal Home Loan Mortgage Corporation.  The sales of loans
were $25 million, $35 million and $18 million in 1999, 1998
and 1997, respectively.  Other noninterest income excluding
security and loans net gains was $3.0 million in 1999, $2.6
million in 1998 and $2.3 million in 1997.  Service charges
and trust department income have both been big contributors
to this increase in income over this three-year period.

Noninterest expense increased $908 thousand in 1999 to $9.4
million and $626 thousand from $7.9 million in 1997 to $8.5
million in 1998.  The increases in salaries and benefits
from $4.3 million in 1997 to $4.5 million in 1998 and $5.1
million in 1999 are mainly attributable to normal salary and
benefit increases and a change in bonus compensation, with
an increased focus on incentive compensation.  Due to this
change, bonuses were $234 thousand higher in 1999 compared
to 1998.  Occupancy expense increased $197 thousand, or 17%
in 1999 to $1.4 million and 16% in 1998, from $1.0 million
in 1997 to $1.2 million in 1998.  In August 1998 the Company
added a new branch in Georgetown and in March 1997, the
Company opened its new branch in Versailles resulting in
higher operating cost attributable to these facilities.  The
Company has also placed more emphasis on maintaining its
existing facilities since 1997, which are reflected in
increases in occupancy expenses.  Other noninterest expense
increased from $2.6 million in 1997 to $2.8 million in 1998
and in 1999 other noninterest expenses increased to $3.0
million.

<PAGE>

The following table is a summary of noninterest income and
expense for the three-year period indicated.

                                   Year Ended December 31 (in thousands)
                                        1999       1998       1997
NON-INTEREST INCOME
Service Charges                        $2,075     $1,811     $1,674
Loan Service Fee Income                   291        283        258
Trust Department Income                   398        300        237
Investment Securities Gains                 1         41         14
(Losses),net
Gains on Sale of Mortgage Loans           351        440         72
Other                                     270        198        135
 Total Non-interest Income              3,386      3,073      2,390

NON-INTEREST EXPENSE
Salaries and Employee Benefits          5,054      4,527      4,274
Occupancy Expenses                      1,361      1,164      1,002
Other                                   3,007      2,823      2,612
 Total Non-interest Expense             9,422      8,514      7,888

Net Non-interest Expense as a
 Percentage of Average Assets            1.88%      1.87%      1.99%

Income Taxes

The Company had income tax expense of $1.7 million in 1999
compared to $1.4 million in 1998 and $1.1 million in 1997.
This represents an effective income tax rate of 27.9% in
1999, 26.5% in 1998 and 25.2% in 1997.  The difference
between the effective tax rate and the statutory federal
rate of 34% is due to tax exempt income on certain loans and
investment securities.  The higher effective rate for 1999
and 1998 is a result of tax-free income remaining virtually
unchanged for these two years while income before taxes
increased $995 thousand in 1999 and $619 thousand in 1998.

Balance Sheet Review

Assets at year-end 1999 totaled $347 million compared to
$309 million in 1998 and $291 million in 1997.  Loan growth
of $32 million in 1999 was funded by deposit growth of $16
million and an increase in borrowings of $20 million.  At
the end of 1999, Cash and Due From Banks were $9 million
higher as a precaution to possible Y2K anxieties.  Changes
in 1998 are a result of loans increasing $27.7 million and
investment securities decreasing $9.3 million.  Assets were
funded by an increase in deposits of $17.4 million.  Federal
Home Loan Bank Advances declined by $3.3 million.

<PAGE>

Loans

Total loans (including loans held for sale) were $242
million at December 31, 1999 compared to $213 million at the
end of 1998 and $185 million in 1997.  As of the end of 1999
and compared to the prior year-end, commercial loans
increased $2.5 million, real estate construction loans
increased $5.9 million, real estate mortgage loans
(including loans held for sale) increased $13.6 million,
agricultural loans increased $2.2 million and installment
loans increased $4.8 million.  In 1998, commercial loans
increased $4.5 million, real estate construction loans
increased $3.4 million, real estate mortgages increased
$11.2 million, agricultural loans increased $6.3 million and
installment loans increased $2.4 million.  Since 1998,
management has utilized regional loan goals for each type of
loan and this emphasis has resulted in improved sales
efforts by the lending personnel.  Management continues to
place more emphasis on the growth without sacrificing the
quality of the loan portfolio.

As of December 31, 1999, the real estate mortgage portfolio
comprised 57% of total loans compared to 59% in 1998.  Of
this, 1-4 family residential property represented 76% in
1999 and 79% in 1998.  Agricultural loans comprised 19% in
1999 and 21% in 1998 of the loan portfolio.  Approximately
75% and 73% of the agricultural loans are secured by real
estate for 1999 and 1998, respectively.  The remainder of
the agricultural portfolio is used to purchase livestock,
equipment and other capital improvements and for general
operation of the farm.  Generally, a secured interest is
obtained in the capital assets, equipment, livestock or
crops.  Automobile loans account for 52% in 1999 and 47% in
1998 of the installment loan portfolio, while the purpose of
the remainder of this portfolio is used by customers for
purchasing retail goods, home improvement or other personal
reasons.  Collateral is generally obtained on these loans
after analyzing the repayment ability of borrower.
Commercial loan's portfolio is mainly for capital outlays
and business operation.  Collateral is requested depending
on the creditworthiness of the borrower.  Unsecured loans
are made to individuals or companies mainly based on the
creditworthiness of the customer.  Approximately 5% of the
loan portfolio is unsecured.  Management is not aware of any
significant concentrations that may cause future material
risks, which may result in significant problems with future
income and capital requirements.

<PAGE>

The following table represents a summary of the Company's
loan portfolio by category for each of the last five years.
There is no concentration of loans (greater than 5% of the
loan portfolio) in any industry.  Bourbon has no foreign
loans or highly leveraged transactions in its loan
portfolio.

Loans Outstanding
                                         December 31 (in thousands)
                                 1999     1998     1997     1996     1995
Commercial                     $ 17,713 $ 15,177 $ 10,644 $ 10,216 $ 11,167
Real Estate Construction         17,003   11,055    7,657    4,200    3,497
Real Estate Mortgage            138,337  124,721  113,524   99,293  102,077
Agricultural                     46,443   44,199   37,924   30,947   27,019
Installment                      22,358   17,608   15,182   14,789   11,029
Other                               280      159      287      374      397
  Total Loans                   242,134  212,919  185,218  159,819  155,186
Less Deferred Loan Fees              33       76       57      154      125
  Total Loans Net of
   Deferred Loan Fees           242,101  212,843  185,161  159,665  155,061
Less loans held for sale          3,494    5,909    5,418      863    1,364
Less Allowance For Loan Losses    3,103    2,734    2,322    2,101    1,860
  Net Loans                     235,504  204,200  177,421  156,701  151,837

The following table sets forth the maturity distribution and
interest sensitivity of selected loan categories at December
31, 1999.  Maturities are based upon contractual term.  The
total loans in this report represents loans net of deferred
loan fees, including loans held for sale but excluding the
allowance for loan losses.  In addition, deferred loan fees
on the above schedule is netted with real estate mortgage
loans on the following schedule.

Loan Maturities and Interest Sensitivity

                               December 31, 1999 (in thousands)
                          One Year One Through    Over     Total
                           or Less  Five Years Five Years  Loans
Commercial                 $ 8,625   $ 6,595   $ 2,494   $ 17,714
Real Estate                 14,321     2,525       162     17,008
Construction
Real Estate Mortgage         9,029    77,389    51,875    138,293
Agricultural                14,256    29,794     2,398     46,448
Installment                  5,481    16,660       217     22,358
Other                          280         0         0        280
  Total Loans               51,992   132,963    57,146    242,101
Fixed Rate Loans            25,206   125,656    17,893    168,755
Floating Rate Loans         26,786     7,307    39,253     73,346
  Total                     51,992   132,963    57,146    242,101

<PAGE>

Deposits

Total deposits increased to $275 million in 1999, up $16
million from 1998.  Noninterest bearing deposits increased
$2 million, while time deposits of $100 thousand and over,
and other interest bearing deposits both increased $7
million.  Public funds totaled $34 million at the end of
1999 ($33 million was interest bearing).  On August 13,
1999, Kentucky Bank acquired the Wilmore, Kentucky branch of
National City Bank.  Included in the purchase were $9.0
million in net deposits and $353 thousand in fixed assets.
The net deposits assumed exceeded the cash received by $287
thousand.

Total deposits increased $17 million in 1998 to $259
million.  Noninterest bearing deposits increased $7 million
to $40 million, while $100,000 and over time deposits and
other interest bearing deposits both increased $5 million.
Public funds composed $35 million, with $34 million of this
being interest bearing.  In addition, management placed more
emphasis on deposits and monitored deposits generated by
type on a monthly basis.

The tables below provide information on the maturities of
time deposits of $100,000 or more at December 31, 1999 and
detail of short-term borrowing for the past three years.

Maturity of Time Deposits of $100,000 or More

                                              December 31, 1999
                                               (in thousands)

Maturing 3 Months or Less                           $ 7,904
Maturing over 3 Months through 6 Months               8,540
Maturing over 6 Months through 12 Months             13,858
Maturing over 12 Months                               4,412

 Total                                               34,714

<PAGE>

Borrowing

The Company utilizes both long and short term borrowing.
Long term borrowing is mainly from the Federal Home Loan
Bank (FHLB).  As of December 31, 1999, $26.6 million was
borrowed from FHLB, an increase of $19.6 million from 1998.
Advances are either paid monthly or at maturity.  This
borrowing is mainly used to fund long term, fixed rate
mortgages and to assist in asset/liability management.
Nearly $361 thousand of FHLB borrowing was paid in 1999, and
advances were made for an additional $20 million.  The
following table depicts relevant information concerning our
short term borrowings.

Short Term Borrowings
                                    December 31 (in thousands)
                                    1999     1998       1997
Federal Funds Purchased:
  Balance at Year end              $     0    $3,750    $2,375
  Average Balance During the Year    2,196       446       488
  Maximum Month End Balance         11,925     4,550     2,375
Repurchase Agreements:
  Balance at Year end               10,330     6,713     4,615
  Average Balance During the Year    5,683     4,329     4,103
  Maximum Month End Balance         10,330     6,713     4,895
Other Borrowed Funds:
  Balance at Year end                1,528       785     2,468
  Average Balance During the Year    1,203     1,198     1,259
  Maximum Month End Balance          1,759     1,761     2,468

<PAGE>

Asset Quality

With respect to asset quality, management considers three
categories of assets to merit close scrutiny.  These
categories include:  loans that are currently nonperforming,
other real estate, and loans that are currently performing
but which management believes require special attention.

The Company discontinues the accrual of interest on loans
that become 90 days past due as to principal or interest
unless extreme justifiable reasons are documented such as
the loan being in the process of collection.  Uncollected
interest generally remains in earned income until collected
and removed from earnings if the loan is charged-off.  A
loan remains in a non-accrual status until factors
indicating doubtful collection no longer exist.  A loan is
classified as a restructured loan when the interest rate is
materially reduced or the term is extended beyond the
original maturity date because of the inability of the
borrower to service the interest payments at market rates.
Other real estate is recorded at the lower of cost or fair
market value less estimated costs to sell.  A summary of the
components of nonperforming assets, including several rates
using period-end data, is shown below.

Nonperforming Assets
                                    December 31 (dollars in thousands)
                                   1999    1998    1997    1996    1995
Non-accrual Loans                 $   63  $  136  $  173  $   33  $   44
Accruing Loans which are
 Contractually past due
 90 days or more                     565     790     154     562     438
Restructured Loans                   131     147     160     180     201
 Total Nonperforming Loans           759   1,073     487     775     683
 Other Real Estate                   371      70       0      79      57
  Total Nonperforming Assets       1,130   1,143     487     854     740
Total Nonperforming Loans as a
 Percentage of Net Loans (including
 loans held for sale) (1)           0.31%   0.50%   0.26%   0.49%   0.44%
Total Nonperforming Assets
 as a Percentage of Total Assets    0.33%   0.37%   0.17%   0.31%   0.27%

(1)  Net of deferred loan fees

Total nonperforming assets loans at December 31, 1999 were
$1.1 million compared to $1.1 million at December 31, 1998
and $487 thousand at December 31, 1997.  Total nonperforming
loans were $759 thousand, $1.1 million and $487 thousand at
December 31, 1999, 1998 and 1997, respectively.  The amount
of lost interest on non-accrual loans is considered
immaterial.  At December 31, 1999, loans currently
performing but which management believes require special
attention were not significant.  The Company continues to
follow its long-standing policy of not engaging in
international lending and not concentrating lending activity
in any one industry.

<PAGE>

Impaired loans as of December 31, 1999 were $201 thousand
compared to $286 thousand in 1998 and $333 thousand in 1997.
These amounts are included in the total nonperforming and
restructured loans presented in the table above.  See Note 4
in the notes to consolidated financial statements included
as Exhibit 13.

A loan is considered impaired when it is probable that all
principal and interest amounts will not be collected
according to the loan contract.  The allowance for loan
losses on impaired loans is determined using the present
value of estimated future cash flows of the loan, discounted
at the loan's effective interest rate or the fair value of
the underlying collateral.  The entire change in present
value of expected cash flows is reported as a provision for
loan losses in the same manner in which impairment initially
was recognized or as a reduction in the amount of provision
for loan losses that otherwise would be reported.  The total
allowance for loan losses related to these loans was $10
thousand, $85 thousand and $57 thousand on December 31,
1999, 1998 and 1997, respectively.

<PAGE>

Loan Losses

The following table is a summary of the Company's loan loss
experience for each of the past five years.

                                    Year Ended December 31 (in thousands)
                                    1999    1998    1997    1996    1995
Balance at Beginning of Year       $2,735  $2,322  $2,101  $1,860  $1,648
Amounts Charged-off:
 Commercial                             0      13       5      55      14
 Real Estate Construction               0       0       0       0       0
 Real Estate Mortgage                  50      36      25       4      41
 Agricultural                          72      19      52      12      36
 Consumer                             289     300     273     142     139
  Total Charged-off Loans             411     368     355     213     230
Recoveries on Amounts
 Previously Charged-off:
  Commercial                            5       4       3      12      15
  Real Estate Construction              0       0       0       0       0
  Real Estate Mortgage                  1       9       1       8      21
  Agricultural                         32       2      25       1       0
  Consumer                             41      66      54      31      11
   Total Recoveries                    79      81      83      52      47
Net Charge-offs                       332     287     272     161     183
Provision for Loan Losses             700     700     493     402     395
Balance at End of Year              3,103   2,735   2,322   2,101   1,860
Total Loans, Net of Deferred
 Loan Fees
Average                           221,309 193,182 171,128 155,735 153,109
At December 31                    242,101 212,843 185,161 159,665 155,061
As a Percentage of Average Loans:
Net Charge-offs                      0.15%   0.15%   0.16%   0.10%   0.12%
Provision for Loan Losses            0.32%   0.36%   0.29%   0.26%   0.26%
Allowance as a Percentage of
 Year-end Net Loans (1)              1.28%   1.28%   1.25%   1.32%   1.20%
Beginning Allowance as a Multiple
 Of Net Charge-offs                   8.2     8.1     7.7    11.6     9.0

(1)  Net of deferred loan fees

<PAGE>

Loans are typically charged-off after being 120 days
delinquent.  Limited exceptions for not charging-off a loan
would be well documented and approved by the appropriate
responsible party or committee.  The provision for loan
losses for 1999 was $700 thousand compared to $700 thousand
in 1998 and $493 thousand in 1997.  Net charge-offs were
$332 thousand in 1999, $287 thousand in 1998 and $272
thousand in 1997.  Net chargeoffs to average loans were
0.15%, 0.15% and 0.16% in 1999, 1998 and 1997, respectively.
With the current quality of the loan portfolio, the loan
loss provision stayed constant from 1998 to 1999.  The trend
in the loan loss provision increasing for 1998 is a result
of considering our historical loan loss trends, risk
analysis of our loan portfolio and the increase in loan
outstandings.  In evaluating the allowance for loan losses,
management considers the composition of the loan portfolio,
historical loan loss experience, the overall quality of the
loans and an assessment of current economic conditions.  At
December 31, 1999, the allowance for loan losses was 1.28%
of loans outstanding compared to 1.28% at year-end 1998 and
1.25% in 1997.  Management believes the allowance for loan
losses at the end of 1999 is adequate to cover inherent
credit losses within the portfolio.

The following tables set forth an allocation for the
allowance for loan losses and loans by category and a
percentage distribution of the allowance allocation.  In
making the allocation, management evaluates the risk in each
category, current economic conditions and charge-off
experience.  An allocation for the allowance for loan losses
is an estimate of the portion of the allowance that will be
used to cover future charge-offs in each loan category, but
it does not preclude any portion of the allowance allocated
to one type of loan being used to absorb losses of another
loan type.

<PAGE>
<TABLE>
<CAPTION>

Allowance for Loan Losses
                                                                December 31 (in thousands)
                                1999                 1998                 1997                 1996                 1995
                         Dollars  Percentage  Dollars  Percentage  Dollars  Percentage  Dollars  Percentage  Dollars  Percentage
<S>                      <C>        <C>       <C>        <C>       <C>        <C>       <C>        <C>       <C>        <C>
Commercial               $    275    8.86%    $    262    9.58%    $    191    8.23%    $    168    8.00%    $    132    7.10%
Real Estate Construction      294    9.47%         168    6.14%         118    5.08%          77    3.66%          38    2.04%
Real Estate Mortgage        1,471   47.41%       1,480   54.11%       1,327   57.15%       1,252   59.59%       1,192   64.09%
Agricultural                  565   18.21%         473   17.29%         393   16.93%         353   16.80%         327   17.58%
Consumer                      498   16.05%         352   12.87%         293   12.62%         251   11.95%         171    9.19%
 Total                      3,103  100.00%       2,735  100.00%       2,322  100.00%       2,101  100.00%       1,860  100.00%


Loans
                                                                December 31 (in thousands)
                                1999                 1998                 1997                 1996                 1995
                         Dollars  Percentage  Dollars  Percentage  Dollars  Percentage  Dollars  Percentage  Dollars  Percentage
Commercial               $ 17,713    7.32%    $ 15,177    7.13%    $ 10,644    5.75%    $ 10,216    6.40%    $ 11,167    7.20%
Real Estate Construction   17,003    7.02%      11,055    5.19%       7,657    4.14%       4,200    2.63%       3,497    2.26%
Real Estate Mortgage      138,304   57.13%     124,645   58.56%     113,467   61.28%      99,139   62.09%     102,077   65.83%
Agricultural               46,443   19.18%      44,199   20.77%      37,924   20.48%      30,947   19.38%      27,019   17.42%
Consumer                   22,358    9.23%      17,608    8.27%      15,182    8.20%      14,789    9.26%      10,904    7.03%
Other                         280    0.12%         159    0.07%         287    0.16%         374    0.23%         397    0.26%
 Total, Net (1)           242,101  100.00%     212,843  100.00%     185,161  100.00%     159,665  100.00%     155,061  100.00%
</TABLE>
[FN]
 (1) Net of deferred loan fees

<PAGE>

Capital

As displayed by the following table, the Company's Tier I
capital (as defined by the Federal Reserve Board under the
Board's risk-based guidelines) at December 31, 1999
increased $2.9 million to $30.6 million.  Total
stockholders' equity, excluding accumulated other
comprehensive income was $32.3 million at December 31, 1999.
The Company's risk-based capital and leverage ratios, as
shown in the following table, exceeded the levels required
to be considered "well capitalized".  The leverage ratio
compares Tier I capital to total average assets less
disallowed amounts of goodwill.

                                      December 31 (dollars in thousands)
                                         1999       1998     Change
Stockholders' Equity (1)                $ 32,269  $ 29,306    $ 2,963
  Less Disallowed Amount                   1,685     1,574        111
Tier I Capital                            30,584    27,732      2,852
  Allowance for Loan Losses                2,926     2,601        325
Tier II Capital                            2,926     2,601        325
  Total Capital                           33,510    30,333      3,177
Total Risk Weighted Assets               233,929   207,970     25,959
Ratios:
 Tier I Capital to Risk-weighted Assets    13.07%    13.33%     -0.26%
 Total Capital to Risk-weighted Assets     14.32%    14.59%     -0.27%
 Leverage                                   9.59%     9.56%      0.03%

(1)  Excluding accumulated other comprehensive income.

The Federal Deposit Insurance Corporation Improvement Act of
1991 ("FDICIA") established five capital categories for
insured depository institutions under its Prompt Corrective
Action Provisions.  The bank regulatory agencies adopted
regulations, which became effective in 1992, defining these
five capital categories for banks they regulate.  The
categories vary from "well capitalized" to "critically
undercapitalized".  A "well capitalized" bank is defined as
one with a total risk-based capital ratio of 10% or more, a
Tier I risk-based capital ratio of 6% or more, a leverage
ratio of 5% or more, and one not subject to any order,
written agreement, capital directive, or prompt corrective
action directive to meet or maintain a specific capital
level.  At December 31, 1999, the bank had ratios that
exceeded the minimum requirements established for the "well
capitalized" category.

In management's opinion, there are no known trends, events
or uncertainties that will have or that are reasonably
likely to have a material effect on the Company's liquidity,
capital resources or operations.
Securities and Federal Funds Sold

<PAGE>

Securities, including those classified as held to maturity
and available for sale, decreased from $72.4 million at
December 31, 1998 to $70.6 million at December 31, 1999.
The decrease is attributable to the increased loan demand.
Federal funds sold totaled $675 thousand at December 31,
1999.

Per Company policy, fixed rate asset backed securities will
not have an average life exceeding seven years, but final
maturity may be longer.  Adjustable rate securities shall
adjust within three years per Company policy.  Of the $14.6
million of adjustable asset backed securities held on
December 31, 1999, $3.4 million are repriceable monthly and
the remaining $11.2 million is repriceable annually.  In
addition, all applicable securities have passed the
appropriate stress tests.  The following tables present the
investment securities for each of the past three years and
the maturity and yield characteristics of securities as of
December 31, 1999.

Investment Securities (Held to maturity at amortized cost,
available for sale at market value)
                                         December 31 (in thousands)
                                         1999       1998      1997

U.S. Treasury Securities
 Available for Sale                      $17,954   $16,087   $19,072
U.S. Federal Agency Securities
 Available for Sale                        5,902     5,979    10,485
State and Municipal Obligations
 Available for Sale                        3,681     3,804     4,077
 Held to Maturity                         15,693    16,933    15,603
Asset-Backed Securities
 Available for Sale                       25,773    25,624    32,466
  Fixed -
    GNMA, FNMA, FHLMC Passthroughs         5,998     2,352     4,924
    GNMA, FNMA, FHLMC CMO's                5,191     7,570     9,970
       Total                              11,189     9,922    14,894
  Variable -
    GNMA, FNMA, FHLMC Passthroughs        11,539    12,529    14,306
    GNMA, FNMA, FHLMC CMO's                3,045     3,173     3,266
       Total                              14,584    15,702    17,572
Other Securities
 Available for Sale                        1,620     3,926         0
Total Securities
 Available for Sale                       54,930    55,420    66,100
 Held to Maturity                         15,693    16,933    15,603
  Total                                   70,623    72,353    81,703

<PAGE>
<TABLE>
<CAPTION>

Maturity Distribution of Securities
                              December 31, 1999 (in thousands)
                                        Over One  Over Five            Asset
                                          Year      Years              Backed
                               One Year  Through   Through  Over Ten  & Equity           Market
                               or Less  Five Yrs  Ten Years  Years   Securities  Total   Value
<S>                            <C>       <C>      <C>      <C>       <C>        <C>      <C>
U.S. Treasury Securities
 Available for Sale            $11,964   $ 5,990  $    0   $    0    $     0    $17,954  $17,954
U.S. Federal Agency Securities
 Available for Sale              1,982     3,920       0        0          0      5,902    5,902
State and Municipal Obligations
 Available for Sale                  0     2,808     873        0          0      3,681    3,681
 Held to Maturity                  651     7,758   4,407    2,877          0     15,693   15,917
Asset-Backed Securities
 Available for Sale                  0         0       0        0     25,773     25,773   25,773
Other Securities
 Available for Sale                  0       241       0        0      1,379      1,620    1,620
Total Securities
 Available for Sale             13,946    12,959     873        0     27,152     54,930   54,930
 Held to Maturity                  651     7,758   4,407    2,877          0     15,693   15,917
  Total                         14,597    20,717   5,280    2,877     27,152     70,623   70,847
Percent of Total                 20.67%    29.33%   7.48%    4.07%     38.45%    100.00%
Weighted Average Yield (1)        5.62%     6.89%  10.02%    7.14%      5.90%      6.49%

</TABLE>
[FN]
 (1)  Tax Equivalent Yield

Impact of Inflation and Changing Prices

The majority of Bourbon's assets and liabilities are
monetary in nature.  Therefore, Bourbon differs greatly from
most commercial and industrial companies that have
significant investments in nonmonetary assets and
inventories.  However, inflation does have an important
impact on the growing of assets in the banking industry and
the resulting need to increase equity capital at higher than
normal rates in order to maintain an appropriate equity to
assets ratio.  Inflation also affects other expenses, which
tend to rise during periods of inflation.

Other Accounting Issues

Beginning January 1, 2001, a new accounting standard will
require all derivatives to be recorded at fair value.
Unless designated as hedges, changes in these fair values
will be recorded in the income statement.  Fair value
changes involving hedges will generally be recorded by
offsetting gains and losses on the hedge and on the hedged
item, even if the fair value of the hedged item is not
otherwise recorded.  This is not expected to have a material
effect, but the effect will depend on derivative holdings
when this standard applies.

<PAGE>

Year 2000

The Company assessed the operational and financial
implications of its Year 2000 needs and developed a plan to
address its data processing systems and their ability to
handle the change.  The Company also assessed the Year 2000
readiness of other third party entities such as public
utilities and governmental units.  These and other like
entities provide important ongoing services to the Company.
Therefore, management also developed contingency plans for
continued operations. The Company's credit customers were
also subject to review for potential losses as a result of
Year 2000 exposure in their own computer systems as well as
the computer systems of their suppliers and customers.

Management believes its plan was successful as all operating
systems performed will during the year change.  While
management does not expect future problems resulting from
the Year 2000 issue, it is possible that other dates in the
year 2000 may further affect computer software and systems,
or cause a Year 2000 problem relating to the Company's own
systems or to those of third parties with whom the Company
conducts business that could adversely affect its financial
condition.

Costs for this project were under $150 thousand, with the
majority of this expenditure being for equipment and
software to be capitalized over 3-5 years.

Monitoring of computer date sensitive issues will continue
in 2000.  Corrective action will be taken if such an event
arises.  Management has determined that if an unlikely
business interruption as a result of computer date sensitive
issues occurred, such an interruption could be material to
the overall financial performance of the Company.

Forward-Looking Statements

This discussion contains forward-looking statements under
the Private Securities Litigation Reform Act of 1995 that
involve risks and uncertainties.  Although the Company
believes that the assumptions underlying the forward-looking
statements contained herein are reasonable, any of the
assumptions could be inaccurate, and therefore, there can be
no assurance that the forward-looking statements included
herein will prove to be accurate.  Factors that could cause
actual results to differ from the results discussed in the
forward-looking statements include, but are not limited to:
economic conditions (both generally and more specifically in
the markets, including the tobacco market, in which the
Company and its bank operate); competition for the Company's
customers from other providers of financial and mortgage
services; government legislation and regulation (which
changes from time to time and over which the Company has no
control); changes in interest rates (both generally and more
specifically  mortgage interest rates); material unforeseen
changes in the liquidity, results of operations, or
financial condition of the Company's customers; material
unforeseen complications related to addressing the Year 2000
problem experienced by the Company, its suppliers, customers
and governmental agencies; and other risks detailed in the
Company's filings with the  Securities and  Exchange
Commission, all of which are difficult to predict and many
of which are beyond the control of the Company.  The Company
undertakes no obligation to republish revised
forward-looking statements to reflect events or
circumstances after the date hereof or to reflect the
occurrence of unanticipated events.

<PAGE>

Item 7A.  Asset/Liability Management, Interest Rate
Sensitivity, Market Risk and Liquidity

Asset/Liability management control is designed to ensure
safety and soundness, maintain liquidity and regulatory
capital standards, and achieve acceptable net interest
income.  Management considers interest rate risk to be the
most significant market risk.  The Company's exposure to
market risk is reviewed on a regular basis by the
Asset/Liability Committee.  Interest rate risk is the
potential of economic losses due to future interest rate
changes.  These economic losses can be reflected as a loss
of future net interest income and/or a loss of current fair
market values.  The objective is to measure the effect on
net interest income and to adjust the balance sheet to
minimize the inherent risk while at the same time maximize
income.  Management realizes certain risks are inherent and
that the goal is to identify and minimize the risks.  Tools
used by management include the standard GAP model and an
interest rate shock simulation model.  The Bank has no
market risk sensitive instruments held for trading purposes.
The following table depicts the change in net interest
income resulting from 100 and 300 basis point changes in
rates.  The projections are based on balance sheet growth
assumptions and repricing opportunities for new, maturing
and adjustable rate amounts.  In addition, the projected
percentage changes from level rates are outlined below along
with the Board of Directors specified limits.  As of
December 31, 1999 the projected percentage changes are
within the Board limits and the Company's interest rate risk
is also within Board limits.  The projected net interest
income report summarizing the Company's interest rate
sensitivity as of December 31, 1999 and December 31, 1998 is
as follows:

<PAGE>

Projected Net Interest Income (December 31, 1999)

                                                     Level
Rate Change:                       - 300    - 100    Rates    + 100    + 300

  Year One  (1/1/00 - 12/31/2000)
   Interest Income               $23,593  $25,822  $26,942  $28,063  $30,303
   Interest Expense                9,785   11,818   12,834   13,850   15,882

      Net Interest Income         13,808   14,004   14,108   14,213   14,421

Net interest income dollar change   (300)    (104)              105      313

Net interest income percentage
 change                             -2.1%    -0.7%      N/A     0.7%     2.2%

   Limitation on % Change         >-10.0%   >-4.0%      N/A   >-4.0%  >-10.0%


Projected Net Interest Income (December 31, 1998)

                                                     Level
Rate Change:                     - 300     - 100     Rates  + 100     + 300

  Year One  (1/1/99 - 12/31/99)
   Interest Income               $19,989  $22,127  $23,210  $24,295  $26,463
   Interest Expense                7,317    9,281   10,264   11,246   13,210

      Net Interest Income         12,672   12,846   12,946   13,049   13,253

Net interest income dollar change   (274)    (100)              103      307

Net interest income percentage
 change                             -2.1%    -0.8%      N/A     0.8%     2.4%

   Limitation on % Change         >-10.0%   >-4.0%      N/A   >-4.0%  >-10.0%

<PAGE>

These numbers are comparable to 1998.  In 1998 and 1999,
year one reflected a decline in net interest income of 2.1%
with a 300 basis point decline.  The 300 basis point
increase in rates reflected a 2.4% increase in net interest
income in 1998 compared to 2.2% in 1999.

Management measures the Company's interest rate risk by
computing estimated changes in net interest income in the
event of a range of assumed changes in market interest
rates.  The Company's exposure to interest rates is reviewed
on a monthly basis by senior management and quarterly with
the Board of Directors.  Exposure to interest rate risk is
measured with the use of interest rate sensitivity analysis
to determine the change in net interest income in the event
of hypothetical changes in interest rates, while interest
rate sensitivity gap analysis is used to determine the
repricing characteristics of the Company's assets and
liabilities.  If estimated changes to net interest income
are not within the limits established by the Board, the
Board may direct management to adjust the Company's asset
and liability mix to bring interest rate risk within Board
approved limits.

In addition, the Company uses interest rate sensitivity gap
analysis to monitor the relationship between the maturity
and repricing of its interest-earning assets and interest-
bearing liabilities, while maintaining an acceptable
interest rate spread. Interest rate sensitivity gap is
defined as the difference between the amount of interest-
earning assets maturing or repricing within a specific time
period and the amount of interest-bearing liabilities
maturing or repricing within that time period.  A gap is
considered positive when the amount of interest-rate-
sensitive assets exceeds the amount of interest-sensitive-
liabilities, and is considered negative when the amount of
interest-rate-sensitive liabilities exceeds the amount of
interest-rate-sensitive assets.  Generally, during a period
of rising interest rates, a negative gap would adversely
affect net interest income, while a positive gap would
result in an increase in net interest income.  Conversely,
during a period of falling interest rates, a negative gap
would result in an increase in net interest income, while a
positive gap would negatively affect net interest income.
The Company's goal is to maintain a reasonable balance
between exposure to interest rate fluctuations and earnings.

The interest rate sensitivity analysis as of December 31,
1999 shown below depicts amounts based on the earliest
period in which they can normally be expected to reprice.
The chart reveals that assets and liabilities are fairly
well matched for the early periods specified below.  The
decay rates used for Demand deposits, NOW's, Savings and
Money Market Savings are 5%, 30%, 20% and 30%, respectively.

<PAGE>
Interest Rate Sensitivity Analysis
<TABLE>
<CAPTION>
                                                             December 31, 1999 (in thousands)
                                           Total     1 Year    2 Years   3 Years   4 Years   5 Years  >5 Years
ASSETS
<S>                                       <C>       <C>       <C>       <C>       <C>       <C>       <C>
Cash & Due From Banks                     $ 19,769  $      -  $      -  $      -  $      -  $      -  $ 19,769
Fed Funds & Int-Earning Due from Banks         948       948         -         -         -         -         -
Investment Securities (1)                   70,623    35,736    12,835     3,494     4,917     3,694     9,947
Loans (including held for sale)            242,100   108,970    28,849    35,899    40,582    25,494     2,306
Others Assets                               14,039     3,345         -         -         -         -    10,694

 Total Assets / Repricing Assets           347,479   148,999    41,684    39,393    45,499    29,188    42,716
 Repricing Assets - Accumulated                      148,999   190,683   230,076   275,575   304,763   347,479
   % of Current Balance                                 42.9%     12.0%     11.3%     13.1%      8.4%     12.3%
    % of Current Balance - Accumulated                  42.9%     54.9%     66.2%     79.3%     87.7%    100.0%

LIABILITIES

Total Deposits                             274,566   144,843    43,599    15,341    11,438     8,728    50,617
Other Borrowings                            38,451    22,088       477       240     5,568    10,022        56
Other Liabilities                            2,742         -         -         -         -         -     2,742
Total Capital                               31,720         -         -         -         -         -    31,720

 Total Liabilities / Repricing Liab        347,479   166,931    44,076    15,581    17,006    18,750    85,135
   Repricing Liabilities - Accumulated               166,931   211,007   226,588   243,594   262,344   347,479
   % of Current Balance                                48.0%      12.7%      4.5%      4.9%      5.4%     24.5%
   % of Current Balance - Accum                        48.0%      60.7%     65.2%     70.1%     75.5%    100.0%


SUMMARY

Total Repricing Assets                               148,999    41,684    39,393    45,499    29,188    42,716
Total Repricing Liabilities                          166,931    44,076    15,581    17,006    18,750    85,135

Total Repricing Gap (by Bucket)                      (17,932)   (2,392)   23,812    28,493    10,438   (42,419)

Total Repricing Assets - Cumulative        315,455   148,999   190,683   230,076   275,575   304,763   347,479
Total Repricing Liabilities - Cumulative   314,233   166,931   211,007   226,588   243,594   262,344   347,479

Repricing Gap - Cumulative                   1,222   (17,932)  (20,324)    3,488    31,981    42,419         -

Gap/Total Assets (by Bucket)                           -5.16%    -0.69%     6.85%     8.20%     3.00%   -12.21%
Cumulative Gap/Total Assets                            -5.16%    -5.85%     1.00%     9.20%    12.21%     0.00%

</TABLE>
[FN]
(1) Held to maturity at amortized cost, available for sale at market value

<PAGE>

Little change in the above numbers has occurred since 1998.
For the first three repricing years in 1998 and 1999, the
cumulative gap percentage is less than 4%.  There was a
slight decrease in the cumulative gap for the three-year
repricing period from 3.15% in 1998 to 1.00% in 1999.  The
cumulative gap at December 31, 1998 for the 5-year period
was 14.7%.  This decreased to 12.2% as of December 31, 1999.
These percentages remain below the Board established
guidelines.

Liquidity risk is the possibility that Bourbon may not be
able to meet its cash requirements.  Management of liquidity
risk includes maintenance of adequate cash and sources of
cash to fund operations and meeting the needs of borrowers,
depositors and creditors.  Excess liquidity has a negative
impact on earnings resulting from the lower yields on short-
term assets.

In addition to cash and cash equivalents, the securities
portfolio provides an important source of liquidity.  Total
securities maturing within one year along with cash and cash
equivalents totaled $35.3 million at December 31, 1999.
Additionally, securities available-for-sale with maturities
greater than one year totaled $41.0 million at December 31,
1999.  These securities are available to meet liquidity
needs on a continuing basis.

Bourbon maintains a relatively stable base of customer
deposits and its steady growth is expected to be adequate to
meet its funding demands.  In addition, management believes
the majority of its $100,000 or more certificates of deposit
are no more volatile than its core deposits.  At December
31, 1999 these balances totaled $35 million, approximately
12.6% of total deposits.

The Company also relies on FHLB advances for both liquidity
and asset/liability management purposes.  These advances are
used primarily to fund long-term fixed rate residential
mortgage loans.  FHLB advances increased $19.6 million in
1999 to $26.6 million.

Generally, Bourbon relies upon net cash inflows from
financing activities, supplemented by net cash inflows from
operating activities, to provide cash used in its investing
activities.  As is typical of many financial institutions,
significant financing activities include deposit gathering,
and the use of short-term borrowings, such as federal funds
purchased and securities sold under repurchase agreements
along with long-term debt.  The Company's primary investing
activities include purchasing investment securities and loan
originations.  Management believes there is sufficient
liquidity to meet all reasonable borrower, depositor and
creditor needs in the present economic environment.

The cash flow statements for the periods presented provide
an indication of Bourbon's sources and uses of cash as well
as an indication of the ability of Bourbon to maintain an
adequate level of liquidity.  A discussion of cash flow
statements for 1999, 1998 and 1997 follows.

Net cash provided by operating activities was $8.3 million,
$3.5 million and $5.2 million for the years ended December
31, 1999, 1998 and 1997, respectively.  The changes in 1999
and 1998 were mainly a result of the increase in net income
from $3.4 million to $3.8 million to $3.5 million in 1997,
1998 and 1999, respectively.  In addition for 1999, $2.6
million more was received from the sale of loans versus the
origination of loans held for sale.

<PAGE>

Net cash flow used in investing activities was $23.9
million, $20.0 million, and $15.8 million and for the years
ended December 31, 1999, 1998 and 1997, respectively.  The
changes in net cash from investing activities included the
result of normal maturities and reinvestment of investment
securities as well as funding related to increases in loans.
In 1999, funding for loan growth was $32 million.  This was
partially offset by the $8 million acquired in the Wilmore
Branch acquisition.  During 1998, funds used for loan growth
were $28 million, partly offset by a decline in investments
of $9 million.  In 1997 and 1998, over $1.1 million was
invested in the new Georgetown branch that opened in August
1998.  In addition, over $400 thousand investment was made
to upgrade the existing hardware and software.

Net cash flow from financing activities was $25.6 million,
$14.9 million and $13.7 million for the years ended December
31, 1999, 1998 and 1997, respectively.  The net cash
increases and decreases were primarily attributable to
changes in total deposits, securities sold under agreements
to repurchase and federal funds purchased, and net changes
in advances from the Federal Home Loan Bank and other
borrowings.  The chance in deposits was $6.8 million, $17.4
million and $10.3 million in 1999, 1998 and 1997,
respectively.  Federal Home Loan Bank advances were $20
million in 1999 and $4 million in 1998.

A number of other techniques are used to measure the
liquidity position, including the ratios presented below.
These ratios are calculated based on annual averages for
each year.

Liquidity Ratios
                                          December 31
                                      1999    1998   1997
Average Loans (including loans held
 for sale)/Average Deposits           83.9%   78.7%  73.6%
Average Securities sold under
 agreements to repurchase and other
 borrowings/Average Assets             2.6%    1.8%   1.8%

This chart shows that the loan to deposit ratio increased in
1999 and 1998.  Loan growth of 15% and deposit growth of 6%
have both been contributing factors to the greater change in
this ratio from 1997 to 1998 compared to the previous year.

<PAGE>

Item 8.  Financial Statements

The consolidated financial statements of the Company
together with the notes thereto and report of independent
auditors are contained in the Company's 1999 Annual Report
to Stockholders included as Exhibit 13, and are incorporated
herein by reference.


Item 9.  Changes In and Disagreements with Accountants on
Accounting and Financial Disclosure

Not Applicable


PART III

Item 10.  Directors and Executive Officers of the Registrant

Under the Company's Articles of Incorporation, the Board of
Directors consists of three different classes, each to
serve, subject to the provisions of the Articles of
Incorporation and Bylaws for a three year term and until his
successor is duly elected and qualified.  The names of the
directors and their terms are set forth below.

Terms expiring in 2000:

William R. Stamler, age 65, is Chairman of Signal
Investments, Inc.  He has been a director of Kentucky Bank
since 1984 and the Company since 1988.

Buckner Woodford, age 55, is President and Chief Executive
Officer of Bourbon Bancshares, Inc. and Kentucky Bank.  He
has been a director of the Kentucky Bank since 1971 and the
Company since inception.

Terms expiring in 2001:

William Arvin, age 59, is an attorney.  He has been a
director of Kentucky Bank and the Company since December 19,
1995.

James L. Ferrell, M.D., age 65, is a Physician.  He has been
a director of Kentucky Bank since 1980 and the Company since
inception.

Joseph B. McClain, age 71, is President of Hopewell Co.
(insurance agency).  He has been a director of Kentucky Bank
since 1971 and the Company since 1984.

Terms expiring in 2002:

Henry Hinkle, age 48, is President of Hinkle Construction
Company.  He has been a director of Kentucky Bank and the
Company since 1989.

Theodore Kuster, age 56, is a farmer and thoroughbred horse
breeder.  He has been a director of Kentucky Bank since 1979
and the Company since 1985.

Robert G. Thompson, age 50, is Executive Director of the
Paris Bourbon County YMCA, a farmer and thoroughbred horse
breeder.  He has been a director of Kentucky Bank and the
Company since 1991.


The Company's other executive officer is Gregory J. Dawson,
age 39.  He is the Chief Financial Officer and has been with
the Company since 1985 and serves at the pleasure of the
Board of Directors.

<PAGE>

Item 11.  Executive Compensation

The following table sets forth information with respect to
the compensation of the President and Chief Executive
Officer of the Company.  No other executive officer earned
total salary and bonus in excess of $100,000.
         Summary Compensation Table
             Annual Compensation
                                             Other Annual  Options
     Name           Year  Salary    Bonus    Compensation  Granted
Buckner Woodford    1999 $162,000  $  1,467      (1)        3,600
Buckner Woodford    1998 $156,000  $  3,161      (1)        3,800
Buckner Woodford    1997 $150,000  $  4,879      (1)        3,200
Buckner Woodford    1996 $136,500  $  1,505      (1)        6,000

(1)  Less than the lesser of $50,000 or 10% of annual salary
and bonuses

The following table contains information regarding the grant
of stock options under the Company's stock option plan to
the Chief Executive Officer during the year ended December
31, 1999.  In addition, in accordance with rules of the
Securities and Exchange Commission, the following table sets
forth the hypothetical grant date present value with respect
to the referenced options, using the Black-Scholes Option
Pricing Model.

    Option Grants in the Last Fiscal Year

                               % of Total
                                Options                           Grant
                       Shares  Granted to  Exercise               Date
                      Granted  Employees    Price   Expiration   Present
      Name              (#)     in 1999     ($/Sh)     Date      Value($)

Buckner Woodford       3,600      14.6%     $20.63    1/12/09    $18,504


The following table sets forth certain information regarding
options exercised by the Chief Executive Officer during
calendar year 1999 and unexercised stock options held by him
as of December 31, 1999.

<TABLE>
Aggregated Option Exercises in Calendar 1999
      and Year-end Stock Option Values

                   Shares                 Number of Securities        Value of  Unexercised
                  Acquired      Value    Underlying Unexercised            In-the-Money
                 on Exercise  Realized    Options at 12/31/99          Options at 12/31/99
     Name           (#)         ($)     Exercisable/Unexercisable   Exercisable/Unexercisable
<S>                 <C>         <C>           <C>                        <C>
Buckner Woodford    None        N/A           10,960/23,280              $152,512/$85,852

</TABLE>

No SAR's exist for the company.

Compensation of Directors

Directors are paid $400 for each board meeting attended and
$100 for each committee meeting attended.  Directors are
also granted a 10-year option to purchase 50 shares of the
Company's common stock following each year in which Kentucky
Bank has a return on assets of 1 percent or greater.  The
option's exercise price is the fair market value per share
on the date of grant.

<PAGE>

Pension Plan

The following table sets forth the annual benefits which an
eligible employee would receive under the Company's
qualified defined benefit pension plan based on remuneration
that is covered under the plan and years of service with the
Company and its subsidiaries.

                    Years of Service

Remuneration     15        20        25        30        35

 $ 25,000      $ 3,750   $ 5,000   $ 6,250   $ 7,500   $ 8,750
   50,000        7,500    10,000    12,500    15,000    17,500
   75,000       11,250    15,000    18,750    22,500    26,250
  100,000       15,000    20,000    25,000    30,000    35,000
  125,000       18,750    25,000    31,250    37,500    43,750
  150,000       22,500    30,000    37,500    45,000    52,500
  175,000       26,250    35,000    43,750    52,500    61,250
  200,000       30,000    40,000    50,000    60,000    70,000

In general, a participant's remuneration covered by the
Company's pension plan is his or her average annual cash
compensation (W-2 earnings) for the last 5 years.  The years
of service for Mr. Woodford are 28 years.

<PAGE>

Item 12.  Security Ownership of Certain Beneficial Owners
and Management

Set forth below are the number of shares of the Company's
common stock beneficially owned by each director and
executive officer, and all current directors and executive
officers as a group as of December 31, 1999.

     Name                   Shares Beneficially Owned(1)
                            Number             Percentage

William Arvin (2)            31,532               1.1%

Gregory J. Dawson (3)        11,220               *

James L. Ferrell, M.D. (4)   30,200               1.1%

Henry Hinkle (5)             27,805               *

Theodore Kuster (6)          18,210               *

Joseph B. McClain (7)        43,596               1.5%

William R. Stamler (8)       31,220               1.1%

Robert G. Thompson (9)        6,900               *

Buckner Woodford (10)       259,278               9.2%

All directors and officers
(9 persons) as a group
(consisting of those
persons named above)(11)   459,961           16.4%

*  Less than 1%

1)   Beneficial ownership as reported in the
  above table has been determined in accordance
  with Rule 13d-3 under the Exchange Act.
  Unless otherwise indicated, beneficial
  ownership includes both sole or shared voting
  and sole or shared investment power.
2)   Includes 11,858 shares held in a
  retirement account, 11,968 shares held of
  record by Mr. Arvin's wife, as to which Mr.
  Arvin disclaims beneficial ownership, 7,276
  held jointly with his wife and 300 shares
  that Mr. Arvin may acquire upon exercise of
  outstanding stock options.
3)   Includes 10,520 shares that Mr. Dawson
  may acquire upon exercise of outstanding
  stock options.
4)   Includes 5,000 shares held in a
  retirement account and 1,500 shares that Mr.
  Ferrell may acquire upon exercise of
  outstanding stock options.  Also, includes
  3,000 shares held by Dr. Ferrell's wife, as
  to which Dr. Ferrell disclaims beneficial
  ownership.

<PAGE>

5)
  Includes 1,000 shares held by his wife and 640 shares held
  by three sons, as to which Mr. Hinkle disclaims
  beneficial ownership.  Includes 24,000 shares held of
  record by Hinkle Contracting Company, as to which Mr.
  Hinkle, as president, has shared voting power.  Also
  includes 700 shares that Mr. Hinkle may acquire upon
  exercise of outstanding stock options.
6)   Includes 6,270 share held of record by
  Mr. Kuster's wife, as to which Mr. Kuster
  disclaims beneficial ownership.  Also
  includes 5,080 shares held in a retirement
  account and 1,500 shares that Mr. Kuster may
  acquire upon exercise of outstanding stock
  options.
7)   Includes 1,500 shares that Mr. McClain
  may acquire upon exercise of outstanding
  stock options.  Also includes 18,800 shares
  held of record by Mr. McClain's wife, as to
  which Mr. McClain disclaims beneficial
  ownership.
8)   Includes 7,860 shares held by Signal
  Investments Corporation, as to which Mr.
  Stamler, as the chief executive officer and
  majority Stockholder of such corporation, has
  sole voting and investment power.  Also
  includes 280 shares that Mr. Stamler may
  acquire upon exercise of outstanding stock
  options.
9)   Includes 1,500 shares that Mr. Thompson
  may acquire upon exercise of outstanding
  stock options.
10)  Includes 8,000 shares held by his wife
  and 11,332 shares held by two sons, as to
  which Mr. Woodford disclaims beneficial
  ownership.  Also includes 208 shares held in
  a retirement account and 12,320 shares that
  Mr. Woodford may acquire upon exercise of
  outstanding stock options.
11)  Includes 30,120 shares that may be
  acquired upon exercise of outstanding stock
  options.

The following table sets forth as of December 31, 1999 the
persons known by the Company to own beneficially (as
determined in accordance with the rules and regulations of
the Commission) more than 5% of the outstanding common
stock.  See note 10 in the preceding table for further
information.

Name and Address               Shares Beneficially
of Beneficial Owner            Owned       Percentage

Buckner Woodford              259,278         9.2%
340 Stoner Avenue
Paris, Kentucky 40361

Item 13.  Certain Relationships and Related Transactions

Directors and officers of the Company and their associates
were customers of and had transactions with the Company's
subsidiary bank in the ordinary course of business during
the year ended December 31, 1999.  Similar transactions may
be expected to take place with the Company's subsidiary bank
in the future.  Outstanding loans and commitments made by
such subsidiary bank in transactions with the Company's
directors and officers and their associates were made on
substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable
transactions with other persons and did not involve more
than a normal risk of collectibility or present other
unfavorable features.  Certain directors and executive
officers were loan customers of Kentucky Bank and
outstanding loans were $1.2 million and $1.2 million as of
December 31, 1999 and 1998, respectively.  See Note 4 in the
notes to consolidated financial statements included as
Exhibit 13.

<PAGE>

Part IV

Item 14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K

(a)  The following exhibits are incorporated
       by reference herein or made a part of this
       Form 10-K:

     3.1  Articles  of  Incorporation of the Registrant  are
          incorporated by reference to Exhibit  3.1  of  the
          Registrant's Registration Statement  on  Form  S-4
          (File No. 33-96358).

     3.2  Bylaws  of  the  Registrant  are  incorporated  by
          reference  to  Exhibit  3.2  of  the  Registrant's
          Registration  Statement  on  Form  S-4  (File  No.
          33-96358).

     10.1 Bourbon's  1993 Employee Stock Ownership Incentive
          Plan  is incorporated by reference to Exhibit 10.2
          of the Registrant's Registration Statement on Form
          S-4 (File No. 33-96358).*

     10.2 Bourbon's      1993     Non-Employee     Directors
          Stock     Ownership     Incentive     Plan      is
          incorporated  by  reference  to  Exhibit  10.3  of
          the   Registrant's   Registration   Statement   on
          Form S-4 (File No. 33-96358).*

     10.3 Bourbon    Bancshares,    Inc.    1999    Employee
          Stock    Option    Plan   is    incorporated    by
          reference  to  Exhibit 99.1  of  the  Registrant's
          Form  10-K  for  the  fiscal year  ended  December
          31, 1998.*

     11   Computation of earnings per share - See Note 10 in
          the notes to consolidated financial statements
          included as Exhibit 13.

     13   Financial Statements:
            Consolidated Balance Sheets
            Consolidated Statements of Income
            Consolidated Statements of Comprehensive Income
            Consolidated Statements of Changes in
            Stockholders' Equity
            Consolidated Statements of Cash Flows
            Notes to Consolidated Financial Statements
            Report of Independent Auditors

     21   Subsidiaries of Registrant

     23   Consent of Crowe, Chizek and Company LLP

     27    Financial Data Schedule  (for SEC use only)

     99.1 Proxy statement dated March 17, 2000, sent to  the
          Registrant's  security holders in connection  with
          the   2000  Annual  Meeting  of  Shareholders  and
          supplementally furnished to the Commission for its
          information   as  required  by   Form   10-K   for
          registrants  which have not registered  securities
          pursuant  to Section 12 of the Securities Exchange
          Act of 1934.  This material is not otherwise to be
          deemed filed with the Commission.

     * Denotes a management contract or compensatory plan or
arrangement  of the Registrant required to be  filed  as  an
exhibit pursuant to Item 601(10) (iii) of Regulation S-K.


(b)  Current Reports on Form 8-K during the quarter ended
December 31, 1999
     None

<PAGE>

                 SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

Bourbon Bancshares, Inc.
By:  __/S/Buckner Woodford__
Buckner Woodford, President and Chief Executive Officer, Director
March 29, 2000

Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities
and on the dates indicated.

__/s/Buckner Woodford________      March 29, 2000
Buckner Woodford, President and Chief Executive Officer, Director

__/s/Gregory J. Dawson_______      March 29, 2000
Gregory J. Dawson, Chief Financial and Accounting Officer

__/s/James L. Ferrell________      March 29, 2000
James L. Ferrell, M.D., Chairman of the Board, Director

_____________________________      March 29, 2000
William Arvin, Director

__/s/Henry Hinkle____________      March 29, 2000
Henry Hinkle, Director

__/s/Theodore Kuster_________      March 29, 2000
Theodore Kuster, Director

__/s/Joseph B. McClain_______      March 29, 2000
Joseph B. McClain, Director

_____________________________      March 29, 2000
William R. Stamler, Director

__/s/Robert G. Thompson______      March 29, 2000
Robert G. Thompson, Director

SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS  FILED
PURSUANT  TO  SECTION 15(d) OF THE ACT BY REGISTRANTS  WHICH
HAVE NOT REGISTERED SECURITIES PURSUANT TO SECTION 12 OF THE
ACT.

The Registrant refers to Exhibits 13 and 99.1 to the Form 10-K.

<PAGE>

INDEX TO EXHIBITS


   Exhibit
    Number     Description of Document

     3.1  Articles  of  Incorporation of the Registrant  are
          incorporated by reference to Exhibit  3.1  of  the
          Registrant's Registration Statement  on  Form  S-4
          (File No. 33-96358).

     3.2  Bylaws  of  the  Registrant  are  incorporated  by
          reference  to  Exhibit  3.2  of  the  Registrant's
          Registration  Statement  on  Form  S-4  (File  No.
          33-96358).

     10.1 Bourbon's    1993    Employee   Stock    Ownership
          Incentive   Plan  is  incorporated  by   reference
          to    Exhibit    10.2    of    the    Registrant's
          Registration  Statement  on  Form  S-4  (File  No.
          33-96358).*

     10.3 Bourbon's      1993     Non-Employee     Directors
          Stock     Ownership     Incentive     Plan      is
          incorporated  by  reference  to  Exhibit  10.3  of
          the   Registrant's   Registration   Statement   on
          Form S-4 (File No. 33-96358).*

     10.3 Bourbon    Bancshares,    Inc.    1999    Employee
          Stock    Option    Plan   is    incorporated    by
          reference  to  Exhibit 99.1  of  the  Registrant's
          Form  10-K  for  the  fiscal year  ended  December
          31, 1998.*

     11   Computation of earnings per share - See Note 10 in
          the notes to consolidated financial statements
          included as Exhibit 13.

     13   Bourbon Bancshares, Inc. 1999 Annual Report

     21   Subsidiaries of Registrant

     23   Consent of Crowe, Chizek and Company LLP

     27    Financial Data Schedule  (for SEC use only)

     99.1 Proxy statement dated March 17, 2000, sent to  the
          Registrant's  security holders in connection  with
          the   2000  Annual  Meeting  of  Shareholders  and
          supplementally furnished to the Commission for its
          information   as  required  by   Form   10-K   for
          registrants  which have not registered  securities
          pursuant  to Section 12 of the Securities Exchange
          Act of 1934.  This material is not otherwise to be
          deemed filed with the Commission.

     * Denotes a management contract or compensatory plan or
arrangement  of the Registrant required to be  filed  as  an
exhibit pursuant to Item 601(10) (iii) of Regulation S-K.

<PAGE>

     Exhibit 13

BOURBON BANCSHARES, INC.

ANNUAL REPORT 1999

<PAGE>

Dear Shareholders,

     Agriculture has long been important to central
Kentucky.  It has provided a livelihood for many and
indirect benefits to many more.  Much of the cash flow from
these farms are from raising tobacco.  Therefore it is a
blow to our entire region that tobacco production will be
cut so drastically.  This has many of our customers taking a
hard look at their operations and trying to adjust to the
inevitable changes.

     We are fortunate that the overall economy in central
Kentucky remains strong.  Population is growing and
unemployment is low.  This environment should make it easier
for both the bank and our customers to adapt.

     Bourbon Bancshares, Inc. had an outstanding year in
1999.  Earnings rose by 17%.  The loan portfolio grew more
than 15% for the third consecutive year.  Total assets
reached an all time high of $347 million.

     We were able to expand our franchise during 1999.  In
August we acquired a branch in Wilmore.  This fit in
perfectly with our geographic pattern in the smaller
communities around Lexington.  We now have eleven offices in
eight different communities, all around the perimeter of
Lexington.

     As we start the new year the Internet continues to grow
in commercial importance. Kentucky Bank has been preparing
to offer Internet service to all its customers at
www.kybank.com.  We expect this to be started during the
first quarter of 2000.

     Plans are also underway to continue improving our
facilities.  There will be an historic renovation project of
the headquarters building in downtown Paris that will
include exterior renovation.  There will also be expansion
of one of our most valuable sites, the branch in Winchester
at Colby Road.  This will include expanding from three drive-
in lanes to six.

     At year-end our Executive Vice President Joe Allen
retired as an employee of Kentucky Bank.  His total banking
career spanned fifty-two years.  His many friends at the
bank wish him a very happy and well-deserved retirement.

                                   /s/Buckner Woodford

                                   Buckner Woodford

<PAGE>

FINANCIAL HIGHLIGHTS

BOURBON BANCSHARES, INC.        1999        1998        1997

   Assets ($ millions)        $   347     $   309     $   291

   Net Income ($ thousands)   $ 4,450     $ 3,804     $ 3,408

Per Share Results

   Primary Earnings           $  1.55     $  1.33     $  1.20

   Dividends                  $   .44     $   .40     $   .36

Stockholder Information

CORPORATE HEADQUARTERS
Bourbon Bancshares, Inc.
4th and Main Street
Paris, Kentucky  40361
606-987-1795

ANNUAL MEETING
The annual meeting of Stockholders of Bourbon Bancshares,
Inc. will be held Tuesday, May 2, 2000 at 11:00 a.m. in the
corporate headquarters.

TRANSFER AGENT, REGISTRAR AND DIVIDEND DISBURSING AGENT
Kentucky Bank
Trust Department
606-987-1795, ext. 316

MARKET MAKERS

Morgan Keegan & Co.
489 East Main Street
Lexington, Kentucky  40507
1-800-937-0161

Hilliard Lyons
West Vine Street, Suite 400
Lexington, Kentucky  40507
1-800-944-2663

OTC Bulletin Board
Symbol:  BBON


INVESTOR INFORMATION
Any individual requesting general information or a copy of
the Corporation's 1999 Form 10-K Report may obtain these by
writing Investor Relations at the Corporate Headquarters.

<PAGE>

          BOURBON BANCSHARES, INC.
               Paris, Kentucky

      CONSOLIDATED FINANCIAL STATEMENTS
      December 31, 1999, 1998 and 1997

<PAGE>

                   CONSOLIDATED BALANCE SHEETS
                           December 31


                                                  1999           1998
ASSETS
Cash and due from banks                      $ 20,041,648   $ 10,756,213
Federal funds sold                                675,000              -
 Cash and cash equivalents                     20,716,648     10,756,213
Investment securities:
 Available for sale                            54,930,326     55,419,734
 Held to maturity (fair value 1999 -
  $15,916,799 and 1998 - $17,854,550)          15,692,975     16,933,755
Mortgage loans held for sale                    3,493,765      5,908,676

Loans                                         238,606,545    206,934,127
 Allowance for loan losses                     (3,102,800)    (2,734,589)
  Net loans                                   235,503,745    204,199,538

Federal Home Loan Bank stock                    3,345,500      3,119,500
Bank premises and equipment, net                7,081,860      6,793,998
Interest receivable                             3,454,218      3,165,110
Intangible assets                               2,108,274      2,034,441
Other assets                                    1,151,471        374,272

Total assets                                 $347,478,782   $308,705,237

LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
 Non-interest bearing                        $ 42,931,235   $ 40,336,201
 Time deposits, $100,000 and over              34,714,390     28,168,022
 Other interest bearing                       196,920,315    190,235,493
  Total deposits                              274,565,940    258,739,716
Securities sold under agreements to
 repurchase and other borrowings               11,858,464     11,248,277
Federal Home Loan Bank advances                26,592,305      6,953,502
Interest payable                                2,141,754      1,778,984
Other liabilities                                 600,746        612,453
 Total liabilities                            315,759,209    279,332,932

Stockholders' equity
 Preferred stock, 300,000 shares
  authorized and unissued                               -              -
 Common stock, no par value; 10,000,000
  shares authorized; 2,802,471 and
  2,809,256 shares issued and outstanding
  in 1999 and 1998                              6,491,373      6,474,241
 Retained earnings                             25,777,789     22,832,043
 Accumulated other comprehensive income          (549,589)        66,021
  Total stockholders' equity                   31,719,573     29,372,305

Total liabilities and stockholders' equity   $347,478,782   $308,705,237

<PAGE>

                CONSOLIDATED STATEMENTS OF INCOME
                     Years Ended December 31

                                        1999          1998          1997
Interest income
 Loans, including fees               $19,167,985   $17,211,687   $15,483,271
 Investment securities
  Taxable                              2,761,337     3,141,285     3,918,974
  Tax exempt                           1,115,480     1,168,049     1,174,113
  Other                                  408,077       462,117       385,106
                                      23,452,879    21,983,138    20,961,464
Interest expense
 Deposits                              9,300,244     9,787,511     9,480,440
 Securities sold under agreements
  to repurchase and other
  short-term borrowings                  386,607       269,135       234,521
 Federal Home Loan Bank advances         767,779       517,105       569,927
 Other                                    92,440        92,717       129,827
                                      10,547,070    10,666,468    10,414,715

Net interest income                   12,905,809    11,316,670    10,546,749
Provision for loan losses                699,600       700,400       492,800
Net interest income after provision
 for loan losses                      12,206,209    10,616,270    10,053,949

Other income
 Service charges                       2,074,999     1,810,756     1,674,348
 Loan service fee income                 290,622       282,879       257,953
 Trust department income                 397,416       300,342       237,254
 Investment securities gains, net            906        40,955        13,686
 Gain on sale of mortgage loans          351,192       439,927        72,236
 Other                                   270,416       198,116       134,510
                                       3,385,551     3,072,975     2,389,987
Other expenses
 Salaries and employee benefits        5,054,249     4,526,735     4,274,022
 Occupancy expenses                    1,361,025     1,163,872     1,002,137
 Amortization                            441,286       400,147       346,891
 Advertising and marketing               323,726       340,664       276,430
 Taxes other than payroll, property
  and income                             234,818       307,146       287,718
 Other                                 2,006,858     1,775,563     1,700,780
                                       9,421,962     8,514,127     7,887,978

Income before income taxes             6,169,798     5,175,118     4,555,958
Provision for income taxes             1,719,685     1,371,602     1,147,924

Net income                           $ 4,450,113   $ 3,803,516   $ 3,408,034

Earnings per share:
  Basic                                   $ 1.59        $ 1.36         $1.22
  Diluted                                   1.55          1.33          1.20

<PAGE>

         CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                     Years Ended December 31


                                               1999        1998        1997

Net income                                  $4,450,113  $3,803,516  $3,408,034

Other comprehensive income (loss), net of tax:
 Unrealized gains (losses) on securities
  arising during the period                   (615,012)   (139,837)    240,455
  Reclassification of realized amount             (598)    (27,030)     (9,033)
 Net change in unrealized gain (loss)
  on securities                               (615,610)   (166,867)    231,422

Comprehensive income                        $3,834,503  $3,636,649  $3,639,456

<PAGE>
<TABLE>
<CAPTION>

   CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
          Years Ended December 31, 1999, 1998 and 1997



                                                                               Accumulated
                                                                                  Other        Total
                                            Common  Stock          Retained   Comprehensive Stockholders'
                                         Shares       Amount       Earnings       Income       Equity

<S>                                   <C>           <C>           <C>           <C>         <C>
Balances, January 1, 1997             $ 2,825,658   $ 6,392,329   $18,239,684   $   1,466   $24,633,479

Common stock issued (including
 employee gifts of 100 shares)             12,260        50,948             -           -        50,948

Common stock purchased                    (48,794)     (110,416)     (492,196)          -      (602,612)

Net change in unrealized gain (loss)
 on securities available for sale, net
 of tax                                         -             -             -     231,422       231,422

Net income                                      -             -     3,408,034           -     3,408,034

Dividends declared - $.36 per share             -             -    (1,005,153)          -    (1,005,153)

Balances, December 31, 1997             2,789,124     6,332,861    20,150,369     232,888    26,716,118

Common stock issued (including
employee gifts of 52 shares)               20,132       141,380             -           -       141,380

Net change in unrealized gain (loss)
 on securities available for sale, net
 of tax                                         -             -             -    (166,867)     (166,867)

Net income                                      -             -     3,803,516           -     3,803,516

Dividends declared - $.40 per share             -             -    (1,121,842)          -    (1,121,842)

Balances, December 31, 1998             2,809,256     6,474,241    22,832,043      66,021    29,372,305

Common stock issued (including
 employee gifts of 95 shares)               7,695        54,187             -           -        54,187

Common stock purchased                    (14,480)      (37,055)     (271,071)          -      (308,126)

Net change in unrealized gain (loss)
 on securities available for sale, net
 of tax                                         -             -             -    (615,610)     (615,610)

Net income                                      -             -     4,450,113           -     4,450,113

Dividends declared - $.44 per share             -             -    (1,233,296)          -    (1,233,296)

Balances, December 31, 1999           $ 2,802,471   $ 6,491,373   $25,777,789   $(549,589)  $31,719,573

</TABLE>
<PAGE>
<TABLE>
<CAPTION>
              CONSOLIDATED STATEMENTS OF CASH FLOWS
                     Years Ended December 31



                                                          1999           1998           1997
<S>                                                  <C>            <C>            <C>
Cash flows from operating activities
 Net income                                          $  4,450,113   $  3,803,516   $  3,408,034
 Adjustments to reconcile net income to net
  cash from operating activities
   Depreciation and amortization                        1,207,402      1,007,948        946,973
   Provision for loan losses                              699,600        700,400        492,800
   Investment securities amortization
     (accretion), net                                       5,293        (42,854)        23,081
   Investment securities gains, net                          (906)       (40,955)       (13,686)
   Originations of loans held for sale                (22,264,141)   (35,798,502)   (18,497,646)
   Proceeds from sale of loans                         24,802,228     35,417,148     18,428,256
   Gain on sale of mortgage loans                        (351,192)      (439,927)       (72,236)
   Federal Home Loan Bank stock dividends                (226,000)      (214,300)      (199,600)
   Changes in:
     Interest receivable                                 (289,108)      (309,545)      (117,665)
     Other assets                                         (33,731)       (10,827)       (82,785)
     Interest payable                                     332,017       (121,840)       537,251
     Other liabilities                                    (50,333)      (406,176)       327,241
      Net cash from operating activities                8,281,242      3,544,086      5,180,018

Cash flows from investing activities
 Purchases of securities available for sale           (38,694,863)   (29,252,389)   (26,674,021)
 Proceeds from sales of securities available for sale  17,828,018      6,548,219     17,343,034
 Proceeds from principal payments and maturities
  of securities available for sale                     20,393,126     33,189,842     19,982,850
 Purchases of investment securities held to maturity     (349,522)    (2,374,891)      (785,000)
 Proceeds from maturities of investment securities
  held to maturity                                      1,616,300      1,070,150      1,510,950
 Net change in loans                                  (32,401,646)   (27,549,007)   (25,886,674)
 Purchases of bank premises and equipment, net           (701,261)    (1,636,487)    (1,284,947)
 Net cash acquired in branch acquisition                8,387,089              -              -
  Net cash from investing activities                  (23,922,759)   (20,004,563)   (15,793,808)

Cash flows from financing activities
 Net change in deposits                                 6,840,197     17,414,395     10,254,610
 Net change in securities sold under agreements
  to repurchase and other borrowings                      610,187      1,790,671      5,298,109
 Advances from Federal Home Loan Bank                  20,000,000      4,000,000              -
 Payments on Federal Home Loan Bank advances             (361,197)    (7,282,789)      (297,740)
 Proceeds from notes payable                                    -              -        450,000
 Payments on notes payable                                      -              -       (450,000)
 Proceeds from issuance of common stock                    50,135        141,380         50,948
 Purchase of common stock                                (304,074)             -       (602,612)
 Dividends paid                                        (1,233,296)    (1,121,842)    (1,005,153)
  Net cash from financing activities                   25,601,952     14,941,815     13,698,162


<PAGE>

              CONSOLIDATED STATEMENTS OF CASH FLOWS
                     Years Ended December 31



                                                          1999           1998           1997

Net change in cash and cash equivalents                 9,960,435     (1,518,662)     3,084,372

Cash and cash equivalents at beginning of year         10,756,213     12,274,875      9,190,503

Cash and cash equivalents at end of year             $ 20,716,648   $ 10,756,213   $ 12,274,875

Supplemental disclosures of cash flow information
 Cash paid during the year for:
  Interest expense                                   $ 10,184,300   $ 10,788,308   $  9,877,464
  Income taxes                                          1,849,988      1,370,000      1,100,000

Supplemental schedules of non-cash investing and
 financing activities:
  Real estate acquired through foreclosure           $    426,205   $     69,676   $          -
  Transfer of loans to loans held for sale                      -              -      4,597,849

</TABLE>
<PAGE>

NOTE  1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis  of  Presentation:  The consolidated  financial  statements
include  the  accounts of Bourbon Bancshares, Inc. (the  Company)
and  its  wholly-owned  subsidiary,  Kentucky  Bank  (the  Bank).
Intercompany  transactions and balances have been  eliminated  in
consolidation.

Nature  of  Operations:  The Bank operates  under  a  state  bank
charter  and  provides  full  banking services,  including  trust
services,   to  customers  located  in  Bourbon,  Clark,   Scott,
Harrison,   Woodford,  Jessamine,  and  adjoining   counties   in
Kentucky.  As a state bank, the Bank is subject to regulation  by
the Kentucky Department of Financial Institutions and the Federal
Deposit Insurance Corporation (FDIC). The Company, a bank holding
company, is regulated by the Federal Reserve.

Branch  Acquisition:  On August 13, 1999, the Bank  acquired  the
Wilmore, Kentucky branch of National City Bank.  Included in  the
purchase were $9.0 million in net deposits and $353,000 in  fixed
assets.   The net deposits assumed exceeded the cash received  by
$287,000.

Estimates  in  the  Financial  Statements:   The  preparation  of
financial  statements  in  conformity  with  generally   accepted
accounting  principles requires management to make estimates  and
assumptions  that  affect  the reported  amounts  of  assets  and
liabilities  and disclosure of contingent assets and  liabilities
at  the date of the financial statements and the reported amounts
of  revenues  and  expenses during the reporting  period.  Actual
results  could  differ from those estimates.  The  allowance  for
loan   losses  and  fair  value  of  financial  instruments   are
particularly subject to change.

Cash  Flows:  For purposes of reporting cash flows, cash and cash
equivalents include cash on hand, amounts due from banks, federal
funds sold, and certain short-term investments with maturities of
less than three months. Generally, federal funds are sold for one-
day  periods.  Net cash flows are reported for loan  and  deposit
transactions.

Investment  Securities:  The Company is required to classify  its
investment  securities portfolio into three categories:   trading
securities, securities available for sale and securities held  to
maturity. Fair value adjustments are made to the securities based
on  their  classification  with the  exception  of  the  held  to
maturity  category. The Company has no investments classified  as
trading.

Investment  securities available for sale  are  carried  at  fair
value.   The difference between amortized cost and fair value  is
recorded  in  stockholders' equity, net of  related  income  tax,
under  accumulated other comprehensive income.  Changes  in  this
difference  are recorded as a component of comprehensive  income.
Amortization of premiums and accretion of discounts are  recorded
as  adjustments  to  interest income  using  the  constant  yield
method.

<PAGE>

NOTE  1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Investment  securities  for which the Company  has  the  positive
intent  and  ability  to hold to maturity  are  stated  at  cost,
adjusted  for amortization of premiums and accretion of discounts
which  are  recorded as adjustments to interest income using  the
constant yield method.

Gains or losses on dispositions are based on the net proceeds and
the  adjusted carrying amount of the securities sold,  using  the
specific identification method.

Loans Held for Sale:  Loans held for sale are valued at the lower
of  cost or market as determined by outstanding commitments  from
investors  or current investor yield requirements, calculated  on
the aggregate loan basis.

Loans:   Loans  are  stated at the amount  of  unpaid  principal,
reduced  by  an  allowance for loan losses.  Interest  income  on
loans  is recognized on the accrual basis except for those  loans
on a nonaccrual status. The accrual of interest on impaired loans
is  discontinued when management believes, after consideration of
economic and business conditions and collection efforts, that the
borrowers'  financial  condition  is  such  that  collection   of
interest  is  doubtful.  When interest accrual  is  discontinued,
interest  income is subsequently recognized only  to  the  extent
cash payments are received.

Loan  origination fees and certain direct origination  costs  are
capitalized and recognized as an adjustment of the yield  on  the
related loan.

Allowance  for  Loan Losses:  The allowance for  loan  losses  is
established  through  a  provision for  loan  losses  charged  to
expense. The allowance is an amount that management believes will
be  adequate to absorb losses on existing loans that  may  become
uncollectible,  based  on evaluations of  the  collectibility  of
loans  and prior loan loss experience. The evaluations take  into
consideration such factors as changes in the nature and volume of
the loan portfolio, overall portfolio quality, review of specific
problem  loans, and current economic conditions that  may  affect
the  borrowers'  ability to pay. Loans are  charged  against  the
allowance  for  loan  losses when management  believes  that  the
collectibility of the principal is unlikely.

The  allowance  for loan losses on impaired loans  is  determined
using  the  present value of estimated future cash flows  of  the
loan,  discounted at the loan's effective interest  rate  or  the
fair value of the underlying collateral. A loan is considered  to
be  impaired when it is probable that all principal and  interest
amounts will not be collected according to the loan contract. The
entire change in present value of expected cash flows is reported
as  provision  for  loan  losses in  the  same  manner  in  which
impairment  initially was recognized or as  a  reduction  in  the
amount  of  provision  for loan losses that  otherwise  would  be
reported.

<PAGE>

NOTE  1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Mortgage  Servicing Rights:  The Bank has sold various  loans  to
the   Federal  Home  Loan  Mortgage  Corporation  (FHLMC)   while
retaining  the servicing rights. Gains and losses on  loan  sales
are  recorded at the time of the cash sale, which represents  the
premium  or  discount  paid by the FHLMC.  The  Bank  receives  a
servicing fee from the FHLMC on each loan sold.  Servicing rights
are  capitalized based on the relative fair value of  the  rights
and the loan and are included in intangible assets on the balance
sheet  and  expensed in proportion to, and over  the  period  of,
estimated net servicing revenues.

Bank  Premises  and Equipment:  Bank premises and  equipment  are
stated  at  cost  less accumulated depreciation. Depreciation  is
recorded  principally  by  the  straight-line  method  over   the
estimated useful lives of the bank premises and equipment.

Real  Estate Acquired Through Foreclosure:  Real estate  acquired
through  foreclosure  is carried at the  lower  of  the  recorded
investment  in the property or its fair value. The value  of  the
underlying  loan is written down to the fair value  of  the  real
estate  to  be  acquired by a charge to the  allowance  for  loan
losses, if necessary.  Any subsequent write-downs are charged  to
operating  expenses.  Certain parcels of real  estate  are  being
leased to third parties to offset holding period costs. Operating
expenses of such properties, net of related income, and gains and
losses on their disposition are included in other expenses.

Repurchase  Agreements:  Substantially all  repurchase  agreement
liabilities  represent  amounts advanced  by  various  customers.
Securities are pledged to cover these liabilities, which are  not
covered by federal deposit insurance.

Income  Taxes:   Income tax expense is the total of  the  current
year income tax due or refundable and the change in deferred  tax
assets  and  liabilities.  The Company uses the liability  method
for  computing deferred income taxes. Under the liability method,
deferred income taxes are based on the change during the year  in
the  deferred tax liability or asset established for the expected
future tax consequences of differences in the financial reporting
and  tax bases of assets and liabilities. The differences  relate
principally  to premises and equipment, accrued pension,  premium
on  loans  and deposits purchased, unrealized gains  (losses)  on
investment  securities  available for  sale,  mortgage  servicing
rights, FHLB stock, and the allowance for loan losses.

Intangible  Assets:   Intangible  assets  include  a  premium  on
deposits  paid  in  connection with the acquisition  of  branches
which  is  being amortized on a straight-line basis over  ten  or
fifteen years and capitalized mortgage servicing rights which are
being amortized over the life of the related loans.

<PAGE>

NOTE  1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Earnings  Per Common Share:  Basic earnings per common  share  is
net  income  divided  by the weighted average  number  of  common
shares  outstanding  during  the period.   Diluted  earnings  per
common share includes the dilutive effect of additional potential
common  shares  issuable  under  stock  options.   Earnings   and
dividends  per  share  are  restated for  all  stock  splits  and
dividends   through  the  date  of  issuance  of  the   financial
statements.

Comprehensive  Income:   Comprehensive  income  consists  of  net
income  and  other  comprehensive  income.   Other  comprehensive
income   includes  unrealized  gains  and  losses  on  securities
available  for  sale  which  are also recognized  as  a  separate
component of equity.

New  Accounting Pronouncements:  Beginning January 1, 2001, a new
accounting  standard will require all derivatives to be  recorded
at  fair  value.  Unless designated as hedges, changes  in  these
fair values will be recorded in the income statement.  Fair value
changes involving hedges will generally be recorded by offsetting
gains and losses on the hedge and on the hedged item, even if the
fair value of the hedged item is not otherwise recorded.  This is
not  expected  to  have a material effect, but  the  effect  will
depend on derivative holdings when this standard applies.

Industry  Segments:   While the Company's chief  decision  makers
monitor  the revenue streams of the various Company products  and
services,  operations  are managed and financial  performance  is
evaluated  on  a  Company-wide basis.  Accordingly,  all  of  the
Company's   operations  are  considered  by  management   to   be
aggregated into one reportable operating segment.

NOTE  2 - RESTRICTIONS ON CASH AND DUE FROM BANKS

Included  in  cash  and  due from banks are certain  non-interest
bearing  deposits  that  are  held  at  the  Federal  Reserve  or
maintained  in  vault  cash in accordance  with  average  balance
requirements specified by the Federal Reserve Board of Governors.
The  reserve  requirement  at December  31,  1999  and  1998  was
$7,544,000 and $5,988,000.

<PAGE>

NOTE  3 - INVESTMENT SECURITIES

Year-end securities are as follows:

                                    Amortized Unrealized Unrealized  Fair
                                       Cost      Gains     Losses    Value
Available for Sale

1999
 U. S. Treasury                    $18,012,932  $     -  $ (58,683) $17,954,249
 U. S. government agencies           5,983,561        -    (81,261)   5,902,300
 States and political subdivisions   3,642,574   44,699     (6,121)   3,681,152
 Mortgage-backed                    26,317,036    5,812   (550,487)  25,772,361
 Other                               1,806,933   14,730   (201,399)   1,620,264

  Total                            $55,763,036  $65,241  $(897,951) $54,930,326


1998
 U. S. Treasury                    $16,013,161  $74,300  $       -  $16,087,461
 U. S. government agencies           5,979,883      406     (1,210)   5,979,079
 States and political subdivisions   3,641,873  161,498          -    3,803,371
 Mortgage-backed                    25,725,143   71,089   (172,037)  25,624,195
 Other                               3,959,643    9,161    (43,176)   3,925,628

  Total                            $55,319,703 $316,454  $(216,423) $55,419,734


Held to Maturity

1999
 States and political subdivisions $15,692,975 $361,580  $(137,756) $15,916,799

1998
 States and political subdivisions $16,933,755 $923,038  $  (2,243) $17,854,550

<PAGE>

NOTE  3 - INVESTMENT SECURITIES (Continued)

The  amortized  cost and fair value of investment  securities  at
December  31,  1999,  by category and contractual  maturity,  are
shown  below.  Expected maturities will differ  from  contractual
maturities because borrowers may have the right to call or prepay
obligations  with  or  without  call  or  prepayment   penalties.
Securities not due at a single maturity are shown separately.

                                              Amortized         Fair
                                                Cost            Value
Available for Sale
 Due in one year or less                     $13,992,453      $13,946,162
 Due after one year through five years        13,013,406       12,959,679
 Due after five years through ten years          876,226          873,024
                                              27,882,085       27,778,865

 Mortgage-backed                              26,317,036       25,772,361
 Equity                                        1,563,909        1,379,100

  Total                                      $55,763,036      $54,930,326


Held to Maturity
 Due in one year or less                   $   650,790  $   655,643
 Due after one year through five years       7,758,325    8,034,867
 Due after five years through ten years      4,406,937    4,480,209
 Due after ten years                         2,876,923    2,746,080

        Total                              $15,692,975  $15,916,799

Proceeds  from sales of investment securities during  1999,  1998
and  1997  were  $17,828,018, $6,548,219 and  $17,343,034.  Gross
gains  of  $29,674,  $40,955  and $31,347  and  gross  losses  of
$28,768, $0 and $17,661, were realized on those sales.

Investment  securities  with  an approximate  carrying  value  of
$61,321,000 and $55,657,000 at December 31, 1999 and  1998,  were
pledged  to secure public deposits, trust funds, securities  sold
under agreements to repurchase and for other purposes as required
or permitted by law.

<PAGE>

NOTE  4 - LOANS

Loans at year-end were as follows:

                                              1999        1998

Commercial                               $ 17,713,094   $ 15,177,364
Real estate construction                   17,003,060     11,055,329
Real estate mortgage                      134,809,876    118,735,789
Agricultural                               46,442,610     44,198,784
Consumer                                   22,357,830     17,607,474
Other                                         280,075        159,387

                                         $238,606,545   $206,934,127

Activity in the allowance for loan losses was as follows:

                                    1999        1998        1997

Beginning balance                $2,734,589  $2,321,536  $2,101,081
Charge-offs                        (410,245)   (368,017)   (355,123)
Recoveries                           78,856      80,670      82,778
Provision for loan losses           699,600     700,400     492,800

Ending balance                   $3,102,800  $2,734,589  $2,321,536

Impaired loans totaled $201,085 and $286,000 at December 31, 1999
and  1998.  The  average recorded investment  in  impaired  loans
during  1999, 1998 and 1997 was $244,000, $310,000 and  $192,000.
The  total  allowance for loan losses related to these loans  was
$10,000  and  $85,000 at December 31, 1999 and  1998.    Interest
income  on  impaired loans of  $18,000, $22,000 and  $23,000  was
recognized for cash payments received in 1999, 1998 and 1997.

Nonperforming loans were as follows:
                                                1999       1998      1997

Loans past due over 90 days still on accrual  $549,000   $790,000  $154,000
Nonaccrual loans                                63,000    136,000   173,000

Nonperforming  loans include impaired loans and  smaller  balance
homogeneous  loans,  such as residential  mortgage  and  consumer
loans, that are collectively evaluated for impairment.

<PAGE>

NOTE  4 - LOANS (Continued)

Mortgage  loans  serviced  for others are  not  included  in  the
accompanying  consolidated balance sheets. The  unpaid  principal
balances  of mortgage loans serviced for others was approximately
$108,480,000  and  $103,122,000 at December 31,  1999  and  1998.
Custodial  escrow  balances maintained  in  connection  with  the
foregoing  loan servicing, and included in demand deposits,  were
approximately  $646,000 and $593,000 at  December  31,  1999  and
1998.

Changes in mortgage servicing rights were as follows:

                                    1999        1998       1997

Beginning balance                 $ 533,822   $ 314,877   $ 189,451
Additions                           228,016     330,902     184,125
Amortization                       (155,351)   (111,957)    (58,699)

Ending balance                    $ 606,487   $ 533,822   $ 314,877

Certain  directors  and executive officers  of  the  Company  and
companies  in  which  they have beneficiary ownership  were  loan
customers of the Bank during 1999 and 1998. Such loans were  made
in  the  ordinary course of business at the Bank's normal  credit
terms  and  interest  rates.  An analysis of  the  activity  with
respect  to  all  director  and executive  officer  loans  is  as
follows:

                                                1999         1998
Balance, beginning of year                    $1,216,000   $1,824,000
Additions, including loans now meeting
 disclosure requirements                         615,000      704,000
Amounts collected, including loans no
 longer meeting disclosure requirements         (657,000)  (1,312,000)

Balance, end of year                          $1,174,000   $1,216,000

<PAGE>

NOTE  5 - PREMISES AND EQUIPMENT

Year-end premises and equipment were as follows:

                                                1999          1998

Land and buildings                           $ 7,717,995   $ 7,040,895
Furniture and equipment                        5,800,240     5,423,361
                                              13,518,235    12,464,256
Less accumulated depreciation                 (6,436,375)   (5,670,258)

                                             $ 7,081,860   $ 6,793,998

Depreciation  expense  was $766,117, $667,799,  and  $523,892  in
1999, 1998, and 1997.

NOTE  6 - DEPOSITS

At  December 31, 1999, the scheduled maturities of time  deposits
are as follows:

        2000                                 $108,940,738
        2001                                   24,824,192
        2002                                    1,266,304
        2003                                      911,140
        2004 and thereafter                       792,094

                                             $136,734,468

Certain  directors  and executive officers  of  the  Company  and
companies  in which they have beneficiary ownership, are  deposit
customers  of  the  Bank.   The  amount  of  these  deposits  was
approximately $2,522,000 and $3,173,000 at December 31, 1999  and
1998.

<PAGE>

NOTE  7 - SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

Securities  sold under agreements to repurchase generally  mature
within one to four days from the transaction date. The securities
underlying   the  agreements  are  maintained  in  a  third-party
custodian's   account   under  a  written  custodial   agreement.
Information  concerning  securities  sold  under  agreements   to
repurchase for 1999 and 1998 is summarized as follows:

                                                1999         1998

Average daily balance during the year         $ 5,683,000   $4,329,000
Average interest rate during the year               4.37%        4.76%
Maximum month-end balance during the year     $10,333,000   $6,713,000

NOTE  8 - FEDERAL HOME LOAN BANK ADVANCES

The  Bank  owns  stock of the Federal Home Loan  Bank  (FHLB)  of
Cincinnati,  Ohio. This stock allows the Bank to borrow  advances
from  the FHLB.   At December 31, 1999 and 1998, $26,592,305  and
$6,953,502 represented the balance due on advances from the FHLB.
All  advances are paid either on a monthly basis or at  maturity,
over  remaining  terms  of  one to eight  years,  with  either  a
variable  interest rate which was 4.75% on December 31,  1999  or
fixed  interest  rates  ranging from 5.05%  to  6.80%.   Advances
subject  to  the variable rate were $10,000,000 on  December  31,
1999.   Advances are secured by the FHLB stock and  substantially
all  first mortgage loans.  Scheduled principal payments  due  on
advances during the years subsequent to December 31, 1999 are  as
follows:   2000 - $11,230,522; 2001 - $226,717; 2002 -  $239,613;
2003 - $4,817,531; 2004 - $10,022,174; and for years thereafter -
$55,748.

NOTE  9 - INCOME TAXES

Income tax expense (benefit) was as follows:

                                    1999         1998         1997

Current payable                  $1,697,291   $1,306,758   $1,158,777
Deferred                             22,394       64,844      (10,853)

                                   $1,719,685 $1,371,602 $1,147,924

<PAGE>

NOTE  9 - INCOME TAXES (Continued)

Year-end  deferred tax assets and liabilities  were  due  to  the
following.   No  valuation  allowance  for  the  realization   of
deferred tax assets is considered necessary.

                                                1999       1998
Deferred tax assets
 Allowance for loan losses                   $ 861,717   $ 736,526
 Unrealized loss on investment securities      283,121           -
 Premium on deposits purchased                 156,646     127,144
 Deferred loan fees                              1,279      22,547
 Other                                          29,763      46,597

Deferred tax liabilities
 Bank premises and equipment                  (142,812)   (131,872)
 Unrealized gain on investment securities            -     (55,802)
 FHLB stock                                   (455,991)   (379,151)
 Mortgage servicing rights                    (206,206)   (181,499)
 Other                                         (54,278)    (27,780)

  Net deferred tax asset                     $ 473,239   $ 156,710

Effective  tax rates differ from federal statutory rates  applied
to financial statement income due to the following:

                                             1999      1998      1997

U. S. federal income tax rate                34.0%     34.0%     34.0%
Changes from the statutory rate
 Tax-exempt investment income                (7.2)     (8.7)    (10.0)
 Non-deductible interest expense related to
  carrying tax-exempt investments              .8       1.1       1.3
 Other                                         .3        .1      (0.1)

                                             27.9%     26.5%     25.2%

<PAGE>

NOTE  10 - EARNINGS PER SHARE

The factors used in the earnings per share computation follow:

                                            1999         1998         1997
Basic Earnings Per Share
 Net income                             $ 4,450,113  $ 3,803,516  $ 3,408,034
 Weighted average common shares
  outstanding                             2,803,276    2,801,320    2,792,402
 Basic  earnings  per share             $      1.59  $      1.36  $      1.22

Diluted Earnings Per Share
 Net income                             $ 4,450,113  $ 3,803,516  $ 3,408,034
 Weighted average common shares
  outstanding                             2,803,276    2,801,320    2,792,402
 Add dilutive effects of assumed
  exercise of stock options                  64,667       59,974       51,192
 Weighted average common and dilutive
  potential common shares outstanding     2,867,943    2,861,294    2,843,594
  Diluted  earnings per share           $      1.55  $      1.33  $      1.20

Stock  options for 600 shares of common stock were not considered
in  computing  earnings  per share for  1997  because  they  were
antidilutive.

NOTE  11 - RETIREMENT PLANS

The   Company  has  a  defined  benefit  pension  plan   covering
substantially all of its employees. The Company's funding  policy
is to contribute annually the maximum amount that can be deducted
for  federal  income  tax purposes. Benefits  are  based  on  one
percent of employee average earnings for the previous five  years
times years of credited service.

<PAGE>

NOTE  11 - RETIREMENT PLANS (Continued)

Information about the pension plan was as follows:
                                                 1999        1998
Change in benefit obligation:
 Beginning benefit obligation                 $2,032,917   $1,813,183
 Service cost                                    188,925      143,717
 Interest cost                                   169,649      143,564
 Actuarial adjustment                            420,482            -
 Benefits paid                                   (79,880)     (67,547)
  Ending benefit obligation                    2,732,093    2,032,917

Change in plan assets, at fair value:
 Beginning plan assets                         2,500,009    1,995,586
 Actual return                                   272,728      348,607
 Employer contribution                           234,801      223,363
 Benefits paid                                   (53,707)     (67,547)
  Ending plan assets                           2,953,831    2,500,009

Funded status                                    221,738      467,092
Unrecognized net actuarial gain                 (195,185)    (515,005)
Unrecognized prior transition asset               (3,345)      (3,717)

Prepaid (accrued) benefit cost                $   23,208   $  (51,630)

Net periodic pension cost include the following components:

                                    1999        1998        1997

Service cost                     $ 188,925   $ 143,717   $ 137,229
Interest cost                      169,649     143,564     126,623
Expected return on plan assets    (198,239)   (179,940)   (136,298)
Amortization of transition asset      (372)       (372)       (372)

Net periodic cost                $ 159,963   $ 106,969   $ 127,182

Discount rate on benefit obligation      7%          8%          8%
Long-term expected rate of return on
 plan assets                             8%          8%          8%
Rate of compensation increase            5%          5%          5%

<PAGE>

NOTE  11 - RETIREMENT PLANS (Continued)

The Company also has a qualified profit sharing plan which covers
substantially  all  employees and includes  a  401(k)  provision.
Profit sharing contributions, excluding the 401(k) provision, are
at  the  discretion of the Company's Board of Directors.  Expense
recognized in connection with the plan was $165,087, $181,743 and
$166,647 in 1999, 1998 and 1997.

NOTE  12 - STOCK OPTION PLAN

The  Company has stock option plans, which are accounted  for  in
accordance with Accounting Principles Board Opinion (APB) No. 25,
"Accounting   for  Stock  Issued  to  Employees",   and   related
interpretations.   Under  the plans, the Company  grants  certain
directors,  officers and key employees stock option awards  which
vest  and become fully exercisable at the end of five years.  The
exercise  price  of each option, which has a ten year  life,  was
equal  to the market price of the Company's stock on the date  of
grant; therefore, no compensation expense was recognized.

Although  the Company has elected to follow APB No. 25, Statement
of Financial Accounting Standards (SFAS) No. 123, "Accounting for
Stock-Based Compensation", requires pro forma disclosures of  net
income and earnings per share as if the Company had accounted for
its  employee stock options under that Statement. The fair  value
of  each  option grant was estimated on the grant date  using  an
option-pricing model.

Summary of stock option transactions are as follows:

                                  1999             1998             1997
                                    Weighted         Weighted         Weighted
                                    Option           Option           Option
                           Options  Price   Options  Price   Options  Price

Outstanding,
 beginning of year         130,760  $11.36  125,640  $ 9.74  117,100  $  8.60
Granted                     25,780   20.62   27,200   15.88   22,000    12.62
Canceled                         -       -   (2,000)  14.55   (1,300)    8.00
Exercised                   (7,600)   7.13  (20,080)   7.04  (12,160)    4.19
Outstanding, end of year   148,940  $13.17  130,760  $11.36  125,640  $  9.74

Weighted remaining contractual
 life                         90.4 months      81.6 months       69.3 months

<PAGE>

NOTE  12 - STOCK OPTION PLAN (Continued)

                                    1999         1998        1997
                                   Options      Options     Options
Options outstanding
 From $3.92 to $6.38 per share      19,600       24,720      35,800
 From $8.63 to $11.14 per share     30,480       32,640      40,640
 From $12.00 to $15.50 per share    69,900       70,200      49,200
 From $18.00 to $20.63 per share    28,960        3,200           -
                                   148,940      130,760     125,640
Eligible for exercise
  From $3.92 to $6.38 per share     19,600       24,720      35,800
  From $8.63 to $11.14 per share    30,480       29,360      36,480
  From $12.00 to $15.50 per share   31,740       16,920      15,240
  From $18.00 to $20.50 per share    2,680            -           -
                                    84,500       71,000      87,520

Under SFAS No. 123, compensation cost is recognized in the amount
of  the  estimated  fair value of the options  and  amortized  to
expense  over the options' vesting periods. The pro forma  effect
on  net  income and earnings per share of this statement  are  as
follows:

                                  1999        1998         1997
Net income
 As reported                  $4,450,113   $3,803,516   $3,408,034
 Pro forma                     4,368,134    3,747,871    3,375,248

Basic earnings per share
 As reported                    $   1.59     $  1.36     $   1.22
 Pro forma                          1.56        1.34         1.21

Diluted earnings per share
 As reported                    $   1.55     $  1.33     $   1.20
 Pro forma                          1.53        1.32         1.19

Weighted averages
 Fair value of options granted  $   5.14     $  4.52     $   3.62
 Risk free interest rate           4.82%       5.20%        6.50%
 Expected life                   8 years      8 years     8 years
 Expected volatility              18.17%      23.40%       21.79%
 Expected dividend yield           2.13%       2.53%        2.86%

<PAGE>

NOTE  13 - LIMITATION ON BANK DIVIDENDS

The  Company's  principal source of funds is  dividends  received
from  the Bank. Banking regulations limit the amount of dividends
that may be paid by the Bank without prior approval of regulatory
agencies.  Under these regulations, the amount of dividends  that
may be paid in any calendar year is limited to the current year's
net  profits, as defined, combined with the retained net  profits
of  the  preceding two years. During 2000 the Bank could, without
prior  approval,  declare  dividends of approximately  $3,254,000
plus  any  2000 net profits retained to the date of the  dividend
declaration.

NOTE  14 - DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

The  fair  values  of  the  Company's  financial  instruments  at
December 31, 1999 and 1998 are as follows:
                                 1999                 1998
                              Carrying    Fair      Carrying   Fair
                               Amount    Value       Amount   Value
                                           (In Thousands)
Financial assets
 Cash and cash equivalents    $ 20,717  $ 20,717   $ 10,756   $10,756
 Investment securities          70,623    70,847     72,353    73,274
 Mortgage loans held for sale    3,494     3,494      5,909     5,978
 Loans, net                    235,504   234,778    204,200   204,716
 FHLB stock                      3,346     3,346      3,120     3,120
 Interest receivable             2,108     2,108      2,034     2,034

Financial liabilities
 Deposits                     $274,566  $275,192   $258,740  $259,532
 Securities sold under
  agreements to repurchase
  and other borrowed funds      11,858    11,858     11,248    11,248
 FHLB advances                  26,592    25,892      6,954     7,033
 Interest payable                2,142     2,142      1,789     1,789

Carrying  amount is the estimated fair value for  cash  and  cash
equivalents, short-term borrowings, Federal Home Loan Bank stock,
accrued interest receivable and payable, demand deposits,  short-
term  debt,  and  variable rate loans or  deposits  that  reprice
frequently and fully.  Security fair values are based  on  market
prices or dealer quotes, and if no such information is available,
on  the  rate and term of the security and information about  the
issuer.   For fixed rate loans or deposits and for variable  rate
loans  or deposits with infrequent repricing or repricing limits,
fair value is based on discounted cash flows using current market
rates applied to the estimated life and credit risk.  Fair values
for  impaired  loans  are estimated using  discounted  cash  flow
analysis or underlying collateral values.  Fair value of debt  is
based  on current rates for similar financing. The fair value  of
commitments to extend credit and standby letters of credit is not
considered material.

<PAGE>

NOTE  15 - OFF BALANCE SHEET ACTIVITIES

Some  financial  instruments, such as  loan  commitments,  credit
lines, letters of credit, and overdraft protection, are issued to
meet  customer financing needs.  These are agreements to  provide
credit  or to support the credit of others, as long as conditions
established in the contract are met, and usually have  expiration
dates.   Commitments may expire without being used.  Off-balance-
sheet  risk to credit loss exists up to the face amount of  these
instruments,  although material losses are not anticipated.   The
same  credit  policies are used to make such commitments  as  are
used for loans, including obtaining collateral at exercise of the
commitment.

Financial instruments with off balance sheet risk were as follows
at year-end:

                                                 1999           1998

Unused lines of credit                        $37,976,000    $34,728,000
Commitments to make loans                       3,800,000      3,892,000
Letters of credit                                 453,000        586,000
Commitments to sell loans                               -      4,000,000

Unused  lines of credit are substantially all at variable  rates.
Commitments to make loans are generally made for a period  of  60
days  or  less  and are primarily fixed at current  market  rates
ranging from 7.63% to 8.25% with maturities ranging from 15 to 30
years.

Commitments  to sell loans are to the Federal Home Loan  Mortgage
Corporation  and  have an underlying interest  rate  designed  to
transfer risk associated with loans held for sale and commitments
to  make loans that are intended to be sold.  The notional amount
of commitments to sell loans represent amounts of loans that have
been  committed  for  delivery on a  specified  date  and  within
certain interest rate ranges, not credit exposure.

NOTE  16 - CONTINGENT LIABILITIES

The  Bank  is  a defendant in legal actions arising  from  normal
business  activities.   Management  believes  these  actions  are
without  merit or that the ultimate liability, if any,  resulting
from  them  will not materially affect the Company's consolidated
financial position or results of operations.

NOTE 17 - STOCKHOLDER'S EQUITY

Stock  Split:   On  March 9, 1999, the stockholders  approved  an
amendment to Bourbon Bancshares, Inc.'s Articles of Incorporation
to increase the authorized common stock to 10,000,000 shares.  On
June  8,  1999,  the  stockholders approved a two-for-one  common
stock  split.   All  shares  and  per  share  amounts  have  been
retroactively restated to reflect the split.

<PAGE>

NOTE  17 - STOCKHOLDER'S EQUITY (Continued)

Regulatory  Matters:   The Company and the Bank  are  subject  to
various  regulatory  capital  requirements  administered  by  the
federal  banking  agencies.   Failure  to  meet  minimum  capital
requirements   can  initiate  certain  mandatory   and   possible
additional   discretionary  actions  by   regulators   that,   if
undertaken, could have a direct material effect on the  Company's
financial statements. Under capital adequacy guidelines  and  the
regulatory  framework for prompt corrective action,  the  Company
and  the  Bank must meet specific capital guidelines that involve
quantitative  measures of the Company's and  the  Bank's  assets,
liabilities,  and certain off-balance sheet items  as  calculated
under  regulatory  accounting practices.  The  Company  and  Bank
capital   amounts  and  classifications  are  also   subject   to
qualitative  judgments  by  regulators  about  components,   risk
weightings, and other factors.

Quantitative measures established by regulation to ensure capital
adequacy  require  the Company and the Bank to  maintain  minimum
amounts  and ratios (set forth in the table below) of  Total  and
Tier  I  capital (as defined in the regulations) to risk-weighted
assets (as defined), and of Tier I capital to average assets  (as
defined).  Management believes, as of December 31, 1999 and 1998,
that   the  Company  and  the  Bank  meet  all  capital  adequacy
requirements to which they are subject.

The  most  recent notification from the Federal Deposit Insurance
Corporation  categorized the Bank as well capitalized  under  the
regulatory  framework  for  prompt  corrective  action.   To   be
categorized  as well capitalized, the Bank must maintain  minimum
Total risk-based, Tier I risk-based and Tier I leverage ratios as
set  forth  in  the following table.  There are no conditions  or
events  since  that  notification that management  believes  have
changed the institution's category.

The  Company's  and  the  Bank's actual amounts  and  ratios  are
presented in the table below:
<TABLE>
<CAPTION>
                                                                                To Be Well
                                                                               Capitalized
                                                                               Under Prompt
                                                              For Capital       Corrective
                                              Actual       Adequacy Purposes Action Provisions
                                           Amount  Ratio     Amount  Ratio    Amount   Ratio
<S>                                       <C>       <C>      <C>       <C>   <C>       <C>
1999                                                      (Dollars in Thousands)
Consolidated
  Total Capital (to Risk-Weighted Assets) $33,510   14.3%    $18,714   8%    $23,392   10%
  Tier I Capital (to Risk-Weighted Assets) 30,584   13.1       9,357   4      14,035    6
  Tier I Capital (to Average Assets)       30,584    9.6      12,755   4      15,944    5
Average Assets)

Bank Only
  Total Capital (to Risk-Weighted Assets) $30,431   13.1%    $18,563   8%    $23,204   10%
  Tier I Capital (to Risk-Weighted Assets) 27,528   11.9       9,281   4      13,922    6
  Tier I Capital (to Average Assets)       27,528    8.7      12,700   4      15,875    5

<PAGE>

NOTE  17 - STOCKHOLDER'S EQUITY (Continued)


                                                                    To Be Well
                                                                                Capitalized
                                                                               Under Prompt
                                                              For Capital       Corrective
                                              Actual       Adequacy Purposes Action Provisions
                                          Amount  Ratio      Amount  Ratio    Amount   Ratio
                                                       (Dollars in Thousands)
1998
Consolidated
  Total Capital (to Risk-Weighted Assets) $30,333   14.6%    $16,621   8%    $20,776   10%
  Tier I Capital (to Risk-Weighted Assets) 27,732   13.3       8,340   4      12,511    6
  Tier I Capital (to Average Assets)       27,732    9.6      11,555   4      14,444    5

Bank Only
  Total Capital (to Risk-Weighted Assets)  $28,360  13.7%    $16,561   8%    $20,701   10%
  Tier I Capital (to Risk-Weighted Assets)  25,771  12.5       8,247   4      12,370    6
  Tier I Capital (to Average Assets)        25,771   8.9      11,582   4      14,478    5

</TABLE>
<PAGE>

NOTE  18 - PARENT COMPANY FINANCIAL STATEMENTS

                    Condensed Balance Sheets
                           December 31

                                                1999      1998
                                                 (In Thousands)
ASSETS
Cash on deposit with subsidiary                 $ 1,606   $   967
Investment in subsidiary                         28,663    27,411
Investment securities available for sale          1,379       977
Other assets                                         71        17

Total assets                                    $31,719   $29,372

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities                                     $     -   $     -

Stockholders' equity
 Preferred stock                                      -         -
 Common stock                                     6,491     6,474
 Retained earnings                               25,778    22,832
 Accumulated other comprehensive income            (550)       66

Total liabilities and stockholders' equity      $31,719   $29,372

<PAGE>

NOTE  18 - PARENT COMPANY FINANCIAL STATEMENTS (Continued)

     Condensed Statements of Income and Comprehensive Income
                     Years Ended December 31

                                                   1999    1998     1997
                                                       (In Thousands)
Income
 Dividends from subsidiary                        $2,700   $2,330   $2,100
 Interest income                                      28        5        -
  Total income                                     2,728    2,335    2,100

Expenses
 Interest expense                                      -        -       10
 Other expenses                                       53       25       21
  Total expenses                                      53       25       31

Income before income taxes and equity in
 undistributed income of subsidiary                2,675    2,310    2,069

Applicable income tax benefits                         9        7       11

Income before equity in undistributed
 income of subsidiary                              2,684    2,317    2,080

Equity in undistributed income of subsidiary       1,766    1,487     1,328

Net income                                         4,450    3,804     3,408

Other comprehensive income (loss), net of tax:
 Unrealized gains (losses) on securities arising
  during the period                                 (615)    (140)      240
 Reclassification of realized amount                   -      (27)       (9)

 Net change in unrealized gain (loss) on securities (615)    (167)      231

Comprehensive income                              $3,835   $3,637    $3,639

<PAGE>


NOTE 18 - PARENT COMPANY FINANCIAL STATEMENTS (Continued)

     Condensed Statements of Cash Flows
           Years Ended December 31

                                               1999      1998      1997
                                                    (In Thousands)
Cash flows from operating activities
 Net income                                   $ 4,450   $ 3,804   $ 3,408
 Adjustments to reconcile net income to net
  cash from operating activities
   Equity in undistributed earnings of
     subsidiary                                (1,766)   (1,487)   (1,328)
   Change in other assets                          (3)       (8)        8
   Change in other liabilities                      -         -       (11)
     Net cash from operating activities         2,681     2,309     2,077


Cash flows from investing activities
Purchase of investment securities available
  for sale                                      (555)      (977)        -


Cash flows from financing activities
 Dividends paid                               (1,233)    (1,122)   (1,005)
 Proceeds from issuance of common stock           50        141        51
 Purchase of common stock                       (304)        -       (603)
  Net cash from financing activities          (1,487)      (981)   (1,557)

Net change in cash                               639        351       520

Cash at beginning of year                        967        616        96

Cash at end of year                          $ 1,606    $   967   $   616


<PAGE>
                 REPORT OF INDEPENDENT AUDITORS



Board of Directors
Bourbon Bancshares, Inc.
Paris, Kentucky



We  have audited the accompanying consolidated balance sheets  of
Bourbon  Bancshares, Inc. as of December 31, 1999 and  1998,  and
the  related  consolidated  statements of  income,  comprehensive
income,  changes in stockholders' equity and cash flows for  each
of  the three years in the period ended December 31, 1999.  These
financial  statements  are the responsibility  of  the  Company's
management. Our responsibility is to express an opinion on  these
financial statements based on our audits.

We  conducted  our  audits in accordance with generally  accepted
auditing  standards. Those standards require  that  we  plan  and
perform  the  audit to obtain reasonable assurance about  whether
the  financial statements are free of material misstatement.   An
audit  includes  examining, on a test basis, evidence  supporting
the amounts and disclosures in the financial statements. An audit
also  includes  assessing  the  accounting  principles  used  and
significant  estimates made by management, as well as  evaluating
the  overall  financial statement presentation.  We believe  that
our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to
above  present  fairly, in all material respects,  the  financial
position of Bourbon Bancshares, Inc. as of December 31, 1999  and
1998,  and  the results of its operations and its cash flows  for
each of the three years in the period ended December 31, 1999, in
conformity with generally accepted accounting principles.


                              /s/Crowe, Chizek and Company LLP

                              Crowe, Chizek and Company LLP

Lexington, Kentucky
January 21, 2000

<PAGE>


Bourbon Bancshares, Inc.
Board of Directors

Buckner Woodford
President and Chief Executive Officer;
Kentucky Bank and Bourbon Bancshares, Inc.
Class of 2000

William R. Stamler
Chairman, Signal Investments, Inc.
Class of 2000

Henry Hinkle
President; Hinkle Contracting Company
Class of 2002

Robert G. Thompson
Director, Paris/Bourbon County YMCA; Snow Hill Farm
Class of 2002

Theodore Kuster
Farmer and Thoroughbred Breeder; West View Farm
Class of 2002

James L. Ferrell, M.D.
Physician; Chairman, Bourbon Bancshares, Inc.
Class of 2001

William M. Arvin
Attorney
Class of 2001

Kentucky Bank - Board of Directors

Buckner Woodford
President and Chief Executive Officer;
Bourbon Bancshares, Inc. and Kentucky Bank

Joe Allen
Executive Vice President, Kentucky Bank

William M. Arvin
Attorney, William M. Arvin and Associates

Dr. Gus A. Bynum
Physician

Bonnie Dean
Retired - Nicholasville City Clerk, Treasurer

James L. Ferrell, M.D.
Physician

Dr. William J. Graul
Physician

Mary Beth Hendricks
Director of Clark County Child Support Services

<PAGE>

Henry Hinkle
President; Hinkle Contracting Company

Theodore Kuster
Farmer and Thoroughbred Breeder; West View Farm

Joseph B. McClain
President; Hopewell Insurance Company, Inc.

William R. Stamler
Chairman, Signal Investments, Inc.

Robert G. Thompson
Director, Paris/Bourbon County YMCA

Gerald M. Whalen
President, Whalen and Co. Insurance and Real Estate

REGIONAL BOARD OF DIRECTORS
CLARK

C. Richard Gamble
Investor

Donald Pace
Consultant, Clark Co. Schools

Ed Saunier
President, Saunier North American Van Lines

Mary Beth Hendricks
Director of Clark County Child Support Services

John G. Roche
Optician

<PAGE>

WOODFORD

Dr. William J. Graul
Physician

James Kay
Businessman, Farmer

Loren Carl
Director, KY Attorney General's Office

Tricia N. Kittinger
Woodford Circuit Clerk

SCOTT

R.C. Johnson, Jr.
Owner and President; Johnson's Funeral Home

Dr. Gus A. Bynum
Physician

Mike Hockensmith
Owner and President, The Hockensmith Agency, Inc.

George Lusby
County Judge Executive


JESSAMINE

William M. Arvin
Attorney, William M. Arvin and Associates

Dan Brewer
Bluegrass RECC

Bonnie Dean
Retired - Nicholasville City Clerk, Treasurer

Eva McDaniel
Jessamine County Clerk

<PAGE>

OFFICERS
BOURBON COUNTY
PARIS
Buckner Woodford - President and CEO
Joe Allen - Executive Vice President
James P. Shipp, Jr. - Sr. Vice President, Branch Administration
Norman J. Fryman - Sr. Vice President, Director of Lending
Greg Dawson - Vice President, Chief Financial Officer
Hugh Crombie - Vice President, Operations
Bill Reynolds - Vice President, Trust Officer
Brenda Bragonier - Vice President, Director of Marketing and Human Resources
R.W. Collins, Jr. - Vice President, Loan Officer
Michael Lovell - Vice President, Loan Officer
George Wilder - Vice President, Loan Officer
Nicholas L. Carter - Assistant Vice President, Loan Officer
Cathy Hill  - Assistant Vice President, Loan Officer
Brenda Berry - Accountant
Mary Lou Boyle - Human Resources
Wallis Brooks - Branch Manager
Patty Carpenter - Loan Operations Officer
Paul Clift - Systems Support
Janice Hash - Accountant and Purchasing Agent
Jean Patton - Compliance/CRA/Quality Control
Donald Roe - Data Processing
Lydia Sosby - Corporate and Automated Products Officer
Rick Wagner - Maintenance Supervisor
Martha Woodford - Corporate and Automated Products Officer
Jan Worth - Trust Officer

Lexington Road Branch
Rita Bugg - Vice President, Branch Manager, Loan Officer

Pleasant Street Branch
Philip Hurst - Assistant Branch Manager

CLARK COUNTY
WINCHESTER
Tim Duncan - Regional Vice President
Becky Taulbee - Assistant Vice President, Loan Officer
Darryl Terry - Vice President, Loan Officer
Carolyn Wilkins - Calling Officer
Ron Burden, Vice President, Loan Officer

Colby Road Branch
Teresa Shimfessel - Assistant Vice President, Branch Manager, Loan Officer

WOODFORD COUNTY
VERSAILLES
Duncan Gardner - Regional Vice President
A.J. Gullett - Assistant Vice President, Loan Officer

<PAGE>

SCOTT COUNTY
PARIS PIKE BRANCH
Jennifer Roberts - Assistant Vice President, Branch Manager, Loan Officer

GEORGETOWN
Mark Walls - Regional Vice President
Ben Sargent - Assistant Vice President, Loan Officer

JESSAMINE COUNTY
NICHOLASVILLE
Tom Buford - Regional Vice President
Jeanie Thompson - Assistant Cashier & CSR
Rick Walling - Assistant Vice President, Loan Officer

WILMORE
Freida Lear, Assistant Vice President, Branch Manager, Loan Officer

HARRISON COUNTY
CYNTHIANA LOAN PRODUCTION OFFICE
Ken DeVasher - Regional Manager, Loan Officer

<PAGE>

Exhibit 21     Subsidiaries of Registrant

              Bourbon Bancshares, Inc.'s Subsidiary

                          Kentucky Bank

<PAGE>

                           EXHIBIT 23

                 CONSENT OF INDEPENDENT AUDITORS

We hereby consent to the incorporation by reference in the Form S-8
Registration Statement No. 333-92725 of Bourbon Bancshares, Inc., of our
report dated January 21, 2000 on the consolidated financial statements of
Bourbon Bancshares, Inc. as of December 31, 1999 and 1998 and for each of the
three years in the period ended December 31, 1999 as included in the
registrant's annual report on Form 10-K.

/s/Crowe, Chizek and Company LLP

Crowe, Chizek and Company LLP


Lexington, KY
March 29, 2000

<PAGE>

Exhibit 99.1   Proxy Statement

                       BOURBON BANCSHARES
                         400 Main Street
                      Paris, Kentucky 40361

            NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
                     TO BE HELD MAY 2, 2000

                                        March 17, 2000
To our Shareholders:

     The annual meeting of the shareholders of Bourbon Bancshares
     (the "Company") will be held on Tuesday, May 2, 2000 at
     11:00 a.m. local time, at the Lexington Road Branch of
     Kentucky Bank, Paris, Kentucky, for the purposes of:

     1.   Election of directors; to elect two Class I directors

     2.   Ratification of Independent Auditors.  To act upon a
          proposal to ratify the appointment of  Crowe, Chizek and Company
          LLP as the Corporation's independent auditors for the fiscal year
          ending December 31, 2000.

     3.   Other Business.  To act upon such other matters as may
          properly be brought before the Annual Meeting or any adjournment
          thereof.  The Board of Directors does not know of any other
          matter to come before the Annual Meeting.

     Information regarding the matters to be acted upon at the
     Annual Meeting is contained in the Proxy statement
     accompanying this Notice.  Only those holders of record of
     the corporation's common stock at the close of business on
     March 17, 2000, are entitled to notice of and to vote at the
     Annual Meeting and any adjournment thereof.

     All Shareholders are cordially invited to attend the Annual
     Meeting, but whether or not you expect to attend the Annual
     Meeting in person, please sign and date the enclosed Proxy
     and return it promptly so your stock may be voted.

     Thank you for your time and consideration.  Please feel free
     to contact my office should you have any questions.

                         BY ORDER OF THE BOARD OF DIRECTORS

                         /s/Buckner Woodford
                         Buckner Woodford
                         President Bourbon Bancshares, Inc.

YOUR VOTE IS IMPORTANT

PLEASE MARK, SIGN, DATE AND RETURN THE ACCOMPANYING PROXY
IMMEDIATELY EVEN IF YOU PLAN TO ATTEND THE ANNUAL MEETING.

<PAGE>

                    BOURBON BANCSHARES, INC.

                         PROXY STATEMENT

INTRODUCTION

     This Proxy Statement is being furnished to shareholders of
Bourbon Bancshares, Inc., a Kentucky Corporation (the "Company"),
in connection with the solicitation of proxies by the Board of
Directors of the Company (the "Board") from holders of record of
the Company's outstanding Common Shares (the "Common Shares") as
of the close of business on March 17, 2000 (the "Annual Meeting
Record Date"), for use at the Annual Meeting of Shareholders of
the Company (the "Annual Meeting") to be held on Tuesday, May 2,
2000, at 11:00 a.m. (Eastern Daylight Time) at the Company's
Lexington Road Branch office of Kentucky Bank, Fourth and Main
Streets, Paris, Kentucky, and at any adjournment or postponement
thereof.  This Proxy Statement is first being mailed to the
Company's shareholders on or about March 17, 2000.  The principal
executive offices of the Company are located at Fourth and Main
Streets, Paris, Kentucky 40361.  Its telephone number is (606)
987-1795.

Purposes of the Annual Meeting

     At the Annual Meeting, holders of Common Shares will be
asked to consider and to vote upon the following matters:

     (1)  To elect two Class I directors:
     (2)  To ratify the appointment of Crowe, Chizek and Company LLP
          as the Company's independent auditors for the 2000 fiscal
          year end
     (3)  To transact such other business as may properly come before
          the meeting.

     The Board recommends that shareholders vote FOR the election
of the Board's nominees for Class I directors and the
ratification of the Board's appointment of  Crowe, Chizek and
Company LLP as the Company's independent auditors for the 2000
fiscal year.  As of the date of this Proxy Statement, the Board
knows of no other business to come before the Annual Meeting.

Voting Rights and Proxy Information

     Only holders of record of Common Shares as of the close of
business on the Annual Meeting Record Date will be entitled to
notice of and to vote at the Annual Meeting or any adjournment or
postponement thereof.  As of  December 31, 1999, there were
2,802,471 Common Shares outstanding and entitled to vote at the
Annual Meeting.  The presence either in person or by properly
executed proxy, of the holders of a majority of the outstanding
Common Shares as of the Annual Meeting Record Date is necessary
to constitute a quorum at the Annual Meeting.  Holders of Common
Shares are entitled to one vote per share on any matter, other
than the election of directors, that may properly come before the
Annual Meeting.  In the election of directors, holders of Common
Shares have cumulative voting rights whereby each holder is
entitled to vote the number of Common Shares owned multiplied by
two (the number of directors to be elected at the Annual
Meeting), and each holder may cast the whole number of votes for
one candidate or distribute such votes among two or more
candidates.  The Board of Directors is soliciting discretionary
authority for the individuals appointed in the proxies to
cumulate votes represented by properly executed proxies and to
vote for less than all the Company's nominees to the Board if
deemed appropriate to ensure the election of as many of the
Company's nominees to the Board as possible.

<PAGE>

     Those persons receiving the two highest number of votes in
the election of directors (net of any votes against their
election) will be elected to the Board.  The appointment of
Crowe, Chizek and Company LLP as the company's independent
auditors for the 2000 year will be ratified, if the votes cast in
favor of ratification exceed the votes cast against that matter.

     All Common Shares that are represented at the Annual Meeting
by properly executed proxies received prior to or at the Annual
Meeting and not revoked will be voted at the Annual Meeting in
accordance with the instructions indicated in such proxies.  If
no instructions are indicated, such proxies will be voted "FOR"
(I) the election of the Board's two nominees as Class I directors
of the Company (or, if deemed appropriate by the individuals
appointed in the proxies, cumulatively voted for less than all of
the Board's nominees) and (II) the ratification of Crowe, Chizek
and Company LLP as the Company's independent auditors for the
2000 year.

     Any proxy given pursuant to this solicitation may be revoked
by the person giving it at any time before it is voted.  Proxies
may be revoked by (i) filing with the Company, to the attention
of William C. Reynolds, Secretary, at or before the Annual
Meeting, a written notice of revocation bearing a later date than
the proxy, (ii) duly executing a subsequent proxy relating to the
same Common Shares and delivering it to the Company at or before
the Annual Meeting or (iii) attending the Annual Meeting and
voting in person (although attendance at the Annual Meeting will
not in and of itself constitute a revocation of a proxy).  Any
written notice revoking a proxy should be sent to Bourbon
Bancshares, Inc., P. O. Box 157, Paris, Kentucky 40362-0157,
Attention:  William C. Reynolds, Secretary.

     The Company will bear the cost of the solicitation of
proxies by the Board in connection with the Annual Meeting.  In
addition to solicitation by mail, the Company will request banks,
brokers and other custodian nominees and fiduciaries to supply
proxy material to the beneficial owners of Common Shares, and
will reimburse them for their expenses in so doing.  Certain
directors, officers and other employees of the Company, not
specially employed for this purpose, may solicit proxies without
additional remuneration therefore, by personal interview, mail,
telephone, facsimile or other electronic means.

ITEM 1 -- ELECTION OF DIRECTORS

     Under the Company's Articles of Incorporation, the Board of
Directors consists of three different classes (Class I, Class II
and Class III), each to serve, subject to the provisions of the
Articles of Incorporation and Bylaws for a three year term and
until his successor is duly elected and qualified.  Except as
listed below, each nominee for a Class II directorship has held
the specified position for the last five years.  The names of the
nominees proposed for election as Class I directors, all of whom
are presently directors of the Company, are set forth below.  The
Company is not aware of any other individual who may be nominated
for election to the Board of Directors at the Annual Meeting.

William R. Stamler, Retired, is a consultant of Stamler Corp,
Oldenburg Group.  He has been a director since 1988.

Buckner Woodford, President of the bank and holding company.
Became a director in 1981.

The Board of Directors does not contemplate that any of the
nominees will be unable to accept election as a director for any
reason.  However, in the event that one or more of such nominees
is unable or unwilling to accept or is unavailable to serve, the
persons named in the proxies or their substitutes shall have
authority, according to their judgment, to vote or to refrain
from voting for other individuals as directors.

<PAGE>

     The Board recommends that shareholders vote "FOR" each of
the above nominees for election as Class I directors of the
Company.

            ITEM 2 -- RATIFICATION OF APPOINTMENT OF
                      INDEPENDENT AUDITORS

     The Company has appointed Crowe, Chizek and Company LLP,
Louisville and Lexington, Kentucky as the Company's independent
auditors for the fiscal year ending December 31, 2000.  Eskew &
Gresham, P.S.C. has served as the Company's independent auditors
since 1982. In January 1998 Eskew & Gresham was merged into
Crowe, Chizek and Company LLP.   Services provided to the Company
and its subsidiaries by Crowe, Chizek and Company LLP with
respect to the fiscal year ended December 31, 1999 included the
examination of the Company's consolidated financial statements
and consultations on various tax matters.

     In the event shareholders do not ratify the appointment of
Crowe, Chizek and Company LLP as the Company's independent
auditors for the 2000 year such appointment will be reconsidered
by the Board.

     The Board recommends that shareholders vote "FOR"
ratification of the appointment of Crowe, Chizek and Company LLP
as the Company's independent auditors for the 2000 year.

OTHER MATTERS

     As of the date of this Proxy Statement, the Company knows of
no business that will be presented for consideration at the
Annual Meeting other than that referred to above.  Proxies in the
enclosed form will be voted in respect of any other business that
is properly brought before the Annual Meeting in accordance with
the judgment of the person or persons voting the proxies.

                              By Order of the Board of Directors

                              /s/William C. Reynolds

                              William C. Reynolds, Secretary


March 17, 2000

<PAGE>

     This Proxy Form is Solicited by the Board of Directors

                    Bourbon Bancshares, Inc.
                         Paris, Kentucky


     The undersigned hereby appoints Buckner Woodford and William
Reynolds, or either one of them (with full power to act alone),
my proxy, each with the power to appoint his substitute, to
represent me to vote all of the Corporation's Common Stock which
I held of record or am otherwise entitled to vote at the close of
business on March 17, 2000, at the 2000 Annual Meeting of
Shareholders to be held on May 2, 2000 and at any adjournments
thereof, with all powers the undersigned would possess if
personally present, as follows:

I    ELECTION OF DIRECTORS

     __   FOR all nominees listed below (except as otherwise
     indicated below)

     __   AGAINST all nominees listed below

                        William Stamler, Buckner Woodford

(INSTRUCTION:  To withhold authority to vote for any individual
               nominee, write the nominee's name on the line)


II          RATIFICATION OF CROWE, CHIZEK AND CO. LLP AS
               INDEPENDENT AUDITORS

             ______FOR        ______AGAINST       _____ABSTAIN


III         OTHER BUSINESS.  In their discretion, the Proxies are
               authorized to act upon such other matters
             As may properly be brought before the Annual Meeting
               or any adjournment thereof.


           THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL OF THE NOMINEES
LISTED IN ITEM I AND "FOR" ITEMS 2 AND 3.

        (PLEASE DATE, MARK, SIGN AND RETURN IMMEDIATELY)

             This proxy form relates to ALL shares owned by the undersigned.

             This proxy form is solicited by the Board of
             Directors and will be voted as specified and in
             accordance with the accompanying proxy statement.  If no
             instruction is indicated, this proxy form will be
             voted "FOR" all of the nominees listed in Item 1 and "FOR" Items
             2 and 3.

             Please sign exactly as name appears.  When shares
             are held by joint tenants, both should sign.
             When signing as attorney, as executor, administrator, trustee or
             guardian, please give full title as such.  If
             a corporation, please sign full corporate name by President or
             other authorized officer.  If a partnership,
             please sign partnership name by authorized person.

             DATE___________, 2000
                                    ______________________________________
                                    Signature


                                    _______________________________________
                                    Signature if held jointly