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

(Mark One)
[ X ]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 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

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 _____


Number of shares of Common Stock outstanding as of November
12, 1999:  2,802,471.

<PAGE>

BOURBON BANCSHARES, INC.

                      Table of Contents

Part I - Financial Information

Item 1.     Financial Statements

          Consolidated Balance Sheets                                  3

          Consolidated Statement of Income and Comprehensive Income
               Six Months Ending September 30, 1999 & 1998             4

          Consolidated Statement of Income and Comprehensive Income
               Three Months Ending September 30, 1999 & 1998           5

          Consolidated Statements of Cash Flows
               Six Months Ending September 30, 1999 & 1998             6

          Consolidated Statements of Cash Flows
               Three Months Ending September 30, 1999 & 1998           7

          Notes to Consolidated Financial Statements                   8

Item 2.     Management's Discussion and Analysis of Financial
          Condition and Results of Operations                          9

Item 3.   Quantitative and Qualitative Disclosures About
          Market Risk                                                 17

Part II - Other Information                                           21

Signatures                                                            22

Exhibits

     27   Financial Data Schedule                                     23

<PAGE>

Item 1 - Financial Statements

CONSOLIDATED BALANCE SHEET  (unaudited)
(thousands)
                                         9/30/99  12/31/98
Assets
  Cash & Due From Banks                         $ 12,682   $ 10,756
  Investment Securities:
    Securities Held to Maturity                   15,407     16,934
    Securities Available for Sale                 50,378     55,420
  Federal Home Loan Bank Stock                     3,288      3,119
  Mortgage Loans Held for Sale                     3,159      5,909
  Loans                                         $227,486   $206,934
  Reserve for Loan Losses                          3,053      2,735
    Net Loans                                   $224,433   $204,199
  Premises and Equipment                           7,195      6,794
  Other Assets                                     6,599      5,574
    Total Assets                                $323,141   $308,705

Liabilities & Stockholders' Equity
  Deposits
    Demand                                      $ 40,490   $ 40,336
    Savings & Interest Checking                   88,694     96,579
    Certificates of Deposit                      134,912    121,825
      Total Deposits                            $264,096   $258,740
  Repurchase Agreements                            6,070      6,713
  Federal Home Loan Bank Advances                 16,667      6,954
  Other Borrowed Funds                             2,327      4,535
  Other Liabilities                                2,789      2,391
    Total Liabilities                           $291,949   $279,333

Stockholders' Equity
  Common Stock                                  $  6,491   $  6,474
  Retained Earnings                               25,007     22,832
  Accumulated Other Comprehensive Income            (306)        66
    Total Stockholders' Equity                  $ 31,192   $ 29,372
    Total Liabilities & Stockholders' Equity    $323,141   $308,705

<PAGE>

BOURBON BANCSHARES, INC.

 CONSOLIDATED STATEMENT OF INCOME AND COMPREHENSIVE INCOME  (unaudited)
(thousands, except per share amounts)         Nine Months Ending
                                              9/30/99   9/30/98
INTEREST INCOME:
  Loans, including fees                       $ 14,002  $ 12,637
  Investment Securities                          2,945     3,290
  Other                                            260       361
    Total Interest Income                     $ 17,207  $ 16,288
INTEREST EXPENSE:
  Deposits                                    $  6,806  $  7,352
  Other                                            866       677
    Total Interest Expense                    $  7,672  $  8,029
  Net Interest Income                         $  9,535  $  8,259
  Loan Loss Provision                              525       488
  Net Interest Income After Provision         $  9,010  $  7,771
OTHER INCOME:
  Service Charges                             $  1,772  $  1,646
  Securities Gains (Losses)                          1        35
  Other                                            772       560
    Total Other Income                        $  2,545  $  2,241
OTHER EXPENSES:
  Salaries and Benefits                       $  3,658  $  3,371
  Occupancy Expenses                               875       854
  Other                                          2,347     2,070
    Total Other Expenses                      $  6,880  $  6,295
  Income Before Taxes                         $  4,675  $  3,717
  Income Taxes                                   1,304       978
  Net Income                                  $  3,371  $  2,739

Other Comprehensive Income, net of tax:
Change in Unrealized Gains on Securities          (372)       (4)

Comprehensive Income                          $  2,999  $  2,735

Earnings per share                            $   1.20  $   0.98
Earnings per share - assuming dilution        $   1.18  $   0.96

<PAGE>

 CONSOLIDATED STATEMENT OF INCOME AND COMPREHENSIVE INCOME  (unaudited)
(thousands, except per share amounts)         Three Months Ending
                                               9/30/99    9/30/98
INTEREST INCOME:
  Loans, including fees                        $  4,891  $  4,336
  Investment Securities                             960     1,070
  Other                                              71       100
    Total Interest Income                      $  5,922  $  5,506
INTEREST EXPENSE:
  Deposits                                     $  2,283  $  2,482
  Other                                             339       218
    Total Interest Expense                     $  2,622  $  2,700
  Net Interest Income                          $  3,300  $  2,806
  Loan Loss Provision                               175       163
  Net Interest Income After Provision          $  3,125  $  2,643
OTHER INCOME:
  Service Charges                              $    478  $    460
  Securities Gains (Losses)                          15         7
  Other                                             358       318
    Total Other Income                         $    851  $    785
OTHER EXPENSES:
  Salaries and Benefits                        $  1,242  $  1,124
  Occupancy Expenses                                291       304
  Other                                             810       742
    Total Other Expenses                       $  2,343  $  2,170
  Income Before Taxes                          $  1,633  $  1,258
  Income Taxes                                      457       328
  Net Income                                   $  1,176  $    930

Other Comprehensive Income, net of tax:
Change in Unrealized Gains on Securities            (33)       93

Comprehensive Income                           $  1,143  $  1,023

Earnings per share                             $   0.42  $   0.33
Earnings per share - assuming dilution         $   0.42  $   0.33

<PAGE>

BOURBON BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(thousands)                                              Nine Months Ending
                                                         9/30/99  9/30/98
Cash Flows From Operating Activities
  Net Income                                             $  3,371 $  2,739
  Adjustments to reconcile net income to
   net cash provided by operating activities:
  Depreciation                                                450      428
  Amortization                                                380      352
  Investment securities (accretion) amortization, net          27      (22)
  Provision for loan losses                                   525      488
  Deferred Income Taxes                                       (53)     (50)
  Investment securities losses (gains), net                    (1)     (35)
  Originations of loans held for sale                     (19,345) (24,272)
  Proceeds from sale of loans                              22,210   27,984
  Capitalization of Mortgage Servicing Rights                (203)    (252)
  Losses (gains) on sale of fixed assets                        -       25
  Losses (gains) on sale of loans                            (115)     (94)
   Losses (gains), including write-downs, on real
    estate acquired through foreclosure, net                   25        -
  Changes in:
    Interest receivable                                      (286)    (417)
    Income taxes refundable                                   (47)       -
    Other assets                                             (592)     (34)
    Interest payable                                          229      119
    Income taxes payable                                       26      285
    Other liabilities                                         143     (416)
      Net cash provided by operating activities          $  6,744 $  6,828
Cash Flows From Investing Activities
  Purchases of securities available for sale             $(32,653)$(19,266)
  Proceeds from sales of securities available for sale     17,828    5,544
  Proceeds from principal payments,  maturities and
   calls of securities available for sale                  19,084   26,606
  Purchase of securities held to maturity                       -   (2,375)
  Proceeds from sales, principal payments, maturities
   and calls of securities held to maturity                 1,551      833
  Net change in loans                                     (20,816) (18,217)
  Purchases of bank premises and equipment, net              (851)  (1,031)
    Net cash provided by investing activities             (15,857)  (7,906)
Cash Flows From Financing Activities:
  Net change in deposits                                 $  5,356 $  9,793
  Net change in securities sold under agreements to
   repurchase and other borrowings                         (2,851)  (5,174)
  Advances from Federal Home Loan Bank                     10,000    4,000
  Payments on Federal Home Loan Bank advances                (287)  (4,460)
  Purchase of common stock                                   (304)       -
  Proceeds from issuance of common stock                       50      142
  Dividends paid                                             (925)    (841)
    Net cash provided by financing activities              11,039    3,460
Net increase (decrease) in cash and cash equivalents        1,926    2,382
Cash and cash equivalents at beginning of period           10,756   12,275
Cash and cash equivalents at end of period               $ 12,682 $ 14,657

<PAGE>

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(thousands)                                             Three Months Ending
                                                          9/30/99  9/30/98
Cash Flows From Operating Activities
  Net Income                                             $  1,176 $    930
  Adjustments to reconcile net income to
   net cash provided by operating activities:
  Depreciation                                                150      143
  Amortization                                                125      121
  Investment securities (accretion) amortization, net           7      (10)
  Provision for loan losses                                   175      163
  Deferred Income Taxes                                       (21)     (14)
  Investment securities losses (gains), net                   (15)      (7)
  Originations of loans held for sale                      (4,090)  (6,195)
  Proceeds from sale of loans                               4,418    6,023
  Capitalization of Mortgage Servicing Rights                 (35)     (64)
  Losses (gains) on sale of loans                              (8)     (54)
  Changes in:
    Interest receivable                                      (349)    (184)
    Income taxes refundable                                   180       57
    Other assets                                             (382)     (55)
    Interest payable                                          239      (10)
    Income taxes payable                                       26      285
    Other liabilities                                         251      130
      Net cash provided by operating activities          $  1,847 $  1,259
Cash Flows From Investing Activities
  Purchases of securities available for sale             $(10,039)$ (8,088)
  Proceeds from sales of securities available for sale      9,007    2,002
  Proceeds from principal payments, maturities and
   calls of securities available for sale                   4,949    7,662
  Purchase of securities held to maturity                       -   (1,385)
  Proceeds from sales, principal payments, maturities
   and calls of securities held to maturity                 1,286       50
  Net change in loans                                     (13,360)  (7,556)
  Purchases of bank premises and equipment, net              (547)    (345)
    Net cash provided by investing activities              (8,704)  (7,660)
Cash Flows From Financing Activities:
  Net change in deposits                                 $ 11,287 $ 15,171
  Net change in securities sold under agreements to
   repurchase and other borrowings                         (8,016)  (5,159)
  Advances from Federal Home Loan Bank                      5,000        -
  Payments on Federal Home Loan Bank advances                 (73)   1,929
  Purchase of common stock                                    (68)       -
  Proceeds from issuance of common stock                        -       56
  Dividends paid                                             (308)    (281)
    Net cash provided by financing activities            $  7,822 $ 11,716
Net increase (decrease) in cash and cash equivalents     $    965 $  5,315
Cash and cash equivalents at beginning of period           11,717    9,342
Cash and cash equivalents at end of period               $ 12,682 $ 14,657

<PAGE>

BOURBON BANCSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.   In Management's opinion, the financial information,
  which is unaudited, reflects all adjustments, (consisting
  solely of normal recurring adjustments) necessary for a fair
  presentation of the financial information as of and for the
  nine and three month periods ended September 30, 1999 and
  September 30, 1998 in conformity with generally accepted
  accounting principles.  These financial statements should be
  read in conjunction with Bourbon Bancshares, Inc. (Company)
  Annual Report on Form 10-K.
2.   The Financial Accounting Standards Board has issued
  Statement of Financial Accounting Standards No. 130,
  "Reporting Comprehensive Income".  The requirements are
  disclosure related and its implementation will have no
  impact on the Company's financial condition or results of
  operations.  Prior period financial statements have been
  restated to meet this reporting format.
3.   Recently, the Financial Accounting Standards Board
  issued Statement 128, "Earnings Per Share", under which
  basic and diluted earnings per share are computed.  Prior
  amounts have been restated to be comparable.  Basic earnings
  per share is based on net income divided by the weighted
  average number of shares outstanding during the period.
  Diluted earnings per share shows the dilutive effect of
  additional common shares issuable under stock options.
4.   Dividends per share paid for the quarter ended
  September 30, 1999 were $0.11 compared to $0.10 on september
  30, 1998.  This is the same rate of dividend paid in each of
  the quarters of the respective years.
5.   As of July 15, 1999, the Company issued a two for one
  stock split.  Each shareholder will receive one additional
  share for each share they held.  Relative numbers have been
  adjusted to reflect this change.
6.   On August 13, 1999, the Company acquired the Wilmore
  office of National City and assumed certain deposits and
  other branch related liabilities.  Assets purchased consist
  of land, bank premises and equipment, intangible assets and
  other assets.  Kentucky Bank was paid $8.2 million in cash
  for the deposits and branch related liabilities assumed,
  less assets purchased.

<PAGE>

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

Summary

Bourbon Bancshares, Inc. recorded net income of $3.4
million, or $1.20 per share and $1.18 per share assuming
dilution for the first nine months ended September 30, 1999
compared to $2.7 million, or $0.98 per share and $0.96 per
share assuming dilution for September.  The first nine
months reflects an increase in earnings of 23%.  The net
income for third quarter of 1999 was $1.2 million, or $0.42
per share and $0.42 per share assuming dilution compared to
$930 thousand, or $0.33 per share and $0.33 per share
assuming dilution for the same period in 1998.  The third
quarter's net income resulted in a 26% increase from 1998 to
1999.  The per share amounts above have been adjusted to
reflect the 2 for 1 stock split effective in July 1999.

Return on average assets was 1.42% for the first nine months
ended September compared to 1.27% for the same time period
in 1998, an increase of 12%.  For the third quarter of 1999,
the return on average assets was 1.47% compared to 1.28% in
1998, an increase of 15%.  Return on average equity was
14.9% and 13.2% for the nine months ended September 30, 1999
and 1998, respectively, an increase of 13%.  The third
quarter of 1999 resulted in an increase in return on equity
of 16% from 13.2% to 15.3% in 1999.

Net Interest Income

Net interest income was $9.5 million for the nine months
ended September 30, 1999 compared to $8.2 million in 1998,
resulting in an increase of $1.3 million or 15.4%.  Net
interest income for the three months ended September 30,
1999 was $3.3 million compared to $2.8 million for the same
period in 1998.  Loan volume continues to improve.  Year to
date average loans are up $24 million, or nearly 12% from
1998 to 1999 resulting in an increase in loan interest
income of $1.4 million for the first nine months and $555
thousand for the third quarter.  Average deposits also
increased from 1998 to 1999, up $14 million, or 6%.  This
increased volume within the declining rate environment
resulted in lower interest expense of $546 thousand for the
first nine months and $199 thousand for the third quarter.

Non-Interest Income

Non-interest income increased for the nine-month period
ended September 30 from $2.2 million in 1998 to $2.5 million
in 1999.  Third quarter's non-interest income increased from
$785 thousand in 1998 to $851 thousand in 1999.  For the
year, an increase of $126 thousand in service charges from
1998 to 1999 is mainly attributable to an improvement in
overdraft charges of $104 thousand ($60 thousand for the
third quarter).    The third quarter of 1999 reflects an
increase in service charges of $18 thousand when compared to
1998.  Trust income accounts for $77 thousand, debit card
interchange income accounts for $46 thousand, and gains on
loans sold accounts for $21 thousand of the $212 thousand
increase in other income for the first nine months.  Other
income increased $40 thousand for the three months ending
September 30, 1999 compared to 1998.  Trust commissions
increased $9 thousand during the third quarter of 1999
compared to 1998.  The increase in trust fees is mainly due
to non-recurring estate fees and trust termination fees.

<PAGE>

Non-Interest Expense

The explanations for the increase of $585 thousand in non-
interest expenses from $6.3 million for the nine months
ended September 30, 1998 to $6.9 million for the same period
in 1999 follows.  The third quarter increase was $173
thousand from $2.2 million in 1998 to $2.3 million in 1999.
Salaries and benefits increased $287 thousand for the first
nine months of 1999 compared to 1998, an increase of 8.5%,
and increased $118 thousand during the third quarter of 1999
compared to 1998.  In 1999, the Company implemented a
compensation plan with additional incentive compensation.
Incentives for the first nine months were $115 thousand
greater in 1999 compared to 1998 due to this change.  Other
compensation and benefits increased 5%.

Occupancy expense increased $21 thousand to $875 thousand
for the first nine months of 1999 compared to 1998.  The
decrease for the third quarter was $13 thousand.
Depreciation is up $22 thousand for the year.  Equipment
maintenance was $10 thousand higher for the first nine
months of 1999.

Other expenses for the first nine months of 1999 compared to
1998 increased $277 thousand, from $2.1 million to $2.3
million.  The third quarter increase compared to 1998 was
$68 thousand.  During the third quarter of 1999, the
processing of electronic products was changed.  Costs of
these products and their increased usage, and the related
conversion have resulted in an increase in expenses of $100
thousand for 1999 compared to 1998.  Other taxes are $25
thousand greater in 1999 compared to 1998.  The overall
growth of the Company has caused this item to increase.
With the selling of mortgage loans, the amortization of
mortgage servicing rights increased $29 thousand from 1998
to 1999.

Income Taxes

The tax equivalent rate for the nine months ended September
30 was 28% for 1999 and 26% for 1998.  The rate for the
third quarter of 1999 was 28% and for 1998 was 26%.  These
rates being less than the statutory rate is a result of the
tax-free securities and loans held by the Company.

Liquidity and Funding

The cash flow statements provide a useful analysis of
liquidity.  This report reveals an increase of cash and cash
equivalents for the first nine months of 1999 of $1.9
million and of $2.4 million for the same period in 1998.
The three months ending September 30, 1999 shows an increase
in cash and cash equivalents of $965 thousand and of $5.3
million for the same period in 1998.  In 1999, proceeds from
the sale of loans were nearly $22 million compared to $28
million in 1998.  Four million dollars of 1998 sales and
five million dollars of 1999 loan securitizations were of a
nonrecurring nature.  The decline in rates allowed the
Company to sell some lower coupon loans.  Originations of
loans held for sale were $19 million and $24 million for the
nine months ending September 30, 1999 and 1998,
respectively.  Third quarter originations were $4 million in
1999 and 6 million in 1998.  The loans sold during the third
quarter were $4 million in 1999 and $6 million in 1998.

<PAGE>

For the first nine-months, proceeds from security
transactions have exceeded purchases by $6 million in 1999
and $11 million in 1998.  For the third quarter, proceeds
from security transactions have exceeded purchases by $5
million in 1999 and $241 thousand in 1998.  Of these
changes, principal payments on securities have amounted to
over $6 million in 1999 and over $10 million for the same
period in 1998.

During 1999, $10 million has been borrowed from the Federal
Home Loan Bank (FHLB), $5 million in the third quarter.  In
1998, $4 million in advances were received from the FHLB and
$4 million repaid on FHLB advances.  Short-term borrowings
decreased $3 million in 1999 and $5 million in 1998.
Deposits increased $5 million in 1999 compared to $10
million in 1998.

Management believes there is sufficient liquidity to meet
all reasonable borrower, depositor and creditor needs in the
present economic environment.

<PAGE>

Non-Performing Assets

As of September 30, 1999, the Company's non-performing
assets totaled $1.1 million or 0.4 of loans compared to $931
thousand or 0.5% of loans in 1998.  (See table below)  Real
estate loans composed 69% and 65% of the non-performing
loans as of September 30, 1999 and 1998, respectively.  Lost
interest income on the non-accrual loans for both 1999 and
1998 is immaterial.

                                           September 30
                                          (in thousands)
                                          1999        1998
Non-accrual Loans                       $   155     $   227
Accruing Loans which are
  Contractually past due
  90 days or more                           505         555
Restructured Loans                          135         149
Total Nonperforming and Restructured    $   795     $   931
Other Real Estate                           312           -
Total Nonperforming and Restructured
 Loans and Other Real Estate            $ 1,107     $   931
Nonperforming and Restructured Loans
 as a Percentage of Net Loans              0.35%       0.47%
Nonperforming and Restructured Loans
 and Other Real Estate as a Percentage
 of Total Assets                           0.34%       0.31%


Provision and Reserve for Possible Loan Losses

The 1999 nine-month provision for loan losses of $525
thousand is higher than the 1998 number of $488 thousand.
Loan growth has required management to increase the
provision in order to maintain a reserve ratio that is
adequate and indicative of the quality of loans currently in
the portfolio.  As depicted in the table below, the loan
loss reserve to total loans was 1.34% on September 30, 1999
and 1.32% on September 30, 1998.  Net charge-offs for the
periods mentioned above have been relatively insignificant.
Management feels the current loan loss reserve is sufficient
to meet future loan problems.

<PAGE>

Loan Losses
                                         Nine Months Ended
                                           September 30
                                          (in thousands)
                                         1999        1998
Balance at Beginning of Period         $  2,735    $  2,322
Amounts Charged-off:
  Commercial                           $      -    $      3
  Real Estate Mortgage                       38          11
  Agricultural                               54          15
  Consumer                                  152         205
Total Charged-off Loans                $    244    $    234
Recoveries on Amounts
 Previously Charged-off:
  Commercial                           $      3    $      3
  Real Estate Mortgage                        1           8
  Agricultural                                2           1
  Consumer                                   31          48
Total Recoveries                       $     37    $     60
Net Charge-offs                        $    207         174
Provision for Loan Losses                   525         488
Balance at End of Period               $  3,053    $  2,636
Total Loans, Net of Unearned Income
  Average                              $211,801    $188,707
  At September 30                       227,486     199,529
As a Percentage of Average Loans:
  Net Charge-offs                          0.10%       0.09%
  Provision for Loan Losses                0.25%       0.26%
Allowance as a Percentage of
 Period-end Net Loans                      1.34%       1.32%
Allowance as a Multiple of
 Net Charge-offs                           14.7        15.1

<PAGE>

Loan Losses

                                      Quarter
                                       Ended
                                   September 30
                                        (in
                                    thousands)
                                       1999         1998
Balance at Beginning of Period         $  2,935    $  2,542
Amounts Charged-off:
  Commercial                           $      -    $      -
  Real Estate Mortgage                       10           -
  Agricultural                               11          15
  Consumer                                   44          83
Total Charged-off Loans                $     65    $     98
Recoveries on Amounts
 Previously Charged-off:
  Commercial                           $      -    $      1
  Real Estate Mortgage                        -           7
  Agricultural                                1           -
  Consumer                                    7          21
Total Recoveries                       $      8    $     29
Net Charge-offs                        $     57    $     69
Provision for Loan Losses                   175         163
Balance at End of Period               $  3,053    $  2,636
Total Loans, Net of Unearned Income
  Average                              $212,579    $187,368
  At September 30                       227,486     199,529
As a Percentage of Average Loans:
  Net Charge-offs                          0.03%       0.04%
  Provision for Loan Losses                0.08%       0.09%
Allowance as a Percentage of
 Period-end Net Loans                      1.34%       1.32%
Allowance as a Multiple of
 Net Charge-offs                           53.6        38.2

<PAGE>


Year 2000

Management has 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.  Management has determined that if a
business interruption as a result of the Year 2000 issue
occurred, such an interruption could be material.  The
primary effort required to prevent a potential business
interruption is the installation of the most current
software release from the Company's third party provider and
replacement of certain system hardware.  The third party
software provider has warranted that Year 2000 remediation
and testing efforts to become compliant have been
successfully completed.  Testing of mission critical systems
was completed at the end of the first quarter.  Non-mission
critical systems have been evaluated and the final follow-up
was completed during the third quarter.  Current cost
estimates for this project are under $150 thousand, with the
majority of this expenditure being for equipment and
software to be capitalized over 3-5 years.  In addition,
over $400 thousand was spent on a new mainframe computer
system to enhance our overall computer technology.  Year
2000 expenses are subject to change and could vary from
current estimates if the final requirements for Year 2000
readiness exceed management's expectations.

The Company must also rely to some extent on 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.
Management has therefore developed and implemented
contingency plans that were put in place in the second
quarter, 1999.

The Company's credit customers are also subject to 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.  The Company is working with  those
customers  that  the Company believes may  be  significantly
affected  to  assess each customer's Year 2000 exposure  and
the  extent to which the customer has addressed the problem.
Any  exposure  which, in the opinion of management,  is  not
adequately addressed will be taken into account in assessing
the  loss  potential, if any, associated  with  that  credit
relationship.

<PAGE>

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  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 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK

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
within the Board of Directors specified limits.  As of
September 30, 1999 the projected percentage changes are
within the Board limits and the Company's interest rate risk
is also with Board limits.  The projected net interest
income report summarizing the Company's interest rate
sensitivity as of September 30, 1999 is as follows:

<PAGE>

(in thousands)

PROJECTED NET INTEREST INCOME

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

Year One  (10/1/99 - 9/30/2000)
   Interest Income               $22,017  $24,077  $25,143  $26,149  $28,222
   Interest Expense                8,078   10,120   11,141   12,162   14,204

       Net Interest Income       $13,939  $13,957  $14,002  $13,987  $14,018


PROJECTED DOLLAR INCREASE (DECREASE) FROM "LEVEL RATES"

Year One  (10/1/99 - 9/30/2000)
   Interest Income                (3,126)  (1,066)   N/A      1,006    3,078
   Interest Expense               (3,063)  (1,021)   N/A      1,021    3,063

       Net Interest Income           (63)     (45)   N/A        (15)      15


PROJECTED PERCENTAGE INCREASE (DECREASE) FROM "LEVEL RATES"

Year One  (10/1/99 - 9/30/2000)
   Interest Income                 -12.4%    -4.2%   N/A        4.0%    12.2%
   Interest Expense                -27.5%    -9.2%   N/A        9.2%    27.5%

       Net Interest Income          -0.4%    -0.3%   N/A       -0.1%     0.1%

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


These numbers are comparable to 1998.  In 1999, year one
reflected a decline in net interest income of 0.4% with a
300 basis point decline compared to the 1.8% decline in
1998.  The 300 basis point increase in rates reflected a
0.1% increase in net interest income in 1999 compared to
1.9% in 1998.  Percentage changes in 1999 are less than 1998
reflecting less vulnerability to drastic shifts in interest
rates.

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.

<PAGE>

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 September 30
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 1999's numbers
reflect a more negative position due to the amount of 5 year
loans originated and deposits being generated, mainly with
repricing opportunities of less than 2 years.  The decay
rates used for Demand deposits, NOW's, Savings and Money
Market Savings are 5%, 30%, 20% and 30%, respectively.

<PAGE>
<TABLE>
<CAPTION>

(in thousands)
                        Total   1      2      3     4      5      >5
                              Year   Years Years Years  Years   Years
ASSETS
<S>                                   <C>       <C>       <C>       <C>       <C>       <C>       <C>
Cash & Due From Banks                 $ 12,500  $      -  $      -  $      -  $      -  $      -  $ 12,500
Fed Funds & Int-Earning Due from Banks     182       182         -         -         -         -         -
Variable Rate Investment                16,593    16,593         -         -         -         -         -
Fixed Rate Investment                   49,192    13,979    10,589     4,691     4,721     3,207    12,005
Variable Rate Loans                     68,935    62,164     1,732     1,693     1,156     2,128        62
Fixed Rate Loans                       158,551    40,932    21,755    33,648    35,425    24,650     2,141
Others Assets                           17,188         -         -         -         -         -    17,188

 Total Assets / Repricing Assets      $323,141  $133,850  $ 34,076  $ 40,032  $ 41,302  $ 29,985  $ 43,896
 Repricing Assets - Accumulated                  133,850   167,926   207,958   249,260   279,245   323,141
   % of Current Balance                             41.4%     10.5%     12.4%     12.8%      9.3%     13.6%
   % of Current Balance - Accumulated               41.4%     52.0%     64.4%     77.1%     86.4%    100.0%
           Accumulated

LIABILITIES

Demand Deposit Accounts               $ 40,490  $  2,025  $  1,923  $  1,827  $  1,736  $  1,649  $ 31,330
NOW Accounts                            53,060    15,918    11,143     7,800     5,460     3,822     8,917
Savings Accounts                        14,375     2,873     2,301     1,840     1,472     1,178     4,711
Money Market Savings                     9,263     2,779     1,945     1,362       953       667     1,557
   Subtotal Deposit Accounts           117,188    23,595    17,312    12,829     9,621     7,316    46,515
Other Variable Deposits                  7,133     7,133         -         -         -         -         -
Fixed Rate Deposits                    139,775   116,756    20,117     1,234       998       531       139
Variable Rate Other Liabilities          7,648     7,073         -         -         -         -       575
Fixed Rate Other Liabilities            17,416       304     1,170       236     4,229    11,416        61
Other Liabilities                        2,789         -         -         -         -         -     2,789
Total Captial                           31,192         -         -         -         -         -    31,192

 Total Liabilities / Repricing Liab   $323,141  $154,861  $ 38,599  $ 14,299  $ 14,848  $ 19,263  $ 81,271
 Repricing Liabilities - Accumulated             154,861   193,460   207,759   222,607   241,870   323,141
   % of Current Balance                             47.9%     11.9%      4.4%      4.6%      6.0%     25.2%
   % of Current Balance - Accum                     47.9%     59.9%     64.3%     68.9%     74.8%    100.0%


SUMMARY

Total Repricing Assets                          $133,850  $ 34,076  $ 40,032  $ 41,302  $ 29,985  $ 43,896
Total Repricing Liabilities                      154,861    38,599    14,299    14,848    19,263    81,271

   Total Repricing Gap (By Bucket)               (21,011)   (4,523)   25,733    26,454    10,722   (37,375)

Total Repricing Assets - Cumulat       298,356   133,850   167,926   207,958   249,260   279,245   323,141
Total Repricing Liabilities - Cum      290,058   154,861   193,460   207,759   222,607   241,870   323,141

Repricing Gap - Cumulative               8,298   (21,011)  (25,534)      199    26,653    37,375         -

Gap/Total Assets (by Bucket)                       -6.50%    -1.40%     7.96%     8.19%     3.32%   -11.57%
Cumulative Gap/Total Assets                        -6.50%    -7.90%     0.06%     8.25%    11.57%     0.00%

</TABLE>
<PAGE>

Part II - Other Information

Item 1.     Legal Proceedings

     The Company is not a party to any material legal
proceedings.

Item 2.     Changes in Securities

     None

Item 3.     Defaults upon Senior Securities

     None

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

     None

Item 5.     Other Information

     None

<PAGE>

Item 6.     Exhibits and Reports on Form 8-K

     1.   Exhibits as required by Item 601 of Regulation S-B.

          27   Financial Data Schedule

     2.   No reports on Form 8-K have been filed during the
quarter for which this report is filed.

SIGNATURES

In accordance with the requirements of the Exchange Act, the
registrant caused the report to be signed on its behalf by
the undersigned, thereunto duly authorized.

                         Bourbon Bancshares, Inc.

Date  ___11/12/99_______ __/s/Buckner Woodford____________
                         Buckner Woodford, President and C.E.O.

Date  ___11/12/99 ______ __/s/Gregory J. Dawson___________
                         Gregory J. Dawson, Chief Financial Officer
<PAGE>