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 June 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
August 10, 1999:  2,805,176.

<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 June 30, 1999 & 1998                    4

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

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

          Consolidated Statements of Cash Flows
               Three Months Ending June 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                                                              23

Exhibits

     27   Financial Data Schedule                                       24

<PAGE>

Item 1 - Financial Statements

CONSOLIDATED BALANCE SHEET  (unaudited)
(thousands)                                     6/30/99   12/31/98
Assets
  Cash & Due From Banks                        $ 11,717   $ 10,756
  Investment Securities:
    Securities Held to Maturity                  16,671     16,934
    Securities Available for Sale                54,414     55,420
  Federal Home Loan Bank Stock                    3,229      3,119
  Loans                                        $217,682   $212,843
  Reserve for Loan Losses                         2,936      2,735
    Net Loans                                  $214,746   $210,108
  Premises and Equipment                          6,798      6,794
  Other Assets                                    6,082      5,574
    Total Assets                               $313,657   $308,705

Liabilities & Stockholders' Equity
  Deposits
    Demand                                     $ 38,219   $ 40,336
    Savings & Interest Checking                  90,780     96,579
    Certificates of Deposit                     123,810    121,825
      Total Deposits                           $252,809   $258,740
  Repurchase Agreements                           3,779      6,713
  Federal Home Loan Bank Advances                11,740      6,954
  Other Borrowed Funds                           12,634      4,535
  Other Liabilities                               2,273      2,391
    Total Liabilities                          $283,235   $279,333

Stockholders' Equity
  Common Stock                                 $  6,288   $  6,474
  Retained Earnings                              24,410     22,832
  Accumulated Other Comprehensive Income           (276)        66
    Total Stockholders' Equity                 $ 30,422   $ 29,372
    Total Liabilities & Stockholders' Equity   $313,657   $308,705

<PAGE>

BOURBON BANCSHARES, INC.

CONSOLIDATED STATEMENT OF INCOME AND COMPREHENSIVE INCOME  (unaudited)
(thousands, except per share amounts)            Six Months Ending
                                                6/30/99    6/30/98
INTEREST INCOME:
  Loans, including fees                        $  9,111    $  8,301
  Investment Securities                           1,985       2,220
  Other                                             189         261
    Total Interest Income                      $ 11,285    $ 10,782
INTEREST EXPENSE:
  Deposits                                     $  4,523    $  4,870
  Other                                             527         459
    Total Interest Expense                     $  5,050    $  5,329
  Net Interest Income                          $  6,235    $  5,453
  Loan Loss Provision                               350         325
  Net Interest Income After Provision          $  5,885    $  5,128
OTHER INCOME:
  Service Charges                              $  1,294    $  1,186
  Securities Gains (Losses)                         (14)         28
  Other                                             414         242
    Total Other Income                         $  1,694    $  1,456
OTHER EXPENSES:
  Salaries and Benefits                        $  2,416    $  2,247
  Occupancy Expenses                                584         550
  Other                                           1,537       1,328
    Total Other Expenses                       $  4,537    $  4,125
  Income Before Taxes                          $  3,042    $  2,459
  Income Taxes                                      847         650
  Net Income                                   $  2,195    $  1,809

Other Comprehensive Income, net of tax:
Change in Unrealized Gains on Securities           (339)        (97)

Comprehensive Income                           $  1,856    $  1,712

Earnings per share                             $   1.57    $   1.29
Earnings per share - assuming dilution         $   1.53    $   1.26

<PAGE>

CONSOLIDATED STATEMENT OF INCOME AND COMPREHENSIVE INCOME  (unaudited)
(thousands, except per share amounts)         Three Months Ending
                                              6/30/99    6/30/98
INTEREST INCOME:
  Loans, including fees                       $  4,631   $  4,181
  Investment Securities                          1,016      1,058
  Other                                             66        136
    Total Interest Income                     $  5,713   $  5,375
INTEREST EXPENSE:
  Deposits                                    $  2,234   $  2,434
  Other                                            295        217
    Total Interest Expense                    $  2,529   $  2,651
  Net Interest Income                         $  3,184   $  2,724
  Loan Loss Provision                              175        162
  Net Interest Income After Provision         $  3,009   $  2,562
OTHER INCOME:
  Service Charges                             $    678   $    618
  Securities Gains (Losses)                        (21)        20
  Other                                            178        116
    Total Other Income                        $    835   $    754
OTHER EXPENSES:
  Salaries and Benefits                       $  1,221   $  1,124
  Occupancy Expenses                               291        280
  Other                                            854        691
    Total Other Expenses                      $  2,366   $  2,095
  Income Before Taxes                         $  1,478   $  1,221
  Income Taxes                                     402        328
  Net Income                                  $  1,076   $    893

Other Comprehensive Income, net of tax:
Change in Unrealized Gains on Securities          (276)       (61)

Comprehensive Income                          $    800   $    832

Earnings per share                            $   0.77   $   0.63
Earnings per share - assuming dilution        $   0.74   $   0.62

<PAGE>

BOURBON BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(thousands)                                              Six Months Ending
                                                         6/30/99   6/30/98
Cash Flows From Operating Activities
  Net Income                                            $  2,195 $  1,809
  Adjustments to reconcile net income to
   net cash provided by operating activities:
  Depreciation                                               300      285
  Amortization                                               255      231
  Investment securities (accretion) amortization, net         20      (12)
  Provision for loan losses                                  350      325
  Deferred Income Taxes                                      (32)     (36)
  Investment securities losses (gains), net                   14      (28)
  Originations of loans held for sale                    (15,255) (18,077)
  Proceeds from sale of loans                             17,792   21,961
  Capitalization of Mortgage Servicing Rights               (168)    (188)
  Losses (gains) on sale of fixed assets                       -       25
  Losses (gains) on sale of loans                           (107)     (40)
  Losses (gains), including write-downs, on real
   estate acquired through foreclosure, net                   25        -
  Changes in:
    Interest receivable                                       63     (233)
    Income taxes refundable                                 (227)     (57)
    Other assets                                            (210)      21
    Interest payable                                         (10)     129
    Other liabilities                                       (108)    (546)
      Net cash provided by operating activities         $  4,897 $  5,569
Cash Flows From Investing Activities
  Purchases of securities available for sale             (22,614) (11,178)
  Proceeds from sales of securities available for sale     8,821    3,542
  Proceeds from principal payments, maturities and
   calls of securities available for sale                 14,135   18,944
  Purchase of securities held to maturity                      -     (990)
  Proceeds from sales, principal payments, maturities
   and calls of securities held to maturity                  265      783
  Net change in loans                                     (7,456) (10,661)
  Purchases of bank premises and equipment, net             (304)    (686)
    Net cash provided by investing activities             (7,153)    (246)
Cash Flows From Financing Activities:
  Net change in deposits                                $ (5,931)$ (5,378)
  Net change in securities sold under agreements to
   repurchase and other borrowings                         5,165      (15)
  Advances from Federal Home Loan Bank                     5,000    4,000
  Payments on Federal Home Loan Bank advances               (214)  (6,389)
  Purchase of common stock                                  (236)       -
  Proceeds from issuance of common stock                      50       86
  Dividends paid                                            (617)    (560)
    Net cash provided by financing activities           $  3,217 $ (8,256)
Net increase (decrease) in cash and cash equivalents    $    961 $ (2,933)
Cash and cash equivalents at beginning of period          10,756   12,275
Cash and cash equivalents at end of period              $ 11,717 $  9,342

<PAGE>

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(thousands)                                            Three Months Ending
                                                         6/30/99  6/30/98
Cash Flows From Operating Activities
  Net Income                                            $  1,076 $    893
  Adjustments to reconcile net income to
   net cash provided by operating activities:
  Depreciation                                               150      143
  Amortization                                               118      119
  Investment securities (accretion) amortization, net         18        -
  Provision for loan losses                                  175      162
  Deferred Income Taxes                                       57        4
  Investment securities losses (gains), net                   21      (20)
  Originations of loans held for sale                     (6,533)  (8,678)
  Proceeds from sale of loans                             11,486    9,106
  Capitalization of Mortgage Servicing Rights               (107)     (80)
  Losses (gains) on sale of fixed assets                       -       25
  Losses (gains) on sale of loans                            (40)     (19)
  Losses (gains), including write-downs, on real
   estate acquired through foreclosure, net                   25        -
  Changes in:
    Interest receivable                                     (375)    (560)
    Income taxes refundable                                 (227)     (57)
    Other assets                                            (209)      20
    Interest payable                                        (134)     160
    Income taxes payable                                    (476)    (364)
    Other liabilities                                        111      114
      Net cash provided by operating activities         $  5,136 $    968
Cash Flows From Investing Activities
  Purchases of securities available for sale            $ (6,985)$   (135)
  Proceeds from sales of securities available for sale     3,974    2,004
  Proceeds from principal payments, maturities and
   calls of securities available for sale                  4,098    4,424
  Purchase of securities held to maturity                      -     (990)
  Proceeds from sales, principal payments, maturities
   and calls of securities held to maturity                  265      783
  Net change in loans                                     (8,546)  (9,047)
  Purchases of bank premises and equipment, net             (130)    (554)
    Net cash provided by investing activities           $ (7,324)$ (3,515)
Cash Flows From Financing Activities:
  Net change in deposits                                $ (5,697)$ (5,327)
  Net change in securities sold under agreements to
   Repurchase and other borrowings                         9,658    3,862
  Advances from Federal Home Loan Bank                         -    4,000
  Payments on Federal Home Loan Bank advances               (140)  (6,320)
  Proceeds from issuance of common stock                      39        -
  Dividends paid                                            (308)    (280)
    Net cash provided by financing activities           $  3,552 $ (4,065)
Net increase (decrease) in cash and cash equivalents    $  1,364 $ (6,612)
Cash and cash equivalents at beginning of period          10,353   15,954
Cash and cash equivalents at end of period              $ 11,717 $  9,342

<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
  six and three month periods ended June 30, 1999 and June 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 June 30,
  1999 were $0.22 compared to $0.20 on June 30, 1998.  This is
  the same rate of dividend paid in the first quarter 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.

<PAGE>

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

Summary

Bourbon Bancshares, Inc. recorded net income of $2.2
million, or $1.57 per share and $1.53 per share assuming
dilution for the first six months ended June 30, 1999
compared to $1.8 million, or $1.29 per share and $1.26 per
share assuming dilution for June 30, 1998.  The first six
months reflects an increase in earnings of 21%.  The net
income for second quarter of 1999 was $1.1 million, or $0.77
per share and $0.74 per share assuming dilution compared to
$900 thousand, or $0.63 per share and $0.62 per share
assuming dilution for the same period in 1998.  The second
quarter's net income resulted in a 20% increase from 1998 to
1999.

Return on average assets was 1.40% for the first six months
ended June 30, 1999 compared to 1.26% for the same time
period in 1998, an increase of 11%.  For the second quarter
of 1999, the return on average assets was 1.35% compared to
1.25% in 1998, an increase of 8%.  Return on average equity
was 14.6% and 13.2% for the six months ended June 30, 1999
and 1998, respectively, an increase of 11%.  The second
quarter of 1999 resulted in an increase in return on equity
of 8% from 13.0% to 14.1% in 1999.

Net Interest Income

Net interest income was $6.2 million for the six months
ended June 30, 1999 compared to $5.5 million in 1998,
resulting in an increase of $782 thousand or 12.9%.  Net
interest income for the three months ended June 30, 1999 was
$3.2 million compared to $2.7 million for the same period in
1998.  Loan volume continues to improve.  Year to date
average loans are up nearly $27 million, or nearly 15% from
1998 to 1999 resulting in an increase in loan interest
income of $810 thousand for the first six months and $450
thousand for the second quarter.  Average deposits also
increased from 1998 to 1999, up $19 million, or 8%.  This
increased volume within the recent declining rate
environment resulted in lower interest expense of $347
thousand for the first six months and $200 thousand for the
second quarter.

Non-Interest Income

Non-interest income increased for the six-month period ended
June 30 from $1.5 million in 1998 to $1.7 million in 1999.
Second quarter's non-interest income increased from $754
thousand in 1998 to $835 thousand in 1999.  For the year, an
increase of $108 thousand in service charges from 1998 to
1999 is mainly attributable to an improvement in overdraft
charges of $44 thousand ($23 thousand for the second
quarter).    The second quarter of 1999 reflects an increase
in service charges of $60 thousand when compared to 1998.
Trust income accounts for $76 thousand and gains on loans
sold accounts for $67 thousand of the $172 thousand increase
in other income for the first six months.  Other income
increased $62 thousand for the three months ending June 30,
1999 compared to 1998.  Trust commissions increased $16
thousand during the second quarter of 1999 compared to 1998.
Gains on loans sold increased $21 thousand for the second
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 $412 thousand in non-
interest expenses from $4.1 million for the six months ended
June 30, 1998 to $4.5 million for the same period in 1999
follows.  The second quarter increase was $271 thousand from
$2.1 million in 1998 to $2.4 million in 1999.  Salaries and
benefits increased $169 thousand for the first six months of
1999 compared to 1998, an increase of 7.5%, and increased
$97 thousand during the second quarter of 1999 compared to
1998.  In 1999, the Company implemented a compensation plan
with additional incentive compensation.  Incentives for the
first six months were $71 thousand greater in 1999 compared
to 1998 due to this change.  Other compensation and benefits
increased 4%.

Occupancy expense increased $34 thousand to $584 thousand
for the first six months of 1999 compared to 1998.  The
increase for the second quarter was $11 thousand.
Depreciation was up $15 thousand for the year.  Equipment
maintenance was $14 thousand higher for the first six months
of 1999.

Other expenses for the first six months of 1999 compared to
1998 increased $209 thousand, from $1.3 million to $1.5
million.  The second quarter increase compared to 1998 was
$163 thousand.  During the second 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 $70
thousand for 1999 compared to 1998.  Other taxes are $18
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 $19 thousand from 1998
to 1999.

Income Taxes

The tax equivalent rate for the six months ended June 30 was
28% for 1999 and 26% for 1998.  The rates for the second
quarter for 1999 and 1998 were 27%.  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 six months of 1999 of $961
thousand and a decrease of $2.9 million for the same period
in 1998.  The three months ending June 30, 1999 shows an
increase in cash and cash equivalents of $1.4 million and a
decrease of $6.6 million for the same period in 1998.  In
1999, proceeds from the sale of loans were nearly $18
million compared to $22 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 $15 million
and $18 million for the six months ending June 30, 1999 and
1998, respectively.  Second quarter originations were $7
million in 1999 and 9 million in 1998.  The loans sold
during the second quarter were $11 million in 1999 and $9
million in 1998.

<PAGE>

For the first six-month, proceeds from security transactions
have exceeded purchases by $1 million in 1999 and $11
million in 1998.  For the second quarter, proceeds from
security transactions have exceeded purchases by $1 million
in 1999 and $6 million in 1998.  Of these changes, principal
payments on securities have amounted to over $4 million in
1999 and over $7 million for the same period in 1998.

During 1999, $5 million has been borrowed from the Federal
Home Loan Bank (FHLB).  In 1998, $4 million in advances were
received from the FHLB and $6 million repaid on FHLB
advances.  Short-term borrowings increased $5 million in
1999 and were virtually the same in 1998.  The decline in
deposits of $6 million in 1999 created the need for this
other short-term borrowing.

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 June 30, 1999, the Company's non-performing assets
totaled $1.1 million or 0.5% of loans compared to $1.1
million or 0.6% of loans in 1998.  (See table below)  Real
estate loans composed 55% and 73% of the non-performing
loans as of June 30, 1999 and 1998, respectively.  Lost
interest income on the non-accrual loans for both 1999 and
1998 is immaterial.

                                               June 30
                                            (in thousands)
                                           1999        1998

Non-accrual Loans                           131         270
Accruing Loans which are
  Contractually past due
  90 days or more                           803         695
Restructured Loans                          139         154
Total Nonperforming and Restructured      1,073       1,119
Other Real Estate                           240           -
Total Nonperforming and Restructured
 Loans and Other Real Estate              1,313       1,119
Nonperforming and Restructured Loans
 as a Percentage of Net Loans              0.49%       0.58%
Nonperforming and Restructured Loans
 and Other Real Estate as a Percentage
 of Total Assets                           0.42%       0.39%


Provision and Reserve for Possible Loan Losses

The 1999 six-month provision for loan losses of $350
thousand is higher than the 1998 number of $325 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 1.35% on June 30, 1999 and
1.33% on June 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
                                      Six Months Ended June 30
                                           (in thousands)
                                          1999         1998

Balance at Beginning of Period            2,735       2,322
Amounts Charged-off:
  Commercial                                  -           3
  Real Estate Mortgage                       28          11
  Agricultural                               43           -
  Consumer                                  108         122
Total Charged-off Loans                     179         136
Recoveries on Amounts
 Previously Charged-off:
  Commercial                                  3           2
  Real Estate Mortgage                        1           1
  Agricultural                                1           1
  Consumer                                   24          27
Total Recoveries                             29          31
Net Charge-offs                             150         105
Provision for Loan Losses                   350         325
Balance at End of Period                  2,935       2,542
Total Loans, Net of Unearned Income
  Average                               213,357     186,029
  At June 30                            217,682     191,835
As a Percentage of Average Loans:
  Net Charge-offs                          0.07%       0.06%
  Provision for Loan Losses                0.16%       0.17%
Allowance as a Percentage of
 Period-end Net Loans                      1.35%       1.33%
Allowance as a Multiple of
 Net Charge-offs                           19.6        24.2


<PAGE>

Loan Losses
                                       Quarter Ended June 30
                                          (in thousands)
                                          1999         1998

Balance at Beginning of Period            2,885       2,437
Amounts Charged-off:
  Commercial                                  -           1
  Real Estate Mortgage                       28          11
  Agricultural                               41           -
  Consumer                                   67          69
Total Charged-off Loans                     136          81
Recoveries on Amounts
 Previously Charged-off:
  Commercial                                  1           1
  Real Estate Mortgage                        1           1
  Agricultural                                1           1
  Consumer                                    8          21
Total Recoveries                             11          24
Net Charge-offs                             125          57
Provision for Loan Losses                   175         162
Balance at End of Period                  2,935       2,542
Total Loans, Net of Unearned Income
  Average                               212,180     184,822
  At June 30                            217,682     191,835
As a Percentage of Average Loans:
  Net Charge-offs                          0.06%       0.03%
  Provision for Loan Losses                0.08%       0.09%
Allowance as a Percentage of
 Period-end Net Loans                      1.35%       1.33%
Allowance as a Multiple of
 Net Charge-offs                           23.5        44.6

<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
is expected to be 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 June
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
June 30, 1999 is as follows:

<PAGE>

(in thousands)

PROJECTED NET INTEREST INCOME

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

Year One  (7/1/99 - 6/30/2000)
   Interest Income           20,901    22,904     23,915    24,926    26,949
   Interest Expense           7,739     9,691     10,668    11,644    13,596

       Net Interest Income   13,162    13,213     13,247    13,282    13,353


PROJECTED DOLLAR INCREASE (DECREASE) FROM "LEVEL RATES"

 Year One  (7/1/99 - 6/30/2000)
   Interest Income           (3,014)  (1,011)        N/A    1,011      3,034
   Interest Expense          (2,928)    (976)        N/A      976      2,928

       Net Interest Income      (86)     (35)        N/A       35        106


PROJECTED PERCENTAGE INCREASE (DECREASE) FROM "LEVEL RATES"

 Year One  (7/1/99 - 6/30/2000)
   Interest Income            -12.6%     -4.2%       N/A      4.2%      12.7%
   Interest Expense           -27.5%     -9.2%       N/A      9.2%      27.5%

       Net Interest Income     -0.6%     -0.3%       N/A      0.3%       0.8%

   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 0.6% with a
300 basis point decline compared to the 0.8% decline in
1998.  The 300 basis point increase in rates reflected a
0.8% increase in net interest income in 1999 compared to
0.9% 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 June 30, 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 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 Year   2 Years   3 Years   4 Years   5 Years  >5 Years
ASSETS
<S>                                  <C>       <C>       <C>       <C>       <C>       <C>       <C>
Cash & Due From Banks                 11,695         -         -         -         -         -    11,695
Fed Funds & Int-
Earning Due from Banks                   150       150         -         -         -         -         -
Variable Rate Investment              16,695    16,695         -         -         -         -         -
Fixed Rate Investment                 53,170    21,508     6,917     4,013     4,118     2,234    14,380
Variable Rate Loans                   67,566    61,516     1,630     1,706     1,284     1,345        85
Fixed Rate Loans                     151,690    38,977    20,455    30,682    31,345    28,269     1,962
Others Assets                         12,691         -         -         -         -         -    12,691

 Total Assets/Repricing Assets       313,657   138,846    29,002    36,401    36,747    31,848    40,813
Repricing Assets - Accumulated                 138,846   167,848   204,249   240,996   272,844   313,657
% of Current Balance                              44.3%      9.2%     11.6%     11.7%     10.2%     13.0%
% of Current Balance - Accumulated                44.3%     53.5%     65.1%     76.8%     87.0%    100.0%

LIABILITIES

Demand Deposit Accounts               38,219     1,911     1,815     1,725     1,638     1,556    29,573
NOW Accounts                          55,748    16,724    11,707     8,195     5,737     4,016     9,369
Savings Accounts                      13,563     2,713     2,170     1,736     1,389     1,111     4,444
Money Market Savings                   9,427     2,828     1,980     1,386       970       679     1,584
 Subtotal Deposit Accounts           116,957    24,176    17,672    13,042     9,734     7,362    44,970
Other Variable Deposits                7,270     7,270         -         -         -         -         -
Fixed Rate Deposits                  128,582   109,453    16,061     1,435       982       528       123
Variable Rate Other Liabilities       15,663    15,663         -         -         -         -         -
Fixed Rate Other Liabilities          12,490       300     1,190       233       246    10,454        67
Other Liabilities                      2,273         -         -         -         -         -     2,273
Total Capital                         30,422         -         -         -         -         -    30,422

 Total Liabilities/Repricing Liab    313,657   156,862    34,923    14,710    10,962    18,344    77,855
 Repricing Liabilities - Accumulated           156,862   191,785   206,495   217,457   235,802   313,657
   % of Current Balance                           50.0%     11.1%      4.7%      3.5%      5.8%     24.8%
   % of Current Balance - Accum                   50.0%     61.1%     65.8%     69.3%     75.2%    100.0%


SUMMARY

Total Repricing Assets                         138,846    29,002    36,401    36,747    31,848    40,813
Total Repricing Liabilities                    156,862    34,923    14,710    10,962    18,344    77,855

   Total Repricing Gap (by Bucket)             (18,016)   (5,921)   21,691    25,785    13,504   (37,042)

Total Repricing Assets - Ac          291,056   138,846   167,848   204,249   240,996   272,844   313,657
Total Repricing Liabilities -
 Cumulative                          280,888   156,862   191,785   206,495   217,457   235,802   313,675

Repricing Gap - Cumulative            10,169   (18,016)  (23,937)   (2,246)   23,539    37,042         -

Gap/Total Assets (by Bucket)                     -5.74%    -1.89%     6.92%     8.22%     4.31%   -11.81%
Cumulative Gap/Total Assets                      -5.74%    -7.63%    -0.72%     7.50%    11.81%     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

<PAGE>

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

     The registrant's 1999 Annual Meeting of Shareholders
was held May 3, 1999.  Proxies were solicited by the
registrant's board of directors.  There was no solicitation
in opposition to the board's nominees as listed in the proxy
statement, and all of the nominees were elected by vote of
the shareholders.  Voting results for each nominee were as
follows:

                             Votes For     Votes Withheld
        Henry Hinkle         1,154,445          2,500
        Theodore Kuster      1,149,345          7,600
        Robert G.            1,154,445          2,500
        Thompson

     The following directors have a term of office that will
continue following the Annual Meeting:  William R. Stamler,
Buckner Woodford, William Arvin, James L. Ferrell, and
Joseph B. McClain.

     A proposal to approve an amendment to Registrant's
Articles of Incorporation to increase the number of
authorized Common Shares from 3,000,000 to 10,000,000 was
approved by a majority of the outstanding shares of the
registrant's common stock.  A total of 1,116,814 shares were
voted in favor of the proposal; 36,101 shares were voted
against; and 4,030 shares abstained (including broker non-
votes).

     A proposal to approve an amendment to Registrant's
Articles of Incorporation to change the number of members of
the Board of Directors from a minimum of nine to a minimum
of five was approved by a majority of the outstanding shares
of the registrant's common stock.  A total of 1,112,535
shares were voted in favor of the proposal; 27,747 shares
were voted against; and 16,663 shares abstained (including
broker non-votes).

     A proposal to approve the 1999 Employee Stock Option
Plan was approved by a majority of the outstanding shares of
the registrant's common stock.  A total of 1,125,040 shares
were voted in favor of the proposal; 17,955 shares were
voted against; and 13,950 shares abstained (including broker
non-votes).

     A proposal to approve the appointment of the firm of
Crowe Chizek and Co. LLP as the independent accountants for
the Corporation to audit the Corporation's financial
statements for its year ending December 31, 1999 was
approved by a majority of the outstanding shares of the
registrant's common stock.  A total of 1,129,170 shares were
voted in favor of the proposal; 5,480 shares were voted
against; and 22,295 shares abstained (including broker non-
votes).

     The total number of Common Shares outstanding as of
March 22, 1999, the record date for the Annual Meeting of
Shareholders was 1,399,628.


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  ___8/11/99________ __/s/Buckner Woodford ___________
                         Buckner Woodford, President and C.E.O.

Date  ___8/11/99________ __/s/Gregory J. Dawson___________
                         Gregory J. Dawson, Chief Financial Officer

<PAGE>