================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB
(Mark One)

     [X]  ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
          OF 1934

For the Fiscal Year Ended December 31, 2000
                                       OR

     [ ]  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
          ACT OF 1934

For the transition period __________ to __________

                          Commission File No. 333-72371

                         KENTUCKY NATIONAL BANCORP, INC.
                 ----------------------------------------------
                 (Name of Small Business Issuer in Its Charter)

              INDIANA                                             61-1345603
-------------------------------                              -------------------
(State or other jurisdiction of                               (I.R.S. Employer
incorporation or organization)                               Identification No.)


1000 NORTH DIXIE AVENUE, ELIZABETHTOWN, KENTUCKY                    42701
------------------------------------------------             -------------------
    (Address of principal executive offices)                      (Zip Code)


          Issuer's telephone number, including area code (270) 737-6000
                                                         --------------

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

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

     Check  whether  the issuer (l) filed all  reports  required  to be filed by
Section 13 or 15(d) of the Securities Exchange Act during the past 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
   ------      -------

     Check if there is no disclosure  of  delinquent  filers in response to Item
405 of Regulation S-B in this form,  and no disclosure  will be contained to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated  by reference  in Part III of this Form 10-KSB or any  amendment to
this Form 10-KSB. [X]

     State issuer's revenues for its most recent fiscal year: $5,886,851

     The aggregate market value of the voting stock held by nonaffiliates of the
registrant  based on the last sale of which the  registrant  was aware  ($25 per
share), was approximately $3.6 million as of March 16, 2001. Solely for purposes
of this calculation,  the term "affiliate" refers to all directors and executive
officers of the registrant and all stockholders beneficially owning more than 5%
of the registrant's common stock.

     As of March 16, 2001,  there were issued and outstanding  248,920 shares of
the registrant's common stock.

     Transitional Small Business Disclosure Format: YES        NO   X
                                                        -----     -----

================================================================================


<PAGE>
                                     PART I

ITEM 1.  BUSINESS
-----------------

     THE COMPANY.  Kentucky  National  Bancorp,  Inc. (the "Company") became the
holding  company for Kentucky  National  Bank (the  "Bank") on May 18, 1999,  by
issuing and exchanging its stock on a share for share basis for the  outstanding
stock of the Bank.  The  transfer of stock  between the  entities  under  common
control was accounted for at historical cost in a manner similar to a pooling of
interests.  Accordingly,  the 2000 financial  statements are presented as if the
holding company formation occurred on January 1, 1999.

     THE BANK.  The Bank  commenced  operations on October 15, 1997.  The Bank's
deposits  are  insured to  applicable  limits by the Federal  Deposit  Insurance
Corporation ("FDIC") and the Bank is a member of the Federal Reserve Bank of St.
Louis and the  Federal  Home Loan Bank of  Cincinnati.  The Bank  engages in the
general   commercial   banking   business,   primarily   serving   the  city  of
Elizabethtown,  Kentucky and  surrounding  Hardin County through its main office
and branch in Elizabethtown. The Bank seeks to provide individuals and small and
medium sized  businesses in its market area with responsive and  technologically
advanced  banking  services.  These services  include loans that are priced on a
deposit-based relationship, easy access to the Bank's decision makers, and quick
and innovative  action  necessary to meet a customer's  banking needs.  The Bank
offers a full range of banking and related financial  services focused primarily
towards  serving  individuals,  the small to  medium  size  businesses,  and the
professional  community.  The Bank  strives  to serve the  banking  needs of its
customers  in  the  Elizabethtown  market  while  developing  personal  hometown
relationships  with its  customers.  Management  believes  that the marketing of
customized  services  will enable the Bank to establish a niche in the financial
services marketplace in this market.

     The Bank's  principal  executive  offices  are  located at 1000 North Dixie
Avenue,  Elizabethtown,  Kentucky.  Its main telephone number is (270) 737-6000.
The Bank maintains a website at www.kentuckynational.com.

MARKET AREA

     The Bank's primary market area consists of  Elizabethtown  and  surrounding
Hardin  County.  The  Bank  believes  that  Hardin  County  has  a  growing  and
diversified  economy and provides an attractive  market for the Bank's services.
Employers in Hardin  County  include the Fort Knox  Military  Reservation  and a
growing manufacturing and service sector. The Bank's location allows the Bank to
serve the community of healthcare service providers and professionals affiliated
with Hardin Memorial Hospital which is located across the street from the Bank's
main office.

     Hardin County is currently  home to  approximately  92,000  persons.  After
contracting  somewhat  during the 1989 to 1994 period due to  down-sizing of the
Fort Knox Military Reservation, the county's population has grown during the two
most  recent  years and is  projected  to  continue to grow during the next five
years.  Although per capita personal income for Hardin County is below the level
for the Commonwealth of Kentucky as a whole,  median household income is higher.
The county's  current  unemployment  rate of 5.0% is slightly above that for the
Commonwealth  of Kentucky as a whole.  Although  the largest  employer in Hardin
County  continues  to be the Fort Knox  Military  Reservation,  the  county  has
experienced  steady  employment growth in the manufacturing and services sectors
during recent years,  a trend which is expected to continue due to the influence
of automotive plants in the region.

BANKING SERVICES

     The  Bank  offers a full  range  of  short-to-medium  term  commercial  and
personal  loans.  Commercial  loans include both secured and unsecured loans for
working  capital  (including  inventory  and  receivables),  business  expansion
(including  acquisition  of  real  estate  and  improvements)  and  purchase  of
equipment and machinery. The Bank also engages in agricultural lending. Consumer
loans   include   secured  and  unsecured   loans  for  financing   automobiles,
recreational   equipment,   home  improvements,   home  education  and  personal
investments.  The Bank also offers home  equity  loans and lines of credit.  The
Bank originates fixed- and variable-rate  mortgage loans and



                                       2
<PAGE>

construction  loans  for  its  portfolio.   In  October  2000,  the  Bank  began
originating residential mortgage loans for sale into the secondary market.

     LOAN PORTFOLIO COMPOSITION. The following table provides information on the
composition of the loan portfolio at the indicated dates.
<TABLE>
<CAPTION>

                                                                            AT DECEMBER 31,
                                                            -----------------------------------------------------
                                                                      2000                            1999
                                                            ---------------------           ---------------------
                                                            AMOUNT            %             AMOUNT            %
                                                            ------          -----           ------          -----
                                                                               (DOLLARS IN THOUSANDS)
<S>                                                         <C>             <C>             <C>             <C>
Real estate -- mortgage:
  Residential.............................................  $   33,308      56.58%          $  27,345       55.77%
  Commercial..............................................       5,093       8.65               3,734        7.62
  Agricultural............................................       1,595       2.71               1,801        3.67
Real estate-- construction................................       4,387       7.45               3,506        7.15
Consumer..................................................       8,874      15.07               7,961       16.24
Commercial and industrial.................................       5,615       9.54               4,683        9.55
                                                            ----------     ------           ---------      ------
                                                                58,872     100.00%             49,030      100.00%
                                                                           ======                          ======
Allowance for credit losses...............................        (626)                          (562)
Unearned fees and discounts...............................        (166)                          (137)
                                                            ----------                      ---------
Loans receivable, net ....................................  $   58,080                      $  48,331
                                                            ==========                      =========
</TABLE>

     In addition to the above, the Bank had approximately $259,000 in loans held
for sale at December 31, 2000.  These loans consisted of fixed-rate  residential
mortgage loans originated for resale into the secondary market.

     LOAN MATURITY  SCHEDULE.  The following table sets forth the maturities for
various  categories of the loan portfolio at December 31, 2000. Demand loans and
loans which have no stated  maturity are treated as due in one year or less.  At
December  31,  2000,  the Company had no loans due after one year with  variable
rates and $44,081,200 in such loans with fixed rates.
<TABLE>
<CAPTION>
                                   DUE WITHIN            ONE TO FIVE          DUE OVER
                                    ONE YEAR                YEARS            FIVE YEARS             TOTAL
                                   ----------            -----------         ----------           ----------
                                                       (IN THOUSANDS)
<S>                                 <C>                   <C>                <C>                   <C>
Real estate -- mortgage:
  Residential....................   $  4,176              $  24,915          $     4,217           $  33,308
  Commercial.....................        462                  4,053                  578               5,093
  Agricultural...................        240                  1,188                  167               1,595
Real estate -- construction......      3,484                    650                  253               4,387
Consumer.........................      1,022                  7,194                  658               8,874
Commercial.......................      5,407                    131                   77               5,615
                                    --------              ---------          -----------           ---------
                                    $ 14,791              $  38,131          $     5,950           $  58,872
                                    ========              =========          ===========           =========
</TABLE>


     REAL ESTATE  LENDING.  The Bank offers  mortgage  loans for the purchase or
refinancing of residential  and commercial  real estate as well as  construction
and land  development  loans and  second  mortgages  secured  by the  borrower's
primary residence.  The Bank's commercial  mortgages are secured by multi-family
residential  properties,   agricultural  properties  and  commercial  properties
(primarily   undeveloped  real  estate).   Residential  mortgage  loans  may  be
originated  on  either a fixed or  variable  rate  basis.  The  residential  and
commercial  mortgages  currently  in the  Bank's  portfolio  feature  a  30-year
amortization  period with a balloon payment after five years.  The Bank does not
hold any longer-term fixed-rate residential mortgages in portfolio.  Residential
and commercial  construction  loans are generally  originated on a variable rate
basis.  Substantially  all of the  Bank's  real  estate  loans  are  secured  by
properties in Elizabethtown,  Kentucky and surrounding  areas.  Under the Bank's
loan policies,  the maximum  permissible  loan-to-value ratio for owner-occupied
residential  mortgages is 90% of the lesser of the  purchase  price or appraised
value.  Residential  mortgage  loans  may be made with  loan-to-value  ratios in
excess of 80% provided the borrower obtains private  mortgage  insurance for any
loan  amounts  in excess of 80%.  For



                                       3
<PAGE>

residential investment  properties,  the maximum loan-to-value ratio is 75%. The
maximum   permissible   loan-to-value   ratio  for  residential  and  commercial
construction  loans  is 80%.  The  maximum  loan-to-value  ratio  for  permanent
commercial   mortgages  is  75%.  The  maximum   loan-to-value  ratio  for  land
development  loans is 70% and for  unimproved  land is 65%. The Bank also offers
home equity loans secured by the borrower's  primary residence provided that the
aggregate  indebtedness  on the property does not exceed 80% of its value.  Loan
officers may make  exceptions to lending  policy  within their  lending  limits.
Exceptions to lending policy are reviewed monthly by the Board of Directors.

     The Bank began  originating  residential  mortgage  loans for sale into the
secondary market in October,  2000. The secondary market loan division primarily
sells  fixed-rate  originations in the secondary  market and does not retain the
servicing  rights on these loans.  The Bank is an approved  seller/servicer  for
Government National Mortgage Association (Ginnie Mae), Federal National Mortgage
Association  (Fannie Mae) and Federal Home Loan  Mortgage  Corporation  (Freddie
Mac) loans with sales to a variety of investors.

     COMMERCIAL  AND  INDUSTRIAL  LENDING.  The  Bank  offers  a full  range  of
financing for local businesses and professionals including installment loans for
financing purchases of equipment, receivable financing, and lines and letters of
credit.  Such loans may be made on a secured  or an  unsecured  basis.  All such
loans are  underwritten on the basis of the borrower's  creditworthiness  rather
than the value of the collateral.  The Bank's  commercial loan customers consist
primarily of professionals and small to medium-sized  businesses  located in the
Elizabethtown  area.  The Bank believes that its  commercial  loan  portfolio is
diversified as to industry.

     CONSUMER  LENDING.  The  Bank  offers  a wide  range  of  consumer  lending
services.  The  Bank  makes  consumer  installment  loans  for the  purchase  of
automobiles,  boats and other  consumer  durable  goods.  Such loans provide for
repayment  in regular  installments  and are secured by the goods  financed.  In
addition,  the Bank offers lines of credit and personal  loans which may be made
on either a secured or unsecured basis. Security for the Bank's secured personal
loans and lines of credit  generally  consists of deposits in the Bank. The Bank
also offers VISA(R) and MasterCard(R) credit cards through an arrangement with a
correspondent bank.

     Although the risk of non-payment  for any reason exists with respect to all
loans,  certain other specific risks are associated  with each type of loan. The
primary risks associated with commercial loans, including commercial real estate
loans, are the quality of the borrower's management and a number of economic and
other  factors  which  induce  business  failures  and  depreciate  the value of
business assets pledged to secure the loan, including competition,  insufficient
capital, product obsolescence, changes in the cost of production,  environmental
hazards,  weather,  changes in laws and  regulations  and general changes in the
marketplace. Primary risks associated with residential real estate loans include
fluctuating  land and property  values and rising interest rates with respect to
fixed-rate,  long-term loans.  Residential construction lending exposes the Bank
to risks related to builder  performance.  Consumer loans are affected primarily
by domestic instability and a variety of factors that may lead to the borrower's
unemployment,  including  deteriorating  economic  conditions  in  one  or  more
segments of a local or broader economy.

     The Bank's lending  activities are conducted  pursuant to written  policies
approved by the Board of  Directors  intended  to ensure  proper  management  of
credit risk.  Loans are subject to a well defined  credit  process that includes
credit evaluation of borrowers,  establishment of lending limits and application
of lending  procedures,  including  the holding of adequate  collateral  and the
maintenance  of  compensating  balances,  as well  as  procedures  for  on-going
identification and management of credit deterioration. Regular portfolio reviews
are  to  be  performed   by  an  outside   consultant   to  identify   potential
underperforming credits, estimate loss exposure and to ascertain compliance with
the Bank's policies.  For significant problem loans,  management review consists
of evaluation of the financial strengths of the borrower and the guarantor,  the
related collateral, and the effects of economic conditions.

     The Bank's loan approval  policy  provides for various levels of individual
lending authority.  The maximum lending authority granted by the Bank to any one
individual is $125,000.  A combination of approvals from certain officers may be
used to lend up to an aggregate of $250,000.  The Bank's Executive  Committee is
authorized to approve loans up to $600,000. Larger loans must be approved by the
full Board of Directors.

                                       4
<PAGE>

     The maximum amount which the Bank is permitted to lend not fully secured to
any one borrower and their related interests may generally not exceed 15% of the
Bank's unimpaired capital and surplus (defined to include a bank's total capital
for regulatory  capital  purposes plus any loan loss  allowances not included in
regulatory  capital).  Provided the amount in excess of 15% is fully  secured by
marketable collateral such as investment securities,  the Bank may make loans up
to 25% of unimpaired capital and surplus.  Under these formulas,  the Bank would
have been permitted to lend up to $890,000 and $1,483,000,  respectively, to any
one  borrower at December 31, 2000.  At December  31, 2000,  the largest  amount
outstanding  to any one  borrower  and  their  related  interests  was  $147,200
unsecured and $492,000 fully secured.

NON-PERFORMING LOANS

     Loans are placed in a  non-accrual  income  status when,  in the opinion of
management, the prospects for recovering both principal and accrued interest are
considered  doubtful.  The Bank  seeks to  control  its level of  non-performing
assets by following strict collection  procedures.  The Bank generally sends out
reminder  notices  as soon as a loan  becomes  15 days  delinquent.  If the loan
becomes 30 days  delinquent,  the  borrower  will  receive  another  letter or a
telephone  call and  collection  efforts  will be  continued  until  the loan is
brought  current.  If a loan becomes 90 days  delinquent,  the loan is generally
placed on  non-accrual  status and the Bank will  initiate  proceedings  for the
repossession or foreclosure upon any collateral securing the loan.

     The following table sets forth the amount of the Bank's restructured loans,
non-accrual  loans  and  accruing  loans 90 days or more  past due at the  dates
indicated.
<TABLE>
<CAPTION>
                                                                             AT DECEMBER 31,
                                                                       ---------------------------
                                                                         2000               1999
                                                                       --------           --------
                                                                           (DOLLARS IN THOUSANDS)

<S>                                                                    <C>                <C>
Restructured loans...................................................  $       0          $       0
                                                                       ---------          ---------
Non-accrual loans:
   Real estate -- mortgage:
     Residential.....................................................        190                111
     Commercial......................................................          0                  9
     Agricultural....................................................          0                  0
   Real estate -- construction.......................................         15                  0
   Consumer..........................................................         20                 35
   Commercial and industrial.........................................          0                  0
                                                                       ---------          ---------
        Total nonaccrual loans.......................................        225                155
                                                                       ---------          ---------

Accruing loans past due 90 days or more:
   Real estate -- mortgage:
     Residential.....................................................          0                  0
     Commercial......................................................          0                  0
     Agricultural....................................................          0                  0
   Real estate -- construction.......................................          0                  0
   Consumer..........................................................          0                  0
   Commercial and industrial.........................................          0                  0
                                                                       ---------          ---------
       Total accruing loans past due 90 days or more.................          0                  0
                                                                       ---------          ---------
       Total non-accrual and past due loans..........................  $     225          $     155
                                                                       =========          =========

       Non-accrual and past due loans to gross loans.................       0.38%              0.32%
                                                                       =========          =========
       Allowance for credit losses to non-accrual and
          past due loans.............................................     278.20%            363.00%
                                                                       =========          =========
</TABLE>

                                       5
<PAGE>

     During the year  ended  December  31,  2000,  the Bank would have  recorded
interest income of $24,200 on non-accrual  loans, if such loans had been current
in accordance  with their original  terms for the period they were  outstanding.
The Bank included $4,500 in interest income on such loans during the year.

     At December 31, 2000, there were no loans  outstanding not reflected in the
above table as to which known  information  about  possible  credit  problems of
borrowers  caused  management  to have serious  doubts as to the ability of such
borrowers to comply with present loan repayment terms.

ALLOWANCE FOR LOAN LOSSES

     The allowance for loan losses is  established  through a provision for loan
losses  charged to expense.  The allowance is maintained at a level  adequate to
absorb  probable  losses.  Management  determines  the adequacy of the allowance
based upon reviews of the portfolio,  recent loss  experience,  current economic
conditions,  the risk  characteristics  of the various  categories  of loans and
other pertinent factors.  Allowances for impaired loans are generally determined
based on collateral  values or the present values of estimated  cash flows.  The
allowance  for loan losses is increased by the  provision  for credit losses and
reduced by chargeoffs net of recoveries.

     Transactions  in the  allowance  for loan  losses  during  the years  ended
December 31, 2000 and 1999 were as follows:
<TABLE>
<CAPTION>
                                                                          YEAR ENDED DECEMBER 31,
                                                                       ----------------------------
                                                                         2000                1999
                                                                       --------            --------
                                                                           (DOLLARS IN THOUSANDS)

<S>                                                                    <C>                <C>
Beginning Balance....................................................  $     562          $     347
                                                                       ---------          ---------

Charge-offs:
   Real estate -- mortgage:
      Residential....................................................          0                 (9)
      Commercial.....................................................          0                  0
      Agricultural...................................................          0                  0
   Real estate -- construction.......................................         (9)                 0
   Consumer..........................................................       (101)               (44)
   Commercial and industrial.........................................        (79)              (126)
                                                                       ---------          ---------
          Total......................................................       (189)              (179)
                                                                       ---------          ---------

Recoveries:
   Real estate -- mortgage:
     Residential.....................................................         18                  0
     Commercial......................................................          0                  0
     Agricultural....................................................          0                  0
   Real estate -- construction.......................................          0                  0
   Consumer..........................................................         17                  2
   Commercial and industrial.........................................          0                  0
                                                                       ---------          ---------
         Total.......................................................         35                  2
                                                                       ---------          ---------

Net charge-offs......................................................       (154)              (177)
Provisions charged to operations.....................................        218                392
                                                                       ---------          ---------
Ending balance.......................................................  $     626          $     562
                                                                       =========          =========
Average loans........................................................  $  54,202          $  42,718
                                                                       =========          =========
Net charge-offs to average loans ....................................       0.28%              0.41%
                                                                       =========          =========
</TABLE>

         Charge-offs  during 2000 increased $10,000 with an increase in consumer
charge-offs  of  $57,000  partially  offset  by a  decrease  in  commercial  and
industrial  loan  charge-offs  of $47,000.  Current  year  consumer  charge-offs
consist  of  several  small  loan  amounts.  Management  determined  that  these
borrowers  would not sufficient  resources


                                       6
<PAGE>

to repay the debt.  The commercial and  industrial  loan  charge-offs  include a
$65,000  charge-off taken on loans to one borrower.  Management  determined that
the borrower would not have sufficient  resources to repay the debt based on the
borrower's  individual  business  circumstances.  Charge-offs  during  1999 were
primarily  attributable  to a $120,000  charge-off  taken on a  commercial  loan
during the first quarter after management determined that the borrower would not
have  sufficient  resources  to repay the debt due to changes in the  borrower's
individual business circumstances.

     The following table shows the allowance for loan losses broken down by loan
category at the dates indicated.
<TABLE>
<CAPTION>

                                                                        AT DECEMBER 31,
                                            -----------------------------------------------------------------
                                                        2000                               1999
                                            -----------------------------       -----------------------------
                                            RESERVE      PERCENT OF LOANS       RESERVE      PERCENT OF LOANS
                                            FOR EACH     IN EACH CATEGORY       FOR EACH    IN EACH CATEGORY
PORTFOLIO                                   CATEGORY      TO TOTAL LOANS        CATEGORY      TO TOTAL LOANS
---------                                   --------     ----------------       --------    -----------------
                                                                  (DOLLARS IN THOUSANDS)
<S>                                         <C>                 <C>             <C>                <C>
   Real estate -- mortgage:
     Residential..........................  $     181           56.58%          $    121           55.77%
     Commercial...........................         82            8.65                 59            7.62
     Agricultural.........................         --            2.71                 --            3.67
   Real estate -- construction............          1            7.45                  4            7.15
   Consumer...............................         70           15.07                 67           16.24
   Commercial and industrial.............         191            9.54                188            9.55
   Unallocated............................        101            0.00                123            0.00
                                            ---------          ------           --------          ------
       Total..............................  $     626          100.00%          $    562          100.00%
                                            =========          ======           ========          ======
</TABLE>

INVESTMENT SECURITIES

     In addition to making loans, the Bank is authorized to maintain a portfolio
of investment  securities to provide  liquidity as well as a source of earnings.
The Bank's securities investment authority includes investments in U.S. Treasury
securities as well as securities issued by U.S.  government  agencies  including
mortgage-backed securities. The Bank also is authorized to invest in obligations
of certain states and their political subdivisions.

     The Bank's investment securities portfolio currently consists of securities
issued by the FHLB and Federal Farm Credit Bank  Systems.  The  following  table
shows the composition of the investment portfolio by major category at the dates
indicated.
<TABLE>
<CAPTION>
                                                                              AT DECEMBER 31,
                                                                       ---------------------------
                                                                         2000               1999
                                                                       --------           --------
                                                                           (DOLLARS IN THOUSANDS)

<S>                                                                    <C>                <C>
U.S. government and federal agency securities........................  $   3,020          $   1,986
                                                                       ---------          ---------
      Total..........................................................  $   3,020          $   1,986
                                                                       =========          =========
</TABLE>

                                       7
<PAGE>
     The following table sets forth the scheduled maturities,  market values and
average  yields  for  the  Bank's  investment   securities  and  mortgage-backed
securities portfolio at December 31, 2000.
<TABLE>
<CAPTION>
                             ONE YEAR OR LESS       ONE TO FIVE YEARS     FIVE TO TEN YEARS   MORE THAN TEN YEARS
                             --------------------  -------------------   -------------------  -------------------
                                         WEIGHTED             WEIGHTED              WEIGHTED             WEIGHTED
                             AMORTIZED   AVERAGE   AMORTIZED  AVERAGE    AMORTIZED  AVERAGE   AMORTIZED   AVERAGE
                               COST       YIELD      COST      YIELD       COST      YIELD      COST       YIELD
                             ----------  --------  ---------  --------   ---------  --------  ---------  --------
                                                                   (DOLLARS IN THOUSANDS)
<S>                          <C>                   <C>         <C>       <C>         <C>      <C>
U.S. government and federal
   agency securities.......  $     --      -- %    $  2,500    6.86%     $    500    7.00%    $   --        -- %
                             --------              --------              --------             ------
      Total................  $     --      --      $  2,500    6.86      $    500    7.00     $   --        --
                             ========              ========              ========             ======
<CAPTION>
                                  TOTAL INVESTMENT PORTFOLIO
                                -------------------------------
                                                       WEIGHTED
                                AMORTIZED    MARKET     AVERAGE
                                  VALUE      VALUE       YIELD
                                ---------    ------    --------
<S>                             <C>          <C>         <C>
U.S. government and federal
    agency securites.........   $  3,000     $ 3,020     6.88%
                                --------     -------
    Total....................   $  3,000     $ 3,020     6.88
                                ========     =======
</TABLE>
     At December 31, 2000, the Bank's other investments consisted of $152,300 in
stock in the Federal  Reserve Bank of St. Louis in which the Bank is required to
invest as a national  bank and  $285,900 in Federal  Home Loan Bank  ("FHLB") of
Cincinnati  stock in which it is  required  to invest in order to be a member of
the FHLB of Cincinnati.

     At December 31, 2000, the Bank had no investments in securities of a single
issuer  (other than the U.S.  government  securities  and  securities of federal
agencies and government-sponsored enterprises) which aggregated more than 10% of
stockholders' equity.

DEPOSITS AND OTHER SOURCES OF FUNDS

     The Bank  funds  its  lending  and  investment  activities  primarily  with
deposits.  The Bank is also  eligible to borrow from the FHLB of  Cincinnati  of
which it became a member in 1998.  FHLB of  Cincinnati  advances may be used for
residential and small business lending.

     DEPOSITS.  The Bank's deposit  products  include regular  savings  accounts
(statements),  money market  deposit  accounts,  demand  deposit  accounts,  NOW
checking accounts, IRA accounts and certificates of deposit accounts. Variations
in  service  charges,  terms and  interest  rates  are used to  target  specific
markets.  Ancillary  products and services  for deposit  customers  include safe
deposit boxes, money orders and travelers checks, night depositories,  automated
clearinghouse transactions, wire transfers, automated teller machines, telephone
banking,  and a customer  call  center.  The Bank also  offers  on-line  banking
through its website. The Bank is a member of Cirrus(R) and MAC(R) ATM networks.

     The Bank obtains deposits  principally through its main and branch offices.
The Bank also attracts  deposits through its website.  The Bank does not solicit
brokered  deposits.  At December  31,  2000,  the Bank had  approximately  $15.4
million in certificates of deposit and other time deposits of $100,000 or more.

     The following  table  provides  information  as to the maturity of all time
deposits of $100,000 or more at December 31, 2000.

                                                                     AMOUNT
                                                                  (IN THOUSANDS)
                                                                  --------------

               Three months or less................................ $   3,417
               Over three through six months.......................     1,899
               Over six through 12 months..........................     5,716
               Over 12 months......................................     4,414
                                                                    ---------
               Total............................................... $  15,446
                                                                    =========

     BORROWINGS.  In  addition  to  deposits,  the Bank  obtains  funds  for its
operations  through various forms of short-term  borrowings  including  advances
from the FHLB of Cincinnati  and purchases of federal  funds.  FHLB advances may
only be used for residential and small business  lending.  At December 31, 2000,
the Bank  had no  outstanding  advances  from  the  FHLB of  Cincinnati.  Future
advances  will be  secured  by a  blanket  lien on all  the

                                       8
<PAGE>

Bank's  residential  mortgages and its FHLB stock.  The Bank  purchases  federal
funds  from  time to  time  from  its  correspondent  bank  primarily  for  cash
management purposes.

     The following  table sets forth certain  information  regarding  short-term
borrowings by the Bank at the dates and for the periods indicated:
<TABLE>
<CAPTION>
                                                                             AT OR FOR THE
                                                                          YEAR ENDED DECEMBER 31,
                                                                       ---------------------------
                                                                         2000               1999
                                                                       --------           --------
                                                                           (DOLLARS IN THOUSANDS)
<S>                                                                    <C>                <C>
Amounts outstanding at end of period:
  FHLB advances......................................................  $      --          $      --
  Federal funds purchased............................................         --                 --

Weighted average rate paid on:
  FHLB advances......................................................         --                 -- %
  Federal funds purchased............................................         --                 --

Maximum amount of borrowings outstanding at any month end:
  FHLB advances......................................................  $      --          $   1,000
  Federal funds purchased............................................         23              1,606

Approximate average amounts outstanding:
  FHLB advances......................................................  $      --          $     453
  Federal funds purchased............................................         22                313

Approximate weighted average rate paid on:
  FHLB advances......................................................         --%              5.37%
  Federal funds purchased............................................       6.41               6.82
</TABLE>


COMPETITION

     The  banking  business  is  highly  competitive.  The  Bank  competes  as a
financial intermediary with other commercial banks, savings associations, credit
unions, mortgage banking firms, consumer finance companies, securities brokerage
firms,  insurance  companies,  money  market  mutual  funds and other  financial
institutions operating in the Elizabethtown market area and elsewhere.

     The Bank's market area is a highly  competitive,  highly  branched  banking
market. There are currently 11 FDIC-insured depository institutions with offices
in Elizabethtown  including several  institutions  affiliated with regional bank
holding   companies.   Based  on  data  compiled  by  the  FDIC,  the  Bank  had
approximately  8.5% of the  FDIC-insured  deposits in  Elizabethtown at June 30,
2000 (the latest date for which such data is  available)  ranking it sixth among
FDIC-insured  institutions  in deposit  market share.  Competition in the market
area for loans to small businesses and professionals,  the Bank's target market,
is  intense,  and  pricing is  important.  Most of the Bank's  competitors  have
substantially  greater  resources  and  lending  limits  than the Bank and offer
certain  services,  such as extensive and established  branch networks and trust
services,  that the  Bank  does  not  expect  to  provide  or will  not  provide
initially.  Moreover,  larger institutions operating in the Elizabethtown market
may have access to borrowed  funds at lower cost than will be  available  to the
Bank. Deposit competition among institutions in the market area also is strong.

     The  Board  of  Directors  believes  that  the  Bank  is  able  to  compete
effectively in this market. The Board of Directors believes that the area reacts
favorably  to the Bank's  community  bank focus and emphasis on service to small
and medium size businesses, individuals and professional concerns.


                                       9
<PAGE>

     Historically,  Kentucky banks had only been permitted to establish branches
in the county in which their main office is located. During the 2000 legislative
season,  however, the Kentucky statutes were amended to permit Kentucky banks to
establish branches throughout the state without geographical  restriction.  This
change in the law may allow new competitors to enter the Bank's market area. See
"Supervision and Regulation."


EMPLOYEES

     At December 31, 2000, the Bank had 23 full-time equivalent employees.


                           SUPERVISION AND REGULATION

REGULATION OF THE COMPANY

     GENERAL.  The Company is a bank holding  company  within the meaning of the
Bank  Holding  Company  Act of 1956  (the  "BHCA").  As  such,  the  Company  is
registered  with the Board of  Governors  of the  Federal  Reserve  System  (the
"Federal  Reserve  Board")  and  subject to Federal  Reserve  Board  regulation,
examination,  supervision and reporting requirements. As a bank holding company,
the  Company is  required to furnish to the  Federal  Reserve  Board  annual and
quarterly  reports of its  operations  at the end of each  period and to furnish
such additional information as the Federal Reserve Board may require pursuant to
the BHCA. The Company is also subject to regular  inspection by Federal  Reserve
Board examiners.

     Under the BHCA,  a bank holding  company must obtain the prior  approval of
the Federal Reserve Board before:  (1) acquiring direct or indirect ownership or
control of any voting shares of any bank or bank holding  company if, after such
acquisition,  the bank  holding  company  would  directly or  indirectly  own or
control more than 5% of such shares;  (2) acquiring all or substantially  all of
the  assets  of  another  bank  or  bank  holding  company;  or (3)  merging  or
consolidating with another bank holding company.

     The  Riegle-Neal  Interstate  Banking and Branching  Efficiency Act of 1994
(the  "Riegle-Neal  Act")  authorizes  the Federal  Reserve  Board to approve an
application of an adequately  capitalized  and  adequately  managed bank holding
company to acquire control of, or acquire all or substantially all of the assets
of, a bank  located in a state  other than such  holding  company's  home state,
without  regard to whether  the  transaction  is  prohibited  by the laws of any
state.  The Federal Reserve Board may not approve the acquisition of a bank that
has not been in existence for the minimum time period (not exceeding five years)
specified  by the  statutory  law of the host state.  The  Riegle-Neal  Act also
prohibits the Federal  Reserve Board from  approving  such an application if the
applicant (and its depository institution  affiliates) controls or would control
more than 10% of the insured deposits in the United States or 30% or more of the
deposits  in the  target  bank's  home state or in any state in which the target
bank maintains a branch.  The  Riegle-Neal  Act does not affect the authority of
states to limit the percentage of total insured  deposits in the state which may
be held or  controlled  by a bank or bank  holding  company to the  extent  such
limitation  does not  discriminate  against  out-of-state  banks or bank holding
companies.  Individual  states may also waive the 30%  state-wide  concentration
limit  contained in the  Riegle-Neal  Act.  Under  Kentucky  law, a bank holding
company is prohibited from acquiring control of any bank or bank holding company
if the bank holding company would control more than 15% of the total deposits of
all depository institutions in the Commonwealth of Kentucky unless waived by the
Commissioner.

     Additionally,  beginning on June 1, 1997, the federal banking  agencies are
authorized to approve interstate merger  transactions  without regard to whether
such transaction is prohibited by the law of any state, unless the home state of
one of the banks  opted out of the  Riegle-Neal  Act by adopting a law after the
date of enactment of the Riegle-Neal Act and prior to June 1, 1997 which applies
equally to all out-of-state  banks and expressly  prohibits merger  transactions
involving  out-of-state  banks. The Commonwealth of Kentucky did not pass such a
law during this period.  Interstate  acquisitions  of branches will be permitted
only if the law of the  state  in which  the  branch  is


                                       10
<PAGE>

located permits such acquisitions.  Interstate  mergers and branch  acquisitions
will  also  be  subject  to  the  nationwide  and  statewide   insured   deposit
concentration amounts described above.

     The BHCA also prohibits,  with certain  exceptions,  a bank holding company
from  acquiring  direct or indirect  ownership or control of more than 5% of the
voting shares of a company that is not a bank or a bank holding company, or from
engaging  directly  or  indirectly  in  activities  other than those of banking,
managing or controlling banks, or providing  services for its subsidiaries.  The
principal  exceptions to these prohibitions  involve certain non-bank activities
which,  by statute or by Federal  Reserve Board  regulation or order,  have been
identified as activities  closely related to the business of banking or managing
or controlling  banks.  The activities of the Company are subject to these legal
and  regulatory  limitations  under  the BHCA and the  Federal  Reserve  Board's
regulations  thereunder.  Notwithstanding  the  Federal  Reserve  Board's  prior
approval of specific  nonbanking  activities,  the Federal Reserve Board has the
power to order a holding company or its  subsidiaries to terminate any activity,
or to  terminate  its  ownership  or  control  of any  subsidiary,  when  it has
reasonable  cause to believe  that the  continuation  of such  activity  or such
ownership  or  control  constitutes  a  serious  risk to the  financial  safety,
soundness or stability of any bank subsidiary of that holding company.

     Effective  with the  enactment of the  Gramm-Leach-Bliley  ("G-L-B") Act on
November  12,  1999,  bank  holding   companies   whose  financial   institution
subsidiaries  are well  capitalized  and  well  managed  and  have  satisfactory
Community  Reinvestment  Act  records  can  elect to become  "financial  holding
companies"  which  are  permitted  to engage  in a  broader  range of  financial
activities  than are  permitted to bank  holding  companies.  Financial  holding
companies  are  authorized  to engage  in,  directly  or  indirectly,  financial
activities. A financial activity is an activity that is (i) financial in nature;
(ii)  incidental  to  an  activity  that  is  financial  in  nature;   or  (iii)
complementary  to a  financial  activity  and that  does  not pose a safety  and
soundness  risk. The G-L-B Act includes a list of activities  that are deemed to
be  financial  in nature.  Other  activities  also may be decided by the Federal
Reserve  Board to be  financial  in nature or  incidental  thereto  if they meet
specified criteria.  A financial holding company that intends to engage in a new
activity  or to acquire a company to engage in such an  activity  is required to
give prior notice to the Federal  Reserve  Board.  If the activity is not either
specified in the G-L-B Act as being a financial activity or one that the Federal
Reserve  Board has  determined  by rule or regulation to be financial in nature,
the prior approval of the Federal Reserve Board is required.

     CAPITAL  ADEQUACY.   The  Federal  Reserve  Board  has  adopted  guidelines
regarding  the capital  adequacy of bank holding  companies,  which require bank
holding  companies  to  maintain  specified  minimum  ratios of capital to total
assets and  capital to  risk-weighted  assets.  See  "Regulation  of the Bank --
Capital Adequacy."

     DIVIDENDS  AND  DISTRIBUTIONS.  The Federal  Reserve Board has the power to
prohibit  dividends by bank holding companies if their actions constitute unsafe
or unsound practices. The Federal Reserve Board has issued a policy statement on
the payment of cash  dividends by bank holding  companies,  which  expresses the
Federal  Reserve  Board's  view  that a bank  holding  company  should  pay cash
dividends  only to the extent that the company's net income for the past year is
sufficient to cover both the cash dividends and a rate of earning retention that
is consistent  with the company's  capital  needs,  asset  quality,  and overall
financial condition.

     Bank  holding  companies  are  required to give the Federal  Reserve  Board
notice of any purchase or redemption of their  outstanding  equity securities if
the gross  consideration for the purchase or redemption,  when combined with the
net  consideration  paid  for all  such  purchases  or  redemptions  during  the
preceding  12  months,  is equal to 10% or more of the  bank  holding  company's
consolidated net worth. The Federal Reserve Board may disapprove such a purchase
or  redemption  if it  determines  that  the  proposal  would  violate  any law,
regulation, Federal Reserve Board order, directive, or any condition imposed by,
or written  agreement  with, the Federal Reserve Board.  Bank holding  companies
whose capital  ratios exceed the thresholds  for "well  capitalized"  banks on a
consolidated basis are exempt from the foregoing  requirement if they were rated
composite 1 or 2 in their most recent  inspection and are not the subject of any
unresolved supervisory issues.

REGULATION OF THE BANK

     GENERAL. As a national bank, the Bank is subject to the primary supervision
of the Office of the Comptroller of the Currency ("OCC") under the National Bank
Act. The OCC regularly  examines the  operations of



                                       11
<PAGE>

the Bank,  including  but not  limited to  capital  adequacy,  reserves,  loans,
investments and management practices.  These examinations are for the protection
of the Bank's  depositors  and not its  shareholders.  In addition,  the Bank is
required to furnish quarterly and annual call reports to the OCC pursuant to the
Federal Deposit Insurance ("FDI") Act. The OCC's enforcement  authority includes
the  power  to  remove  officers  and  directors  and  the  authority  to  issue
cease-and-desist  orders to prevent a national  bank from  engaging in unsafe or
unsound practices or violating laws or regulations governing its business.

     The Bank is a member of the Federal  Reserve  System and its  deposits  are
insured by the FDIC to the legal maximum of $100,000 for each insured depositor.
Some of the aspects of the  lending  and  deposit  business of the Bank that are
subject to regulation by the Federal  Reserve Board and the FDIC include reserve
requirements  and  disclosure  requirements  in  connection  with  personal  and
mortgage loans and savings deposit accounts. In addition, the Bank is subject to
numerous  federal  and state  laws and  regulations  which  set  forth  specific
restrictions and procedural  requirements  with respect to the  establishment of
branches, investments, interest rates on loans, credit practices, the disclosure
of credit terms and discrimination in credit transactions.

     CAPITAL  ADEQUACY.  The OCC has established  guidelines with respect to the
maintenance of appropriate  levels of capital by national banks. The regulations
impose two sets of capital adequacy requirements:  minimum leverage rules, which
require national banks to maintain a specified minimum ratio of capital to total
assets, and risk-based capital rules, which require the maintenance of specified
minimum ratios of capital to "risk-weighted" assets.

     OCC regulations require national banks to maintain a minimum leverage ratio
of "Tier 1 capital" (as defined in the risk-based capital  guidelines  discussed
in the following paragraphs) to total assets of 3.0%. Although setting a minimum
3.0%  leverage  ratio,  the capital  regulations  state that only the  strongest
banks, with composite  examination  ratings of 1 under the rating system used by
the  federal  bank  regulators,  would be  permitted  to operate at or near such
minimum level of capital.  All other  national  banks are expected to maintain a
leverage  ratio of at least 1% to 2% above the minimum  ratio,  depending on the
assessment  of an  individual  organization's  capital  adequacy  by its primary
regulator.  Any national bank  experiencing or anticipating  significant  growth
would be  expected  to  maintain  capital  well  above the  minimum  levels.  In
addition,  FDIC policies  required the Bank to maintain a minimum leverage ratio
of 8.0% during the first three years of operation.

     The risk-based  capital rules of the OCC require national banks to maintain
minimum  regulatory  capital  levels  based upon a weighting of their assets and
off-balance  sheet obligations  according to risk. The risk-based  capital rules
have  two  basic  components:   a  core  capital  (Tier  1)  requirement  and  a
supplementary  capital (Tier 2) requirement.  Core capital consists primarily of
common stockholders' equity,  certain  noncumulative  perpetual preferred stock,
and minority interests in the equity accounts of consolidated subsidiaries; less
all  intangible  assets,  except  for  certain  mortgage  servicing  rights  and
purchased credit card  relationships.  Supplementary  capital elements  include,
subject to certain  limitations,  the  allowance for losses on loans and leases;
perpetual  preferred stock that does not qualify as Tier 1 capital and long-term
preferred  stock with an original  maturity of at least 20 years from  issuance;
hybrid capital instruments,  including perpetual debt and mandatory  convertible
securities; and subordinated debt and intermediate-term preferred stock.

     The risk-based  capital  regulations assign balance sheet assets and credit
equivalent  amounts of off-balance  sheet  obligations to one of four broad risk
categories  based  principally on the degree of credit risk  associated with the
obligor.  The assets and off-balance sheet items in the four risk categories are
weighted  at 0%,  20%,  50% and  100%.  These  computations  result in the total
risk-weighted  assets. The risk-based capital  regulations require all banks and
bank  holding  companies to maintain a minimum  ratio of total  capital to total
risk-weighted assets of 8%, with at least 4% as core capital. For the purpose of
calculating these ratios:  (i) supplementary  capital will be limited to no more
than 100% of core  capital;  and (ii) the  aggregate  amount of certain types of
supplementary  capital will be limited.  In  addition,  the  risk-based  capital
regulations  limit the allowance for loan losses  includable as capital to 1.25%
of total risk-weighted assets.

     OCC  regulations  and guidelines  additionally  specify that national banks
with significant exposure to declines in the economic value of their capital due
to changes in  interest  rates may be required  to  maintain  higher  risk-based
capital ratios. The federal banking agencies, including the OCC, have proposed a
system for  measuring


                                       12
<PAGE>

and assessing the exposure of a national bank's net economic value to changes in
interest  rates.  The federal banking  agencies,  including the OCC, have stated
their intention to propose a rule  establishing  an explicit  capital charge for
interest rate risk based upon the level of a national bank's  measured  interest
rate risk  exposure  after more  experience  has been gained  with the  proposed
measurement process.

     In accordance with the Federal Deposit  Insurance  Corporation  Improvement
Act of 1991, the OCC has also adopted  regulations which classify national banks
by capital  levels and which require the OCC to take various  prompt  corrective
actions in the event a national  bank fails to satisfy  the  capital  standards.
Under these regulations,  a well-capitalized  bank is one that is not subject to
any  regulatory  order or directive to meet any specific  capital level and that
has or exceeds the following capital levels: a total risk-based capital ratio of
10%, a Tier 1  risk-based  capital  ratio of 6%, and a leverage  ratio of 5%. An
adequately capitalized bank is one that does not qualify as well-capitalized but
meets or exceeds the following capital requirements:  a total risk-based capital
ratio of 8%, a Tier 1 risk-based  capital  ratio of 4%, and a leverage  ratio of
either  (i) 4% or (ii) 3% if the  bank  has the  highest  composite  examination
rating.  A bank not  meeting  these  criteria  is treated  as  undercapitalized,
significantly undercapitalized,  or critically undercapitalized depending on the
extent to which the bank's capital levels are below these standards.  A national
bank that falls within any of the three undercapitalized  categories established
by the prompt  corrective action regulation will be subject to severe regulatory
sanctions.

     BRANCHING.  Under  the  McFadden  Act of  1927,  national  banks  may  only
establish  branches to the extent  specifically  authorized by statute for banks
chartered by the state in which the national  bank is located and subject to the
restrictions  as to location  imposed by state law on state banks.  Kentucky law
historically  provided  that  Kentucky  banks  could only  maintain  and operate
branches in the  counties in which their main office was  located.  On March 17,
2000, however, the Governor of Kentucky signed legislation that permits Kentucky
banks to establish branches without  geographical  restriction.  The Riegle-Neal
Act  authorizes  the OCC and FDIC to  approve  interstate  branching  de novo by
national and state banks, respectively,  only in states which specifically allow
for such branching.  The  Riegle-Neal Act also requires the appropriate  federal
banking agencies to prescribe  regulations  which prohibit any out-of-state bank
from using the  interstate  branching  authority  primarily  for the  purpose of
deposit  production.  These  regulations must include  guidelines to ensure that
interstate  branches  operated  by an  out-of-state  bank  in a host  state  are
reasonably helping to meet the credit needs of the communities which they serve.

     DIVIDEND  LIMITATIONS.  Pursuant to the National Bank Act, no national bank
may pay dividends  from its paid-in  capital.  All dividends must be paid out of
current or retained net  profits,  after  deducting  reserves for losses and bad
debts. A national bank is prohibited  from paying a dividend if it has sustained
losses in excess of its undivided profits on hand. The National Bank Act further
restricts the payment of dividends out of net profits by  prohibiting a national
bank from  declaring a dividend on its shares of common  stock until its surplus
fund  equals the amount of its capital  stock or, if the  surplus  fund does not
equal the amount of capital stock,  until  one-tenth of a bank's net profits for
the preceding  half year in the case of quarterly or semi-annual  dividends,  or
the  preceding  two  half-year  periods  in the case of  annual  dividends,  are
transferred to the surplus fund.  Prior OCC approval is required for the payment
of a dividend if the total of all  dividends  declared by a national bank in any
calendar  year would exceed the total of its net profits for that year  combined
with its net profits for the two preceding years, less any required transfers to
surplus or a fund for the retirement of any preferred  stock.  In addition,  the
Bank is prohibited by federal statute from paying  dividends or making any other
capital  distribution  that would cause the Bank to fail to meet its  regulatory
capital  requirements.  Further,  the OCC also has  authority  to  prohibit  the
payment of dividends by a national bank when it determines such payment to be an
unsafe and unsound banking practice.

     DEPOSIT  INSURANCE.  The Bank is  required to pay  semi-annual  assessments
based on a percentage  of its insured  deposits to the FDIC for insurance of its
deposits by the Bank Insurance Fund.  Under the Federal  Deposit  Insurance Act,
the FDIC is required to set semi-annual assessments for BIF-insured institutions
to  maintain  the  designated  reserve  ratio of the BIF at  1.25% of  estimated
insured  deposits or at a higher  percentage of estimated  insured deposits that
the FDIC  determines  to be justified for that year by  circumstances  raising a
significant risk of substantial future losses to the BIF.

     Under the risk-based  deposit  insurance  assessment  system adopted by the
FDIC, the assessment rate for an insured depository  institution  depends on the
assessment risk classification assigned to the institution by the FDIC, which is
determined by the institution's capital level and supervisory evaluations. Based
on the data reported to


                                       13
<PAGE>


regulators  for the date closest to the last day of the fourth  month  preceding
the semi-annual  assessment  period,  institutions  are assigned to one of three
capital groups -- well capitalized, adequately capitalized or undercapitalized."
Within each capital group,  institutions  are assigned to one of three subgroups
on the basis of supervisory evaluations by the institution's primary supervisory
authority and such other  information  as the FDIC  determines to be relevant to
the  institution's  financial  condition  and  the  risk  posed  to the  deposit
insurance fund. Under the current assessment  schedule,  well-capitalized  banks
with the best  supervisory  ratings  are not  required  to pay any  premium  for
deposit  insurance.  All  BIF-insured  banks,  however,  are  required to pay an
assessment  to the FDIC in an amount  equal to 2.12  basis  points  times  their
assessable  deposits to help fund  interest  payments on certain bonds issued by
the Financing  Corporation,  an agency  established by the federal government to
finance takeovers of insolvent thrifts.

     ENFORCEMENT.   Under  the  FDI  Act,   the  OCC  has  primary   enforcement
responsibility  over  national  banks  and has the  authority  to bring  actions
against such banks and all institution-affiliated  parties, including directors,
officers,  stockholders,  and any  attorneys,  appraisers  and  accountants  who
knowingly or recklessly participate in wrongful action likely to have an adverse
effect on an insured  institution.  Formal enforcement action may range from the
issuance of a capital directive or cease and desist order to removal of officers
and/or  directors to  institution  of  receivership  or  conservatorship.  Civil
penalties cover a wide range of violations and can amount to $25,000 per day, or
even $1 million per day in especially  egregious  cases.  Under the FDI Act, the
FDIC has the authority to recommend to the OCC that it take  enforcement  action
with respect to a national bank. If action is not taken by the agency,  the FDIC
has authority to take such action under certain circumstances.  Federal law also
establishes criminal penalties for certain violations.

     TRANSACTIONS  WITH AFFILIATES.  A national bank or its subsidiaries may not
engage in "covered  transactions"  with any one  affiliate in an amount  greater
than 10% of such bank's capital stock and surplus, and for all such transactions
with all  affiliates  a national  bank is  limited to an amount  equal to 20% of
capital  stock  and  surplus.  All  such  transactions  must  also  be on  terms
substantially  the same, or at least as favorable,  to the bank or subsidiary as
those provided to a non-affiliate.  The term "covered  transaction" includes the
making of loans,  purchase of assets,  issuance of a guarantee and similar other
types of transactions.  An affiliate of a national bank is any company or entity
which  controls or is under common  control with the national bank. In a holding
company context, the parent holding company of a national bank and any companies
which are  controlled  by such  parent  holding  company are  affiliates  of the
national  bank.  For  purposes  of the  aggregate  limit  on  transactions  with
affiliates,  the term affiliate would also include any financial subsidiary of a
national  bank.  The  BHCA  further  prohibits  a  depository  institution  from
extending  credit to or offering  any other  services,  or fixing or varying the
consideration for such extension of credit or service, on the condition that the
customer obtain some  additional  service from the institution or certain of its
affiliates or not obtain services of a competitor of the institution, subject to
certain limited exceptions.

     LOANS TO DIRECTORS, EXECUTIVE OFFICERS AND PRINCIPAL STOCKHOLDERS. Loans to
directors, executive officers and principal stockholders of a national bank must
be made on  substantially  the same  terms as those  prevailing  for  comparable
transactions with persons who are not executive officers,  directors,  principal
stockholder  or  employees  of the Bank  unless the loan is made  pursuant  to a
compensation or benefit plan that is widely  available to employees and does not
favor  insiders.  Loans  to  any  executive  officer,   director  and  principal
stockholder  together  with  all  other  outstanding  loans to such  person  and
affiliated  interests  generally  may not exceed  15% of the  bank's  unimpaired
capital  and  surplus  and  all  loans  to  such  persons  may  not  exceed  the
institution's  unimpaired  capital and unimpaired  surplus.  Loans to directors,
executive officers and principal stockholders,  and their respective affiliates,
in  excess of the  greater  of  $25,000  or 5% of  capital  and  surplus  (up to
$500,000) must be approved in advance by a majority of the board of directors of
the  bank  with any  "interested"  director  not  participating  in the  voting.
National  banks  are  prohibited  from  paying  the  overdrafts  of any of their
executive  officers or directors.  In addition,  loans to executive officers may
not be made on terms more favorable than those afforded other  borrowers and are
restricted as to type, amount and terms of credit.

FINANCIAL MODERNIZATION LEGISLATION

     On November 12, 1999, the President signed  legislation  which could have a
far-reaching impact on the financial services industry. The G-L-B Act authorizes
affiliations between banking, securities and insurance firms and authorizes bank
holding  companies  and national  banks to engage in a variety of new  financial
activities.  Under



                                       14
<PAGE>

the  G-L-B  Act,  any  bank  holding   company  whose   depository   institution
subsidiaries  have satisfactory  Community  Reinvestment Act ("CRA") records may
elect to become a  financial  holding  company if it  certifies  to the  Federal
Reserve  Board  that  all  of  its  depository   institution   subsidiaries  are
well-capitalized and well-managed. Financial holding companies may engage in any
activity that the Federal Reserve Board,  after  consultation with the Secretary
of the  Treasury,  determines  to be  financial  in  nature or  incidental  to a
financial  activity.  Financial  holding companies may also engage in activities
that are  complementary  to financial  activities  and do not pose a substantial
risk to the safety and soundness of their depository institution subsidiaries or
the financial system generally. The G-L-B Act specifies that activities that are
financial in nature  include  lending and  investing  activities,  insurance and
annuity underwriting and brokerage,  financial,  investment and economic advice,
selling  interests  in  pooled  investment  vehicles,  securities  underwriting,
engaging in activities  currently permitted to bank holding companies (including
activities  in which bank holding  companies may  currently  engage  outside the
United  States)  and  merchant   banking   through  a  securities  or  insurance
underwriting  affiliate.  The Federal Reserve Board,  in  consultation  with the
Department of Treasury, may approve additional financial activities.

     The G-L-B Act permits well capitalized and well managed national banks with
satisfactory  CRA  records to invest in  financial  subsidiaries  that engage in
activities  that are  financial in nature (or  incidental  thereto) on an agency
basis.  National  banks that are among the 50 largest  insured banks and have at
least one issue of  investment  grade debt  outstanding  may invest in financial
subsidiaries  that  engage in  activities  as  principal  other  than  insurance
underwriting,  real estate  development or merchant banking.  All national banks
are given the authority to underwrite  municipal  revenue  bonds.  The aggregate
total  consolidated  assets of a national bank's financial  subsidiaries may not
exceed the lesser of 45% of the bank's total consolidated assets or $50 billion.
A  national  bank  would be  required  to deduct its  investments  in  financial
subsidiaries  from its  regulatory  capital.  National  banks  must  also  adopt
procedures for protecting the bank against risks  associated  with the financial
subsidiary  and to preserve the  separate  corporate  identity of the  financial
subsidiary.  Financial  subsidiaries  of state and national banks (which include
any subsidiary engaged in an activity not permitted to a national bank directly)
would be treated as  affiliates  for  purposes of the  limitations  on aggregate
transactions  with affiliates in Sections 23A and 23B of the Federal Reserve Act
and for purposes of the anti-tying restrictions of the Bank Holding Company Act.
State-chartered   banks  would  be  prohibited   from   investing  in  financial
subsidiaries unless they would be well capitalized after deducting the amount of
their  investment  from capital and observe the other  safeguards  applicable to
national banks.

     The  G-L-B  Act  imposes  functional  regulation  on  bank  securities  and
insurance  activities.  Banks  will  only  be  exempt  from  SEC  regulation  as
securities  brokers if they limit their  activities  to those  described  in the
G-L-B  Act.  Banks  that  advise  mutual  funds  will be subject to the same SEC
regulation  as other  investment  advisors.  Bank  common  trust  funds  will be
regulated  as mutual  funds if they are  advertised  or offered  for sale to the
general public.  National banks and their  subsidiaries  will be prohibited from
underwriting  insurance  products  other  than those  which  they were  lawfully
underwriting  as of January 1, 1999 and are prohibited from  underwriting  title
insurance or tax-free annuities. National banks may only sell title insurance in
states in which  state-chartered  banks are authorized to sell title  insurance.
The G-L-B Act directs the federal  banking  agencies to  promulgate  regulations
governing  sales  practices  in  connection  with   permissible  bank  sales  of
insurance.

     The G-L-B Act imposes  new  requirements  on  financial  institutions  with
respect to customer  privacy.  The G-L-B Act generally  prohibits  disclosure of
customer  information  to  non-affiliated  third parties unless the customer has
been given the  opportunity  to object and has not objected to such  disclosure.
Financial  institutions  are further required to disclose their privacy policies
to customers  annually.  Financial  institutions,  however,  will be required to
comply  with state law if it is more  protective  of customer  privacy  than the
G-L-B Act.  The G-L-B Act directs the federal  banking  agencies,  the  National
Credit Union Administration,  the Secretary of the Treasury,  the Securities and
Exchange  Commission and the Federal Trade Commission,  after  consultation with
the National Association of Insurance Commissioners,  to promulgate implementing
regulations  within six months of enactment.  The privacy provisions will become
effective in July 2001.

     The G-L-B Act contains significant  revisions to the Federal Home Loan Bank
System. The G-L-B Act imposes new capital  requirements on the Federal Home Loan
Banks and authorizes them to issue two classes of stock with differing  dividend
rates and redemption requirements. The G-L-B Act deletes the current requirement
that the  Federal  Home Loan  Banks  annually  contribute  $300  million  to pay
interest on certain  government  obligations  in favor of a 20% of net  earnings
formula.  The G-L-B Act expands the  permissible  uses of Federal


                                       15
<PAGE>


Home Loan Bank advances by community financial  institutions (under $500 million
in assets) to include funding loans to small  businesses,  small farms and small
agri-businesses.  The G-L-B Act makes  membership  in the Federal Home Loan Bank
System voluntary for federal savings associations.

     The  G-L-B  Act  contains  a  variety  of  other  provisions   including  a
prohibition  against ATM surcharges  unless the customer has first been provided
notice of the  imposition  and  amount of the fee.  The  G-L-B Act  reduces  the
frequency  of CRA  examinations  for smaller  institutions  and imposes  certain
reporting  requirements  on  depository   institutions  that  make  payments  to
non-governmental entities in connection with the CRA.

ITEM 2.  PROPERTIES
-------------------

     The Bank leases  both its main  office at 1000 North  Dixie  Avenue and its
branch office at Dolphin Drive and U.S. Highway 62 in Elizabethtown, Kentucky.

     The main office has 5,000 square feet of space and was  constructed for the
Bank by a partnership in which each of the Bank's directors has an interest. The
Bank  leases its main office from the  partnership  under a ten-year  lease with
four successive  renewal options of ten years each.  Rental payments are $12,000
per month during the initial term of the lease with provision for increase based
on the percentage  increase in the Consumer  Price Index.  See "Item 12. Certain
Relationships and Related Transactions."

     Due to the  growth  of the Bank and  increases  in  personnel,  the Bank is
reaching full premises capacity at the main branch location.  A related party is
currently  constructing  a  building  addition  onto the main  branch  which the
Company will lease under a capital lease  arrangement  upon its completion which
is  expected to be August  2001.  As a result of the  addition  of building  and
equipment  under  capital  leases  in  the  aggregate  amount  of  approximately
$900,000,  the Company will incur monthly  amortization expense of approximately
$1,900,  and monthly  operating  lease expense for land rental of  approximately
$700. The monthly cash flow requirement under the lease  obligations,  including
interest expense, will be approximately $10,500 per month.

     The Bank's  branch  office which opened in December,  1998 has 2,771 square
feet of space.  The office is leased under a five-year  lease with provision for
five renewals of five years each.  During the initial term of the lease,  rental
payments are $2,540 per month for the building  space plus an additional  $1,616
per month for the land used for the drive-through teller window.

ITEM 3.  LEGAL PROCEEDINGS
--------------------------

     Although  the  Bank  from  time  to  time  is  involved  in  various  legal
proceedings  in the  normal  course of  business,  there are no  material  legal
proceedings to which the Bank is a party or to which its property is subject.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
------------------------------------------------------------

     There were no matters  submitted to a vote of the security  holders  during
the fourth quarter of fiscal year 2000.


                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
-----------------------------------------------------------------

     There is currently no trading market for the Company's common stock and the
Company has not paid any  dividends.  Under the Stock  Transfer  Agreement  into
which each shareholder has entered,  shareholders must first offer shares to the
Bank's  Organizers  prior to any transfer for value. At December 31, 2000, there
were 246,440 shares outstanding and 323 shareholders of record.



                                       16
<PAGE>
ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
------------------------------------------------------------------

         The Company recorded its first full year of profits in the Bank's third
full year of operations in 2000.  Net income for the year was $602,000  compared
to a loss of $125,000 for the year ended  December 31, 1999.  Net income for the
2000  fiscal year was helped in great  measure by the  lifting of the  valuation
allowance  relating to net  deferred  tax assets.  Also,  the Bank  continues to
significantly  increase  its  loan  portfolio  and  has  successfully  attracted
deposits from the community.  Although the Company  reported a loss for the year
ended December 31, 1999,  the Company had recorded  profits for each of the last
three  quarters  of  1999.  Had the Bank not been  required  to  charge-off  all
capitalized start-up costs during the first quarter of 1999, related to a change
in accounting principle, it would have a shown a profit for the full year. It is
management's  intention  to  continue  to grow  the  Bank's  loan  portfolio  by
attracting local deposits with superior service and competitive rates.

FORWARD-LOOKING STATEMENTS

     When used in this discussion and elsewhere in this Annual Report, the words
or phrases  "will  likely  result,"  "are  expected  to," "will  continue,"  "is
anticipated,"  "estimate,"  "project"  or similar  expressions  are  intended to
identify  "forward-looking   statements"  within  the  meaning  of  the  Private
Securities Litigation Reform Act of 1995. The Bank cautions readers not to place
undue reliance on any such  forward-looking  statements,  which speak only as of
the date made, and to advise readers that various  factors,  including  regional
and national economic conditions,  unfavorable  judicial decisions,  substantial
changes in levels of market  interest  rates,  credit and other risks of lending
and investment  activities and competitive  and regulatory  factors could affect
the Bank's  financial  performance and could cause the Bank's actual results for
future periods to differ materially from those anticipated or projected.

     The Company does not undertake and specifically disclaims any obligation to
update any  forward-looking  statements to reflect  occurrence of anticipated or
unanticipated events or circumstances after the date of such statements.

COMPARISON  OF THE RESULTS OF OPERATIONS  FOR THE YEARS ENDED  DECEMBER 31, 2000
AND 1999

     GENERAL.  Net income  for the year ended  December  31,  2000 was  $601,700
($2.46 basic earnings per share)  compared to a net loss of $(125,500)  ($(0.52)
basic  earnings per share) for the year ended  December 31, 1999. Net income for
the 2000 fiscal year was helped in great measure by the lifting of the valuation
allowance  relating to net deferred tax assets.  In accordance with Statement of
Financial  Accounting Standards No. 109, the Company determined that it was more
likely  than  not  that net  deferred  tax  assets  will be  realized,  and thus
concluded  that no  valuation  allowance  was  needed for  deductible  temporary
differences. The lifting of the valuation allowance relating to net deferred tax
assets  resulted in a current  income tax  benefit of  $186,900.  The  Company's
results of operations  for 1999 were  negatively  affected by a $156,800  charge
related  to a change in  accounting  principle  which  required  the  Company to
immediately charge-off all remaining capitalized start-up costs. The increase in
earnings  also  reflects  the  continued  growth in the Bank's  interest-earning
assets  which was  partially  offset by a decrease in the Bank's  interest  rate
spread from 3.69% in 1999 to 3.40% in 2000.

     NET INTEREST INCOME.  The primary component of the Bank's net income is its
net interest income which is the difference  between income earned on assets and
interest  expense  paid on the deposits and  borrowings  used to fund them.  Net
interest  income is  determined  by the spread  between the yields earned on the
Bank's   interest-earning   assets  and  the  rates  paid  on   interest-bearing
liabilities as well as the relative amounts of such assets and liabilities.  Net
interest  income  divided by average  interest-earning  assets,  represents  the
Bank's net interest margin.

     For the year  ended  December  31,  2000,  net  interest  income  increased
$440,700  or  22.0%  compared  to the  prior  year.  Interest  income  increased
$1,461,300,  or 36.6%,  for the year ended  December  31,  2000  while  interest
expense  increased  $1,020,600,  or 51.3%.  The increase in net interest  income
reflects  the  continued  growth  in  interest-earning   assets.  Total  average
interest-earning assets increased by approximately  $14,117,000 or 32.0% with an
increase in average  yield of 31 basis  points  while  average  interest-bearing
liabilities  increased by approximately  $13,347,000 with an increase in average
cost of 60 basis  points.  Reflecting  the  faster  growth  in  interest-bearing
liabilities, the Bank's net interest margin narrowed to 4.20% from 4.55%.



                                       17
<PAGE>

     During the year ended  December  31, 2000,  the Bank  reported net interest
income,  before  provision for credit  losses,  of $2,447,400.  Interest  income
(consisting  of $5,142,400  interest and fees on loans,  $227,900 in interest on
securities  and $85,200 in interest on federal  funds sold)  totaled  $5,455,500
while interest  expense,  which  consisted of $2,873,100 in interest on deposits
(including  $892,400  on  certificates  of  deposit  over  $100,000),  $1,400 in
interest on federal funds  purchased and $133,600 in interest on capital  leases
totaled $3,008,100.

     During the year ended  December  31, 1999,  the Bank  reported net interest
income,  before  provision for credit  losses,  of $2,006,700.  Interest  income
(consisting  of  $3,902,900  interest and fees on loans,  $33,300 in interest on
securities  and $58,000 in interest on federal  funds sold)  totaled  $3,994,200
while interest  expense,  which  consisted of $1,806,700 in interest on deposits
(including  $555,500  on  certificates  of deposit  over  $100,000),  $21,300 in
interest on federal  funds  purchased,  $24,400 in interest on Federal Home Loan
Bank advances and $135,100 in interest on capital leases totaled $1,987,500.

     The following table provides  information  for the designated  periods with
respect to the average  balances,  income and expense and annualized  yields and
costs  associated  with  various  categories  of  interest-earning   assets  and
interest-bearing liabilities.
<TABLE>
<CAPTION>
                                                                      YEAR ENDED DECEMBER 31,
                                               --------------------------------------------------------------------------
                                                             2000                                     1999
                                               ---------------------------------       ----------------------------------
                                                                         AVERAGE                                  AVERAGE
                                               AVERAGE                   YIELD/        AVERAGE                    YIELD/
                                               BALANCE      INTEREST      COST         BALANCE       INTEREST      COST
                                               -------      --------     -------       -------       --------     -------
                                                                             (DOLLARS IN THOUSANDS)
<S>                                            <C>          <C>           <C>          <C>           <C>            <C>
ASSETS:
Interest-earning assets:
   Federal funds sold.......................   $  1,343     $      85     6.33%        $    1,079    $      58      5.38%
   Securities...............................      3,279           228     6.95                488           33      6.76
   Loans, net of allowances (1).............     53,603         5,142     9.59             42,541        3,903      9.17
                                               --------     ---------                  ----------    ---------
        Total interest-earning assets.......     58,225         5,455     9.37             44,108        3,994      9.06
                                                            ---------                                ---------
Non-interest-earning assets.................      4,056                                     3,100
                                               --------                                ----------
        Total assets........................   $ 62,281                                $   47,208
                                               ========                                ==========

LIABILITIES AND STOCKHOLDERS' EQUITY:
Interest-bearing deposits:
  Savings and NOW...........................   $  5,821     $     202     3.41%        $    4,242    $     148      3.48%
  Money market..............................      1,571            66     4.23              1,131           45      4.00
  Other time deposits.......................     41,658         2,605     6.25             29,542        1,614      5.46
FHLB advances...............................         --            --      --                 454           24      5.37
Federal funds purchased.....................         22             1     6.41                313           21      6.82
Capital lease obligations...................      1,283           134    10.43              1,326          135     10.18
                                               --------     ---------                  ----------    ---------
        Total interest-bearing
             liabilities....................     50,355         3,008     5.97             37,008        1,987      5.37
                                                            ---------                                ---------
Non-interest-bearing deposits...............      5,912                                     4,802

Other liabilities...........................        541                                       362

Stockholders' equity........................      5,473                                     5,036
                                               --------                                ----------

Total liabilities and equity................   $ 62,281                                $   47,208
                                               ========                                ==========
Net interest income.........................                $   2,447                                $   2,007
                                                            =========                                =========
Net interest spread.........................                              3.40%                                     3.69%
                                                                         =====                                    ======
Net interest margin.........................                              4.20%                                     4.55%
                                                                         =====                                    ======
<FN>
---------
(1)    Includes non-accrual loans and loans held for sale.
</FN>
</TABLE>


                                       18
<PAGE>

     The following  table  allocates the changes in the components of the Bank's
net interest income between the years ended December 31, 2000 and 1999. For each
category of interest  income and  interest  expense,  changes are  allocated  to
changes due to rate (prior  year's  average  volume  multiplied by the change in
rate between periods) and changes due to volume (prior year's average rate times
change in volume between periods). Changes due to changes in rate/volume (change
in rate  times  change in volume)  are  allocated  between  change in volume and
change in rate in proportion to the absolute dollar amounts of each.
<TABLE>
<CAPTION>
                                                                 YEAR ENDED DECEMBER 31,
                                                          ----------------------------------
                                                               2000      VS.       1999
                                                          ----------------------------------
                                                                           CHANGE DUE TO:
                                                          INCREASE/    ---------------------
                                                          DECREASE     RATE           VOLUME
                                                          ---------    ----           ------
                                                                       (IN THOUSANDS)

<S>                                                       <C>          <C>            <C>
Federal funds sold.....................................   $     27     $   10         $      17
Investment securities..................................        195          1               194
Loans, net of allowances...............................      1,239        178             1,061
                                                          --------     ------         ---------
     Total interest-earning assets.....................      1,461        189             1,272
                                                          --------     ------         ---------

Deposits...............................................      1,066        238               828
FHLB advances..........................................        (24)        --               (24)
Federal funds purchased................................        (20)        (7)              (13)
Capital lease obligations..............................         (1)         3                (4)
                                                          --------     ------         ---------
     Total interest-bearing liabilities................      1,021        234               787
                                                          --------     ------         ---------
      Total............................................   $    440     $  (45)        $     485
                                                          ========     ======         =========
</TABLE>


     PROVISION FOR LOAN LOSSES. The provision for loan losses for the year ended
December 31, 2000 was $217,600, compared to $391,600 for the year ended December
31, 1999.  Net  charge-offs  for the year ended  December  31, 2000  declined to
$154,000  (0.28% of average loans) compared to $177,000 (0.41% of average loans)
during the year ended December 31, 1999. The balance for the year ended December
31, 1999 included a specific  charge-off of $120,000.  There were no significant
charge-offs requiring an additional provision during the current year, resulting
in a decrease in the provision  for loan losses for the year ended  December 31,
2000. The Company makes  provisions for loan losses in amounts deemed  necessary
to maintain the adequacy of the allowance for loan losses. At December 31, 2000,
the Company's  allowance for loan losses was  $625,500,  or 1.06%,  of the gross
loan portfolio.

     OTHER  INCOME.  Other  income  for the year  ended  December  31,  2000 was
$431,400  compared to $295,800 for the year ended December 31, 1999, an increase
of $135,600,  or 45.8%.  The Bank's other income  consists  primarily of service
charges and fees related to loan and deposit account activity as well as the net
gain on sale of loans in the  secondary  market.  The  increase in other  income
during the 2000 period  reflects the continued  growth in loans and deposits and
the addition of the secondary market loan division in October, 2000.

     OTHER  EXPENSES.  Other  expenses for the year ended December 31, 2000 were
$2,246,400  compared to $1,879,600 for the year ended  December 31, 1999.  Other
expenses  include  salaries and  employee  benefits,  advertising,  professional
services, postage, telephone and supplies,  occupancy costs, directors' fees and
various other operational expenses.  The increases in other expenses reflect the
growth of the Bank.  Salaries and employee  benefits  increased  relative to the
increase in employees at the main office and branch  office from Bank growth and
the addition of a secondary market mortgage loan division during 2000. Occupancy
expense includes land rent expense in 2000 of  approximately  $62,500 related to
the main office and branch land  leases.  The addition of the  secondary  market
mortgage loan division also increased  salaries and employee  benefits  expense,
postage,  telephone  and  supplies  and a variety of other  categories  of other
operating expense. The increase of data processing expenses are due primarily to
increased  computer services related to bank growth and the addition of internet
banking services during 1999.

                                       19
<PAGE>

     INCOME TAX EXPENSE (BENEFIT).  For the year ended December 31, 2000, income
tax (benefit) was $(186,900)  compared to no tax expense  (benefit) during 1999.
The tax benefit  during the 2000  period  related to the  reversal of  valuation
allowances  related to the Bank's net deferred tax assets.  The Company provides
for both the current and  deferred tax effects of the  transactions  reported in
its financial statements and established deferred tax assets and liabilities for
the temporary  differences and established  financial reporting and tax bases of
its  assets  and  liabilities.   The  Company,  however,  establishes  valuation
allowances  for its net  deferred  tax assets  unless it is more likely than not
that  these net  deferred  tax assets  will be  realized.  Based on its  current
earnings and other factors,  the Company  determined that it is more likely than
not that it will realize certain of its net deferred tax assets and reversed the
corresponding valuation allowance.

COMPARISON OF FINANCIAL CONDITION AT DECEMBER 31, 2000 AND DECEMBER 31, 1999

     The Company's total assets  increased by $10.5 million,  or 18.8%, to $66.5
million at  December  31,  2000 from $56.0  million at December  31,  1999.  The
Company's  asset growth is primarily  attributable  to growth in the Bank's loan
portfolio  which  increased by $9.8  million,  or 20.3%,  from $48.3  million at
December 31, 1999 to $58.1 million at December 31, 2000. The Bank also increased
its  investment  portfolio  and Federal funds sold from $3.6 million at December
31,  1999 to $3.8  million at  December  31,  2000 as part of the Bank's  formal
liquidity plan. The Bank's asset growth was funded principally  through deposits
which  increased by $9.5 million,  or 19.3%,  from $49.2 million at December 31,
1999 to $58.7 million at December 31, 2000.  Deposit growth has come principally
through  certificates  of deposit  which grew from $35.8 million at December 31,
1999 to $45.7 million at December 31, 2000.  During 1999, the Bank also obtained
funding from the Federal  Home Loan Bank  ("FHLB") of  Cincinnati  from which it
secured  several  short-term  advances  throughout  the year.  No advances  were
outstanding  at December 31, 2000. The increase in accrued  interest  receivable
and other assets of  approximately  $400,300 was  partially  attributable  to an
increase in deferred tax assets of approximately $181,300 related to the lifting
of the valuation  allowance related to deferred tax assets. The remainder of the
increase  in  accrued  interest   receivable  and  other  assets  was  primarily
attributable to the growth in the Bank's loan portfolio.  The growth in deposits
resulted  in a  corresponding  increase  in accrued  interest  payable and other
liabilities of approximately $153,900.

     Management projects that the Bank will continue to meet its liquidity needs
primarily  through deposit growth.  The Bank  experienced  strong growth in both
interest-bearing  and  non-interest-bearing   deposits  during  the  year  ended
December 31, 2000.  Management's  plans to meet future  liquidity  needs include
continued  growth of the branch location and the internet banking site, which is
expected  to  significantly  enhance  the Bank's  ability to attract  and secure
deposit  customers  and growth of the  investment  portfolio.  The Bank may also
obtain  additional  advances  from  FHLB  of  Cincinnati.  Short  and  long-term
advances,  secured by the  Bank's  qualifying  residential  loan  portfolio  are
available from the FHLB,  should the need arise. The Bank plans to explore other
sources of funding to meet liquidity needs.

     Stockholders'  equity  increased  $853,600,  or 16.8%,  to $5.9  million at
December 31, 2000 from $5.1 million at December  31, 1999  primarily  due to the
net income during the year, a $68,500 credit to surplus for compensation accrued
as the result of the  vesting of stock  options  and by the  issuance  of common
stock totaling  $161,000 for the  settlement of directors'  fees in lieu of cash
payments.  Stockholders'  equity was increased by $22,400 in unrealized gains on
available-for-sale  securities,  net of tax benefits. As a result of the holding
company  reorganization,  stockholders' equity account was restated to equal the
Bank's stockholders' equity net of retained deficit prior to the reorganization.

ASSET/LIABILITY MANAGEMENT

     Net interest  income,  the primary  component of the  Company's net income,
arises from the difference between the yield on interest-earning  assets and the
cost of interest-bearing liabilities and the relative amounts of such assets and
liabilities.  The Company manages its assets and liabilities by coordinating the
levels of and gap between  interest-rate  sensitive  assets and  liabilities  to
minimize  changes in net interest income and in the economic value of its equity
despite changes in market interest rates.  The Bank's  Asset/Liability  and Risk
Management  Committee  meets on a monthly basis to monitor  compliance  with the
Board's  objectives.  Among  other  tools used by the  Asset/Liability  and Risk
Management  Committee  to monitor  interest  rate risk is a "gap"  report  which



                                       20
<PAGE>

measures the dollar difference between the amount of interest-earning assets and
interest-bearing  liabilities  subject to repricing  within a given time period.
Generally,  during a period of rising  interest  rates,  a negative gap position
would adversely affect net interest income, while a positive gap would result in
an  increase  in net  interest  income,  while,  conversely,  during a period of
falling  interest  rates,  a negative  gap would  result in an  increase  in net
interest income and a positive gap would adversely affect net interest income.

     The  following  table  analyzes  the Bank's  interest-rate  sensitivity  at
December 31, 2000. The table  categorizes  the Bank's assets and  liabilities by
their maturity or earliest repricing opportunity.  For purposes of the table, it
is assumed that 52% of demand and 22% of savings  deposits  mature  within three
months with the remainder maturing within the one-to-five year period.
<TABLE>
<CAPTION>
                                                                             OVER 1
                                                          OVER 3 TO          THROUGH          OVER
                                       0-3 MONTHS         12 MONTHS          5 YEARS        5 YEARS(1)        TOTAL
                                       ----------         ---------          -------        ----------        -----
<S>                                     <C>               <C>              <C>              <C>             <C>
Rate-Sensitive Assets:
   Federal funds sold.................  $     304         $     --         $      --        $     --        $     304
   Securities.........................         --               --             2,512             946            3,458
   Loans held for sale................        259               --                --              --              259
   Loans..............................      4,631            9,984            37,590           5,875           58,080
                                        ---------         --------         ---------        --------        ---------
        Total rate-sensitive assets...      5,194            9,984            40,102           6,821           62,101
                                        ---------         --------         ---------        --------        ---------
   Cash and due from banks............         --               --                --           1,575            1,575
   Fixed assets.......................         --               --                --           1,924            1,924
   Other assets.......................         --               --                --             901              901
                                        ---------         --------         ---------        --------        ---------
        Total assets..................  $   5,194         $  9,984         $  40,102        $ 11,221        $  66,501
                                        =========         ========         =========        ========        =========

Rate-Sensitive Liabilities:
  Deposits:
     Demand...........................  $   3,390         $     --         $   3,151        $     --        $   6,541
     Savings..........................        224               --               773              --            1,007
     Time.............................      9,920           19,428            15,837             488           45,673
  Other borrowings....................         --               22                95           1,143            1,260
                                        ---------         --------         ---------        --------        ---------
        Total rate-sensitive
          liabilities.................     13,544           19,450            19,856           1,631           54,481
                                        ---------         --------         ---------        --------        ---------
  Demand deposits.....................         --               --                --           5,454            5,454
  Accrued and other liabilities.......         --               --                --             632              632
  Stockholders' equity................         --               --                --           5,934            5,934
                                        ---------         --------         ---------        --------        ---------
        Total liabilities and equity..  $  13,544         $ 19,450         $  19,856        $ 13,651        $  66,501
                                        =========         ========         =========        ========        =========

GAP...................................  $  (8,350)        $ (9,466)        $  20,246        $  5,190        $   7,620
Cumulative GAP........................     (8,350)         (17,816)            2,430           7,620
Cumulative GAP as a % of
  total assets........................     (12.56)%        (26.79)%             3.65%          11.46%
<FN>
-------------------------
(1) Includes non-rate-sensitive assets.
</FN>
</TABLE>

     As seen in the  preceding  table,  for the first 365 days  60.6% of earning
liabilities  funding  sources are estimated to reprice  compared to 24.4% of all
interest-earning  assets.  Changes  in the mix of earning  assets or  supporting
liabilities  can either  increase or decrease  the net interest  margin  without
affecting  interest  rate  sensitivity.  In addition,  the interest  rate spread
between an asset and its supporting  liability can vary significantly  while the
timing of repricing for both the asset and the liability  remains the same, thus
impacting net interest income.  This characteristic is referred to as basis risk
and generally relates to the possibility that the repricing  characteristics  of
short-term  assets tied to the Bank prime lending rate are different  from those
of short-term funding sources such as certificates of deposit.

     Varying  interest  rate  environments  can  create  unexpected  changes  in
prepayment  levels of assets  and  liabilities  which are not  reflected  in the
interest  rate  sensitivity   analysis  report.   These   prepayments  may  have
significant effects on the Bank's exposure to changes in interest rates.


                                       21
<PAGE>

     The preceding  table  indicates that the Bank is in a liability or negative
gap  position  at 0 to  12  months.  This  liability  sensitive  position  would
generally  indicate that the Bank's net interest  income would  decrease  should
interest rates rise and would increase should interest rates fall. When the Bank
is in a positive  position  this would  generally  indicate  that the Bank's net
interest  income would  increase  should  interest rates rise and would decrease
should interest rates fall. Management  anticipates further narrowing the Bank's
cumulative  gap  position  due to loan  growth  increasing  relative  to deposit
growth. In controlling growth,  management  anticipates evaluating the condition
of the economy,  the pattern of market interest rates and other economic data to
determine  the  appropriate  mix and  repricing  characteristics  of assets  and
liabilities required to produce an optimal net interest margin.  Management also
anticipates  further  narrowing  of its  cumulative  gap position as a result of
managing its available  federal funds liquidity and FHLB advances.  Accordingly,
management  expects  only  minimal  sensitivity  to parallel  shifts in interest
rates.

LIQUIDITY AND CAPITAL RESOURCES

     The Company  currently has no business other than that of the Bank and does
not currently have any material  funding  commitments.  The Company's  principal
source of  liquidity  will be  dividends  received  from the  Bank.  The Bank is
subject to various regulatory restrictions on the payment of dividends. The Bank
may not pay  dividends  in excess of its  earnings for the current year plus its
retained  earnings  for the prior two fiscal  years  without the approval of the
Office of the Comptroller of the Currency.  In addition,  the Bank is prohibited
from paying dividends while it has a deficit in its retained earnings account.

     The Bank's  principal  sources of funds for  investments and operations are
net income,  deposits  from its primary  market  area,  principal  and  interest
payments on loans,  interest received on investment securities and federal funds
purchased.  The Bank is also  eligible to borrow from the FHLB of  Cincinnati of
which it became a member in 1998. Its principal funding  commitments are for the
origination  or  purchase  of  loans,  the  payment  of  maturing  deposits  and
obligations  under  capital  leases for buildings  and  equipment.  Deposits are
considered  the  primary  source of funds  supporting  the  Bank's  lending  and
investment activities.

     The Bank's most liquid assets are cash and cash equivalents, which are cash
on hand, amounts due from financial  institutions,  federal funds sold and money
market  mutual  funds.  The levels of such  assets are  dependent  on the Bank's
operating financing and investment  activities at any given time. The variations
in levels of cash and cash  equivalents  are  influenced  by  deposit  flows and
anticipated future deposit flows.

     Cash and cash equivalents (cash due from banks,  interest-bearing  deposits
in other  financial  institutions,  and federal funds sold),  as of December 31,
2000,  totaled $1.9 million  compared to $2.9 million at December 31, 1999.  The
Bank's cash flows were provided  mainly by financing  activities  including $9.5
million from deposit increases.  Operating activities provided $625,300 in cash.
The Bank used these cash flows for its investing activities primarily to fund an
increase in gross loans of $9.8 million.

     At December 31, 2000, the Bank had outstanding commitments to fund loans in
the amount of approximately $4.2 million,  including outstanding standby letters
of credit of $361,200 and commitments to related parties of $1.2 million.  It is
anticipated  that such  commitments  will be funded  from cash on hand,  federal
funds purchased, FHLB borrowings, and future deposits increases.

ACCOUNTING DEVELOPMENTS

     In June 1998 the Financial  Accounting Standards Board issued SFAS No. 133.
"Accounting  for  Derivative  Instruments  and  Hedging  Activities,"  which was
amended in July 1999 by SFAS No. 137. SFAS No. 133  establishes  accounting  and
reporting  standards for derivative  instruments,  including certain  derivative
instruments   embedded  in  other  contracts,   (collectively   referred  to  as
derivatives)  and for hedging  activities.  It requires that an entity recognize
all  derivatives  as either assets or  liabilities in the statement of financial
position and measure those instruments at fair value. The accounting for changes
in the fair value of  derivatives  depends on the  derivative  and the resulting
designation.  If certain  conditions are met, a derivative  may be  specifically
designated  as (a) a hedge of the  exposure  to  changes  in the fair value of a
recognized asset or liability or an unrecognized firm commitment, (b) a


                                       22
<PAGE>

hedge of the exposure to variable cash flows of a forecasted transaction, or (c)
a hedge of certain foreign currency  exposures.  SFAS No. 133 as amended by SFAS
No. 137 is effective  for all fiscal  quarters of fiscal years  beginning  after
June 15, 2000. The Company has not yet  determined  the impact,  if any, of this
Statement,  including  its  provisions  for the  potential  reclassification  of
investment securities, on operations, financial condition or equity.

IMPACT OF INFLATION AND CHANGING PRICES

     The consolidated  financial  statements and notes thereto  presented herein
have been prepared in accordance with generally accepted accounting  principles,
which require the  measurement  of financial  position and operating  results in
terms of  historical  dollars  without  considering  the changes in the relative
purchasing  power of money over time due to  inflation.  Unlike most  industrial
companies,  nearly all of the Company's  assets and  liabilities are monetary in
nature.  As a result,  interest  rates  have a greater  impact on the  Company's
performance  than do the effects of general levels of inflation.  Interest rates
do not  necessarily  move in the same  direction  or to the same  extent  as the
prices of goods and services.

ITEM 7.  FINANCIAL STATEMENTS
-----------------------------

     The Company's  financial  statements are contained in this Annual Report on
Form 10-KSB immediately following Item 13.

ITEM  8.  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
--------------------------------------------------------------------------------
          FINANCIAL DISCLOSURE
          --------------------

     Not applicable.

                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
--------------------------------------------------------------------------------
        WITH SECTION 16(A) OF THE EXCHANGE ACT
        --------------------------------------

     Set forth below is information  about the directors and executive  officers
and significant employees of the Company. The Board of Directors is divided into
three classes.  Directors serve for three-year terms with one class of directors
standing for election each year. Each current  director has served as a director
of this Bank since its organization in 1997 and became a director of the Company
upon its incorporation in 1999. Unless indicated otherwise, the positions stated
for each individual are positions held in the Bank and the positions  stated are
positions  which are  currently  held and which  have been held for at least the
past five years.
<TABLE>
<CAPTION>
                                                                                                   CURRENT TERM
NAME                             AGE        POSITIONS WITH THE COMPANY                              TO EXPIRE
----                             ---        --------------------------                              ---------
<S>                              <C>        <C>                                                       <C>
Robert E. Robbins, M.D.          66         Chairman of the Board, Director of the Company            2002
                                            and the Bank

Lawrence P. Calvert              53         Chief Executive Officer, Director of the Company          2001
                                             and the Bank

Ronald J. Pence                  45         President, Director of the Company and the Bank           2003
Kevin D. Addington               38         Director of the Company and the Bank                      2003
Henry Lee Chitwood               55         Director of the Company and the Bank                      2003
Lois Watkins Gray                63         Director of the Company and the Bank                      2001
William R. Hawkins               43         Director of the Company and the Bank                      2001
Christopher G. Knight, M.D.      56         Director of the Company and the Bank                      2002
Allen McNutt                     57         Director of the Company and the Bank                      2002
Larry F. Witten                  46         Chief Lending Officer                                      --
</TABLE>


                                       23
<PAGE>

     ROBERT  E.  ROBBINS,   M.D.   practices   general   surgery  with  Surgical
Specialists, PSC, in Elizabethtown, Kentucky. He is active in numerous local and
national medical  organizations.  In addition, Dr. Robbins is active in property
development in the Elizabethtown area. He has also served as a past president of
the  Elizabethtown  Lions  Club  and as a former  First  Vice  President  of the
Elizabethtown Chamber of Commerce.

     LAWRENCE P. CALVERT has served as the Chief  Executive  Officer of the Bank
since its opening in October 1997.  Mr.  Calvert has over 26 years of experience
in banking in Hardin  County.  Most  recently,  Mr.  Calvert served as the Chief
Executive  Officer of The Cecilian  Bank,  a $100  million  asset bank with five
locations in Hardin  County.  Mr.  Calvert  joined The Cecilian Bank in 1973 and
left that  bank in  January  of 1997 in order to help  organize  the  Bank.  Mr.
Calvert has various other business  interests in Hardin County and is serving as
a director of the Elizabethtown Chamber of Commerce.

     RONALD J. PENCE has served as the President of the Bank since it opened for
business in October 1997.  He has over 21 years of banking  experience in Hardin
County,  serving most  recently as the Chief  Financial  Officer of The Cecilian
Bank which he joined in 1978 and left in 1997 to assist in the  formation of the
Bank. Mr. Pence has numerous  business  interests in Hardin County and is active
in civic affairs. He currently serves as a director of the Rotary International.

     KEVIN D. ADDINGTON is the President of Addington Transportation, Inc. which
owns and operates  warehouse and storage  facilities in the Elizabethtown  area.
Mr.  Addington  is also the owner of  Addington  Properties  which is engaged in
property leasing and management.  He is active in local civic affairs and serves
as Administrative Board Chairman for the Cecilia United Methodist Church.

     HENRY LEE CHITWOOD is a sales  executive for Bean Publishing Co., an office
equipment and  furnishings  supplier.  Mr.  Chitwood  also has various  property
interests.

     LOIS WATKINS GRAY is the  Superintendent  of Schools for Hardin  County,  a
position  which she has held since 1992.  Ms. Gray has served as an educator for
six years in Hardin County. She is also active in state and national educational
and professional groups.

     WILLIAM R.  HAWKINS is the  founder and owner of Three Oaks  Marketing  and
Development which markets satellite television systems. Operating under the name
Starpath  of  Hardin  County,  Mr.  Hawkins'  company  holds the  franchise  for
providing direct television programming for Hardin County. Mr. Hawkins is active
in industry  groups and trade  associations  having held  numerous  posts in the
Satellite Broadcasting and Communication  Association of America. Mr. Hawkins is
also a founder of the T. Howard Foundation,  an educational  foundation on whose
board of directors he currently serves.

     CHRISTOPHER G. KNIGHT, M.D. is an ophthalmologist  practicing with Knight &
Smith, PSC in Elizabethtown,  Kentucky.  He also has other diversified  business
interests in local medical, media and real estate. Dr. Knight is active in local
medical and civic  organizations.  He serves on the Board of Directors of Wesley
Hilltop House.

     ALLEN MCNUTT is the owner and operator of McNutt  Construction  Company,  a
general  construction  firm engaged in commercial and industrial  renovation and
new  construction.  Mr. McNutt has been engaged in construction and construction
contracting  in Hardin County for nearly 30 years.  Mr.  McNutt's other business
interests include part ownership of the Hardin County Independent  newspaper and
local real estate investments.  Mr. McNutt is also active in various local civic
organizations and professional groups.

     LARRY F. WITTEN serves as the Bank's Chief Lending Officer.  Mr. Witten has
extensive local banking experience in Hardin County.  Prior to joining the Bank,
Mr.  Witten  served as the Chief  Financial  Officer  of The  Cecilian  Bank,  a
position he had held since May 1996.  Before  joining  The  Cecilian  Bank,  Mr.
Witten had served as


                                       24
<PAGE>

Vice President - Commercial and Mortgage  Lending for Bank One in Hardin County.
Mr. Witten had been  affiliated  with Bank One and its  predecessors  in various
capacities for over ten years.

ITEM 10.  EXECUTIVE COMPENSATION
--------------------------------

     SUMMARY  COMPENSATION  TABLE.  The following  table sets forth the cash and
noncash  compensation awarded to or earned by the Chief Executive Officer of the
Company and the Bank and by each executive officer whose salary and bonus earned
in fiscal year 2000 exceeded $100,000 for services rendered in all capacities to
the Company and its subsidiaries (the "Named Executive Officers").
<TABLE>
<CAPTION>
                                                                                LONG-TERM
                                                                              COMPENSATION AWARDS
                                         ANNUAL COMPENSATION               --------------------------
                                  ------------------------------------     RESTRICTED        SECURITIES
    NAME AND                                              OTHER ANNUAL       STOCK           UNDERLYING        ALL OTHER
PRINCIPAL POSITION       YEAR     SALARY    BONUS         COMPENSATION      AWARD(S)          OPTIONS        COMPENSATION
------------------       ----     ------    -----         ------------      --------          -------        ------------

<S>                      <C>     <C>        <C>         <C>                   <C>            <C>              <C>
Lawrence P. Calvert      2000    $ 115,000  $   --      $      --              --            4,500            $   7,003 (1)
Chief Executive Officer  1999      115,000      --             --              --               --               10,695
                         1998      115,000      --             --              --               --                9,695

Ronald J. Pence          2000    $ 115,000  $   --      $      --              --            4,500            $   6,616 (2)
President                1999      115,000      --             --              --               --                9,593
                         1998      115,000      --             --              --               --                8,535
<FN>
------------
(1)  Mr.  Calvert's  "Other  Compensation"  consisted  of $803 in paid term life
     insurance premiums and $6,200 in deferred director fees for 2000.
(2)  Mr.  Pence's  "Other  Compensation"  consisted  of $416 in paid  term  life
     insurance premiums and $6,200 in deferred director fees for 2000.
</FN>
</TABLE>


     OPTION GRANTS IN LAST FISCAL YEAR. The following table contains information
concerning the grants of stock options to the Named Executive Officers.
<TABLE>
<CAPTION>
                                NUMBER OF              % OF TOTAL
                               SECURITIES                OPTIONS
                               UNDERLYING              GRANTED TO
                                 OPTIONS              EMPLOYEES IN         EXERCISE           EXPIRATION
NAME                            GRANTED (1)            FISCAL YEAR           PRICE               DATE
----                            -----------            -----------           -----               ----

<S>                               <C>                    <C>                <C>                <C>
Lawrence P. Calvert               4,500                  28.13%             $25.00             02/16/10
Ronald J. Pence                   4,500                  28.13%             $25.00             02/16/10
<FN>
--------
(1)  All options were granted  under the 2000 Stock Option and  Incentive  Plan.
     One-third of the options  vested  immediately.  The remaining  options vest
     over two years upon achievement of corporate performance goals.
</FN>
</TABLE>

     OPTION  YEAR-END VALUE TABLE.  The following  table sets forth  information
concerning the value of options held by the Named Executive  Officers at the end
of fiscal year 2000. No options were exercised during fiscal year 2000.  Options
are  considered  in-the-money  if  the  fair  market  value  of  the  underlying
securities  exceeds the exercise  price.  Neither Mr.  Calvert's nor Mr. Pence's
options were in-the-money at December 31, 2000.
<TABLE>
<CAPTION>
                                          NUMBER OF SECURITIES            VALUE OF UNEXERCISED
                                        UNDERLYING UNEXERCISED             IN-THE-MONEY OPTIONS
                                           OPTIONS AT YEAR-END                AT YEAR-END
                                    ------------------------------     ------------------------------
NAME                                EXERCISABLE      UNEXERCISABLE     EXERCISABLE      UNEXERCISABLE
----                                -----------      -------------     -----------      -------------
<S>                                   <C>              <C>               <C>              <C>
Lawrence P. Calvert                   7,500            3,000             $   --           $   --
Ronald J. Pence                       7,500            3,000                 --               --
</TABLE>


                                       25
<PAGE>

DIRECTOR COMPENSATION

     Directors do not receive  separate  compensation  for their services on the
Company's Board of Directors.  Directors of the Bank are paid a retainer of $500
a month for each  month in which  there is only one board  meeting  and $700 per
month for any month in which there is more than one  meeting.  Directors  do not
receive any additional fees for committee meetings.

     Under the Kentucky National  Bancorp,  Inc. Director Fee Deferral Plan (the
"Director Plan"),  directors may elect to receive shares of Common Stock in lieu
of cash fees for their  service.  In order to  participate in the Director Plan,
directors  must agree to defer  receipt of all or a portion of their  Board fees
and will be entitled to receive  shares of Common Stock with a fair market value
equal  to the  fees  deferred.  Shares  are  distributed  annually  as  soon  as
practicable  after the calendar  year for which  shares have been  earned.  Upon
shareholder approval of the Director Plan, each director received 644 shares for
all  director  fees that had been  deferred  through  December  31,  1999.  Each
director  has elected to  participate  in the  Director  Plan and is eligible to
receive 248 shares of Common Stock for fees deferred during 2000.

     Pursuant to the  Kentucky  National  Bancorp,  Inc.  2000 Stock  Option and
Incentive Plan (the "Option Plan"), each non-employee  director received options
to  acquire  1,000  shares of Common  Stock at an  exercise  price of $25.00 per
share.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
------------------------------------------------------------------------

     (a) SECURITY  OWNERSHIP OF CERTAIN  BENEFICIAL  OWNERS. The following table
sets  forth  information  regarding  all  persons  known to the  Company to have
beneficially owned more than 5% of the Company's Common Stock as of December 31,
2000.
<TABLE>
<CAPTION>
                                                                               PERCENT OF SHARES
NAME AND ADDRESS                               AMOUNT AND NATURE OF            OF COMMON STOCK
OF BENEFICIAL OWNER                           BENEFICIAL OWNERSHIP(1)           OUTSTANDING (2)
-------------------                           -----------------------          -----------------

<S>                                                 <C>                              <C>
Robert E. Robbins                                   14,217 (3)                       5.76%
P.O. Box 2089
Elizabethtown, Kentucky  42701

Lawrence P. Calvert                                 14,585 (4)                       5.74%
1000 North Dixie Avenue
Elizabethtown, Kentucky  42701

Ronald J. Pence                                     20,584 (4)                      8.11%
1000 North Dixie Avenue
Elizabethtown, Kentucky  42701

Kevin D. Addington                                  13,418 (3)                      5.44%
701 W. Park Road
Elizabethtown, Kentucky  42701

Christopher G. Knight                               13,417 (3)                      5.44%
1109 Woodland Drive
Elizabethtown, Kentucky  42701

Larry F. Witten                                     14,960 (5)                      5.83%
1000 North Dixie Avenue
Elizabethtown, Kentucky  42701

Allen McNutt                                        13,417 (3)                      5.44%
109 Gaither Station Road
Elizabethtown, Kentucky  42701


                                       26
<PAGE>

<FN>

-----------
(1)  For purposes of this table, a person is deemed to be the  beneficial  owner
     of any  shares  of  Common  Stock  if he or she  has or  shares  voting  or
     investment  power  with  respect  to such  Common  Stock  or has a right to
     acquire  beneficial  ownership at any time within 60 days from December 31,
     2000.  As used  herein,  "voting  power" is the power to vote or direct the
     voting of shares and  "investment  power" is the power to dispose or direct
     the disposition of shares. Except as otherwise noted,  ownership is direct,
     and the named persons  exercise sole voting and  investment  power over the
     shares of the Common Stock.
(2)  In  calculating  the  percentage  ownership of an individual or group,  the
     number of shares  outstanding  is deemed to include  any  shares  which the
     individual or group may acquire  through the exercise of options  within 60
     days of December 31, 2000.
(3)  Includes  333  shares  which he has the right to  acquire  pursuant  to the
     exercise of options.
(4)  Includes  7,500 shares  which Mr.  Pence and Mr.  Calvert have the right to
     acquire pursuant to the exercise of options.
(5)  Includes 5,500 shares which Mr. Witten has the right to acquire pursuant to
     the exercise of options.
</FN>
</TABLE>


     (b)  SECURITY  OWNERSHIP  OF  MANAGEMENT.   The  following  table  provides
information as of December 31, 2000 concerning ownership of the Company's Common
Stock  (which  constitutes  its only  class of  equity  securities)  each of its
directors, the Named Executive Officers and all executive officers and directors
as a group. Each person listed has sole voting and investment power with respect
to the shares listed across from his name except as noted otherwise.
<TABLE>
<CAPTION>
                                                            Beneficial Ownership (1)
                                                    -----------------------------------------------
                                                     Number                        Percentage of
Name                                                of Shares                  Shares Outstanding(2)
----                                                ----------                 ---------------------
<S>                                                   <C>                                 <C>
Robert E. Robbins, M.D.                               14,217 (3)                         5.76%
Lawrence P. Calvert                                   14,585 (4)                         5.74%
Ronald J. Pence                                       20,584 (4)                         8.11%
Kevin D. Addington                                    13,418 (3)                         5.44%
Henry Lee Chitwood                                     7,417 (3)                         3.01%
Lois Watkins Gray                                      4,417 (3)                         1.79%
William R. Hawkins                                     7,411 (3)                         3.01%
Christopher G. Knight, M.D.                           13,417 (3)                         5.44%
Allen McNutt                                          13,417 (3)                         5.44%

All directors and executive
  officers as a group (10 persons)                   123,579 (5)                        45.89%
<FN>
-----------
1    For definition of beneficial ownership, see footnote 1 to the table in Item
     11(a) of this Annual Report on Form 10-KSB.
2    In  calculating  percentage  ownership  for a given  individual or group of
     individuals,  the number of shares of the Common Stock outstanding includes
     unissued shares subject to options  exercisable  within 60 days of December
     31, 2000 held by that individual or group.
3    Includes 333 shares which the individual has the right to acquire  pursuant
     to the exercise of options.
4    Includes  7,500  shares  which he has the right to acquire  pursuant to the
     exercise of options.
5    Includes  22,831 shares which  directors  and  executive  officers have the
     right to acquire pursuant to the exercise of options.

</FN>
</TABLE>

     (c) CHANGES IN CONTROL. Not applicable.


ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
--------------------------------------------------------

     From time to time,  it is  expected  that the Bank will  engage in  banking
transactions  with its directors,  officers and their associates in the ordinary
course of business.  At December 31, 2000,  $569,800 of loans were  outstanding.
Loans to  directors  and  executive  officers  will only be made in the ordinary
course of business of the Bank and on


                                       27
<PAGE>


substantially the same terms, including interest rates and collateral,  as those
prevailing at the time for comparable  transactions  with other persons and will
not  involve  more than the  normal  risk of  collectibility  or  present  other
unfavorable features.

     The Bank leases its main office from Kentucky National Properties,  L.L.C.,
a limited  liability  company in which each of the directors has a 10% ownership
interest.  The lease is for a ten-year term with four successive renewal options
of ten years each. Rental payments are $12,000 per month during the initial term
of the lease with provision for increase based on the percentage increase in the
Consumer Price Index. During the term of the lease and any renewals thereof, the
premises  may only be used for a bank or  banking  institution  unless the prior
written consent of the lessor has been received.

     Kentucky  National  Properties,  L.L.C.  is constructing an addition to the
Bank's main  office  which is expected to be  completed  in August  2001.  It is
anticipated  that the Bank will lease these premises under a capital lease in an
aggregate  amount  of  $900,000  and  incur  monthly   amortization  expense  of
approximately  $1,900,  and monthly  operating  lease expense for land rental of
approximately   $700.  The  monthly  cash  flow  requirement   under  the  lease
obligations,  including  interest  expense,  will be  approximately  $10,500 per
month.


                                     PART IV

ITEM 13.  EXHIBITS LIST AND REPORTS ON FORM 8-K
-----------------------------------------------

     (a)  Exhibits List. The following exhibits are either filed as part of this
          -------------
          Annual Report on Form 10-KSB or incorporated herein by reference:

          NO.                        DESCRIPTION
          --                         -----------

          3.1      Articles of Incorporation                                  *
          3.2      Bylaws                                                     *
          4        Form of Common Stock Certificate                           *
          10.1     Restrictive Stock Transfer Agreement                       *
          10.2     Organizational Stock Option and Incentive Plan +          **
          10.3     Lease Agreement Between Kentucky National
                      Properties, L.L.C.and Kentucky National Bank            *
          10.4     Kentucky National Bancorp, Inc. 2000 Stock Option
                      and Incentive Plan +                                  ***
          10.5     Kentucky National Bancorp, Inc. Director Fee
                       Deferral Plan  +                                     ***
          21       Subsidiaries of the Registrant
          23       Consent of EKW & Associates, llp

-------------
*    Incorporated by reference from the Registrant's  Registration  Statement on
     Form S-4 (File No. 333-72371).
**   Incorporated by reference from Registrant's  Post-Effective Amendment No. 1
     to Registration Statement on Form S-8 (File No. 333-72371).
***  Incorporated by reference from Registrant's  Registration Statement on Form
     S-8 (File No. 333-41676).
+    Management or compensatory plan required to be filed as an exhibit.


     (b)  Reports on Form 8-K. No current  reports on Form 8-K were filed during
          -------------------
          the last quarter of the fiscal year covered by this report.


                                       28
<PAGE>







                         KENTUCKY NATIONAL BANCORP, INC.

                                    INDEX TO
                        CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999

                                                                            Page



Independent Auditor's Report                                                F-1

Consolidated Statements of Condition                                        F-2

Consolidated Statements of Operations                                       F-3

Consolidated Statements of Changes in
     Stockholders' Equity                                                   F-5

Consolidated Statements of Cash Flows                                       F-6

Notes to Consolidated Financial Statements                                  F-8


                                       29
<PAGE>










                          INDEPENDENT AUDITOR'S REPORT

Board of Directors
Kentucky National Bancorp, Inc.
Elizabethtown, Kentucky


We have  audited  the  accompanying  consolidated  statements  of  condition  of
Kentucky  National  Bancorp,  Inc.  as of December  31,  2000 and 1999,  and the
related statements of operations,  stockholders'  equity, and cash flows for the
years then ended.  These  financial  statements  are the  responsibility  of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
financial statements based on our audits.

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

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material  respects,  the financial  position of Kentucky National
Bancorp,  Inc.  as of  December  31,  2000  and  1999,  and the  results  of its
operations and cash flows for the years then ended, in conformity with generally
accepted accounting principles.



/s/ EKW & Associates, llp


Owensboro, Kentucky
February 2, 2001


                                      F-1
<PAGE>


                         KENTUCKY NATIONAL BANCORP, INC.

                      CONSOLIDATED STATEMENTS OF CONDITION

                           DECEMBER 31, 2000 AND 1999
<TABLE>
<CAPTION>
                                                                                    DECEMBER 31
                                                                          -----------------------------------
                                                                              2000                    1999
                                                                          -----------             -----------

                               ASSETS

<S>                                                                       <C>                     <C>
Cash and due from banks                                                   $ 1,574,759             $ 1,594,188
Federal funds sold                                                            304,000               1,331,000
Investment securities:
  Securities available-for-sale                                             3,305,870               2,152,985
  Securities held-to-maturity, at fair value                                  152,300                 180,000
Loans held for sale                                                           258,535                    -
Loans, net                                                                 58,079,886              48,330,667
Premises and equipment                                                      1,924,511               1,980,301
Accrued interest receivable and other assets                                  901,432                 501,106
                                                                          -----------             -----------

     Total assets                                                         $66,501,293             $56,070,247
                                                                          ===========             ===========

                LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:
  Deposits                                                                $58,675,405             $49,206,413
  Obligations under capital leases                                          1,260,482               1,305,929
  Accrued interest payable and other
    liabilities                                                               631,713                 477,767
                                                                          -----------             -----------

     Total liabilities                                                     60,567,600              50,990,109
                                                                          -----------             -----------

Stockholders' equity:
  Preferred stock, $.01 par value;
    authorized 1,000,000 shares                                                  -                       -
  Common stock, $.01 par value:
    authorized, 5,000,000 shares; issued and
    outstanding, 246,440 and 240,000 shares
    at December 31, 2000 and 1999,                                              2,464                   2,400
    respectively
  Surplus                                                                   5,441,528               5,212,125
  Retained earnings (deficit)                                                 476,241                (125,467)
  Accumulated other comprehensive
    income (loss)                                                              13,460                  (8,920)
                                                                          -----------             -----------

     Total stockholders' equity                                             5,933,693               5,080,138

Commitments and contingent liabilities                                           -                       -
                                                                          -----------             -----------

     Total liabilities and stockholders'
       equity                                                             $66,501,293             $56,070,247
                                                                          ===========             ===========
</TABLE>


                 See notes to consolidated financial statements.

                                      F-2
<PAGE>

                         KENTUCKY NATIONAL BANCORP, INC.

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                 FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999
<TABLE>
<CAPTION>

                                                                                      DECEMBER 31
                                                                          -----------------------------------
                                                                              2000                    1999
                                                                          -----------             -----------
<S>                                                                       <C>                     <C>
Interest income:
  Loans, including fees                                                   $ 5,142,388             $ 3,902,900
  Securities                                                                  227,947                  33,298
  Federal funds sold                                                           85,144                  57,987
                                                                          -----------             -----------

     Total interest income                                                  5,455,479               3,994,185
                                                                          -----------             -----------

Interest expense:
  Deposit accounts                                                          1,980,629               1,251,173
  Certificates of deposit over $100,000                                       892,417                 555,491
  Federal funds purchased                                                       1,425                  21,346
  Federal Home Loan Bank advances                                                -                     24,366
  Capital leases                                                              133,639                 135,129
                                                                          -----------             -----------

     Total interest expense                                                 3,008,110               1,987,505
                                                                          -----------             -----------

     Net interest income                                                    2,447,369               2,006,680

Provision for loan losses                                                     217,572                 391,602
                                                                          -----------             -----------

     Net interest income after provision
       for loan losses                                                      2,229,797               1,615,078
                                                                          -----------             -----------

Other income:
  Service charges and fees                                                    368,387                 263,325
  Credit life and accident insurance                                           49,678                  32,481
  Net gain on sale of loans                                                    13,307                    -
                                                                          -----------             -----------

                                                                              431,372                 295,806
                                                                          -----------             -----------
Other expenses:
  Salaries and employee benefits                                            1,043,663                 788,598
  Net occupancy expense                                                       151,245                 132,485
  Advertising                                                                 117,224                 114,118
  Data processing                                                             213,385                 157,959
  Postage, telephone and supplies                                             112,666                 100,848
  Directors fees                                                               45,918                  68,985
  Bank franchise tax                                                           68,476                  77,747
  Equipment expense                                                            89,907                  68,288
  Insurance expense                                                             7,776                   5,261
  Professional services                                                       210,916                 213,662
  Other operating expenses                                                    185,211                 151,631
                                                                          -----------             -----------

                                                                            2,246,387               1,879,582
                                                                          -----------             -----------
</TABLE>

                                    Continued

                                      F-3
<PAGE>
                         KENTUCKY NATIONAL BANCORP, INC.

                CONSOLIDATED STATEMENTS OF OPERATIONS, CONTINUED

                 FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999

<TABLE>
<CAPTION>

                                                                                     DECEMBER 31
                                                                          -----------------------------------
                                                                              2000                    1999
                                                                          -----------             -----------
<S>                                                                       <C>                     <C>
Income before income taxes and cumulative
  effect of accounting change                                             $   414,782             $    31,302
Income tax (benefit) expense                                                 (186,926)                   -
                                                                          -----------             -----------

Net income before cumulative effect of
  accounting change                                                           601,708                  31,302
Cumulative effect of accounting change                                           -                   (156,769)
                                                                          -----------             -----------

Net income (loss)                                                         $   601,708             $  (125,467)
                                                                          ===========             ===========

Earnings (loss) per share:
  Basic                                                                   $      2.46             $      (.52)
                                                                          ===========             ===========
  Diluted                                                                 $      2.43                    N/A
                                                                          ===========             ===========
</TABLE>


                 See notes to consolidated financial statements.

                                      F-4
<PAGE>

                         KENTUCKY NATIONAL BANCORP, INC.

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                 FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999

<TABLE>
<CAPTION>

                                                                                      Accumu-
                                                                                      lated
                                                                                      Other
                                                                                      Compre-         Compre-
                                  Common Stock                                        hensive         hensive
                           -----------------------                     Retained       Income         Income
                            Shares         Amount      Surplus          Deficit       (Loss)         (Loss)             Total
                           --------      ---------   -----------      ----------   -----------    ------------     --------------
<S>                        <C>          <C>          <C>              <C>          <C>            <C>              <C>
Balance,
 December 31, 1998         240,000      $ 240,000    $ 5,762,966      $(807,279)   $       -                       $ 5,195,687

Elimination of
 subsidiary bal-
 ances upon cor-
 porate reorgani-
 zation                   (240,000)      (240,000)    (5,762,966)       807,279            -                        (5,195,687)

Issuance of Ken-
 tucky National
 Bancorp, Inc.
 common stock
 upon corporate
 reorganization            240,000          2,400      5,193,287            -              -                         5,195,687

Incentive stock
 option plan                   -              -           18,838            -              -                            18,838

Net loss                       -              -              -         (125,467)           -      $  (125,467)        (125,467)

Other comprehensive
 income, net of tax:

  Unrealized gains
  (losses) on
  securities avai-
  lable-for-sale
  net of reclassi-
  fication adjust-
  ment                         -              -              -              -           (8,920)        (8,920)          (8,920)
                          --------     ----------    -----------    -----------    -----------      ---------      -----------
Comprehensive
 income                                                                                             $(134,387)
                                                                                                    =========

Balance,
 December 31, 1999         240,000          2,400      5,212,125       (125,467)        (8,920)                      5,080,138

Incentive stock
  option plan                  -              -           68,467            -              -                            68,467

Issuance of stock            6,440             64        160,936            -              -                           161,000

Net income                     -              -              -          601,708            -      $   601,708          601,708

Other comprehen-sive
 income, net of tax:

  Unrealized gains
  (losses) on
  securities avai-
  lable-for-sale
  net of reclassi-
  fication adjust-
  ment                         -              -              -              -           22,380         22,380           22,380
                          --------     ----------    -----------    -----------    -----------    -----------      -----------
Comprehensive
 income                                                                                           $   624,088
                                                                                                  ===========

Balance,
 December 31, 2000         246,440     $    2,464    $ 5,441,528    $   476,241    $    13,460                     $ 5,933,693
                          ========     ==========    ===========    ===========    ===========                     ===========

</TABLE>

                 See notes to consolidated financial statements.


                                      F-5
<PAGE>

                         KENTUCKY NATIONAL BANCORP, INC.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                 FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999
<TABLE>
<CAPTION>
                                                                                     DECEMBER 31,
                                                                             2000                    1999
                                                                          -----------             -----------
<S>                                                                       <C>                     <C>
Cash flows from operating activities:
  Net income (loss)                                                       $   601,708             $  (125,467)
  Adjustments to reconcile net income (loss)
       to net cash provided by operating
       activities:
    Provisions for loan losses                                                217,572                 391,602
    Provision for depreciation                                                110,582                 101,217
    Federal Home Loan Bank Stock dividend                                     (17,600)                (11,200)
    Incentive stock option compensation                                        68,467                  18,838
    Deferred tax                                                             (192,835)                   -
    Cumulative effect of accounting change                                       -                    156,769
    Net change in:
      Loans held for sale                                                    (258,535)                   -
      Accrued interest receivable and other
        assets                                                               (219,020)               (160,569)
      Accrued interest payable and other
        liabilities                                                           314,946                 153,276
                                                                          -----------             -----------

          Net cash provided by operating
            activities                                                        625,285                 524,466
                                                                          -----------             -----------

Cash flows from investing activities:
  Purchase of available-for-sale securities                                (1,101,376)             (2,058,400)
  Redemption of Federal Reserve stock                                          27,700                    -
  Net increase in loans                                                    (9,966,791)            (14,521,685)
  Purchases of premises and equipment                                         (54,792)               (147,895)
                                                                          -----------             -----------

          Net cash used in investing
            activities                                                    (11,095,259)            (16,727,980)
                                                                          -----------             -----------

Cash flows from financing activities:
  Net increase in deposits                                                  9,468,992              18,694,171
  Payments on capital lease obligations                                       (45,447)                (43,267)
  Net decrease in federal funds purchased                                        -                   (447,000)
  Federal Home Loan Bank advances                                                -                  2,000,000
  Payments on advances from Federal Home
    Loan Bank                                                                    -                 (2,000,000)
                                                                          -----------             -----------

Net cash provided by financing activities                                   9,423,545              18,203,904
                                                                          -----------             -----------

Net increase (decrease) in cash and cash
  equivalents                                                              (1,046,429)              2,000,390

Cash and cash equivalents, beginning of year                                2,925,188                 924,798
                                                                          -----------             -----------

Cash and cash equivalents, end of year                                    $ 1,878,759             $ 2,925,188
                                                                          ===========             ===========

</TABLE>

                                    Continued


                                      F-6
<PAGE>

                         KENTUCKY NATIONAL BANCORP, INC.

                CONSOLIDATED STATEMENTS OF CASH FLOWS, Continued

                 FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999
<TABLE>
<CAPTION>
                                                                          DECEMBER 31,
                                                                              2000                   1999
                                                                          ------------            -----------
<S>                                                                       <C>                     <C>
Supplemental disclosures:
  Cash paid for interest                                                  $ 3,604,213             $ 1,940,700
                                                                          ===========             ===========

  Federal Home Loan Bank Stock dividend
    received                                                              $    17,600             $    11,200
                                                                          ===========             ===========
  Total increase (decrease) in unrealized
    gain on securities available-for-sale                                 $    33,909             $   (13,515)
                                                                          ===========             ===========
</TABLE>

NONCASH TRANSACTIONS:

During the year ended  December  31,  2000,  the Company  issued 6,440 shares of
common stock in lieu of cash payment for accrued  directors'  and counsel's fees
from inception through December 31, 1999 in the amount of $161,000 in accordance
with a deferred  compensation  plan  approved by the  stockholders  on April 25,
2000.

The Bank recorded  assets and obligations for bank equipment and buildings under
capital leases in the aggregate amount of $1,389,902 for the year ended December
31, 1999.





                 See notes to consolidated financial statements.


                                      F-7
<PAGE>

                         KENTUCKY NATIONAL BANCORP, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.   SIGNIFICANT ACCOUNTING POLICIES

     The following is a description of the more significant  accounting policies
     which  Kentucky  National  Bank follows in  preparing  and  presenting  its
     financial statements.

     A.   BASIS OF PRESENTATION

          Kentucky  National  Bancorp,  Inc.,  became the  holding  company  for
          Kentucky  National Bank on May 18, 1999, by issuing and exchanging its
          stock on a share for  share  basis  for the  outstanding  stock of the
          Bank.  The transfer of stock between the entities under common control
          was accounted for at historical  cost in a manner similar to a pooling
          of interests. Accordingly, the 1999 financial statements are presented
          as if the holding company formation occurred on January 1, 1999.

          The consolidated financial statements include the accounts of Kentucky
          National Bancorp, Inc. and its subsidiary, Kentucky National Bank, for
          the years ended December 31, 2000 and 1999. All material  intercompany
          balances and transactions have been eliminated in consolidation.

     B.   BUSINESS

          Kentucky  National  Bank (the Bank) is a wholly  owned  subsidiary  of
          Kentucky  National  Bancorp,  Inc. (the Company),  a one-bank  holding
          company,  and provides a full range of banking  services to individual
          and corporate customers  primarily in the Hardin County,  Kentucky and
          surrounding  area.  The Bank is  subject  to  competition  from  other
          financial  institutions.  The Bank is also subject to bank regulations
          and undergoes periodic examination by bank regulators.

     C.   USE OF ESTIMATES

          The  preparation of financial  statements in conformity with generally
          accepted  accounting  principles requires management to make estimates
          and  assumptions  that  affect  the  reported  amounts  of assets  and
          liabilities and disclosure of contingent assets and liabilities at the
          date of the financial  statements and the reported amounts of revenues
          and expenses during the reporting period.  Actual results could differ
          from those estimates.

          Material  estimates that are  particularly  susceptible to significant
          change  relate to the  determination  of the  allowance  for losses on
          loans and the  valuation of real estate  acquired in  connection  with
          foreclosures  or in  satisfaction  of loans.  In  connection  with the
          determination  of the  allowances  for losses on loans and  foreclosed
          real estate, management obtains independent appraisals for significant
          properties.

     D.   INVESTMENT SECURITIES

          Debt  securities that management has the ability and intent to hold to
          maturity  are  classified  as  held-to-maturity  and  carried at cost,
          adjusted for amortization of premiums and accretion of discounts


                                    Continued

                                      F-8
<PAGE>


                         KENTUCKY NATIONAL BANCORP, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.   SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

     D.   INVESTMENT SECURITIES, CONTINUED

          using the interest method. Other marketable  securities are classified
          as available-for-sale and are carried at fair value.  Unrealized gains
          and losses on securities  available-for-sale  are recognized as direct
          increases or decreases in  stockholders'  equity.  Cost of  securities
          sold is recognized using the specific identification method.

     E.   LOANS HELD-FOR-SALE

          Mortgage  loans  originated  and  intended  for sale in the  secondary
          market are carried at the lower of cost or  estimated  market value in
          the  aggregate.   Net  unrealized  losses  are  recognized  through  a
          valuation allowance by charges to income.

     F.   LOANS

          Loans are stated at the unpaid principal  balance,  less the allowance
          for loan  losses  and  unearned  income.  Interest  income on loans is
          recorded on the accrual  basis  except for those loans in a nonaccrual
          income status. Loans are placed in a nonaccrual income status when, in
          the opinion of management, the prospects for recovering both principal
          and accrued interest are considered doubtful. Unearned income, arising
          principally  from  consumer  installment  loans,  is  reflected  as  a
          reduction  of loans  and is  recognized  as  income  by a method  that
          approximates the interest method.  The accrual of interest on impaired
          loans is discontinued when, in management's  opinion, the borrower may
          be  unable to meet  payments  as they  come  due.  Interest  income is
          subsequently recognized only to the extent cash payments are received.

     G.   ALLOWANCE FOR CREDIT LOSSES

          The  allowance is maintained  at a level  adequate to absorb  probable
          losses.  Management  determines the adequacy of the allowance based on
          reviews of the portfolio,  recent loss  experience,  current  economic
          conditions,  the risk  characteristics  of the various  categories  of
          loans and other pertinent  factors.  Allowances for impaired loans are
          generally  determined based on collateral values or the present values
          of the  provision  for loan losses and reduced by  charegoffs,  net of
          recoveries.

     H.   PREMISES AND EQUIPMENT

          Premises  and  equipment  are  stated  at  cost,  net  of  accumulated
          depreciation. Depreciation expense is computed using the straight-line
          method over the estimated useful lives of the assets.


                                    Continued

                                      F-9
<PAGE>

                         KENTUCKY NATIONAL BANCORP, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.   SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

     I.   ORGANIZATION COSTS

          In  April  1998,   Accounting  Standards  Executive  Committee  issued
          Statement  of  Position  98-5,  "Reporting  on the  Costs of  Start-up
          Activities,"  effective  for  financial  statements  for fiscal  years
          beginning  after December 15, 1998. In accordance  with this standard,
          the Bank expensed on January 1, 1999,  unamortized  start-up  costs in
          the  amount  of  $156,769  as  a  cumulative  effect  of a  change  in
          accounting principle.

     J.   INCOME TAXES

          Income  taxes are  provided  for the tax  effects of the  transactions
          reported in the financial  statements  and consist of taxes  currently
          due plus  deferred  taxes  related  primarily to  differences  between
          allowance for loan losses,  accumulated  depreciation  and startup and
          organization  costs and for  financial and income tax  reporting.  The
          deferred tax assets and  liabilities  represent  the future tax return
          consequences  of those  differences,  which will  either be taxable or
          deductible when the assets and liabilities are recovered or settled.

     K.   FAIR VALUES OF FINANCIAL INSTRUMENTS

          The  following  methods  and  assumptions  were  used  by the  Bank in
          estimating its fair value disclosures for financial instruments:

          CASH AND CASH  EQUIVALENTS  - The  carrying  amounts  reported  in the
          statement  of  financial  condition  for  cash  and  cash  equivalents
          approximate those assets' fair values.

          INVESTMENT  SECURITIES  - Fair values for  investment  securities  are
          based on quoted  market  prices,  where  available.  If quoted  market
          prices  are not  available,  fair  values  are based on quoted  market
          prices of comparable instruments.

          MORTGAGE  LOANS   HELD-FOR-SALE   -  Fair  values  of  mortgage  loans
          held-for-sale  are  based on  commitments  on hand from  investors  or
          prevailing market prices.

          LOANS - For  variable-rate  loans that reprice  frequently and with no
          significant  change in credit risk,  fair values are based on carrying
          amounts.  The fair  values for other  loans (for  example,  fixed rate
          commercial  real  estate  and  rental  property   mortgage  loans  and
          commercial and industrial  loans) are estimated using  discounted cash
          flow  analysis,  based on interest rates  currently  being offered for
          loans with similar terms to borrowers of similar credit quality.  Loan
          fair value estimates include judgments  regarding future expected loss
          experience and risk characteristics.

          DEPOSITS - The fair values disclosed for demand deposits (for example,
          interest-bearing  checking  accounts  and passbook  accounts)  are, by
          definition,  equal to the amount  payable  on demand at the  reporting
          date (that is, their carrying amounts). The fair values

                                    Continued

                                      F-10
<PAGE>

                         KENTUCKY NATIONAL BANCORP, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.   SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

     K.   FAIR VALUES OF FINANCIAL INSTRUMENTS, CONTINUED

          for certificates of deposit are estimated using a discounted cash flow
          calculation  that applies  interest rates  currently  being offered on
          certificates  to a schedule of  aggregated  contractual  maturities on
          such time deposits.

          SHORT-TERM   BORROWINGS  -  the  carrying  amounts  of  federal  funds
          purchased approximate their fair values.

          OBLIGATIONS  UNDER  CAPITAL  LEASES - The fair  values  of the  Bank's
          capital lease  obligations are estimated  using  discounted cash flows
          analysis based on the Bank's current  incremental  borrowing rates for
          similar types of borrowing arrangements.

          OTHER  LIABILITIES - Commitments  to extend credit were  evaluated and
          fair value was  estimated  using the fees  currently  charged to enter
          into similar  agreements,  taking into account the remaining  terms of
          the   agreements   and   the   present    creditworthiness    of   the
          counter-parties.  For  fixed-rate  loan  commitments,  fair value also
          considers the difference  between current levels of interest rates and
          the committed rates.

          ACCRUED   INTEREST  -  The  carrying   amounts  of  accrued   interest
          approximate their fair values.

          OFF-BALANCE  SHEET  INSTRUMENTS  - Fair  values for  off-balance-sheet
          lending  commitments are based on fees currently charged to enter into
          similar  agreements,  taking into account the  remaining  terms of the
          agreements and the counterparties' credit standing.

     L.   OFF BALANCE SHEET FINANCIAL INSTRUMENTS:

          In the  ordinary  course of  business  the Bank has  entered  into off
          balance  sheet  financial  instruments  consisting of  commitments  to
          extend  credit,  commercial  letters of credit and standby  letters of
          credit.  Such  financial  instruments  are  recorded in the  financial
          statements when they become payable.

     M.   STATEMENT OF CASH FLOWS:

          For purposes of the statement of cash flows, cash and cash equivalents
          include  cash on hand,  demand  balances  due from banks,  and federal
          funds sold.

     N.   ADVERTISING:

          The Bank expenses the cost of advertising as incurred.

     0.   RECLASSIFICATIONS

          Certain 1999 amounts have been  reclassified  to conform with the 2000
          presentation.

                                    Continued


                                      F-11
<PAGE>
                         KENTUCKY NATIONAL BANCORP, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


2.   INVESTMENT SECURITIES

     A comparison of the amortized cost and fair values of investment securities
     and the gross  unrealized gains and losses at December 31, 2000 and 1999 is
     as follows:
<TABLE>
<CAPTION>
                                                                                 2000
                                                   ---------------------------------------------------------------
                                                                              UNREALIZED
                                                    AMORTIZED        ------------------------------      FAIR
                                                     COSTS            GAINS            LOSSES            VALUE
                                                   ----------        --------         --------         ----------
<S>                                                <C>               <C>              <C>              <C>
       Available-for-sale:
        U.S. Treasury and Federal
         Agencies                                  $2,999,576        $ 20,549         $   (155)        $3,019,970
        Federal Home Loan Bank stock                  285,900            -                -               285,900
                                                   ----------        --------         --------         ----------

                                                   $3,285,476        $ 20,549         $   (155)        $3,305,870
                                                   ==========        ========         ========         ==========

       Held-to-maturity:
        Federal Reserve stock                      $  152,300        $   -            $   -            $  152,300
                                                   ==========        ========         ========         ==========
<CAPTION>
                                                                                 1999
                                                   ---------------------------------------------------------------
                                                                              UNREALIZED
                                                    AMORTIZED        ------------------------------      FAIR
                                                     COSTS            GAINS            LOSSES            VALUE
                                                   ----------        --------         --------         ----------
<S>                                                <C>               <C>              <C>              <C>
       Available-for-sale:
        U.S. Treasury and Federal
         Agencies                                  $2,000,000        $   -            $(13,515)        $1,986,485
        Federal Home Loan Bank stock                  166,500            -                -               166,500
                                                   ----------        --------         --------         ----------

                                                   $2,166,500        $   -            $(13,515)        $2,152,985
                                                   ==========        ========         ========         ==========
       Held-to-maturity:
        Federal Reserve stock                      $  180,000        $   -            $   -            $  180,000
                                                   ==========        ========         ========         ==========
</TABLE>

     A  summary  of  investment   securities  at  December  31,  2000  based  on
     contractual maturities is presented in the table below. Expected maturities
     will differ from  contractual  maturities  because the issuers may have the
     right to call or prepay  obligations  with or  without  call or  prepayment
     penalties.
<TABLE>
<CAPTION>
                                                                            AMORTIZED                FAIR
                                                                              COST                   VALUE
                                                                           -----------            -----------
       <S>                                                                 <C>                    <C>
       Available-for sale:
         Due after one year through five years                             $ 2,499,576            $ 2,511,875
         Due after five years through ten years                                500,000                508,095
                                                                           -----------            -----------

                                                                             2,999,576              3,019,970
            Federal Home Loan Bank stock                                       285,900                285,900
                                                                           -----------            -----------

                                                                           $ 3,285,476            $ 3,305,870
                                                                           ===========            ===========
       Held-to-maturity:
         Federal Reserve stock                                             $   152,300            $   152,300
                                                                           ===========            ===========
</TABLE>

     During 2000,  the Bank redeemed  Federal  Reserve stock of $27,700 due to a
     decrease in the amount of stock  required  to be held.  There were no other
     sales,  maturities  or transfers of securities  during 2000 or 1999.  There
     were no securities  pledged to secure public  deposits at December 31, 2000
     or 1999.


                                    Continued


                                      F-12
<PAGE>

                         KENTUCKY NATIONAL BANCORP, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3.   LOANS

     The composition of loans at December 31, 2000 and 1999 are as follows:
<TABLE>
<CAPTION>
                                                                               2000                          1999
                                                                           -----------                   ------------
<S>                                                                        <C>                           <C>
              Commercial and industrial                                    $ 5,614,756                   $ 4,683,574
              Real estate - mortgage                                        38,401,240                    31,078,761
              Real estate - construction                                     4,386,658                     3,506,579
              Agricultural                                                   1,595,434                     1,800,706
              Consumer                                                       8,748,586                     7,891,829
              Other                                                            125,584                        68,686
                                                                           -----------                   -----------

                                                                            58,872,258                    49,030,135
              Less:
                Allowance for loan losses                                      625,556                       561,944
                Unearned income                                                166,816                       137,524
                                                                           -----------                   -----------

                                                                           $58,079,886                   $48,330,667
                                                                           ===========                   ===========
</TABLE>

     At  December  31,  2000,  the  Bank  had no loans  that  were  specifically
     classified as impaired.  Impairment of loans having recorded investments of
     approximately $9,100 at December 31, 1999 was recognized in conformity with
     FASB  Statement No. 114, as amended by FASB  Statement No. 118. The average
     recorded  investment in impaired  loans during 1999 was $10,800.  The total
     allowance  for loan  losses  related  to these  loans was $0.  There was no
     interest income on impaired loans recognized for cash payments  received in
     1999.

     An analysis of the changes in the allowance for loan losses is as follows:
<TABLE>
<CAPTION>
                                                                               2000                    1999
                                                                           -----------             -----------
              <S>                                                          <C>                     <C>
              Balance, beginning of period                                 $   561,944             $   347,000
              Loans charged off                                               (188,841)               (179,358)
              Loan recoveries                                                   34,881                   2,700
              Provision for loan losses                                        217,572                 391,602
                                                                           -----------             -----------

              Balance, end of period                                       $   625,556             $   561,944
                                                                           ===========             ===========
</TABLE>

     Loans  to  executive  officers  and  directors  amounted  to  approximately
     $569,800 and $236,100 at December 31, 2000 and 1999, respectively.

4.   PREMISES AND EQUIPMENT

     A summary of premises  and  equipment  at December  31, 2000 and 1999 is as
     follows:
<TABLE>
<CAPTION>
                                                                               2000                    1999
                                                                           -----------             -----------
              <S>                                                          <C>                     <C>
              Bank premises                                                $   384,593             $   384,593
              Furniture and equipment                                          418,605                 363,813
              Leaseholds                                                     1,389,902               1,389,902
                                                                           -----------             -----------

                                                                             2,193,100               2,138,308
              Less accumulated depreciation                                    268,589                 158,007
                                                                           -----------             -----------

                                                                           $ 1,924,511             $ 1,980,301
                                                                           ===========             ===========
</TABLE>

                                    Continued

                                      F-13
<PAGE>

                         KENTUCKY NATIONAL BANCORP, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5.   DEPOSITS

     The  composition of deposits at December 31, 2000 and 1999 is summarized as
     follows:
<TABLE>
<CAPTION>
                                                                              2000                            1999
                                                                           -----------                     ------------
              <S>                                                          <C>                             <C>
              Non-interest bearing demand                                  $ 5,453,667                     $ 5,615,796
              Interest bearing demand                                        6,541,172                       6,857,130
              Savings                                                        1,007,109                         922,629
              Certificates of deposit over
                $100,000                                                    15,446,356                      13,759,569
              Other interest bearing deposits                               30,227,101                      22,051,289
                                                                           -----------                     ------------

                                                                           $58,675,405                     $49,206,413
                                                                           ===========                     ============
</TABLE>

     At December 31,  2000,  scheduled  maturities  of  certificates  of deposit
     including IRA's are as follows:

                  2001                                   $29,347,757
                  2002                                    15,837,250
                  2003                                        88,450
                  2004                                       400,000
                                                         -----------

                                                         $45,673,457
                                                         ===========

     The Bank held  deposits of  approximately  $2,402,700  and  $2,397,800  for
     related parties at December 31, 2000 and 1999, respectively.

6.   CAPITAL LEASES

     The  Bank  has  entered  into  a  long-term  capital  lease  agreement  for
     substantially all bank equipment and furniture.  The lease, which commenced
     on February 1, 1998, extends for a five year period expiring 2003. The Bank
     has also  entered  into an  agreement  to lease a branch  building and land
     commencing  on May 11, 1998,  and extending for an initial five year period
     with five successive five year renewal terms expiring in 2028. In addition,
     the Bank has entered  into an agreement  with a related  party for lease of
     the bank  building  and land.  This  lease  commenced  on March 1, 1998 and
     extends for an initial  period of ten years with four  successive  ten year
     renewal terms expiring in 2048. The building components of these leases are
     classified  as  capital  leases.  The land  components  are  classified  as
     operating  leases.  At December 31, 2000 the future  minimum lease payments
     under the capital leases were as follows:

                  For the year ending:
                  2001                                     $   178,396
                  2002                                         178,396
                  2003                                         132,361
                  2004                                         132,361
                  2005                                         132,361
                  Thereafter                                 4,995,313
                                                           -----------

                  Total minimum lease payments               5,749,188
                  Less amounts representing interest         4,488,706
                                                           -----------

                  Present value of net minimum
                    lease payments                         $ 1,260,482
                                                           ===========

                                    Continued


                                      F-14
<PAGE>
                         KENTUCKY NATIONAL BANCORP, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


6.   CAPITAL LEASES, CONTINUED

     Future minimum annual rental commitments under the noncancelable  operating
     lease for land is as follows:

               For the year ending:
                        2001                               $    61,511
                        2002                                    61,511
                        2003                                    61,511
                        2004                                    61,511
                        2005                                    61,511
                        Thereafter                           2,220,698
                                                           -----------

               Total minimum annual rental
                 commitments                               $ 2,528,253
                                                           ===========

     Rental  expense  under  long-term   noncancellable   operating  leases  was
     approximately $62,500 and $60,700 for the years ended December 31, 2000 and
     1999, respectively.

7.   SHORT-TERM BORROWINGS

     Federal funds purchased  generally  mature within one to four days from the
     transaction date.

8.   FEDERAL HOME LOAN BANK ADVANCES

     During 1999 the Bank entered into a blanket agreement for advances from the
     Federal Home Loan Bank (FHLB).  The Bank has no  outstanding  advances from
     FHLB at  December  31,  2000 and 1999.  Mortgage  loans  with a balance  of
     approximately  $27,709,700  and  $23,531,300 at December 31, 2000 and 1999,
     respectively,  and all FHLB stock are pledged to the FHLB as  collateral in
     the event that the Bank requires future advances.

9.   COMPREHENSIVE INCOME

     During the year ended December 31, 1999,  Kentucky National  Bancorp,  Inc.
     adopted  FASB  Statement  No. 130,  "Reporting  Comprehensive  Income." The
     statement requires the reporting of comprehensive income in addition to net
     income from operations.  Comprehensive income is a more inclusive financial
     reporting  methodology  that  includes  disclosures  of  certain  financial
     information that historically has not been recognized in the calculation of
     net income.

     At  December  31, 2000 and 1999,  the Bank held  securities  classified  as
     available-for-sale, which have net unrealized gains (losses) of $20,394 and
     $(13,515),  respectively.  The before and after tax amount and tax  expense
     (benefit)  of this  component of  comprehensive  income for the years ended
     December 31, 2000 and 1999 is summarized below:


                                    Continued


                                      F-15
<PAGE>

                         KENTUCKY NATIONAL BANCORP, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


9.   COMPREHENSIVE INCOME, CONTINUED
<TABLE>
<CAPTION>
                                                                                   TAX
                                                               BEFORE            (BENEFIT)            AFTER
                                                                TAX               EXPENSE              TAX
                                                              --------            --------           --------
       <S>                                                    <C>                 <C>                <C>
       2000
         Unrealized holding gains                             $ 33,909            $ 11,529           $ 22,380
         Reclassification adjustment
          for gains included in net
          income                                                  -                   -                  -
                                                              --------            --------           --------

                                                              $ 33,909            $ 11,529           $ 22,380
                                                              ========            ========           ========

       1999
         Unrealized holding losses                            $(13,515)           $ (4,595)          $ (8,920)
         Reclassification adjustment
          for gains included in net
          income                                                  -                   -                  -
                                                              --------            --------           --------

                                                              $(13,515)           $ (4,595)          $ (8,920)
                                                              ========            ========           ========
</TABLE>

10.  INCOME TAXES

     The Company and the Bank file a consolidated income tax return. The Bank is
     charged or credited the amount equal to the income tax that would have been
     applicable on a separate return basis.

     The components of consolidated  income tax expense (benefit)  applicable to
     continuing  operations  for the years ended December 31, 2000 and 1999 were
     as follows:

                                               2000                 1999
                                           -----------             --------

             Current                       $     5,909             $   -
             Deferred                         (192,835)                -
                                           -----------             --------

                                           $  (186,926)            $   -
                                           ===========             ========

     Deferred   income  tax  assets  net  of  deferred  tax   liabilities   were
     approximately   $185,900   and  $4,600  at  December  31,  2000  and  1999,
     respectively.  Such amounts are included in accrued interest receivable and
     other assets in the  accompanying  balance sheet.  At December 31, 2000 and
     1999, deferred tax assets and liabilities are composed of the following:
<TABLE>
<CAPTION>
                                                            2000                    1999
                                                        -----------             ------------
             <S>                                        <C>                     <C>
             Deferred tax assets:
               Allowance for loan losses                $   156,900             $   143,200
               Net operating losses                            -                    109,000
               Startup costs                                 35,500                  54,100
               Organization costs                            25,100                  39,200
               Stock options                                 38,900                  15,600
               Available-for-sale securities                   -                      4,600
                                                        -----------             -----------

                                                            256,400                 365,700
                                                        -----------             -----------
</TABLE>

                                    Continued

                                      F-16
<PAGE>

                         KENTUCKY NATIONAL BANCORP, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

10.  INCOME TAXES, CONTINUED
<TABLE>
<CAPTION>
                                                                             2000                    1999
                                                                         -----------             -----------
             <S>                                                         <C>                     <C>
             Deferred tax liabilities:
               Federal Home Loan Bank stock                              $    (9,800)            $    (3,800)
               Accumulated depreciation                                      (53,800)                (34,100)
               Available-for-sale securities                                  (6,900)                   -
                                                                         -----------             -----------

                                                                             (70,500)                (37,900)
                                                                         -----------             -----------

                                                                             185,900                 327,800
             Less valuation allowance                                           -                   (323,200)
                                                                         -----------              -----------

             Net deferred tax asset                                      $   185,900             $     4,600
                                                                         ===========             ===========
</TABLE>

     During 2000, the valuation allowance in place for deferred income taxes was
     eliminated  based  on  the  expectation  of  future  taxable  income  being
     sufficient  to  realize  deferred  tax  assets.  Eliminating  the  deferred
     valuation allowance resulted in a deferred tax benefit of $244,300.

     During the year ended  December  31, 2000,  the Company used  approximately
     $320,000 in tax loss carryforwards to offset taxable income.

     The provision for federal tax expense  differs from the amount  computed by
     applying the U.S.  federal  income tax rate of 34 percent to income  before
     income taxes as a result of the following:
<TABLE>
<CAPTION>
                                                                             2000                  1999
                                                                         -----------             --------
<S>                                                                      <C>                     <C>
             U.S. federal income tax                                     $   141,000             $   -
             Changes from statutory tax:
               Deferred tax valuation adjustment                            (323,200)                -
               Other, net                                                     (4,726)                -
                                                                         -----------             --------

             Net deferred tax asset                                      $  (186,926)            $   -
                                                                         ===========             ========
</TABLE>

11.  EARNINGS PER SHARE

     Earnings  (loss) per share has been determined in accordance with Statement
     of Financial Accounting  Standards No. 128, "Earnings Per Share".  Earnings
     (loss) per common and common equivalent share were computed by dividing net
     income  by  the  weighted   average   number  of  shares  of  common  stock
     outstanding.  Diluted  earnings  per share for the year ended  December 31,
     2000 is determined by dividing net income by the weighted average number of
     shares of common  stock  outstanding  plus the weighted  average  number of
     shares  that would be issued  upon  exercise  of the  dilutive  stock-based
     compensation plan assuming proceeds are used to purchase shares pursuant to
     the treasury stock method.  Diluted earnings per share does not include the
     effect of  outstanding  options to  purchase  40,000  and 16,000  shares of
     common   stock  in  2000  and  1999,   respectively   as  their  effect  is
     antidilutive.

     The following data shows the amounts used in computing  earnings (loss) per
     share  (EPS) and the effect on income and the  weighted  average  number of
     shares of dilutive potential common stock at December 31, 2000 and 1999.

                                    Continued


                                      F-17
<PAGE>

                         KENTUCKY NATIONAL BANCORP, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

11.  EARNINGS PER SHARE, CONTINUED
<TABLE>
<CAPTION>
                                                                             2000                    1999
                                                                         -----------             -----------
             <S>                                                         <C>                     <C>
             Income available to common stock-
               holders use in basic and diluted
               EPS                                                       $   601,708             $  (125,467)
                                                                         ===========             ===========

             Weighted average number of common
               shares used in basic EPS                                  $   244,293             $   240,000
                                                                         ===========             ===========

             Effect of dilutive securities:
               Stock-based compensation plan                             $     2,919                   N/A
                                                                         ===========             ===========

             Weighted number of common shares
               and dilutive potential common
               stock used in diluted EPS                                 $   247,212                   N/A
                                                                         ===========             ===========
</TABLE>

12.  REGULATORY MATTERS

     Under applicable banking laws, bank regulatory authorities must approve the
     declaration  of dividends in any year, in an amount in excess of the sum of
     net income of that year and retained earnings net of dividends and required
     transfers of the preceding two years.  At December 31, 2000,  there were no
     retained  earnings  available for the payment of dividends without approval
     by bank regulatory authorities.

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

     Quantitative measures established by regulations to ensure capital adequacy
     require the Bank to maintain  minimum  amounts and ratios (set forth in the
     table  below) of total and Tier I capital  (as defined by  regulations)  to
     risk-weighted  assets (as  defined),  and of Tier I capital (as defined) to
     average assets (as defined).  Management believes,  as of December 31, 2000
     and 1999, that the Bank met all capital  adequacy  requirements to which it
     is subject.

     As of December 31, 2000,  the most recent  notification  from the Office of
     the Comptroller of Currency (OCC)  categorized the Bank as well capitalized
     under the regulatory framework for prompt corrective action.

     To be categorized as well capitalized, the Bank must maintain minimum total
     risk-based Tier I risk-based and Tier I leverage ratios as set forth in the
     following  table.  There are no conditions or events since the notification
     that Management believes have changed the Bank's category.

                                    Continued

                                      F-18
<PAGE>


                         KENTUCKY NATIONAL BANCORP, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


12.  REGULATORY MATTERS, CONTINUED

     The Bank's  actual  capital  amounts and ratios are also  presented  in the
     table as of December 31, 2000 and 1999.
<TABLE>
<CAPTION>
                                                                         FOR CAPITAL                 FOR WELL
                                                                          ADEQUACY                  CAPTIALIZED
                                                  ACTUAL                  PURPOSES                   PURPOSES
                                          ----------------------    ----------------------     ----------------------
                                           AMOUNT       RATIO        AMOUNT        RATIO        AMOUNT       RATIO
                                          ---------    ---------    ---------     --------     ---------    ---------
<S>                                         <C>          <C>          <C>           <C>          <C>          <C>
       DECEMBER 31, 2000:
       Total capital to
        risk weighted assets                $6,463       13.76%       $3,758        8.00%        $4,697       10.00%

       Tier I capital to risk
        weighted assets                      5,875       12.51%        1,879        4.00%         2,818        6.00%

       Tier I capital to
        average assets                       5,875        8.89%        1,983        3.00%         3,304        5.00%

       DECEMBER 31, 1999:
       Total capital to
        risk weighted assets                $5,568       14.15%       $3,148        8.00%        $3,935       10.00%

       Tier I capital to risk
        weighted assets                      5,075       12.90%        1,547        4.00%         2,361        6.00%

       Tier I capital to
        average assets                       5,075        9.34%        16.30        3.00%         2,717        5.00%

</TABLE>

13.  STOCK OPTION PLANS

     Under a plan effective at inception,  the Company granted performance based
     options  to  purchase  16,000  shares  of  stock to key  employees  with no
     additional  options  available under the plan. Under a new plan approved by
     stockholders  on April 25,  2000,  the Company  granted  performance  based
     options  to  purchase  24,000  shares  of stock to key  employees,  service
     providers and consultants,  with 6,000 additional  options  available to be
     granted  under the plan.  The options to purchase  shares  expires 10 years
     from the date of the grant.  Options  vest over a period range from 1997 to
     2002 upon achievement of performance or production incentives. Compensation
     accrued  under the plans at December  31,  2000 and 1999 was  approximately
     $68,500 and $18,800, respectively.

     A summary of the options outstanding during 2000 and 1999 are as follows:
<TABLE>
<CAPTION>

                                                                  2000                               1999
                                                     -------------------------------    -------------------------------
                                                                        WEIGHTED                           WEIGHTED
                                                       NUMBER           AVERAGE            NUMBER           AVERAGE
                                                         OF             EXERCISE             OF            EXERCISE
                                                       OPTIONS           PRICE            OPTIONS            PRICE
                                                     ------------    ---------------    -------------    --------------

       <S>                                            <C>            <C>                 <C>             <C>
       Issued at inception                            40,000         $ 25.00             16,000          $ 25.00

       Granted during year                              -                                  -

       Exercised during year                            -                                  -
                                                     -------                            -------
       Outstanding at year end                        40,000         $ 25.00             16,000          $ 25.00
                                                     =======                            =======
</TABLE>




                                    Continued

                                      F-19
<PAGE>

                         KENTUCKY NATIONAL BANCORP, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

13.  STOCK OPTION PLANS, CONTINUED

<TABLE>
<CAPTION>
                                                                  2000                               1999
                                                     -------------------------------    -------------------------------
                                                                        WEIGHTED                           WEIGHTED
                                                       NUMBER           AVERAGE            NUMBER           AVERAGE
                                                         OF             EXERCISE             OF            EXERCISE
                                                       OPTIONS           PRICE            OPTIONS            PRICE
                                                     ------------    ---------------    -------------    --------------
<S>                                                   <C>                                <C>
       Eligible for exercise at
         year end                                     24,000                             10,667
                                                     -------                            -------

       Weighted average fair
         value of options
         granted during year                            -                                  -
                                                     =======                            =======
</TABLE>

14.  DEFERRED COMPENSATION PLAN

     On April 25,  2000,  the  stockholders  approved a plan for the  payment of
     deferred  directors'  and  counsels'  fees  whereby up to 18,000  shares of
     common stock may be issued for the  settlement of such fees in lieu of cash
     payment.  Under the plan,  6,440 shares were  immediately  distributed  for
     payment of fees accrued  from  inception  through  December 31, 1999 in the
     amount of $161,000.  At December  31,  2000,  fees in the amount of $62,000
     were accrued for an additional  2,480 shares  expected to be issued in 2001
     in lieu of cash fees.  Shares  are to be  distributed  annually  as soon as
     practical  after the  calendar  year for which the shares have been earned.
     The plan is effective until its termination by the Board of Directors.

15.  FAIR VALUES OF FINANCIAL INSTRUMENTS

     The  estimated  fair  values of the  Bank's  financial  instruments  are as
     follows:
<TABLE>
<CAPTION>
                                                                  2000                                1999
                                                     --------------------------------    --------------------------------
                                                        CARRYING            FAIR            CARRYING            FAIR
                                                         AMOUNT             VALUE            AMOUNT            VALUE
                                                     ---------------     ------------    ---------------    -------------
                                                             (IN THOUSANDS)                      (IN THOUSANDS)
<S>                                                     <C>               <C>                <C>              <C>
       FINANCIAL ASSETS:
        Cash and cash equivalents                      $ 1,879           $ 1,879            $ 2,925          $ 2,925
        Securities available-for-
         sale                                            3,306             3,306              2,153            2,153
        Securities held to maturity                        152               152                180              180
        Loans and loans held-for-
         sale, net of allowance                         58,339            58,818             48,331           48,331
        Accrued interest receivable                        657               657                486              486
       FINANCIAL LIABILITIES:
        Deposits                                        58,675            58,436             49,206           49,157
        Obligations under capital
         leases                                          1,260             1,260              1,306            1,306
        Accrued interest payable                           372               372                224              224
       OFF-BALANCE-SHEET
          LIABILITIES:
        Commitments to extend
         credit                                          3,800             3,800              4,498            4,498
        Standby letters of credit                          361               361                571              571
</TABLE>

     The carrying  amounts in the preceding  table are included in the statement
     of financial condition under the applicable captions.

                                    Continued


                                      F-20
<PAGE>

                         KENTUCKY NATIONAL BANCORP, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


16.  RELATED PARTY TRANSACTIONS

     The Bank, in the normal  course of business,  leases its main office from a
     related  party.  Payments made under both capital and operating  leases for
     the  year  ended  December  31,  2000 and 1999  amounted  to  approximately
     $144,000 and $144,400,  respectively.  In addition,  during 1999,  the Bank
     made payments of approximately $310,000 to a related party for construction
     of improvement to a new branch location.

     Directors fees payable were approximately  $55,800 and $144,900 at December
     31, 2000 and 1999, respectively.

17.  COMMITMENTS AND CONTINGENT LIABILITIES

     In the normal course of business, the Bank has outstanding  commitments and
     contingent  liabilities.  At  December  31,  2000  and  1999,  the Bank has
     commitments  to extend  credit  which are not  reflected  in the  financial
     statements  of  approximately  $4,161,388  and  $5,069,500,   respectively,
     including  stand-by  letters of $361,227 and $571,400  and  commitments  to
     related  parties  of  $1,241,615  and  $700,000,  respectively.  The Bank's
     exposure to credit loss in the event of  nonperformance  by the other party
     to these  commitments  is represented  by the  contractual  amount of those
     instruments.

     Commitments  to extend credit are  agreements to lend to a customer as long
     as there is no  violation of any  condition  established  in the  contract.
     Commitments  generally  have fixed  expiration  dates or other  termination
     clauses and may require payment of a fee. Since many of the commitments are
     expected to expire without being drawn upon, the total  commitment  amounts
     do not necessarily  represent future cash requirements and do not generally
     present any significant liquidity risk to the Bank. The Bank evaluates each
     customer's  creditworthiness  on a  case-by-case  basis.  The  extension of
     credit  is  based  on  management's  credit  evaluation  of the  inventory,
     property, plant and equipment, and income-producing commercial properties.

     Standby letters of credit are conditional commitments issued by the Bank to
     guarantee the  performance of a customer to a third party.  Standby letters
     of  credit  generally  have  fixed  expiration  dates or other  termination
     clauses  and may  require  payment of a fee.  The credit  risk  involved in
     issuing  letters  of credit is  essentially  the same as that  involved  in
     extending  loan  facilities to  customers.  The Bank's policy for obtaining
     collateral,  and the nature of such collateral,  is essentially the same as
     that involved in making commitments to extend credit.

     A related party is currently constructing a building addition onto the main
     branch which the Bank will lease under a capital lease arrangement upon its
     completion which is expected to be August 2001. As a result of the addition
     of building and equipment  under capital leases in the aggregate  amount of
     approximately $900,000, the Bank will incur monthly amortization expense of
     approximately  $1,900,  and monthly operating lease expense for land rental
     of approximately  $700. The monthly cash flow  requirement  under the lease
     obligations,  including interest expense, will be approximately $10,500 per
     month.

                                    Continued


                                      F-21
<PAGE>

                         KENTUCKY NATIONAL BANCORP, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


17.  COMMITMENTS AND CONTINGENT LIABILITIES, CONTINUED

     The Bank  maintains  cash  balances in other  banks.  At December 31, 2000,
     balances  at other  financial  institutions  in  excess  of FDIC  insurance
     coverage were approximately $824,500.

18.  CONCENTRATIONS OF CREDIT

     Most of the Bank's loans,  commitments  and standby  letters of credit have
     been granted to customers in the Bank's market area. Most credit  customers
     are  depositors of the Bank.  The  distribution  of  commitments  to extend
     credit approximates the distribution of loans outstanding.

19.  CONDENSED FINANCIAL INFORMATION (PARENT COMPANY ONLY)

     Information  as to the financial  position,  results of operations and cash
     flows of Kentucky National  Bancorp,  Inc. as of December 31, 2000 and 1999
     is summarized as follows:
<TABLE>
<CAPTION>
                                                STATEMENT OF FINANCIAL CONDITION
                                                   DECEMBER 31, 2000 AND 1999

                                                             ASSETS

                                                                               2000                      1999
                                                                           ------------              ------------

       <S>                                                                 <C>                       <C>
       Investment in subsidiary                                            $  5,887,833              $  5,080,138
       Other assets                                                              45,860                      -
                                                                           ------------              ------------

            Total assets                                                   $  5,933,693              $  5,080,138
                                                                           ============              ============

                                              LIABILITIES AND STOCKHOLDERS' EQUITY

                                                                               2000                      1999
                                                                           ------------              ------------

       Stockholders' equity                                                $  5,933,693              $  5,080,138
                                                                           ------------              ------------

            Total liabilities and
              stockholders' equity                                         $  5,933,693              $  5,080,138
                                                                           ============              ============

                                                      STATEMENT OF INCOME
                                             YEARS ENDED DECEMBER 31, 2000 AND 1999

                                                                               2000                      1999
                                                                           ------------              ------------

       Net income (loss) of subsidiary                                     $    624,315              $    (86,147)
       General and administrative expenses                                      (68,467)                  (39,320)
                                                                           ------------              ------------

            Income (loss) before tax                                            555,848                  (125,467)

       Income tax benefit                                                        45,860                      -
                                                                           ------------              ------------

            Net income (loss)                                              $    601,708              $   (125,467)
                                                                           ============              ============
</TABLE>




                                    Continued


                                      F-22
<PAGE>
                         KENTUCKY NATIONAL BANCORP, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


19.  CONDENSED FINANCIAL INFORMATION (PARENT COMPANY ONLY), CONTINUED
<TABLE>
<CAPTION>
                                                    STATEMENT OF CASH FLOWS
                                             YEARS ENDED DECEMBER 31, 2000 AND 1999

                                                                               2000                      1999
                                                                           ------------              ------------
       <S>                                                                 <C>                       <C>
       Cash flows from operating activities:
         Net income (loss)                                                 $    601,708              $   (125,467)
         Adjustments to reconcile net income
             to cash provided by operating
             activities:
           Net (income) loss of subsidiary                                     (624,315)                   86,147
           Incentive stock option compensation                                   68,467                    18,837
           Increase in other assets                                             (45,860)                     -
                                                                           ------------              ------------

            Net cash used by operating
              activities                                                           -                      (20,483)
                                                                           ------------              ------------

       Cash flows from investing activities:
         Dividends received from  subsidiary                                       -                       20,483
                                                                           ------------              ------------

       Cash flows from financing activities                                        -                         -
                                                                           ------------              ------------

       Net increase in cash                                                        -                         -
       Cash, beginning of period                                                   -                         -
                                                                           ------------              ------------

       Cash, end of period                                                 $       -                 $       -
                                                                           ============              ============
</TABLE>


<PAGE>



                                   SIGNATURES

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

                                         KENTUCKY NATIONAL BANCORP, INC.


Date:  March 26, 2001                    By:  /s/ Ronald J. Pence
                                              ----------------------------------
                                              Ronald J. Pence
                                              President
                                              (Duly Authorized Officer)

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


By:/s/ Lawrence P. Calvert                                  Date: March 26, 2001
   --------------------------------------------------
      Lawrence P. Calvert
      Chief Executive Officer and Director
      (Principal Executive Officer)


By:/s/ Ronald J. Pence                                      Date: March 26, 2001
   --------------------------------------------------
      Ronald J. Pence
      President and Director
      (Principal Financial and Accounting Officer)


By:/s/ Robert E. Robbins                                    Date: March 26, 2001
   --------------------------------------------------
      Robert E. Robbins
      Chairman of the Board and Director


By:/s/ Kevin D. Addington                                   Date: March 26, 2001
   --------------------------------------------------
      Kevin D. Addington
      Director

By:/s/ Henry Lee Chitwood                                   Date: March 26, 2001
   --------------------------------------------------
      Henry Lee Chitwood
      Director

By:/s/ Lois Watkins Gray                                    Date: March 26, 2001
   --------------------------------------------------
      Lois Watkins Gray
      Director

By:/s/ William R. Hawkins                                   Date: March 26, 2001
   --------------------------------------------------
      William R. Hawkins
       Director

By:/s/ Christopher G. Knight                                Date: March 26, 2001
   --------------------------------------------------
      Christopher G. Knight
      Director

By:/s/ Leonard Allen McNutt                                 Date: March 26, 2001
   --------------------------------------------------
      Leonard Allen McNutt
      Director