UNITED STATES 
                      SECURITIES AND EXCHANGE COMMISSION 
                            Washington, D. C. 20549

                                   FORM 10-K 

(Mark One) 
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934, For the Fiscal Year Ended December 31, 1996 
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934

Commission File Number Number 0-16839 

                           PEOPLES FIRST CORPORATION 
            (Exact name of registrant as specified in its charter)

          Kentucky                                               61-1023747 
(State or other jurisdiction of                               (I R S Employer 
 incorporation or organization)                             Identification No.)

100 South Fourth Street 
Paducah, Kentucky                                                     42002-2200
(Address of principal exective offices)                               (Zip Code)
     Registrant's telephone number, including area code: (502) 441-1200 

          Securities Registered Pursuant to Section 12(g) of the Act: 
                         Common Stock, No Par Value 

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

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

The aggregate market value of the voting stock held by non-affiliates of the 
Registrant as of February 14, 1997: Common stock, no par value - $212,877,000.

The number of shares outstanding of the Registrant's only class of stock as of
February 14, 1997: Common stock, no par value - 10,010,958 shares outstanding.

                    Documents Incorporated by Reference 

Portions of Peoples First Corporation's definitive proxy statement dated 
March 15, 1997 are incorporated into Part III. 












INDEX 
                                                                           Page

PART I. 

Item 1.  Business                                                             3
Item 2.  Properties                                                          15
Item 3.  Legal Proceedings                                                   15
Item 4.  Submission of Matters to a Vote of Securities Holders               15

PART II. 

Item 5.  Market for the Registrant's Common Stock and Related 
           Stockholder Matters                                               16
Item 6.  Selected Financial Data                                             17
Item 7.  Management's Discussion and Analysis of Financial 
           Condition and Results of Operations                               19
Item 8.  Financial Statements and Supplementary Data                         30
Item 9.  Changes in and Disagreements with Accountants on 
           Accounting and Financial Disclosure                               63

PART III. 

Item 10.  Directors and Executive Officers of the Registrant                 64
Item 11.  Executive Compensation                                             65
Item 12.  Security Ownership of Certain Beneficial Owners 
            and Management                                                   65
Item 13.  Certain Relationships and Related Transactions                     65

PART IV. 

Item 14.  Exhibits, Financial Statement Schedules and Reports 
            on Form 8-K                                                      65

          Signatures                                                         67













                                                                              2







PART I 

Item 1.  Business 

Peoples First Corporation (the "Company"), headquartered in Paducah, Kentucky,
is a bank and savings and loan holding company registered with the Board of
Governors of the Federal Reserve System ("Federal Reserve Board") pursuant to
Section 5(a) of the Bank Holding Company Act of 1956, as amended.  In recent
years, the Company has been one of the ten largest independent financial
institutions headquartered in Kentucky.  The Company conducts a complete range
of commercial and personal banking activities in Western Kentucky and
Northwestern Tennessee through three wholly owned subsidiaries: The Peoples
First National Bank & Trust Company of Paducah ("Peoples Bank") in the
Kentucky counties of McCracken, Marshall, Ballard, Livingston, Calloway and
Graves; First Kentucky Federal Savings Bank of Central City (First Kentucky
FSB) in the Kentucky counties of Muhlenberg, Ohio, McLean and Butler Counties;
and, Guaranty Federal Savings Bank of Clarksville, Tennessee (Guaranty FSB) in
Montgomery County, Tennessee.  Peoples First Corporation's principal executive
offices are located at 100 South Fourth Street, Paducah, Kentucky 42002-2200. 

The Company is a Kentucky Corporation incorporated on March 1, 1983.  The
Company became a bank holding company when it acquired Peoples Bank in 1983.
The Company acquired (and subsequently merged into Peoples Bank during 1994)
First Liberty Bank in 1985, First National Bank of LaCenter in 1987, Salem Bank,
Inc. in 1989, Bank of Murray in 1992 and Liberty Bank and Trust in 1994.  During
1994, the Company acquired all of the outstanding shares of First Kentucky
Bancorp, Inc. in exchange for 1,076,353 shares of Peoples First Corporation
common stock.  First Kentucky FSB's six locations are immediately east of the
market area served by the Company's lead subsidiary bank.  In 1996, the Company
acquired all of the outstanding shares of Guaranty FSB in exchange for 315,002
shares of Peoples First Corporation common stock.  Guaranty FSB's three
locations are immediately southeast of the market area served by the Company's
lead subsidiary bank. 

Dividends from Peoples Bank, First Kentucky FSB and Guaranty FSB (collectively
the "banks") are the principal source of cash flow for the Company.  Legal
limitations are imposed on the amount of dividends that may be paid by the
individual banks.  Although the Company may engage in other activities, subject
to rules and regulations of the Federal Reserve Board and Kentucky Department of
Financial Institutions, it is currently expected that the banks will remain the
principal source of operating revenues. 

Peoples Bank, organized in 1926, provides a full range of banking services to
the Western Kentucky region through its main office in Paducah, Kentucky and
twelve full service branch offices, three limited service branch offices and one
business operations office.  Commercial lending services provided to medium-size
and small businesses, real estate mortgage lending and individual consumer
lending services are the primary sources of operating revenues.  Peoples Bank
had total deposits of $925.0 million at December 31, 1996 and is the first or
second largest commercial banking operation in each of the five counties in
which it operates. 


                                                                              3






First Kentucky FSB, organized in 1934, provides a broad array of banking
services to the Western Kentucky region through its main office in Central City,
Kentucky and five branch offices.  Residential real estate mortgage lending is
the primary source of operating income.  First Kentucky FSB had total deposits
of $147.0 million at December 31, 1996 and is largest financial institution
headquartered in their immediate West-Central Kentucky market area. 

Guaranty FSB, organized in 1973, provides a broad array of banking services to
the Northeastern Tennessee region through its main office and two branch offices
in Clarksville.  Residential real estate mortgage lending is the primary source
of operating income.  Guaranty FSB had total deposits of $43.4 million at
December 31, 1996 and is seventh largest financial institution in Montgomery
County, Tennesse. 

At December 31, 1996, the Company had 533 full-time equivalent employees.
Management considers employee relations to be good with all of the employees.
No employees are covered by a collective bargining agreement. 

Competition 

The banks actively compete on local and regional levels with other commercial
banks and financial institutions for all types of deposits, loans, trust
accounts and the provision of financial and other services.  With respect to
certain banking services, the banks compete with insurance companies, savings
and loan associations, credit unions and other financial institutions.  Many of
the banks' competitors are not commercial banks or savings and loan
associations.  For example, the banks compete for funds with  money market
mutual funds, brokerage houses, and governmental and private issuers of money
market instruments.  The banks also compete for loans with other financial
institutions and private concerns providing financial services.  These include
finance companies, credit unions, certain governmental agencies and merchants
who extend their own credit selling to consumers and other customers.  Many of
the financial institutions and other interests with which the banks compete
have capital resources substantially in excess of the capital and resources of
the banks. 

Supervision and Regulation

The Company is a bank holding company within the meaning of the Bank Holding
Company Act.  As such, it is registered with the Federal Reserve Board (FRB) and
files reports with and is subject to examination by that body. 

Peoples Bank, chartered under the National Bank Act, is subject to the supervi-
sion of and is regularly examined by the Comptroller of the Currency of the
United States.  By law, Peoples Bank is a member of the Federal Reserve System
and insured members of the Bank Insurance Fund of the Federal Deposit Insurance
Corporation (FDIC).  As such, it is subject to regulation by these federal
agencies.  First Kentucky FSB and Guaranty FSB, are federally chartered savings
associations, subject to the supervision of and are regularly examined by Office
of Thrift Supervision.  They are subject to certain reserve


                                                                              4







requirements of the FRB and are insured members of the Savings Association
Insurance Fund of the FDIC, and, as such, are subject to regulation and examined
by these federal agencies. 

The Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA)
was principally designed to deal with the financial crisis involving the thrift
industry and the Federal Savings and Loan Insurance Corporation.  FIRREA
contains many provisions which affect banks and bank holding companies.  FIRREA
included substantial increases in the enforcement powers available to
regulators.  Several civil and criminal penalties were added which address
misconduct and knowingly or recklessly causing a substantial loss to an insured
institution.  FIERRA expanded the power of bank holding companies by permitting
them to acquire any savings assocation, including healthy as well as troubled
institutions. 

The Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA)
contained many provisions affecting the banking industry.  FDICIA included
provisions, among others to: 1) reform the deposit insurance system, 2)
establish a format for closer monitoring of financial institutions and to enable
prompt corrective action by banking regulators when a financial institution
begins to experience difficulty, 3) establish five capital levels for financial
institutions that would impose more scrutiny and restriction on less capitalized
institutions, 4) require regulators to set operational and managerial standards
for all insured institutions, including limits on excessive compensation to
executive officers, directors and principal shareholders, and establish
standards for loans secured by real estate, 5) adopt certain accounting reforms
and require annual on-site examinations of federally insured institutions and
the ability to require independent audits, 6) restrict state-chartered banks
from engaging in activities not permitted for national banks unless they are
adequately capitalized and have FDIC approval.  Further, FDICIA permited the
FDIC to make special assessments on insured depository institutions, in amounts
determined by the FDIC to be necessary to give it adequate assessment income to
repay amounts borrowed from the U.S. Treasury Department and other sources or
for any other purpose the FDIC deems necessary. 

Future legislative actions, possibly including restructuring and modernization
of financial institution regulation, could have dramatic effect on the cost of
doing business and competitiveness.  The terms or timing of future legislation
or regulatory actions that may be adopted cannot be predicted, accordingly, the
potential effect on the Company is unknown. 

The continuing volatile conditions in the national economy and in the money
markets, together with the effects of actions by monetary and fiscal authorities
in recent years, make it exceedingly difficult to predict with any reasonable
accuracy the possible future changes in interest rates and their effect on
deposit levels, loan demand and the business and earnings of the Company and the
banks. 






                                                                              5






Statistical Disclosures

I.  Distribution of Assets, Liabilities and Stockholders' Equity; Interest Rates
    and Interest Differential 

A.  AVERAGE BALANCE SHEETS                       For the Year Ended December 31,
    (in thousands)                               1996         1995         1994
_______________________________________________________________________________

INTEREST-EARNING ASSETS 
Short-term investments                         $2,512       $2,877       $3,831
Taxable securities                            244,917      251,107      285,242
Non-taxable securities                         61,734       64,835       69,731
Loans (1)                                     960,726      865,707      755,314
                                            ---------    ---------    ---------
                                            1,269,889    1,184,526    1,114,118
NONINTEREST-EARNING ASSETS 
Cash and due from banks                        35,586       33,515       34,878
Allowance for loan losses                     (14,066)     (12,691)     (11,524)
Other assets                                   44,221       40,582       40,800
                                            ---------    ---------    ---------
                                           $1,335,630   $1,245,932   $1,178,272
                                            =========    =========    =========

INTEREST-BEARING LIABILITIES 
Transaction accounts                         $310,666     $253,689     $235,918
Savings deposits                               84,684       87,618      106,891
Time deposits                                 588,289      598,514      567,438
Short-term borrowings                         112,459       86,400       51,489
Long-term borrowings                            9,785        7,946       13,644
Other liabilities                               1,382        1,292        1,201
                                            ---------    ---------    ---------
                                            1,107,265    1,035,459      976,581

NONINTEREST-BEARING LIABILITIES 
Demand deposits                                82,269       82,752       85,307
Other liabilities                              11,523        9,176        8,391

STOCKHOLDERS' EQUITY                          134,573      118,545      107,993
                                            ---------    ---------    ---------
                                           $1,335,630   $1,245,932   $1,178,272
                                            =========    =========    =========

(1) Nonperforming loans are included in 
    average loans 








                                                                              6






B. ANALYSIS OF NET INTEREST EARNINGS             For the Year Ended December 31,
   (in thousands)                                1996         1995         1994
_______________________________________________________________________________

INTEREST INCOME 
Short-term investments                           $122         $160         $169
Taxable securities                             15,842       16,082       17,493
Non-taxable securities (TE) (2)                 5,704        5,847        6,302
Loans (TE) (2)                                 87,950       78,573       62,520
                                              -------      -------      -------
                                              109,618      100,662       86,484

INTEREST EXPENSE 
Transaction accounts                           11,606        9,101        6,970
Saving deposits                                 2,422        2,460        2,996
Time deposits                                  32,874       34,047       25,744
Short-term borrowings                           5,958        4,939        2,169
Long-term borrowings                              608          515          900
Other liabilities                                  91           90           76
                                              -------      -------      -------
                                               53,559       51,152       38,855
                                              -------      -------      -------
NET INTEREST INCOME (TE) (2)                   56,059       49,510       47,629
TE Basis Adjustment                            (1,945)      (1,916)      (2,080)
                                              -------      -------      -------
NET INTEREST EARNINGS                         $54,114      $47,594      $45,549
                                              =======      =======      =======

(2) Tax equivalent (TE) interest income is based 
    upon a Federal income tax rate of 35%. 























                                                                              7






B. AVERAGE YIELDS AND RATES PAID                 For the Year Ended December 31,
                                                 1996         1995         1994
_______________________________________________________________________________

AVERAGE YIELDS FOR INTEREST-EARNING ASSETS 
Short-term investments                           4.86%        5.56%        4.41%
Taxable securities                               6.47%        6.40%        6.13%
Non-taxable securities (TE) (2)                  9.24%        9.02%        9.04%
Loans (TE) (1) (2)                               9.15%        9.08%        8.28%
All interest-earning assets                      8.63%        8.50%        7.76%

AVERAGE RATES FOR INTEREST-BEARING LIABILITIES 
Transaction accounts                             3.74%        3.59%        2.95%
Saving deposits                                  2.86%        2.81%        2.80%
Time deposits                                    5.59%        5.69%        4.54%
Short-term borrowings                            5.30%        5.72%        4.21%
Long-term borrowings                             6.21%        6.48%        6.60%
Other liabilities                                6.58%        6.97%        6.33%
All interest-bearing liabilities                 4.84%        4.94%        3.98%
                                                 ----         ----         ----
NET INTEREST-RATE SPREAD (TE) (2)                3.79%        3.56%        3.78%
                                                 ====         ====         ====

NET YIELD ON INTEREST-EARNING ASSETS             4.41%        4.18%        4.28%
                                                 ====         ====         ====

(1) Nonperforming loans are included in 
    average loans 
(2) Tax equivalent (TE) interest income is based 
    upon a Federal income tax rate of 35%. 























                                                                              8






C. FOR THE LAST TWO FISCAL YEARS 

CHANGES ATTRIBUTABLE TO VOLUME AND RATE        Change       Due to       Due to
(in thousands)                              1996/1995       Volume     Rate (3)
_______________________________________________________________________________

INTEREST INCOME 
Short-term investments                           ($38)        ($20)        ($18)
Taxable securities                               (240)        (396)         156
Non-taxable securities (TE) (2)                  (143)        (280)         137
Loans (1) (2)                                   9,377        8,624          753
                                               ------
                                                8,956        7,254        1,702
INTEREST EXPENSE 
Transaction accounts                            2,505        2,044          461
Saving deposits                                   (38)         (82)          44
Time deposits                                  (1,173)        (582)        (591)
Short-term borrowings                           1,019        1,490         (471)
Long-term borrowings                               93          119          (26)
Other liabilities                                   1            6           (5)
                                               ------
                                                2,407        3,547       (1,140)
                                               ------       ------       ------
NET INTEREST EARNINGS (TE) (2)                 $6,549       $3,707       $2,842
                                               ======       ======       ======

(1) Nonperforming loans are included in average loans. 
(2) Tax equivalent (TE) net interest income is based upon a Federal income 
    tax rate of 35%. 
(3) Changes due to both rate and volume are included in due to rate. 























                                                                              9






CHANGES ATTRIBUTABLE TO VOLUME AND RATE        Change       Due to       Due to
(in thousands)                              1995/1994       Volume     Rate (3)
_______________________________________________________________________________

INTEREST INCOME 
Short-term investments                            ($9)        ($42)         $33
Taxable securities                             (1,411)      (2,093)         682
Non-taxable securities (TE) (2)                  (455)        (442)         (13)
Loans (TE) (1)                                 16,053        9,138        6,915
                                               ------
                                               14,178        5,465        8,713

INTEREST EXPENSE 
Transaction accounts                            2,131          525        1,606
Saving deposits                                  (536)        (540)           4
Time deposits                                   8,303        1,410        6,893
Short-term borrowings                           2,770        1,471        1,299
Long-term borrowings                             (385)        (376)          (9)
Other liabilities                                  14            6            8
                                               ------
                                               12,297        2,343        9,954
                                               ------       ------       ------
NET INTEREST INCOME (TE) (2)                   $1,881       $3,123      ($1,242)
                                               ======       ======       ======

(1) Nonperforming loans are included in average loans. 
(2) Tax equivalent (TE) net interest income is based upon a Federal income 
    tax rate of 35%. 
(3) Changes due to both rate and volume are included in due to rate. 
























                                                                             10






II.  Security Portfolios 

A.  Footnote 4 to the Consolidated Financial Statements included herein on page
42 presents the book value as of the end of 1996 and 1995 of securities by type
of security. 

B.  Footnote 4 to the Consolidated Financial Statements included herein on page 
42 presents the amortized cost, estimated market value and the weighted average
yield of securities at December 31, 1996, by contractual maturity range.

C.  As of December 31, 1996, the Company owned no securities (other than U. S. 
Government and U. S. Government agencies and corporations) issued by one issuer 
for which the book value exceeded ten percent of stockholders' equity. 

III.  Loan Portfolio 

A.  The table of Types of Loans in Management's Discussion and Analysis of 
Financial Condition and Results of Operations (MDA) included herein on page 22
presents the amount of all loans in various categories as of the end of 1996 
and 1995. 

B. The following table presents the maturities in the loan portfolio, excluding
commercial paper, real estate mortgage, installment, consumer revolving credit 
and other loans at December 31, 1996: 

Loan Portfolio Maturities         1 year       1 to 5         Over
December 31, 1996                or less        years      5 years        Total
_______________________________________________________________________________
(in thousands) 

Commercial, financial 
  and agricultural               $75,267      $34,642      $10,374     $120,283
Real estate construction          25,527        1,438        2,968       29,933
                                 -------      -------      -------      -------
                                $100,794      $36,080      $13,342     $150,216
                                 =======      =======      =======      =======

The amounts of these loans due after one year which have predetermined rates 
and adjustable rates are $16.9 million and $32.5 million, respectively. 

C. Risk Elements 

1.  The table of Nonperforming Assets in MDA included herein on page 22 states 
the amount of nonaccrual, past due and restructured loans.  The following table 
states the gross interest income that would have been recorded for the years 
ended December 31, 1992 through 1996, if the nonaccrual and renegotiated loans 
had been current in accordance with their original terms, and the amount of 
interest income that was included in net income for each year: 





                                                                             11






Interest Income on Nonaccrual 
  and Restructured Loans 
Year ended December 31,             1996         1995         1994         1993
_______________________________________________________________________________
(in thousands) 

Contractual interest                $504         $421         $209         $407
Interest recognized                  343          351          192          279


2.  Potential Problem Loans 
 
Internal credit review procedures are designed to alert management of possible
credit problems which would create serious doubts as to the future ability of
borrowers to comply with loan repayment terms.  At December 31, 1996, loans with
a total principal balance of $26.4 million had been identified that may become
nonperforming in the future, compared to $14.3 million at December 31, 1995. 
Potential problem loans are not included in nonperforming assets since the 
borrowers currently meet all applicable loan agreement terms.  The identified 
potential problem loan totals consist of many different loans and are generally 
loans for which the collateral appears to be sufficient but that have potential 
financial weakness evidenced by internal credit review's analysis of historical 
financial information.  At December 31, 1996, a total of $16.9 million of
potential problem loans were to four borrowers. 

3.  Foreign Outstandings 

There were no foreign outstandings at anytime during the last three years. 

4.  Loan Concentrations 

As of December 31, 1996, there was no concentration of loans exceeding 10% of 
total loans which are not otherwise disclosed in the Types of Loans table 
pursuant to III. A.  There were no amounts loaned in excess of 10% of total 
loans to a multiple of borrowers engaged in similar activities which would 
cause them to be similarly impacted by economic or other conditions.  Most 
loans are originated in the immediate market area of the banks. 

D. Other Interest Bearing Assets 

The Company has no other interest earning assets that would be required to 
be disclosed under Item III. C.1. or 2. if such assets were loans. 











                                                                             12






IV.  SUMMARY OF LOAN LOSS EXPERIENCE 

A.  The following table presents an analysis of loss experience and the allow- 
ance for loan losses for the years ended December 31, 1996, 1995, 1994, 1993, 
and 1992: 

Analysis of the Allowance 
  for Loan Losses 
Year ended December 31,             1996         1995         1994         1993
_______________________________________________________________________________
(in thousands) 

Balance at beginning of 
 year                            $13,371      $12,188      $10,715       $8,606
Allowance associated with 
 loans acquired                      481           --           --           --
Provision charged to 
 expense                           2,664        2,167        1,723        2,541
Loan charge-offs 
  Commercial, financial 
   and agricultural                 (467)        (450)        (248)        (463)
  Real estate mortgage              (401)        (225)         (81)        (240)
  Consumer loans                  (1,273)        (540)        (279)        (317)
  Consumer revolving 
   credit                           (383)         (92)         (78)         (24)
                                  ------       ------       ------       ------
                                  (2,524)      (1,307)        (686)      (1,044)

Loan charge-off recoveries 
  Commercial, financial 
   and agricultural                  556          133          339          376
  Real estate mortgage                59           63            9          110
  Consumer loans                     141          117           76          122
  Consumer revolving
   credit                             47           10           12            4
                                  ------       ------       ------       ------
                                     803          323          436          612
                                  ------       ------       ------       ------
Net loan charge-offs              (1,721)        (984)        (250)        (432)
                                  ------       ------       ------       ------
Balance at end of year           $14,795      $13,371      $12,188      $10,715
                                  ======       ======       ======       ======


Year end balance of loans     $1,036,429     $913,789     $805,791     $703,533
Average loans outstanding        960,726      865,707      755,314      660,345
Allowance / year end loans          1.42%        1.46%        1.51%        1.52%
Provision / net chargeoffs        154.79%      220.22%      689.20%      588.19%
Nonperforming assets              12,187        6,806        6,679        6,591
Potential problem loans           26,362       14,300       14,800       22,400



                                                                             13






B. The following tables present a breakdown of the allowance for loan losses 
at December 31, 1996, 1995, 1994, 1993 and 1992: 

Allocation of the Allowance 
  for Loan Losses 
December 31,                        1996         1995         1994         1993
_______________________________________________________________________________
(in thousands) 

Commercial, financial 
 and agricultural                 $3,107       $2,951       $3,134       $2,973
Real estate 
  Construction                       150           97           97           61
  Residential mortgage             1,612        1,598        1,496        1,285
  Commercial mortgage              4,100        3,905        4,050        3,626
Consumer loans                     5,326        4,381        3,215        2,598
Consumer revolving credit            500          439          196          172
                                  ------       ------       ------       ------
                                 $14,795      $13,371      $12,188      $10,715
                                  ======       ======       ======       ======

Percent of Loans in Each 
 Category to Total Loans 
December 31,                        1996         1995         1994         1993
_______________________________________________________________________________
(in thousands) 

Commercial, financial 
 and agricultural                   11.6%        12.5%        13.9%        16.9%
Real estate mortgage 
  Construction                       2.9%         2.1%         2.4%         1.7%
  Residential mortgage              40.7%        39.9%        39.5%        38.3%
  Commercial mortgage               16.8%        17.3%        17.3%        18.1%
Consumer loans                      27.9%        28.0%        26.6%        24.6%
Other                                0.1%         0.2%         0.3%         0.4%
                                   -----        -----        -----        -----
                                   100.0%       100.0%       100.0%       100.0%
                                   =====        =====        =====        =====

V. DEPOSITS 

A.B.  Average Balances and Rates Paid by Deposit 

The Average Balance Sheets table and Average Yields and Rates Paid table in- 
cluded herein on pages 6 and 8 present the average amount of and the average
rate paid for the years ended December 31, 1996, 1995 and 1994. 

C. Foreign Deposits 

The Company had no foreign deposits during the past three years. 



                                                                             14






D.E.  Maturity Distribution of Time Deposits of $100,000 or More 

The following table states the amount of time certificates of deposit at 
December 31, 1996, of $100,000 or more by maturity: 

Maturity of $100,000 Time Deposits 
December 31, 1996 
_______________________________________________________________________________
(in thousands) 

Maturing 3 months or less                                               $13,923
Maturing over 3 months through 6 months                                  12,126
Maturing over 6 months through 12 months                                 28,366
Maturing over 12 months                                                  48,077
                                                                        -------
                                                                       $102,492
                                                                        =======

                                                 For the Year Ended December 31,
VI.  RETURN ON EQUITY AND ASSETS                 1996         1995         1994
_______________________________________________________________________________

1.  Return on average assets                     1.29%        1.19%        1.11%
2.  Return on average equity                    12.75%       12.46%       12.15%
3.  Dividend payout ratio                       36.84%       32.00%       29.10%
4.  Equity to assets ratio                      10.08%        9.51%        9.17%


VII.  SHORT-TERM BORROWINGS 

A.  Footnote 8 to the Consolidated Financial Statements included herein on page
49 presents for each category of short-term borrowings, the amounts outstanding
at the end of the reported periods, the weighted average interest rate, the
maximum amount of borrowings in each catergory at any month-end and the
approximate weighted interest rate. 

Item 2.  PROPERTIES 

The Company's investments in premises and equipment are comprised of properties
owned and leased by the banks.  Peoples Bank owns the building housing its main
offices, which contains 17,325 square feet of space and is located at 401
Kentucky Avenue.  Peoples Bank also owns its Service Center, located at 100
South Fourth Street, which contains 50,000 square feet of space and houses the
Company's executive offices.  Of the twenty-four other banking offices of the
banks, twenty-one are owned and three are leased by their respective bank. 

Item 3.  LEGAL PROCEEDINGS - None 

Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - None 




                                                                             15






PART II 

Item 5.  MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SHAREHOLDER 
         MATTERS 

Market Information, Dividends 
The registrant's only class of common stock is traded on the National Associa- 
tion of Securities Dealers Automated Quotation System National Market System. 
Peoples First Corporation's common stock symbol is "PFKY".  Share and per share
information have been adjusted to give effect 5% stock dividends declared on
April 19, 1995, January 17, 1996 and January 21, 1997.  The high and low stock
prices and the quarterly dividends declared on the Company's common stock for
each quarter of 1996 and 1995 are as follows: 

High and Low Stock Prices          First       Second        Third       Fourth
  Dividends Declared             quarter      quarter      quarter      quarter
_______________________________________________________________________________

High 1996                         $22.38       $22.62       $21.90       $24.29
Low 1996                           19.50        19.76        20.00        20.95
Cash dividends declared             0.14         0.15         0.15         0.19

High 1995                         $17.28       $17.46       $20.63       $21.77
Low 1995                           14.90        14.68        16.55        19.05
Cash dividends declared             0.10         0.10         0.14         0.14

Holders 
The approximate number of holders of registrant's only class of common stock as 
of February 14, 1997, was 3,200. 
  























                                                                             16






Item 6.  SELECTED FINANCIAL DATA 
<TABLE>
<CAPTION>
<S>                         <C>          <C>          <C>          <C>
December 31,                        1996         1995         1994         1993
________________________________________________________________________________
(in thousands) 

Interest-Earning Assets 
Loans, net                    $1,023,520     $901,126     $793,759     $693,322
Securities                       304,311      306,642      333,527      375,366
Short-term investments                 0            0            0        3,100
                               ---------    ---------    ---------    ---------
                               1,327,831    1,207,768    1,127,286    1,071,788
Cash and due from banks           43,285       37,524       39,333       42,591
Premises and equipment            19,376       18,226       16,980       16,698
Other assets                      27,272       24,078       26,957       25,429
                               ---------    ---------    ---------    ---------
                              $1,417,764   $1,287,596   $1,210,556   $1,156,506
                               =========    =========    =========    =========
Liabilities and Stockholders' Equity 
Interest-bearing deposits     $1,029,877     $960,744     $910,598     $906,646
Noninterest-bearing deposits      85,376       86,360       87,985       86,250
Short-term borrowings            132,167       93,469       84,567       32,502
Long-term borrowings              14,013        7,757        9,536       16,555
Other liabilities                 11,782       11,094        7,607        8,182
                               ---------    ---------    ---------    ---------
                               1,273,215    1,159,424    1,100,293    1,050,135
Stockholders' equity             144,549      128,172      110,263      106,371
                               ---------    ---------    ---------    ---------
                              $1,417,764   $1,287,596   $1,210,556   $1,156,506
                               =========    =========    =========    =========

</TABLE>
As more fully explained in Note 2 to the consolidated financial statements,
  additional banking organizations were acquired in 1996, 1994 and 1992. 



















                                                                             17




<TABLE>
<CAPTION>
<S>                         <C>          <C>          <C>          <C>
Year ended December 31,             1996         1995         1994         1993
________________________________________________________________________________
(in thousands except per share data) 

Results of Operations 
Interest income                 $107,673      $98,746      $84,404      $80,845
Interest expense                  53,559       51,152       38,855       37,997
                                 -------      -------      -------      -------
Net interest income               54,114       47,594       45,549       42,848
Provision for loan losses          2,664        2,167        1,723        2,541
Net interest income after        -------      -------      -------      -------
  provision for loan losses       51,450       45,427       43,826       40,307
Noninterest income                 8,535        7,944        7,076        6,683
Noninterest expense               34,843       32,158       32,312       29,373
                                 -------      -------      -------      -------
Income before tax expense         25,142       21,213       18,590       17,617
Income tax expense                 7,978        6,446        5,465        4,807
                                 -------      -------      -------      -------
Net Income                       $17,164      $14,767      $13,125      $12,810
                                 =======      =======      =======      =======

Average shares outstanding        10,025        9,852        9,767        9,787
Net income per common share        $1.71        $1.50        $1.34        $1.31
Cash dividends per common 
  share                             0.63         0.48         0.39         0.34

</TABLE>
Shares outstanding and per share amounts have been adjusted for a two-for-one 
  stock split on January 4, 1994 and 5% stock dividends on April 19, 1995, 
  January 17, 1996 and January 21, 1997. 

As more fully explained in Note 2 to the consolidated financial statements,
  additional banking organizations were acquired in 1996, 1994 and 1992. 




















                                                                             18



Item 7.  Management's Discussion and Analysis of Financial Condition and 
         Results of Operations 

Management's discussion and analysis includes forward-looking statements.  Many
factors affect Peoples First Corporation's (Company) financial position and
profitability, including changes in economic conditions, the volatility of
interest rates, political events and competition from other providers of
financial services.  Because these factors are unpredictable and beyond the
Company's control, earnings may fluctuate from period to period.  The purpose of
this discussion and analysis is to provide annual report readers with
information relevant to understanding and assessing the financial condition and
results of operations of the Company. 

Headquartered in Paducah, Kentucky, the Company is a bank and savings and loan
holding company registered with the Federal Reserve Board.  The Company's market
area is primarily western Kentucky and the contiguous interstate areas.  This
discussion should be read in conjunction with the consolidated financial
statements and accompanying notes. 

The Company's one commercial bank subsidiary and two savings bank subsidiaries
operate principally in a single business segment offering general commercial and
savings bank services through 28 banking offices.  Commercial banking services,
mortgage banking and consumer financing are all activities the Company considers
to be their one business segment. 

EARNING ASSETS 
Average earning assets of the Company for 1996, increased 7.2%, or $85.4 million
to $1,269.9 million from $1,184.5 million for 1995.  This compares to growth in
earning assets  of 6.3% and 5.0%, for 1995 and 1994, respectively.  Loan growth
during the last three years has been partially funded with reductions in
securities, the other significant earning asset category.  The Company maintains
a consistently favorable ratio of average earning assets to average total
assets.  The ratio was 95.1% for both 1996 and 1995, compared to 94.6% for 1994.
Loans are the Company's primary earning asset.  Loan growth, while still strong,
has slowed from previous levels.  Average loans for 1996 increased 11.0%, or
$95.0 million, to $960.7 million, while average loan growth for 1995 and 1994
was 14.6% and 14.4%, respectively.  The changing mix of earning assets was
favorable during the last two years as average loans were an increasing
percentage of total earning assets. 

Table 1 
Average Earning Assets 
Year ended December 31,                          1996         1995         1994
_______________________________________________________________________________
(dollars in thousands) 

Total average earning assets               $1,269,889   $1,184,526   $1,114,118
Percent of average earning assets 
  Average loans                                  75.7%        73.1%        67.8%
  Average securities                             24.1         26.7         31.9
  Average other earning assets                    0.2          0.2          0.3

                                                                             19







The Company primarily directs lending activities to its regional market from
which deposits are drawn.  Management has focused on secured lending and the
growth of real estate mortgage and consumer loans during the last three years. 

Table 2 
Types of Loans 
December 31,                        1996         1995         1994         1993
_______________________________________________________________________________
(in thousands) 

Commercial, financial 
  and agricultural              $120,283     $113,929     $111,929     $118,906
Real estate 
  Construction                    29,933       19,386       19,421       12,255
  Residential mortgage           421,129      364,607      318,551      269,265
  Commercial mortgage            174,576      158,429      139,629      127,666
Consumer, net                    289,653      255,975      214,309      173,191
Other                                855        1,463        1,952        2,250
                               ---------    ---------    ---------    ---------
                               1,036,429      913,789      805,791      703,533
Allowance for loan losses        (14,795)     (13,371)     (12,188)     (10,715)
                               ---------    ---------    ---------    ---------
                              $1,021,634     $900,418     $793,603     $692,818
                               =========    =========    =========    =========

Management intends to further leverage stockholders' equity without creating
excessive interest rate risk, through reduction in the amount of loan funding
derived from securities activities.  Purchases of securities held for sale
increased in 1996 to $73.6 million, up from $33.0 million in 1995 and $39.9
million in 1994.  Average securities decreased $9.3 million during 1996, $39.0
million during 1995 and $34.9 million during 1994.  The Company maintains a
portfolio of securities held for sale as an available source of funding for loan
growth.  U.  S. treasury and agency obligations represent approximately 77.0% of
the securities portfolios at December 31, 1996. 

At December 31, 1996, mortgage-backed securities, which included Real Estate
Mortgage Investment Conduit (REMIC) and CMO instruments, were approximately
53.5% of the securities portfolios, compared to approximately 51.8% at December
31, 1995 and 46.0% at December 31, 1994.  The REMIC issues are entirely U. S.
agencies issues.  The CMO issues are marketable, collateralized mortgage
obligations backed by agency-pooled collateral or whole-loan collateral.  All
nonagency issues held are currently rated AA or AAA by either Standard & Poors
or Moody's.  At December 31, 1996, approximately 19.2% of the mortgage-backed
securities are floating-rate issues, the majority being indexed to the Constant
Maturity Treasury index.  Management's normal practice is to purchase securities
at or near par value to reduce risk of premium write-offs resulting from
unexpected prepayments. 

At December 31, 1996, the Company had no structured notes (as currently defined
by regulatory agencies) in the securities portfolios since management believes
the uncertainty of cash flows from these securities, which are driven by
interest-rate movements, could expose the Company to greater market risk than
traditional securities. 
                                                                             20






FUNDING 
The most important and stable source of funding is core deposits, considered by
management to include demand deposits, interest-bearing transaction accounts,
saving deposits and time deposits under $100,000.  Core deposits for 1996
increased 5.2%, or $48.5 million to $974.3 million from $925.8 million for 1995.
Excluding the savings bank acquisition, the 1996 increase was 3.8%, or $37.2
million.  Local markets for deposits are competitive.  Core deposits are a
decreasing portion of average interest-bearing liabilities.  The core deposit
base is supplemented with brokered deposits, short-term and long-term borrowings
to fully fund loan growth.  Average brokered deposits amounted to $22.8 million,
$24.7 million and $22.1 million for the years ended December 31, 1996, 1995 and
1994, respectively.  Average short-term and long-term borrowings were $122.2
million for 1996, up from $94.3 million for 1995 and $65.1 million for 1994. 

Management anticipates an increasing need to rely on non-core funding.  The
Company's subsidiary banks have obtained various short-term and long-term
advances from the Federal Home Loan Bank (FHLB) under Blanket Agreements for
Advances and Security Agreements (Agreements).  The Agreements entitle the
subsidiary banks to borrow additional funds from the FHLB to fund mortgage loan
programs and satisfy other funding needs.  Additional funding totaling
approximately $158.3 million is available at December 31, 1996 from undrawn
federal funds purchased, lines-of-credit for U.S. treasury notes and FHLB
advances. 

Table 3 
Average Interest-bearing Liabilities 
Year ended December 31,                          1996         1995         1994
_______________________________________________________________________________
(dollars in thousands) 

Total average interest-bearing 
 liabilities                               $1,107,265   $1,035,459     $976,581
Percent of average total interest- 
 bearing liabilities 
  Interest-bearing core deposits                 80.5%        81.4%        84.0%
  CDs of $100,000 or more                         6.2          7.0          6.9
  Brokered deposits                               2.1          2.4          2.3
  Average short-term borrowings                  10.2          8.3          5.3
  Average long-term borrowings                    0.9          0.8          1.4
  Other                                           0.1          0.1          0.1


NONPERFORMING ASSETS AND RISK ELEMENTS 
Nonperforming assets, including nonaccrual, 90-day past due and restructured
loans and foreclosed properties, totaled $12.2 million at December 31, 1996,
compared to $6.8 million and $6.7 million at December 31, 1995 and 1994,
respectively.  Nonperforming assets as a percentage of total loans and other
real estate increased to 1.17% at December 31, 1996 compared to 0.74% and 0.83%
at December 31, 1995 and 1994, respectively.  The 1996 increase in nonperforming
assets is principally due to one $3.0 million loan that is past due 90 days,
one $1.0 million nonaccrual loan and numerous small consumer loans.  Management


                                                                             21






was prepared for the increased level of consumer chargeoffs and nonperforming
loans and believes that the level will remain relatively high compared to prior
periods due to the cyclical nature of consumer credit.  There are generally good
economic conditions in the market area and management believes the Company's
comprehensive loan administration and workout procedures are adequate to manage
the credit risks.  Also, diversification within the loan portfolio is an
important means of reducing inherent lending risks.  At December 31, 1996, the
Company had no concentrations of ten percent or more of total loans in any
single industry nor any geographical area outside of the Paducah, Kentucky,
western Kentucky region, the immediate market area of the subsidiary banks. 

The Company discontinues the accrual of interest on loans which become ninety
days past due as to principal or interest, unless the loans are adequately
secured and in the process of collection.  Other real estate owned is carried at
the lower of cost or fair value.  A loan is classified as a renegotiated loan
when the interest rate is materially reduced or the term is extended beyond the
original maturity date because of the inability of the borrower to service the
debt under the original terms. 

Table 4 
Nonperforming Assets 
December 31,                        1996         1995         1994         1993
_______________________________________________________________________________
(in thousands) 

Nonaccrual loans                  $4,680       $1,817         $531         $835
Loans past due 90 days             4,710        1,471        1,838          503
Renegotiated loans                 2,707        2,874        2,741        2,995
Other real estate owned               90          644        1,569        2,258
                                  ------       ------       ------       ------
                                 $12,187       $6,806       $6,679       $6,591
                                  ======       ======       ======       ======
Nonperforming assets as a 
  percent of total loans 
  and other real estate             1.17%        0.74%        0.83%        0.93%
Allowance for loan losses 
  coverage of nonperform- 
  ing assets                         121%         196%         182%         163%


In years prior to 1996, management's efforts to monitor and minimize nonper-
forming assets resulted in nonperforming totals lower than peer bank holding
company ratios.  A significant focus on underwriting standards is maintained by
management and the subsidiary bank boards.  Internal credit review procedures
are designed to alert management of possible credit problems which would create
serious doubts as to the future ability of borrowers to comply with loan
repayment terms.  At December 31, 1996, loans with a total principal balance of
$26.4 million have been identified that may become nonperforming in the future,
compared to $12.8 million at December 31, 1995 and $12.9 million at December 31,
1994.  The 1996 increase was due to two commercial loan relationships.
Management is working closely with these borrowers in their efforts to resolve


                                                                             22






potential cash flow problems.  Potential problem loans are not included in
nonperforming assets since the borrowers currently meet all applicable loan
agreement terms. 


CAPITAL RESOURCES AND DIVIDENDS 
The Company's believes that a strong capital position is vital to continued
profitability, as well as depositor, investor and regulator confidence.
Stockholders' equity was 10.2% of assets at December 31, 1996, an increase from
10.0% at December 31, 1995.  Exclusive of unrealized net gain and loss on
securities held for sale, net of applicable income taxes, stockholders' equity
increased $17.0 million, or 13.4%, during 1996, and increased $12.4 million, or
10.8%, during 1995.  The capital base has been strengthened through the issuance
of common stock and earnings retention.  Common stock was issued for the savings
bank acquisition and through various shareholder and employee plans.  The
earnings retention rate, which the board of directors adjusts through
declaration of cash dividends, was 63.2% for 1996, 68.2% for 1995 and 70.9% for
1994.  Proceeds from the sale of common stock through shareholder and employee
plans amounted to $1.7 million in 1996, $2.2 million in 1995 and $1.0 million in
1994.  During 1996, the board of directors authorized the repurchase of up to
400,000 shares of the Company's common stock in the open market.  A total of
89,005 shares were repurchased during the year for $1.9 million.  Unrealized
gain or loss on securities held for sale, net of applicable income taxes, is
recorded directly to stockholders' equity.  For 1996, stockholders' equity was
decreased by $0.6 million, for 1995 was increased by $5.6 million and for 1994
was decreased by $6.5 million to record the change during the year in the fair
value of securities held for sale. 

The board of directors develops and reviews the capital goals and policies of
the consolidated entity and each of the subsidiary banks.  The Company's capital
policies are designed to retain sufficient amounts for healthy financial ratios,
considering future planned asset growth and to leverage stockholders' equity to
a desirable degree.  All of the Company's subsidiary banks were "well
capitalized" based on the regulatory defined minimums of a Tier I leverage ratio
of 5%, a Tier I capital ratio of 6% and a total capital ratio of 10%.
Subsidiary bank dividends are the principal source of funds for the Company's
payment of dividends to its stockholders.  At December 31, 1996, approximately
$26.4 million in retained earnings of subsidiary banks was available for
dividend payments to the Company without regulatory approval or without reducing
capital of the respective banks below minimum standards. 

The board of directors raised the quarterly dividend to $0.14 per share in the
third quarter of 1995, to $0.15 per share in the second quarter of 1996 and to
$0.19 per share in the fourth quarter of 1996.  Stock dividends of 5% were
declared in April 1995, January 1996 and January 1997. 


RESULTS OF OPERATIONS 
Net income increased 16.2% in 1996, reaching a record level of $17.2 million,
compared to an increase of 13.0% in 1995 when net income was $14.8 million.  On
a per common share basis, net income increased 14.0% to $1.71 per share for the


                                                                             23






year ended December 31, 1996, compared to an increase of 11.9% to $1.50 per
share for the year ended December 31, 1995.  Net income per common share for the
fourth quarter of 1996 increased 11.9% to $0.47 from $0.42 for the fourth
quarter of 1995.  The 1996 increase in earnings was primarily due to increased
interest margins and improved noninterest income partially offset by higher
provisions for loan losses and overhead.  Strong loan growth, reductions in
deposit insurance expense and the absence of acquisition related expense
contributed to the 1995 earnings increase.  Earnings performance for 1994 was
negatively impacted by transaction costs of approximately $0.06 per share
related to two acquisitions completed during that year. 

Performance measures continue to show consistent improvement.  Return on
average stockholders' equity for the years ended December 31, 1996, 1995 and
1994 was 12.75%, 12.46% and 12.15%, respectively.  Return on average assets for
the years ended 1996, 1995 and 1994 was 1.29%, 1.19% and 1.11%, respectively. 


NET INTEREST INCOME 
The primary source of income for the Company remains net interest income, the
amount by which interest earned on assets exceeds the interest paid on
supporting funds.  Measured on a fully taxable equivalent (TE) basis, net
interest income for the year ended December 31, 1996, increased 13.3%, or $6.6
million to $56.1 million compared to $49.5 million for 1995.  For the year ended
December 31, 1995, net interest income (TE) increased 4.0%, or $1.9 million from
$47.6 million for 1994.  Two important factors determine net interest income.
They are the volume of earning assets and the margin earned thereon.  The
resilient economy of the Midwest area and the desire to be a prominent lender is
apparent in loan growth, the Company's primary earning asset.  More than
one-half of 1996's increase and all of 1995's increase is attributable to growth
in the volume of average earning assets.  The fully taxable equivalent net
interest income margin on average earning assets was 4.41%, 4.18% and 4.28% for
the years ended December 31, 1996, 1995 and 1994, respectively.  Management's
deliberate efforts to concentrate on appropriate pricing is reflected in the
increased margin. 

Time deposits, the highest cost funding source, were 53.1% of the average of all
interest-bearing liabilities for 1996, down from 57.8% for 1995.  Competitively
priced short-term money market accounts partially contributed to customer
choices.  The subsidiary banks generally maintain a relatively balanced position
between volumes of rate-repricing assets and liabilities to guard to some degree
against adverse effects to net interest income from possible fluctuations in
interest rates. 


PROVISION FOR LOAN LOSSES 
The provision for loan losses reflects management's judgement of the cost
associated with credit risk inherent in the loan portfolio.  The provision for
loan losses amounted to $2.7 million for 1996, an increase of 22.7% compared to
$2.2 million for 1995, which was an increase of 29.4% compared to $1.7 million
in 1994.  The increases were required to reflect the growth in outstanding loans
and chargeoffs, particularily consumer loan chargeoffs.  The provision for loan 


                                                                             24






losses as a percentage of average loans was 0.28% for the year ended December
31, 1996, up from 0.25% for the year ended December 31, 1995 and 0.23% for the
year ended December 31, 1994. 

Net loan chargeoffs over most of the last three years were at levels below
historical trends.  Net chargeoffs for 1996 were $1.7 million compared to $1.0
million for 1995 and $0.3 million for 1994.  As a percentage of average loans,
net chargeoffs were 0.18% for 1996, up from 0.11% for 1995 and 0.03% for 1994,
periods of low net chargeoffs.  Net chargeoffs as a percent of average loans
were 0.17% for the five-year period ended December 31, 1996.  The allowance for
loan losses is maintained at a level which management considers adequate to
absorb estimated potential losses in the loan portfolio, after reviewing the
individual loans and in relation to risk elements in the portfolios and giving
consideration to the prevailing economy and anticipated changes.  At December
31, 1996, the allowance for loan losses is 1.42% of outstanding loans compared
1.46% of outstanding loans at December 31, 1995.  The December 31, 1996
allowance is 121% of nonperforming assets compared to 196% at December 31, 1995.
This reduction is due to an increase in nonaccrual and past due loans, most of
which were in the process of collection. 


NONINTEREST INCOME 
Noninterest income is an important but not yet significant source of revenue
for the Company, representing 13.1% of tax equivalent net revenues in 1996,
compared to 13.7% in 1995 and 12.9% in 1994.  Noninterest income amounted to
$8.5 million in 1996, a 7.4% increase compared to $7.9 million in 1995 which was
an increase of 11.3% compared to $7.1 million in 1994.  Excluding net securities
gains, the 1996 and 1995 increases were more comparable and were 8.9% and 11.4%,
respectively.  Management desires to increase annual noninterest income revenue
by 10% by focusing on increased business activity in the trust department,
insurance, brokerage activities and other commission business. 

Service charges on deposit accounts, the largest component of noninterest
income, increased 8.4% in 1996 and 4.6% in 1995.  The increases are attributable
to account growth coupled with more uniform application of charges.  Net
securities gains of $178,143 and $62,309, were recognized in 1995 and 1994,
respectively.  Securities held for sale, primarily mortgage-backed securities,
totaling $12.1 million and $11.9 million, were sold in 1995 and 1994,
respectively, to reduce, the Company's interest rate sensitivity on assets in
response to changing interest rates and prepayment risks as a part of the
Company's asset/liability strategies. 

Trust fees for 1996 increased 9.0% from 1995 which increased 3.3% from 1994.
These increases match the growth in the amount of trust assets managed which
were primarily in estate and personal trust accounts.  Following growth rates of
41.3% and 48.3% in insurance commissions in 1995 and 1994, respectivley,
attributable to greater opportunities resulting from the significant increase in
consumer loans, the Company's penetration of this product was less successful in
1996.  Income from secondary-market mortgage loan services, investment brokerage
services and property and casualty insurance products all generated higher level
of fees in 1996 due to account growth. 


                                                                             25






NONINTEREST EXPENSE 
The ratio of noninterest expense net of noninterest income exclusive of
securities gains to average total assets was 1.97% for 1996, 1.96% for 1995 and
2.15% for 1994.  Management continues to focus on controlling the rate of
increase of noninterest expense through employee productivity.  The Company
consolidated six of the previously separate corporate subsidiaries into one bank
during 1995 and 1994 to allow the personnel at all locations to better focus on
consistent quality customer service, increasing the volume of business and to
reduce a small amount of redundant costs. 

Noninterest expense increased 8.3% in 1996 to $34.8 million, reflecting higher
equipment and data processing expenses.  Noninterest expense decreased 0.3% in
1995 to $32.2 due to reduced deposit insurance rates and the absence of merger-
related professional fees.  This compares to an increase of 10.1% in 1994 when
all categories of noninterest expense rose. 

Salaries and employee benefits increased 4.1% in 1996, compared to 6.0% in 1995.
Staffing levels were approximately the same at December 31, 1996 and 1994.  The
Company has made investments in equipment and facilities of approximately $7.3
million during the last three years as technology has advanced and the need to
leverage personnel costs has intensified.  Occupancy expense increased 2.5% in
1996, 5.5% in 1995 and 6.2% in 1994.  Equipment expense increased 15.2% in 1996,
13.2% in 1995 and 16.2% in 1994 due to depreciation and maintenance of new
equipment.  Much of the recent years' equipment purchases are electronic and
technology related assets which the Company depreciates over a five year or
shorter period.  Management plans to continue to invest in technology for new
product delivery systems. 

Deposit insurance expense totaled $1.6 million in 1996, an increase of 23.1%,
compared to $1.3 million in 1995.  Deposit insurance expense decreased 43.5% in
1995 from $2.3 million in 1994.  In the third quarter of 1996, the Federal
Deposit Insurance Corporation (FDIC) made a special assessment on savings banks'
deposits of $0.657 for every $100 of savings bank deposits on March 31, 1995.
The amount of the special assessment paid in 1996 by the Company's two savings
bank subsidiaries was $1.3 million.  In the second quarter of 1995, the FDIC
reduced the rate paid by most commercial banks from $0.23 to $0.04 per $100 of
insured deposits and effective January 1996, the rate was reduced to a $2,000
annual minimum per bank.  All of the Company's subsidiaries received the lowest
applicable deposit assessment rates from the FDIC.  Management expects the level
of deposit insurance expense to be insignificant in 1997. 

Increased data processing expense is attributable to a greater volume of activ-
ity and the outsourcing of a portion of credit card functions.  The increase was
15.4% in 1996 and 2.7% in 1995.  Kentucky Bankshare taxes increased 13.6% in
1996 compared to 1995.  A small reduction in this expense occurred in 1995 due
to the consolidation of six separate banking corporations.  The Company's bank
subsidiaries are required to maintain significant noninterest-bearing balances
with the Federal Reserve and to pay fees to regulatory agencies for periodic
examinations by the agencies. 




                                                                             26






INCOME TAXES 
The Company's income tax planning is based on the goal of maximizing long-term
after-tax profitability.  Income tax expense is impacted by the mix of taxable
versus tax-exempt revenues from securities and loans as well as certain
nondeductible expenses.  The Company manages the effective tax rate to some
degree based upon changing tax laws, particularly alternative minimum tax
provisions, the availability and price of nontaxable debt securities and other
portfolio considerations. 

Increases in income tax expense are attributable to higher operating earnings
and higher effective tax rates.  The Company's effective income tax rate was
31.7%, 30.4% and 29.4%, for the years ended December 31, 1996, 1995 and 1994,
respectively.  The 1% federal income tax rate increase mandated by the Omnibus
Budget Reconciliation Act of 1993 and a continued decline in the amount of
tax-exempt income as a percentage of operating income has increased the
effective rate.  Nondeductible merger-related expenses also serve to increase
the effective rate. 


LIQUIDITY AND INTEREST-RATE SENSITIVITY 
The goal of the asset/liability management (ALM) process is to manage the
structure of the balance sheet to provide the maximum level of net interest
income while maintaining acceptable levels of interest sensitivity risk.  The
Company's objective of liquidity management is to ensure the ability to access
funding which enables each bank to efficiently satisfy the cash flow
requirements of depositors and borrowers.  ALM involves the funding and
investment strategies necessary to maintain an appropriate balance between
interest sensitive assets and liabilities as well as to assure adequate
liquidity.  The Company monitors funds available from a number of sources to
meet its objectives.  The primary source of liquidity for the banks, in addition
to loan repayments, is their debt securities portfolios.  Securities classified
as held for sale are those that the Company intends to use as part of its
asset/liability management and that may be sold prior to maturity in response to
changes in interest rates, resultant prepayment risks and other factors.  The
Company's access to the retail deposit market through individual locations in
thirteen different counties has been a reliable source of funds.  Additional
funds for liquidity are available by borrowing federal funds from correspondent
banks, Federal Home Loan Bank borrowings and brokered deposits.  Various types
of analyses are performed to ensure adequate liquidity, and to evaluate the
desirability of the relative interest rate sensitivity of assets and
liabilities.  Management considers current liquidity positions of the subsidiary
banks to be adequate to meet depositor and borrower needs. 

Because banks must assume interest rate risks as part of their normal opera-
tions, the Company actively manages its interest rate sensitivity as well as
liquidity positions.  Both interest rate sensitivity and liquidity are affected
by maturing assets and sources of funds; however, management must also consider
those assets and liabilities with interest rates which are subject to change
prior to maturity.  Management seeks to fairly closely match the duration of
repricing assets and liabilities over time to avoid unnecesary interest rate
risks.  Currently, the Company does not employ interest rate swaps, financial
futures or options to affect interest rate risks. 

                                                                             27






<TABLE>
<CAPTION>
<S>                         <C>          <C>          <C>          <C>

Table 5 
Interest Rate Sensitivity 
 Analysis                           1-91       92-183     184 days     Total at
December 31, 1996                   Days         Days    to 1 year       1 year
_______________________________________________________________________________
(in thousands) 

Rate Sensitive Assets 
Securities, at cost 
  U.S. treasury 
   and agencies                   $3,490       $3,015         $390       $6,895
  Mortgage-backed                 18,118       11,087       15,447       44,652
  Municipal bonds                    139          735        1,825        2,699
  Other                           10,394            0            0       10,394
                                 -------      -------      -------      -------
                                  32,141       14,837       17,662       64,640
Loans                            336,579      151,360      231,503      719,442
                                 -------      -------      -------      -------
                                 368,720      166,197      249,165      784,082
Rate Sensitive Liabilities 
Deposits 
  Transaction and savings        174,772            0            0      174,772
  Time                           153,186       79,772      174,463      407,421
Short-term borrowings            101,275        5,356       25,536      132,167
Long-term borrowings               3,102          254        2,602        5,958
                                 -------      -------      -------      -------
                                 432,335       85,382      202,601      720,318
                                 -------      -------      -------      -------
Period Gap                      ($63,615)     $80,815      $46,564      $63,764
                                 =======      =======      =======      =======

Cumulative Gap at 12/31/96      ($63,615)     $17,200      $63,764      $63,764

Cumulative Gap at 12/31/95     ($100,928)    ($19,511)     $97,865      $97,865

</TABLE>
Management made the following assumptions in preparing the Interest Rate
Sensitivity Analysis: 

     o Assets and liabilities are generally scheduled according to their 
       earliest repricing dates regardless of their contractual maturities. 
     o Nonaccrual loans are included in the rate-sensitive category. 
     o The scheduled maturities of mortgage-backed securities assume 
       principal prepayments on dates estimated by management, relying 
       primarily on current and concensus interest-rate forecasts in 
       conjunction with historical prepayment schedules. 
     o Transaction and savings deposits that have no contractual maturities 
       are scheduled according to management's best estimate of their re- 
       pricing in response to changes in market rates. 



                                                                             28



The subsidiary banks and the Company collectively measure their level of
earnings exposure to future interest rate movements.  Simulation and interest
rate gap analyses are used to scrutinize the sensitivity of net interest income
over a relatively short (1-2 years) time horizon.  The analyses are used to
examine the impact on earnings of an immediate interest rate shock as well as
other forecasted interest rate scenarios.  Each scenario incorporates what
management believes to be the most reasonable assumptions about such variables
as volumes, prepayment rates for mortgage assets and repricing characteristics.
A valuation analysis is also performed to measure the sensitivity of the
Company's net interest income.  This analysis involves discounting projected
future cash flows of assets, liabilities and off-balance sheet positions to
arrive at an estimated net present economic value. 


INDUSTRY DEVELOPMENTS 
On September 29, 1994, the Riegle-Neal Interstate Banking and Branching
Efficiency Act of 1994 (the "Branching Act") was enacted.  Under the Branching
Act, beginning September 29, 1995, adequately capitalized and adequately managed
bank holding companies are allowed to acquire banks across state lines, without
regard to whether the transaction is prohibited by state law; however, they will
be required to maintain the acquired institutions as separately chartered
institutions.  Any state law relating to the minimum age of target banks (not to
exceed five years) will be preserved.  Under the Branching Act, the Federal
Reserve Board will not be permitted to approve any acquisition if, after the
acquisition, the bank holding company would control more than 10% of the
deposits of insured depository institutions nationwide or 30% or more of the
deposits in the state where the target bank is located.  The Federal Reserve
Board could approve an acquisition, notwithstandig the 30% limit, if the state
waives the limit either by statute, regulation or order of the appropriate state
official. 

In addition, under the Branching Act beginning on June 1, 1997, banks will be
permitted to merge with one another across state lines and thereby create a main
bank with branches in separate states.  The Company has current plans to merge
the Tennessee savings bank into the Kentucky commercial bank in the third
quarter of 1997.  After establishing branches in a state through an interstate
merger transaction, the bank could establish and acquire additional branches at
any location in the state where any bank involved in the merger could have
established or acquired branches under applicable federal or state law.  The
Company regularly explores opportunities for acquisitions in the adjoining
interstate area.  Branching Act provisions are designed to allow acquiring
companies the opportunity to operate more efficiently. 

Under the Branching Act, states may adopt legislation permitting interstate
mergers before June 1, 1997.  In contrast, states may adopt legislation before
June 1, 1997, subject to certain conditions, opting-out of interstate branching.
If a state opts-out of interstate branching, no out-of-state bank may establish
a branch in that state through an acquisition or de novo, and a bank whose home
state opts-out may not participate in an interstate merger transaction.  None of
the states contiguous with western Kentucky have opted-out of interstate
branching. 


                                                                             29






Item 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 

Independent Auditors' Reports 


The Board of Directors and Stockholders 
Peoples First Corporation 

We have audited the accompanying consolidated balance sheets of Peoples First
Corporation and subsidiaries as of December 31, 1996 and 1995, and the related
consolidated statements of income, changes in stockholders' equity and cash
flows for each of the years in the three-year period ended December 31, 1996.
These consolidated financial statements are the responsibility of the Company's
management.  Our responsibility is to express an opinion on these consolidated
financial statements based upon our audits. 

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Peoples First
Corporation and subsidiaries as of December 31, 1996 and 1995, and the results
of their operations and their cash flows for each of the years in the three-year
period ended December 31, 1996, in conformity with generally accepted accounting
principles. 


/s/ KPMG Peat Marwick LLP 

St. Louis, Missouri 
January 27, 1997 
















                                                                             30






                                                       December 31, December 31,
CONSOLIDATED BALANCE SHEETS                                   1996         1995
_______________________________________________________________________________
(in thousands) 
 
ASSETS 
Cash and due from banks                                    $43,285      $37,524
Securities held for sale                                   182,352      146,322
Securities held for investment                             121,959      160,320
Loans held for sale                                          1,886          708
Loans receivable, net                                    1,021,634      900,418
Excess of cost over net assets 
 of purchased subsidiaries                                  10,586        9,248
Premises and equipment                                      19,376       18,226
Other assets                                                16,686       14,830
                                                         ---------    ---------
                                                        $1,417,764   $1,287,596
                                                         =========    =========
LIABILITIES AND STOCKHOLDERS' EQUITY 
Deposits 
  Demand deposits                                          $85,376      $86,360
  Interest-bearing transaction accounts                    335,977      291,539
  Savings deposits                                          85,145       83,607
  Time deposits                                            608,755      585,598
                                                         ---------    ---------
                                                         1,115,253    1,047,104
Short-term borrowings                                      132,167       93,469
Long-term borrowings                                        14,013        7,757
Other liabilities                                           11,782       11,094
                                                         ---------    ---------
     Total liabilities                                   1,273,215    1,159,424

Stockholders' Equity 
  Common stock                                               7,812        7,207
  Surplus                                                   69,691       53,269
  Retained earnings                                         66,762       66,878
  Unrealized net gain on 
   securities held for sale                                    284          926
  Debt on ESOP shares                                            0         (108)
                                                         ---------    ---------
                                                           144,549      128,172
                                                         ---------    ---------
                                                        $1,417,764   $1,287,596
                                                         =========    =========

Fair value of securities held for investment              $125,061     $165,042
Common shares issued and outstanding                         9,999        9,686






See accompanying notes to consolidated financial statements.                 31






                                                     Year Ended December 31,
CONSOLIDATED STATEMENTS OF INCOME                1996         1995         1994
_______________________________________________________________________________
(in thousands, except per share data) 

INTEREST INCOME 
Interest and fees on loans                    $87,872      $78,487      $62,437
Taxable interest on securities                 15,842       16,082       17,493
Nontaxable interest on securities               3,837        4,017        4,305
Interest on short-term investments                122          160          169
                                              -------      -------      -------
                                              107,673       98,746       84,404
INTEREST EXPENSE 
Interest on deposits                           46,902       45,608       35,710
Other interest expense                          6,657        5,544        3,145
                                               ------       ------       ------
                                               53,559       51,152       38,855
                                               ------       ------       ------
Net Interest Income                            54,114       47,594       45,549
Provision for Loan Losses                       2,664        2,167        1,723
                                               ------       ------       ------
Net Interest Income after 
 Provision for Loan Losses                     51,450       45,427       43,826

Noninterest Income                              8,535        7,944        7,076
Noninterest Expense                            34,843       32,158       32,312
                                               ------       ------       ------
Income Before Income Tax Expense               25,142       21,213       18,590
Income Tax Expense                              7,978        6,446        5,465
                                               ------       ------       ------
NET INCOME                                    $17,164      $14,767      $13,125
                                               ======       ======       ======

Net Income per Common Share                     $1.71        $1.50        $1.34

Cash Dividends per Common Share                  0.63         0.48         0.39

















See accompanying notes to consolidated financial statements.                 32






<TABLE>
<CAPTION>
<S>                                      <C>          <C>          <C>



CONSOLIDATED STATEMENTS OF CHANGES             Common                  Retained
 IN STOCKHOLDERS' EQUITY                        stock      Surplus     earnings
________________________________________________________________________________
(in thousands, except share data) 

BALANCE AT DECEMBER 31, 1993                   $6,381      $33,862      $64,416
Net income                                                               13,125
Net income for period attributable to
 change in fiscal year of subsidiary                                        335
Cash dividends declared 
  Common stock ($0.39 per share)                                         (3,231)
  By pooled companies prior to merger                                      (906)
Issuance of 60,100 common shares pursuant 
 to shareholder and employee plans                 41          997
Reduction of ESOP debt 
Change in unrealized net gain 
 (loss) on securities held for sale 
                                               ------       ------       ------
BALANCE AT DECEMBER 31, 1994                    6,422       34,859       73,739
Net income                                                               14,767
Cash dividends declared ($0.48 per share)                                (4,604)
Common stock dividends declared (5%)              665       16,359      (17,024)
Issuance of 168,938 common shares pursuant 
 to shareholder and employee plans                120        2,051
Reduction of ESOP debt 
Change in unrealized net gain 
 (loss) on securities held for sale 
                                               ------       ------       ------
BALANCE AT DECEMBER 31, 1995                    7,207       53,269       66,878
Net income                                                               17,164
Cash dividends declared ($0.63 per share)                                (6,169)
Common stock dividend declared (5%)               372       10,739      (11,111)
Issuance of 87,457 common shares pursuant 
 to shareholder and employee plans                 65        1,696
Issuance of 315,002 common shares 
 for acquisition                                  234        5,803
Repurchase of 89,005 common shares                (66)      (1,816)
Reduction of ESOP debt 
Change in unrealized net gain 
 (loss) on securities held for sale 
                                               ------       ------       ------
BALANCE AT DECEMBER 31, 1996                   $7,812      $69,691      $66,762
                                               ======       ======       ======

</TABLE>






See accompanying notes to consolidated financial statements.                 33


<TABLE>
<CAPTION>
<S>                                                   <C>          <C>


                                                                  Year Ended Dec
CONSOLIDATED STATEMENTS OF CASH FLOWS                         1996         1995
________________________________________________________________________________
(in thousands) 

OPERATING ACTIVITIES 
Net income                                                 $17,164      $14,767
Adjustments to reconcile net income to net 
  cash provided by operating activities: 
    Depreciation and amortization                            3,126        2,752
    Net premium amortization on securities                     575          953
    Provision for loan losses                                2,664        2,167
    Provision for deferred income taxes                        352         (316)
    Net (increase) decrease in loans 
     held for sale                                            (377)        (553)
    Other, net                                              (1,178)       2,449
                                                            ------       ------
Net Cash Provided by Operating 
  Activities                                                22,326       22,219

INVESTING ACTIVITIES 
Net decrease in short-term investments                           0            0
Proceeds from sales of securities 
  held for sale                                                  0       12,086
Proceeds from maturities, calls and
  prepayments of securities held for sale                   41,678       13,045
Proceeds from maturities, calls and
  prepayments of securities held for investment             47,808       44,639
Purchase of securities held for sale                       (73,565)     (33,033)
Purchase of securities held for investment                  (6,502)      (1,775)
Net increase in loans                                      (78,072)    (109,011)
Purchases of premises and equipment                         (2,044)      (3,190)
Net cash received in acquisition                             1,185            0
                                                            ------       ------
Net Cash Used by Investing Activities                      (69,512)     (77,239)

















See accompanying notes to consolidated financial statements.                 34


CONSOLIDATED STATEMENTS OF                                        Year Ended Dec
 CASH FLOWS - CONTINUED                                       1996         1995
________________________________________________________________________________
(in thousands) 

FINANCING ACTIVITIES 
Net increase in deposits                                   $25,620      $48,521
Net increase in short-term borrowings                       34,447        8,903
Proceeds from long-term borrowings                               0          139
Repayments of long-term borrowings                            (830)      (1,919)
Proceeds from issuance of common stock                         696        1,418
Repurchase of common stock                                  (1,882)           0
Cash dividends paid                                         (5,104)      (3,851)
                                                            ------       ------
Net Cash Provided by Financing Activities                   52,947       53,211
                                                            ------       ------
Cash and Cash Equivalents 
  Decrease                                                   5,761       (1,809)
  Beginning of Year                                         37,524       39,333
                                                            ------       ------
  End of Year                                              $43,285      $37,524
                                                            ======       ======

SUPPLEMENTAL DISCLOSURES 
Cash paid for interest expense                             $54,279      $48,642
Cash paid for income taxes                                   8,824        5,558

NONCASH INVESTING AND FINANCING TRANSACTIONS 
Other real estate transferred 
  to (from) loans, net                                        (108)         (30)
Dividends reinvested                                         1,065          753
Common stock issued in acquisition                           6,037            0


</TABLE>


















See accompanying notes to consolidated financial statements.                 35






1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 
Peoples First Corporation (Company) through its subsidiaries, Peoples First
National Bank and Trust Company, First Kentucky Federal Savings Bank and
Guaranty Federal Savings Bank, operates principally in a single business segment
offering a full range of banking services to individual and corporate customers
in the western Kentucky and contiguous interstate area.  The Company and the
subsidiary banks are subject to the regulations of various Federal and state
agencies and undergo periodic examination by regulators. 

The accounting policies and reporting practices of the Company and its
subsidiaries conform to generally accepted accounting principles and general
practices within the banking industry.  In preparing financial statements,
management is required to make assumptions and estimates which affect the
Company's reported amounts of assets and liabilities and the results of
operations.  Estimates and assumptions involve future events and may change. 

The more significant accounting policies are summarized below. 

BASIS OF PRESENTATION 
The consolidated financial statements include the accounts of the parent company
and its subsidiaries.  All significant intercompany balances and transactions
have been eliminated.  Prior period financial statements are also restated to
include the accounts of companies which are acquired and accounted for as
pooling of interests.  Results of operations of companies acquired subject to
purchase accounting are included from the dates of acquisition.  In accordance
with purchase accounting, assets and liabilities of purchased companies are
stated at fair values, less accumulated amortization and depreciation since the
dates of acquisition.  The excess of cost over fair value of the net assets
acquired is being amortized on the straight-line method over a fifteen-year
period. 

SECURITIES HELD FOR SALE AND INVESTMENT 
At acquisition, securities are classified into one of three categories: trading,
held for sale or investment.  Transfers of debt securities between categories
are recorded at fair value at the date of transfer.  Unrealized gains or losses
associated with transfers of debt securities from the investment to the held for
sale category are recorded and maintained as a separate component of stock-
holders' equity.  The unrealized gains or losses included as a separate
component of stockholders' equity for debt securities transferred to the
investment from the held for sale category are maintained and amortized into
earnings over the remaining life of the debt securities as an adjustment to
yield.  Amortization or accretion of premiums or discounts on securities are
recognized as adjustments to interest income using the level yield method. 

Trading securities are bought and held principally with the intention of selling
them in the near term.  The Company currently has no trading securities.
Securities that are being held for indefinite periods of time, including secur-
ities that management intends to use as a part of its asset/liability strategy,
or that may be sold in response to changes in interest rates, changes in prepay-
ment risk, to meet liquidity needs, the need to increase regulatory capital or
other similar factors, are classified as securities held for sale and are stated


                                                                             36






at fair value.  Fair value is based on market prices quoted in financial publi-
cations or other independent sources.  Net unrealized gains or losses are
excluded from earnings and reported, net of applicable income taxes, as a
separate component of stockholders' equity until realized.  Securities for which
the Company has the ability and positive intent to hold until maturity are
classified as securities held for investment and are carried at amortized cost. 

Realized gains or losses on securities held for sale or investment are accounted
for using the specific security.  A decline in the fair value of any security
held for sale or investment below cost that is deemed other than temporary
results in a charge to earnings and the establishment of a new cost basis for
the security.  Mortgage-backed securities represent a significant portion of the
security portfolios.  Amortization of premiums and accretion of discounts on
mortgage-backed securities are analyzed in relation to the corresponding
prepayment rates, both historical and estimated, using a method which
approximates the level yield method. 

LOANS HELD FOR SALE 
The Company's operations include a limited amount of mortgage banking.  Mortgage
banking activities include the origination of residential mortgage loans for
sale to various investors.  Mortgage loans originated and intended for sale in
the secondary market, principally under programs with the Government National
Mortgage Association (GNMA) or the Federal National Mortgage Association (FNMA),
are carried at the lower of cost or market value.  Mortgage banking revenues,
including origination fees, servicing fees, net gains on sales of servicing
rights, net gains or losses on sales of mortgages and other fee income amount to
less than 1% of the Company's total revenue for the years ended December 31,
1996, 1995 and 1994. 

The Company became subject to Statement of Financial Standards No. 122,
"Accounting for Mortgage Servicing Rights" (FAS 122), effective for the year
beginning January 1, 1996.  FAS 122 requires a mortgage banking enterprise that
acquires mortgage servicing rights through either purchase or origination of
mortgage loans and sells or securitizes those loans with servicing rights
retained to allocate the total cost of the mortgage loans to the mortgage
servicing rights and the loans (without the mortgage servicing rights) based on
their relative fair values if it is practical to estimate those fair values.
FAS 122 had no effect on the consolidated financial statements other than
required disclosure since loans sold with retained servicing rights are an
immaterial amount.   

LOANS RECEIVABLE 
Loans receivable held for investment are carried at cost, as the Company has the
ability and it is management's intention to hold them to maturity.  Interest on
commercial and real estate mortgage loans is accrued if deemed collectible and
credited to income based upon the principal amount outstanding.  Unearned
discount attributable to certain consumer loans is credited to income using a
method which approximates the level yield method. 





                                                                             37






The Company evaluates the collectibility of both contractual interest and
contractual principal of all receivables when assessing the need for loss
recognition.  When in the opinion of management the collection of interest on a
loan is unlikely or when either principal or interest is past due over 90 days,
that loan is generally placed on nonaccrual status.  When a loan is placed in
nonaccrual status, accrued interest for the current period is reversed and
charged against earnings and accrued interest from prior periods is charged
against the allowance for loan losses.  A loan remains on nonaccrual status
until the loan is current as to payment of both principal and interest and/or
the borrower demonstrates the ability to pay and remain current.  Interest
payments received on nonaccrual loans are applied to principal if there is any
doubt as to the collectibility of total principal, otherwise these payments are
recorded as interest income.  The Company recognizes interest income on
nonaccrual impaired loans equal to the amount of interest received, if any, in
cash. 

ALLOWANCE FOR LOAN LOSSES 
The allowance for loan losses is increased by provisions for loan losses charged
to operations and is maintained at a level adequate to absorb estimated credit
losses associated with the loan portfolio, including binding commitments to lend
and off-balance sheet credit instruments.  The allowance for loan losses is
decreased by charge offs, net of recoveries.  At the end of each quarter, or
more frequently if warranted, management uses a systematic, documented approach
in determining the appropriate level of the allowance for loan losses.
Management's approach provides for general and specific allowances and is based
upon current economic conditions, past loan loss experience, collection
experience, risk characteristics of the loan portfolio, assessment of collateral
values and such other factors which in management's judgement deserve current
recognition in estimating potential loan losses. 

The Company adopted Statement of Financial Accounting Standards No.  114,
"Accounting by Creditors for Impairment of a Loan", (FAS 114) and Statement of
Financial Accounting Standards No.  118, "Accounting by Creditors for Impairment
of a Loan - Income Recognition and Disclosures", (FAS 118) effective for the
year beginning January 1, 1995.  As a result of applying FAS 114, as amended by
FAS 118, certain impaired loans subject to the statements are reported at the
present value of expected future cash flows discounted at the loan's effective
interest rate, or at the loan's observable market price or the fair value of the
collateral if the loan is collateral dependent, by allocating a portion of the
allowance for loan losses to such loans.  If these allocations cause the
allowance for loan losses to be increased, such increase is recorded as
provision for loan losses.  No adjustment to the provision for loan losses was
required due to the adoption of FAS 114 and FAS 118 in the first quarter of
1995. 

INTANGIBLE ASSETS 
Net assets of subsidiaries acquired in purchase transactions are recorded at
fair value at the date of acquisition.  The excess of cost over net assets
acquired is amortized by systematic charges in the statement of income over the
period benefited.  Management evaluates the periods of amortization continually
to determine whether later events and circumstances warrant revised estimates.


                                                                             38






Currently, amortization is provided on a straight-line basis over fifteen years.
Accumulated amortization was $4.1 million at December 31, 1996 and $3.2 million
at December 31, 1995 and amortization expense was $879,164, $829,884 and
$829,884, for the years ended December 31, 1996, 1995 and 1994, respectively. 

The Company adopted Statement of Financial Accounting Standards No.  121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of", (FAS 121) effective for the year beginning January 1, 1996.
FAS 121 requires the recognition of a loss on impaired assets when the carrying
amount of the asset may not be recoverable.  This statement applies to assets
other than loans, which are covered under FAS 114 which the Company adopted in
1995.  Management periodically evaluates whether events or circumstances have
occurred that would result in impairment in the value or life of goodwill, core
deposit or other long-lived assets.  Management considers intangibles to be
potentially impaired if internal management reports for respective business
units show a net loss before amortization of intangibles.  The recoverability of
the asset is then evaluated using undiscounted cash flow projections.  The
Company's adoption of FAS 121 had no effect on the consolidated financial
statements other than required disclosure. 

PREMISES AND EQUIPMENT 
Premises and equipment are stated at cost, less accumulated depreciation and
amortization.  The provision for depreciation and amortization is computed using
the straight-line method over the estimated useful lives of the assets.  Esti-
mated useful lives on buildings range from ten to thirty years and two to ten
years on equipment.  Leasehold improvements are amortized over the term of the
related leases.  Expenditures for major renewals and betterments of premises and
equipment are capitalized and those for maintenance and repairs are expensed as
incurred. 

OTHER REAL ESTATE 
Real estate acquired through foreclosure or deed in lieu of foreclosure is in-
cluded in other assets, and is recorded at the lower of cost or the property's
fair value at the time of foreclosure less estimated disposal costs, if any.
The excess of cost over fair value of other real estate at the date of
acquisition is charged to the allowance for loan losses.  Subsequent reductions
in carrying value to reflect current fair value and any other period costs are
charged to noninterest expense as incurred. 

FINANCIAL INSTRUMENTS 
During October 1994, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No.  119, "Disclosure about Derivative
Financial Instruments and Fair Value of Financial Instruments" (FAS 119).  FAS
119 requires disclosure about the amounts, nature and terms of derivative
financial instruments that are not subject to FAS 105, "Disclosure of
Information about Financial Instruments with Off-Balance Sheet Risks and
Financial Instruments with Concentrations of Credit Risk".  FAS 119 requires
that a distinction be made between financial instruments held or issued for
trading purposes and financial instruments held or issued for purposes other
than trading.  FAS 119 was effective for financial statements issued for fiscal
years after December 31, 1994.  The Company's adoption of FAS 119 had no effect
on the consolidated financial statements other than the required disclosure with
respect to fixed rate loan commitments. 
                                                                             39






STOCK OPTIONS 
The Company applies APB Opinion No.  25 in accounting for its stock option plan
and, accordingly, no compensation cost has been recognized for stock option
grants in the consolidated financial statements.  During October, 1995, the
Financial Accounting Standards Board issued Statement of Financial Accounting
Standards No.  123, "Accounting for Stock-Based Compensation" (FAS 123).  FAS
123 establishes a new fair value-based method of accounting for equity
instruments issued to employees.  The effect of FAS 123 on the Company was the
inclusion of certain disclosures in Note 12 to the consolidated financial
statements. 

TRANSFER AND SERVICING OF FINANCIAL ASSETS AND EXTINGUISHMENTS OF LIABILITIES 
During June, 1996, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No.  125, "Accounting for Transfers and Servicing
of Financial Assets and Extinguishments of Liabilities" (FAS 125).  FAS 125
provides accounting and reporting standards for transfers and servicing of
financial assets and extinguishments of liabilities based on consistent
application of a financial-components approach that focuses on control.  It
distinguishes transfers of financial assets that are sales from transfers that
are secured borrowings, based on control of the transferred assets.  The
adoption of FAS 125 effective at the beginning of 1997 will not have an impact
on the Company's financial position, results of operations or liquidity. 

INCOME TAXES 
Income tax expense is reported as the total of current income taxes payable and
the net change in deferred income taxes payable provided for temporary
differences.  Deferred income taxes reflect the net tax effects of temporary
differences between the carrying values of assets and liabilities for financial
reporting purposes and the values for income tax purposes.  Deferred income
taxes are recorded at the statutory Federal rates in effect at the time that the
temporary differences are expected to reverse.  The measurement of deferred tax
assets is reduced, if necessary, by the amount of any tax benefits that, based
upon management's judgment of available evidence, are not expected to be
realized.  The significant components of deferred tax assets and liabilities are
principally related to unrealized net gain or loss on securities, allowance for
loan losses, amortization of premiums on debt securities, depreciation of
premises and equipment and deferred compensation.  The Company files a
consolidated Federal income tax return which includes all of its subsidiaries. 

PER COMMON SHARE DATA 
Share and per share information have been adjusted to give effect to stock
splits and stock dividends in the three years ended December 31, 1996, including
the 5% stock dividend declared in January 1997, and payable in March 1997.  Net
income per common share is determined by dividing net income by the weighted
average number of common shares outstanding and common stock equivalents
pertaining to common stock options.  The average number of shares outstanding
including common stock equivalents for 1996, 1995 and 1994 were 10,025,411,
9,851,674 and 9,767,160, respectively.  Common stock equivalents have no
material dilutive effect. 




                                                                             40






CASH AND CASH EQUIVALENTS 
For purposes of the consolidated statements of cash flows, the Company considers
cash and due from banks and highly liquid securities purchased with a maturity
of three months or less to be cash equivalents. 

RECLASSIFICATIONS 
Certain amounts in the 1995 and 1994 consolidated financial statements have been
reclassified to conform with the 1996 presentation.  The reclassifications had
no effect on previously reported stockholders' equity or net income. 

2.  BUSINESS COMBINATIONS 
The Company regularly explores opportunities for acquisitions of financial
institutions.  During the three year period ended December 31, 1996, the Company
was a party to three business combinations.  The most recent acquisition was
accounted for using the purchase method of accounting.  Results of operations
subject to purchase accounting are included from the date of acquisition.
Disclosure of pro forma condensed results of operations as if this acquisition
were consummated as of the beginning of the period have been omitted due to
the immaterial effect on operations.  The two earlier acquisitions were
accounted for using the pooling of interest method of accounting.  Results of
operation subject to pooling of interest accounting are reflected on a combined
basis from the earliest period presented. 

On August 30, 1996, the Company consummated the acquisition of Guaranty Federal
Savings Bank (Guaranty).  The Company acquired all of the outstanding shares of
Guaranty in exchange for 315,002 shares of Peoples First Corporation common
stock.  Guaranty's three locations in Clarksville, Tennessee, are immediately
southeast of the market area served by the Company's other subsidiary banks.
Immediately prior the acquisition, Guaranty had total assets of approximately
$55.9 million and stockholders' equity of $3.2 million. 

On October 7, 1994, the Company consummated the acquisition of Libsab Bancorp,
Inc.  (Libsab) and Liberty Bank and Trust, a wholly owned subsidiary of Libsab.
The Company acquired all of the outstanding shares of Libsab in exchange for
1,247,750 shares of Peoples First Corporation common stock.  Libsab's three
locations are part of the market area served by the Company's other subsidiary
banks.  During 1995, Liberty Bank & Trust was merged into Peoples First National
Bank and Trust Company.  Immediately prior to the acquisition, Libsab had total
assets of approximately $141.9 million. 

On March 10, 1994, the Company consummated the acquisition of First Kentucky
Bancorp, Inc.  (First Kentucky) and First Kentucky Federal Savings Bank, a
wholly owned subsidiary of First Kentucky.  The Company acquired all of the
outstanding shares of First Kentucky in exchange for 1,076,353 shares of Peoples
First Corporation common stock.  First Kentucky's six locations are immediately
east of the market area served by the Company's other subsidiary banks.
Immediately prior the acquisition, First Kentucky had total assets of
approximately $176.8 million. 





                                                                             41







3.  CASH AND DUE FROM BANKS 
The Company's banking subsidiaries are required to maintain certain reserve
balances in cash with Federal Reserve Banks (FRB).  The reserve balances
maintained in accordance with FRB requirements, partially satisfied by vault
cash on hand, as of December 31, 1996 and 1995 were $8.0 million and $11.5
million, respectively.  The average amount of required reserves were $12.8
million and $8.9 million, respectively, for the years ended December 31, 1996
and 1995. 

4.  SECURITIES HELD FOR SALE AND INVESTMENT 
The amortized cost and fair value of securities held for sale as of 
December 31, 1996 and 1995 are summarized as follows: 

                                                Gross        Gross
Securities Held For Sale       Amortized   unrealized   unrealized         Fair
December 31, 1996                   cost        gains       losses        value
_______________________________________________________________________________
(in thousands) 

U.S. treasury and agencies       $58,604         $307        ($310)     $58,601
Mortgage-backed securities       108,487          916         (501)     108,902
Federal Home Loan Bank 
 stock and other securities       14,819           30            0       14,849
                                 -------      -------      -------      -------
                                $181,910       $1,253        ($811)    $182,352
                                 =======      =======      =======      =======

                                                Gross        Gross
Securities Held For Sale       Amortized   unrealized   unrealized         Fair
December 31, 1995                   cost        gains       losses        value
_______________________________________________________________________________
(in thousands) 

U.S. treasury and agencies       $48,370         $467        ($116)     $48,721
Mortgage-backed securities        84,591        1,220         (273)      85,538
Federal Home Loan Bank 
 stock and other securities       11,958          105            0       12,063
                                 -------      -------      -------      -------
                                $144,919       $1,792        ($389)    $146,322
                                 =======      =======      =======      =======












                                                                             42






The amortized cost and fair value of securities held for investment as of
December 31, 1996 and 1995 are summarized as follows: 

Securities                                      Gross        Gross
  Held for Investment          Amortized   unrealized   unrealized         Fair
December 31, 1996                   cost        gains       losses        value
_______________________________________________________________________________
(in thousands) 

U.S. treasury and agencies        $7,102           $7         ($35)      $7,074
Mortgage-backed securities        53,819          486         (168)      54,137
State and political 
 subdivisions                     60,938        2,830          (18)      63,750
Other securities                     100            0            0          100
                                 -------      -------      -------      -------
                                $121,959       $3,323        ($221)    $125,061
                                 =======      =======      =======      =======


Securities                                      Gross        Gross
  Held for Investment          Amortized   unrealized   unrealized         Fair
December 31, 1995                   cost        gains       losses        value
_______________________________________________________________________________
(in thousands) 

U.S. treasury and agencies       $23,894         $187         ($13)     $24,068
Mortgage-backed securities        73,357          891          (88)      74,160
State and political 
 subdivisions                     62,569        3,843         (102)      66,310
Other securities                     500            4            0          504
                                 -------      -------      -------      -------
                                $160,320       $4,925        ($203)    $165,042
                                 =======      =======      =======      =======

There were no sales of securities in 1996.  Proceeds from sales of securities
during 1995 and 1994 were $12,085,690 and $11,885,303, respectively.  Gross
gains of $178,143 and $62,309 and no gross losses were realized on those sales
during 1995 and 1994, respectively. 

The amortized cost, estimated fair value and the weighted average yield of
securities held for sale and held for investment at December 31, 1996, by
estimated maturity, are shown below.  Actual maturities will differ from the
depicted maturities because of the borrowers' right to call or prepay
obligations with or without prepayment penalties.  Management evaluates, on an
ongoing basis, the potential maturities for asset/liability purposes.  Yields on
tax-exempt obligations have not been computed on a tax-equivalent basis. 







                                                                             43






Securities Held for Sale                                               Weighted
  Maturity Distribution                     Amortized         Fair      average
December 31, 1996                                cost        value        yield
_______________________________________________________________________________
(in thousands) 

U.S. treasury and agencies 
  1 year or less                               $2,495       $2,494         5.55%
  Over 1 through 5 years                       51,838       51,813         6.17
  Over 5 through 10 years                       3,481        3,487         6.66
  Over 10 years                                   789          807         5.72
Mortgage-backed securities 
  1 year or less                               15,740       15,846         6.40
  Over 1 through 5 years                       61,484       61,667         6.72
  Over 5 through 10 years                      28,211       28,328         6.79
  Over 10 years                                 3,053        3,061         6.73
Federal Home Loan Bank 
 stock and other securities                    14,819       14,849         7.08
                                              -------      -------
                                             $181,910     $182,352         6.55%
                                              =======      =======         ====

Securities Held for Investment                                         Weighted
  Maturity Distribution                     Amortized         Fair      average
December 31, 1996                                cost        value        yield
_______________________________________________________________________________
(in thousands) 

U.S. treasury and agencies 
  1 year or less                               $5,396       $5,383         5.96%
  Over 1 through 5 years                        1,706        1,692         6.19
Mortgage-backed securities 
  1 year or less                               33,769       33,847         6.27
  Over 1 through 5 years                       15,794       16,056         7.04
  Over 5 through 10 years                       1,061          998         4.54
  Over 10 years                                 3,195        3,235         6.85
State and political subdivisions 
  1 year or less                                4,237        4,293         6.45
  Over 1 through 5 years                       17,827       18,629         6.37
  Over 5 through 10 years                      24,557       25,985         6.09
  Over 10 years                                14,317       14,843         5.66
Other 
  Over 1 through 5 years                          100          100         8.25
                                              -------      -------
                                             $121,959     $125,061         6.27%
                                              =======      =======         ====







                                                                             44






At December 31, 1996 and 1995, securities, all of which were under the control
of the Company, with carrying values of approximately $150.6 million and
$145.1 million, respectively, were pledged to secure repurchase agreements,
public and trust deposits and for other purposes as required by law.  Amounts
advanced under repurchase agreements represent short-term borrowings and are
reflected as liabilities on the consolidated balance sheets. 

5.  LOANS RECEIVABLE 
The Company's lending activities are concentrated primarily in western Kentucky,
southern Illinois, northwestern Tennessee and southeastern Missouri.  The loan
portfolio is well diversified and consists of business loans extending across
many industry types, as well as loans to individuals.  As of December 31, 1996
and 1995, total loans to any group of customers engaged in similar activities
and having similar economic characteristics, as defined by standard industrial
classifications, did not exceed 10% of total loans, although the geographical
concentration is a necessary factor for regional banks. 

Major classification of loans receivable are as follows: 

December 31,                                                  1996         1995
_______________________________________________________________________________
(in thousands) 

Commercial, financial and agricultural                    $120,283     $113,929
Real estate 
  Construction                                              29,933       19,386
  Residential mortgage                                     421,129      364,607
  Commercial mortgage                                      174,576      158,429
Consumer, net of unearned income of $4,854 and  
 $12,980 at December 31, 1996 and 1995                     289,653      255,975
Other                                                          855        1,463
                                                         ---------    ---------
                                                         1,036,429      913,789
Allowance for loan losses                                  (14,795)     (13,371)
                                                         ---------    ---------
                                                        $1,021,634     $900,418
                                                         =========    =========

The Company evaluates each customer's creditworthiness on a case by case basis.
The amount of collateral obtained, if deemed necessary by the Company upon
extension of credit, is based on management's credit evaluation of the borrower.
Collateral varies but may include accounts receivable, inventory, property,
plant and equipment, income producing commercial properties, real estate and
other property owned by the borrowers. 









                                                                             45






Activity in the allowance for loan losses was as follows for the three-year
period ended December 31, 1996: 

Allowance for Loan Losses 
Year Ended December 31,                          1996         1995         1994
_______________________________________________________________________________
(in thousands) 

Balance at beginning of year                  $13,371      $12,188      $10,715
Allowance associated with loans acquired          481          ---          ---
Provision charged to expense                    2,664        2,167        1,723
Loans charged off                              (2,524)      (1,307)        (686)
Recoveries of loans 
 previously charged off                           803          323          436
                                               ------       ------       ------
Net loans charged off                          (1,721)        (984)        (250)
                                               ------       ------       ------
Balance at end of year                        $14,795      $13,371      $12,188
                                               ======       ======       ======

Nonaccrual and renegotiated loans totaled $7.4 million and $4.7 million at
December 31, 1996 and 1995, respectively.  Beginning in 1995, loans, except
large groups of smaller-balance homogeneous loans, for which the full collection
of principal and interest is not probable, or a delay in payments is expected,
are evaluated for impairment. 

Information regarding impaired loans at December 31, 1996 and 1995 is as
follows: 

Impaired Loans 
December 31,                                                  1996         1995
_______________________________________________________________________________
(in thousands) 

Recorded investment in impaired loans                       $4,454       $4,109
Less portion for which no allowance 
 for loan losses is allocated                                  325          308
                                                            ------       ------
Portion of impaired loan balance for 
 which an allowance for loan losses 
 is allocated                                               $4,129       $3,801
                                                            ======       ======
Portion of allowance for loan losses 
 allocated to the impaired loan balance                     $1,142         $829
                                                            ======       ======








                                                                             46






Information regarding impaired loans is as follows for the years ended 
December 31, 1996 and 1995: 

Impaired Loans 
Year Ended December 31,                                       1996         1995
_______________________________________________________________________________
(in thousands) 

Average investment in impaired loans                        $4,926       $4,258
Interest income recognized on 
 impaired loans                                                488          378
Interest income recognized on 
 impaired loans on cash basis                                    0            0

Certain officers and directors of the Company and its subsidiaries and certain
corporations and individuals related to them are loan customers of the Company's
subsidiary banks.  The activity of these loans during the years ended December
31, 1996 and 1995 is summarized below.  Such loans were made on substantially
the same terms, including interest rates and collateral, as those prevailing at
the time for comparable transactions with other customers.  These loans did not
involve more than the normal risk of collectibility, except for borrowing
relationships totaling approximately $10.3 million which were internally
classified by management in 1996 as potential problem loans because of apparent
cash flow uncertainty. 

Loans to Officers and Directors 
Year Ended December 31,                                       1996         1995
_______________________________________________________________________________
(in thousands) 

Balance at beginning of year                               $13,445      $11,825
Additions                                                    9,905        2,165
Repayments                                                    (743)        (631)
Changes in officer and director status                         400           86
                                                            ------       ------
Balance at end of year                                     $23,007      $13,445
                                                            ======       ======
















                                                                             47






6.  PREMISES AND EQUIPMENT 
A summary of premises and equipment is as follows: 

December 31,                                                  1996         1995
_______________________________________________________________________________
(in thousands) 

Land                                                        $2,738       $2,394
Buildings                                                   19,580       18,421
Equipment                                                   14,544       12,432
Leasehold improvements                                         994          985
Construction in progress                                         0          764
                                                            ------       ------
                                                            37,856       34,996
Accumulated depreciation and amortization                  (18,480)     (16,770)
                                                            ------       ------
                                                           $19,376      $18,226
                                                            ======       ======

The amount of depreciation and amortization related to premises and equipment
that was charged to operating expenses in 1996, 1995 and 1994 was $2,148,864
$1,857,202 and $1,650,659 respectively. 

7.  DEPOSIT LIABILITIES 
The aggregate amount of time deposits, each with a minimum balance of $100,000,
was $102.5 million and $96.1 million at December 31, 1996 and 1995,
respectively.  Interest expense on time deposits over $100,000 was $5.3 million,
$6.0 million and $4.2 million for the years ended December 31, 1996, 1995 and
1994, respectively.  Also included in deposit liabilities were brokered time
deposits of $15.5 million, $26.6 million and $21.4 million at December 31, 1996,
1995 and 1994, respectively.  At December 31, 1996, the scheduled maturities of
time deposits were as follows: 

Time Deposit Maturities 
For the years ending December 31, 
__________________________________________________________________ 
(in thousands) 

          1997                               $384,915
          1998                                145,454
          1999                                 38,410
          2000                                 26,168
          2001 and thereafter                  13,808
                                              -------
                                             $608,755
                                              =======







                                                                             48






8.  SHORT-TERM BORROWINGS 
Federal funds purchased, repurchase agreements and U.S. treasury notes generally
represent borrowings with overnight maturities as do certain short-term advances
from the Federal Home Loan Bank (FHLB) of Cincinnati.  Information pertaining to
the subsidiary banks' short-term borrowings is summarized below: 

Short-term Borrowings                            1996         1995         1994
_______________________________________________________________________________
(dollars in thousands) 

Federal funds purchased 
  Average balance                             $19,284      $13,414      $21,171
  Year end balance                             21,525       15,100       41,500
  Highest month-end balance                    33,100       35,000       41,500
  Average interest rate                          5.44%        6.07%        4.63%
  Year end interest rate                         6.40%        5.60%        6.12%
Repurchase agreements 
  Average balance                             $28,041      $25,794      $22,702
  Year end balance                             28,415       23,869       21,567
  Highest month-end balance                    36,624       32,120       24,090
  Average interest rate                          4.48%        4.64%        3.50%
  Year end interest rate                         4.74%        4.05%        4.08%
Short-term FHLB advances 
  Average balance                             $63,161      $46,733       $7,581
  Year end balance                             79,400       54,500       21,500
  Highest month-end balance                    83,700       54,500       21,500
  Average interest rate                          5.51%        6.19%        5.18%
  Year end interest rate                         5.54%        5.85%        6.16%
U.S. treasury notes 
  Average balance                              $1,973           $0           $0
  Year end balance                              2,826            0            0
  Highest month-end balance                     4,899            0            0
  Average interest rate                          5.06%          --           --
  Year end interest rate                         5.16%          --           --

At December 31, 1996, the subsidiary banks had unsecured lines-of-credit for
federal funds purchased from unaffiliated banks totaling $55.0 million, of which
$33.5 million was undrawn and available, and total lines-of-credit for U.S.
treasury notes of $9.0 million, of which $6.2 million was undrawn and available.

9.  LONG-TERM BORROWINGS 
Information pertaining to the subsidiary banks' long-term borrowings is
summarized below: 

December 31,                                     1996         1995
___________________________________________________________________
(in thousands) 

Federal Home Loan Bank advances                14,013        7,649
Employee Stock Ownership Plan debt                  0          108
                                               ------       ------
                                              $14,013       $7,757
                                               ======       ======
                                                                             49






The subsidiary banks obtain various short-term and long-term advances from the
FHLB under Blanket Agreements for Advances and Security Agreements (Agreements).
The Agreements entitle the subsidiary banks to borrow funds from the FHLB to
fund mortgage loan programs and satisfy other funding needs.  At December 31,
1996, the subsidiary banks had secured lines-of-credit from FHLB totaling
$212.0 million, of which $118.6 million was undrawn and available.  Of the
long-term advances at December 31, 1996, all were at fixed interest rates
ranging from 4.70% to 8.10%.  FHLB advances are collateralized by the subsidiary
banks' FHLB stock they are required to own, other securities in the approximate
amount of $3.0 million and certain single-family first mortgage loans in the
approximate amount of $313.5 million.  As members of the FHLB system, the
Company's subsidiary banks must hold a minimum of FHLB stock equal to one
percent of home mortgage related assets.  Additional FHLB stock ownership is
required as the level of advances increase.  The subsidiary banks are in
compliance with the FHLB stock ownership requirements with a total required
investment of $10.4 million at December 31, 1996.  The long-term advances
provide for scheduled monthly payments but may be prepaid at the option of the
subsidiary banks with the payment of a premium. 

One of the Company's subsidiaries was obligated to pay, through annual contri-
butions and dividends to their Employee Stock Ownership Plan, a note payable to
an unaffiliated financial institution.  An original amount of $253,570 was
borrowed in May 1991.  The loan wassecured by the pledge of certain shares of
the stock of the subsidiary.  Interest was payable quarterly at the lender's
prime rate less 0.50% which can be adjusted daily (9.75% at December 31, 1995).
The note provided for annual principal payments of $25,357 and was paid off in
October 1996. 

Annual minimum principal repayment requirements for long-term borrowings for the
years 1997 through 2001 are $484,250, $442,294, $477,638, $506,147 and $548,286,
respectively. 

10.  FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK 
The Company is a party to financial instruments with off-balance-sheet risk in
the normal course of business to meet the financing needs of its customers.
These financial instruments include commitments to extend credit and standby
letters of credit.  The Company's exposure to credit loss in the event of
nonperformance by the other party to the financial instrument for commitments to
extend credit and standby letters of credit 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.  Standby
letters of credit are conditional commitments issued by the Company to guarantee
the performance of a customer to a third party.  These off-balance-sheet
financial instruments generally have fixed expiration dates or other termination
clauses and may require payment of a fee.  Since some of the financial
instruments may expire without being drawn upon, the total amounts do not
necessarily represent future cash requirements.  Commitments to extend credit
and standby letters of credit are subject to the same underwriting and
collateral standards as on-balance-sheet items. 


                                                                             50






Contractual commitments to extend credit and standby letters of credit at
December 31, 1996 and 1995 are summarized as follows: 

Financial Instruments with 
  Off-Balance-Sheet Risk 
December 31,                                                  1996         1995
_______________________________________________________________________________
(in thousands) 

Contractual commitments to extend credit                  $126,331     $115,788
Standby letters of credit                                   11,882       10,894

Of the total commitments to extend credit at December 31, 1996 and 1995, $1,000
and $99,072, respectively, represent fixed-rate loan commitments. 

11.  EMPLOYEE BENEFITS 
The Company maintains two noncontributory Employee Stock Ownership Plans (ESOP)
and an employer matching 401(k) Plan.  The plans cover substantially all of
the Company's employees. 

Employer contributions to the ESOPs are determined annually by the Company's
board of directors and were $236,130, $215,360 and $201,696 for the years ended
1996, 1995 and 1994, respectively.  The ESOPs' investments include 300,363 and
307,142 shares of the Company's common stock at December 31, 1996 and 1995,
respectively.  The fair value of the Company's common stock owned by the ESOPs
was $7.3 million and $6.5 million at December 31, 1996 and 1995, respectively.
Participants may elect to receive their benefits either in a lump-sum cash
amount or in shares of the Company's stock. 

Under the 401(k) Plan, participants may voluntarily contribute a percentage of
their salary through payroll deductions.  The Company is currently committed to
make contributions to the 401(k) Plan annually in an amount equal to 100% of the
first 3% contribution of each participant's base salary.  For the years ended
December 31, 1996, 1995 and 1994, the Company's required matching contribution
amounted to $258,747, $243,924 and $225,583, respectively.  Employees have
several investment options in which contributions may be invested. 

Post retirement benefits other than pensions are not provided for the Company's
employees.  Eligible retired employees may for a period of time maintain certain
health care benefits through policies of the Company at the retired employee's
expense.  There was no cost for employee benefits for retired employees in 1996,
1995 and 1994. 

12.  STOCKHOLDERS' EQUITY 

AUTHORIZED CAPITAL STOCK 
The Company has six million authorized shares of no par preferred stock and
thirty million authorized shares of no par, $0.7812 stated value common stock. 





                                                                             51






SHARE PURCHASE RIGHTS PLAN 
In January of 1995, the Board of Directors of the Company adopted a Share
Purchase Rights Plan and distributed a dividend of one Preferred Share Purchase
Right (Right) for each outstanding common share of the Company and for each
common share issued thereafter.  The Rights are generally designed to deter
coercive takeover tactics and to encourage all persons interested in acquiring
control of the Company to deal with each shareholder on a fair and equal basis.
Each Right trades in tandem with its respective share of common stock until the
occurrence of certain events, in which case it would separate from the common
stock and entitle the registered holder, subject to the terms of the Rights
Agreement, to purchase certain equity securities at a price below their market
value.  The Company has not issued any of the authorized no par preferred stock.

DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN 
In 1987, the Board of Directors of the Company adopted the Peoples First
Corporation Share Owner Dividend Reinvestment and Stock Purchase Plan (DRIP),
and amended the plan during 1994.  The DRIP provides for the issuance of
1,203,930 shares of authorized but previously unissued common stock.  On certain
investment dates, shares may be purchased with all or a portion of reinvested
dividends or with optional cash payments not to exceed $3,000.  The price of
shares purchased pursuant to the DRIP is the average market price reported by
Nasdaq for the last five trading days of the month preceding the dividend
payment month.  At December 31, 1996, 756,032 shares were reserved for
issuance under the DRIP.  Shares issued under the DRIP totaled 74,717, 71,858
and 47,020 shares in 1996, 1995 and 1994, respectively. 

STOCK OPTION PLAN 
The Peoples First Corporation 1986 Stock Option Plan (Option Plan), as amended
in 1994, authorizes the granting to key employees of the Company incentive stock
options and nonqualified stock options to purchase common stock of the Company
at market value at the time the options are granted.  The Option Plan authorizes
grants of options to purchase up to ten percent of the Company's outstanding
common shares.  The authorized number of option shares at December 31, 1996 was
999,960 of which 151,035 is available for further grant under the Option Plan.
Shares sold under the Option Plan may be either unissued authorized shares or
shares reacquired by the Company.  Options granted are exercisable, subject to
vesting and other requirements, at varying times from the first through the
tenth year after the grant date.  Optionees may exercise their options with cash
or with shares of the Company's common stock. 

The Company applies APB Opinion No.  25 in accounting for its Option Plan and,
accordingly, no compensation cost has been recognized for stock option grants in
the consolidated financial statements.  Had the Company determined compensation
cost based on the fair value at the grant date for its stock options under FAS
123, considering only options granted in 1996 and 1995, the Company's net income
and net income per common share would have been the pro forma amounts indicated
below.  The full impact of calculating compensation cost for stock options
under FAS 123 is not reflected because compensation cost is reflected over the
options' vesting period of up to ten years and compensation cost for options
granted prior to January 1, 1995 have not been considered. 



                                                                             52






Pro Forma Net Income 
Year Ended December 31,                                       1996         1995
_______________________________________________________________________________
(in thousands, except per share data) 

Net Income 
  As reported                                              $17,164      $14,767
  Pro forma                                                 17,103       14,749

Net Income per Common Share 
  As reported                                                 1.71         1.50
  Pro forma                                                   1.71         1.50

The per share weighted-average fair value of stock options granted during 1996
and 1995 was $4.92 and $5.03 on the date of grant using an option-pricing model
(Black Scholes) with the following weighted-average assumptions: 1996 - 3.28%
expected dividend yield, 24.63% expected volatility, 6.16% risk-free interest
rate and eight year expected life; 1995 - 2.50% expected dividend yield, 23.21%
expected volatility, 5.53% risk-free interest rate and ten year expected life.
Outstanding stock options are considered common stock equivalents in the
computation of net income per common share. 
                                                                       Weighted
                                                                        average
                                                             Number    exercise
Stock Option Plan Activity                                of shares       price
_______________________________________________________________________________

Outstanding at December 31, 1993                           517,412        $8.86
  Granted                                                  104,186        21.23
  Exercised                                                (14,587)        5.93
  Forfeited                                                 (4,167)       14.04
                                                           -------
Outstanding at December 31, 1994                           602,844        11.04
  Granted                                                   43,549        21.32
  Exercised                                               (114,281)        7.67
  Forfeited                                                (25,051)       13.93
                                                           -------
Outstanding at December 31, 1995                           507,061        12.53
  Granted                                                   82,974        23.22
  Exercised                                                (12,740)        8.59
  Forfeited                                                (10,304)       19.56
                                                           -------
Outstanding at December 31, 1996                           566,991       $14.06
                                                           =======

At December 31, 1996, the range of exercise prices and weighted-average
remaining contractual life of outstanding options was $6.40 - $23.33 and 5.3
years, respectively.  At December 31, 1996 and 1995, the number of shares
subject to options that were exercisable was 329,709 and 289,754, respectively.
At December 31, 1996 and 1995, the weighted average exercise price of
exercisable shares was $9.44 and $8.65, respectively. 


                                                                             53






RETAINED EARNINGS RESTRICTION 
In connection with the Company's savings bank subsidiaries conversion from
mutual to stock form of ownership during 1991 and 1981, the subsidiaries
restricted the amount of retained earnings at that date by establishing
liquidation accounts equal to approximately $6.8 million for the purpose of
granting to eligible depositors a priority in the event of future liquidation.
Only in such an event, an eligible depositor who continues to maintain an
account will be entitled to receive a distribution from the liquidation account.
The total amount of the liquidation account decreases in an amount
proportionately corresponding to decreases in the deposit account balances of
the eligible account holders. 

DIVIDEND LIMITATIONS 
Payment of dividends by the subsidiary banks, which is the principal source of
funds for payment of cash dividends by the Company to its shareholders, are 
subject to various national and/or state regulatory restrictions.  At December
31, 1996, total retained earnings of the Company's direct subsidiaries was
approximately $127.2 million, of which $26.4 million was available for payment
of dividends without approval by the applicable regulatory authority. 

REGULATORY CAPITAL 
The Company and its subsidiary banks are 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 the regulators that, if undertaken, could
have a direct material effect on the Company's financial statements.  Under
capital adequacy guidelines and the regulatory framework for prompt corrective
action, the Company and its subsidiary banks must meet specific capital
guidelines that involve quantitative measures of the entity's assets,
liabilities and certain off-balance-sheet items calculated under regulatory
accounting practices.  The Company's and subsidiary banks' capital amounts and
classification are also subject to qualitative judgments by the regulators
about components, risk weightings, and other factors. 

Quantitative measures established by regulators to ensure capital adequacy
require the Company and subsidiary banks to maintain minimum amounts and ratios
of total and Tier I capital (as defined in the regulations) to risk-weighted
assets (as defined), and of Tier I capital (as defined) to average assets (as
defined).  Managements believes, as of December 31, 1996, that the Company and
subsidiary banks meet all capital adequacy requirements to which they are
subject. 

As of November 27, 1995, the most recent notification from the Office of the
Comptroller of the Currency categorized the Company's only significant
subsidiary as well capitalized under the regulatory framework for prompt
corrective action.  To be categorized as well capitalized the Company 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 institutions'
category. 



                                                                             54






The Company's and Peoples Bank's actual capital amounts and ratios are also
presented in the following table.  Totals of $3.7 million and $0.9 million were
effectively deducted from capital for interest-rate risk in 1996 and 1995,
respectively. 
<TABLE>
<CAPTION>
<S>                                      <C>          <C>          <C>



                                                                             For
Regulatory Capital                                    Actual              Adequa
December 31, 1996 and 1995                     Amount        Ratio       Amount
________________________________________________________________________________
(amounts in thousands) 

As of December 31, 1996: 
Total Capital to Risk Weighted Assets 
  Company                                    $144,908        14.33%     $80,914
  Peoples Bank                                120,572        13.77       70,045
Tier I Capital to Risk Weighted Assets 
  Company                                     132,986        13.15       40,457
  Peoples Bank                                109,920        12.55       35,022
Tier I Capital to Average Assets 
  Company                                     132,986         9.55       55,688
  Peoples Bank                                109,920         9.42       46,690
As of December 31, 1995: 
Total Capital to Risk Weighted Assets 
  Company                                     129,141        14.23       72,584
  Peoples Bank                                111,707        13.71       65,183
Tier I Capital to Risk Weighted Assets 
  Company                                     117,937        13.00       36,292
  Peoples Bank                                101,494        12.46       32,591
Tier I Capital to Average Assets 
  Company                                     117,937         9.30       50,706
  Peoples Bank                                101,494         9.29       43,684

</TABLE>
13.  INCOME TAXES 
The current and deferred portions of income tax expense were as follows:

Year Ended December 31,                          1996         1995         1994
_______________________________________________________________________________
(in thousands) 

Current taxes                                  $7,626       $6,762       $6,397
Deferred taxes                                    352         (316)        (932)
                                                -----        -----        -----
Income tax expense                             $7,978       $6,446       $5,465
                                                =====        =====        =====








                                                                             55

The following is a reconciliation between the amount of income tax expense and
the amount of tax computed by applying the statutory Federal income tax rates: 

Year Ended December 31,                          1996         1995         1994
_______________________________________________________________________________
(in thousands) 

Tax computed at statutory rates                $8,800       $7,425       $6,407
Increase (decrease) in taxes 
  resulting from: 
    Tax-exempt income                          (1,266)      (1,328)      (1,413)
    Goodwill amortization                         308          290          290
    Other, net                                    136           59          181
                                                -----        -----        -----
Income tax expense                             $7,978       $6,446       $5,465
                                                =====        =====        =====

Not all temporary differences are accounted for through income tax expense on
the consolidated statements of income.  The tax effects of temporary
differences, that give rise to significant elements of the deferred tax assets
and deferred tax liabilities are as follows: 

December 31,                                                  1996         1995
_______________________________________________________________________________
(in thousands) 

Deferred tax assets: 
  Allowance for loan losses                                 $4,871       $4,272
  Deferred compensation                                        487          431
  Other real estate owned                                        0          181
  Other                                                        111           74
                                                             -----        -----
                                                             5,469        4,958
Deferred tax liabilities: 
  Unrealized security gain                                     (35)        (125)
  Stock dividends on securities                               (675)        (405)
  Accrued interest income                                      (31)         (89)
  Premises and equipment                                    (1,346)      (1,335)
  Other                                                       (439)         (48)
                                                             -----        -----
                                                            (2,526)      (2,002)
                                                             -----        -----
Net deferred tax assets                                     $2,943       $2,956
                                                             =====        =====

Deferred tax assets have not been reduced by a valuation allowance.  Based on
the weight of available evidence, management believes it is more likely than not
all of the deferred tax assets will be realized.  Neither current or deferred
taxes have been provided for approximately $2.5 million of income at December
31, 1996 and 1995 which represents allocations for bad debt deductions for tax



                                                                             56






purposes only.  Under existing tax regulations, if the amounts that qualify for
Federal income tax purposes are later used for purposes other than bad debt
losses, including distributions in liquidation, such distributions will be
subject to Federal income tax at the then current corporate rate. 

14.  CONTINGENCIES 

In the ordinary course of business, there are various legal proceedings pending
against the Company and its subsidiaries.  Management, after consultation with
legal counsel, is of the opinion that the ultimate resolution of these
precedings will have no material effect on the consolidated financial condition
or results of operations of the Company. 

15.  SUPPLEMENTAL INCOME STATEMENT INFORMATION 
Details of noninterest income and noninterest expense are as follows: 
 
Noninterest Income 
Year Ended December 31,                          1996         1995         1994
_______________________________________________________________________________
(in thousands) 

Service fees on deposits                       $4,767       $4,396       $4,201
Net securities gains                                0          178           62
Trust department fees                           1,330        1,220        1,181
Insurance commissions                             578          664          470
Other income                                    1,860        1,486        1,162
                                                -----        -----        -----
                                               $8,535       $7,944       $7,076
                                                =====        =====        =====


Noninterest Expense 
Year Ended December 31,                          1996         1995         1994
_______________________________________________________________________________
(in thousands) 

Salaries                                      $13,854      $13,302      $12,370
Employee benefits                               2,500        2,411        2,450
Occupancy expense                               1,814        1,769        1,677
Equipment expense                               2,171        1,885        1,665
FDIC insurance expense                          1,637        1,338        2,250
Data processing expense                         2,590        2,245        2,187
Bankshare taxes                                 1,533        1,349        1,365
Goodwill amortization                             879          830          830
Other expense                                   7,865        7,029        7,518
                                               ------       ------       ------
                                              $34,843      $32,158      $32,312
                                               ======       ======       ======





                                                                             57






16.  PARENT COMPANY FINANCIAL INFORMATION 
Following are condensed balance sheets of Peoples First Corporation (parent
company only) as of December 31, 1996 and 1995, and the related condensed
statements of income and cash flows for the years ended 1996, 1995 and 1994: 

Condensed Balance Sheets 
December 31,                                     1996         1995
__________________________________________________________________ 
(in thousands) 

ASSETS 
Cash in subsidiary bank                        $3,329         $797
Investment in subsidiary banks                141,257      127,105
Other assets                                      320          556
                                              -------      -------
                                             $144,906     $128,458
                                              =======      =======
LIABILITIES AND STOCKHOLDERS' EQUITY 
Liabilities 
Accrued expenses and other liabilities           $357         $286

Stockholders' equity 
Common stock                                    7,812        7,207
Surplus                                        69,691       53,269
Retained earnings                              66,762       66,878
Unrealized net gain on  
  securities held for sale                        284          926
Debt on ESOP shares                                 0         (108)
                                              -------      -------
                                              144,549      128,172
                                              -------      -------
                                             $144,906     $128,458
                                              =======      =======

Common shares issued and outstanding            9,999        9,686


















                                                                             58






Condensed Statements of Income 
Year Ended December 31,                          1996         1995         1994
_______________________________________________________________________________
(in thousands) 

INCOME 
Dividends from subsidiary banks                $9,100       $5,078      $10,878
Other income                                        3            3           11
                                               ------       ------       ------
                                                9,103        5,081       10,889
EXPENSE 
Interest expense                                   11           44          385
Legal and accounting fees                         217          284          571
Other expense                                     390          378          654
                                               ------       ------       ------
                                                  618          706        1,610
                                               ------       ------       ------
Income before income tax benefit 
  and equity in undistributed 
  income of subsidiary banks                    8,485        4,375        9,279
Income tax benefit                                200          164          385
Income before equity in                        ------       ------       ------
  undistributed income 
  of subsidiary banks                           8,685        4,539        9,664
Equity in undistributed 
  income of subsidiary banks                    8,479       10,228        3,461
                                               ------       ------       ------
NET INCOME                                    $17,164      $14,767      $13,125
                                               ======       ======       ======
























                                                                             59






Condensed Statement of Cash Flows 
Year Ended December 31,                          1996         1995         1994
_______________________________________________________________________________
(in thousands) 

OPERATING ACTIVITIES 
Net income                                    $17,164      $14,767      $13,125
Adjustments to reconcile net income to net 
  cash provided by operating activities: 
    Equity in undistributed 
     income of subsidiaries                    (8,479)     (10,228)      (3,461)
    Amortization and other, net                   137         (271)         134
Net Cash Provided by                           ------       ------       ------
  Operating Activities                          8,822        4,268        9,798

FINANCING ACTIVITIES 
Proceeds from notes payable                         0            0        3,800
Repayments of notes payable                         0       (1,530)     (11,859)
Proceeds from issuance of common stock            696        1,418          495
Repurchase of common stock                     (1,882)           0            0
Cash dividends paid                            (5,104)      (3,851)      (2,698)
                                               ------       ------       ------
Net Cash Used by Financing Activities          (6,290)      (3,963)     (10,262)

Net Increase (Decrease) in Cash                 2,532          305         (464)
  and Cash Equivalents 
Cash and Cash Equivalents at 
  Beginning of Year                               797          492          956
                                               ------       ------       ------
Cash and Cash Equivalents at End of 
  Year                                         $3,329         $797         $492
                                               ======       ======       ======

SUPPLEMENTAL DISCLOSURES 
Cash paid for interest expense                     $0          $53         $405
Cash received for income taxes                   (558)        (345)        (711)

NONCASH INVESTING AND FINANCING TRANSACTIONS 
Dividends reinvested                            1,065          753          542














                                                                             60






17.  DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS 
To value financial instruments for both on- and off-balance sheet assets and
liabilities where it is practicable to estimate that value, quoted market prices
are utilized by the Company where readily available.  If quoted market prices
are not available, fair values are based on estimates using present value and
other valuation techniques.  These techniques are significantly affected by the
assumptions used, including the discount rate and estimates of future cash
flows.  The calculated fair value estimates, therefore, cannot be substantiated
by comparison to independent markets and, in many cases, could not be realized
in immediate settlement of the instrument.  Certain financial instruments are
excluded from disclosure requirements.  Accordingly, the aggregate fair value
amounts presented are not intended to represent the underlying value of the
Company. 

The following methods and assumptions were used in estimating the fair value for
financial instruments. 

CASH, DUE FROM BANKS, ACCRUED INTEREST RECEIVABLE, ACCRUED INTEREST PAYABLE
AND SHORT-TERM BORROWINGS 
The carrying amount reported for cash, due from banks, accrued interest receiv-
able, accrued interest payable and short-term borrowings approximates the fair
value for those assets and liabilities. 

DEBT AND EQUITY SECURITIES 
For securities held both for sale and investment, fair values are based on
quoted market prices or dealer quotes, if available.  If a quoted market price
is not available, fair value is estimated using quoted prices for similar
securities. 

LOANS  
Loan balances are assigned fair values based on a discounted cash flow analysis.
The discount rate is based on the treasury yield curve, with rate adjustments
for credit risk, liquidity, servicing costs and the prepayment uncertainty. 

DEPOSITS 
The fair value for demand deposits and interest-bearing deposits with no fixed
maturity date is considered to be equal to the amount payable on demand or
maturity date.  Time deposits are assigned fair values based on a discounted
cash flow analysis using discount rates which approximate interest rates
currently being offered on liabilities with comparable maturities. 

LONG-TERM BORROWINGS 
The fair value of long-term borrowings is based on a discounted cash flow
analysis with a discount rate based on current incremental borrowing rates for
similar types of arrangements. 








                                                                             61






UNRECOGNIZED FINANCIAL INSTRUMENTS 
No fair value of loan commitments is presented since the Company does not
generally collect fees for loan commitments.  The fair value of guarantees and
letters of credit is based on equivalent fees that would be charged for similar
agreements and is less than $100,000 for 1996 and 1995. 

The book values and estimated fair values for financial instruments as of
December 31, 1996 and 1995 are reflected below. 

Financial Instruments 
December 31, 1996                                       Book value   Fair value
_______________________________________________________________________________ 
(in thousands) 

Financial Assets 
Cash and due from banks                                    $43,285      $43,285
Securities held for sale                                   182,352      182,352
Securities held for investment                             121,959      125,061
Loans held for sale                                          1,886        1,886
Loans receivable, net                                    1,021,634    1,063,034
Accrued interest receivable                                  9,850        9,850

Financial Liabilities 
Deposits                                                 1,115,253    1,118,860
Short-term borrowings                                      132,167      132,167
Long-term borrowings                                        14,013       13,854
Accrued interest payable                                     6,297        6,297


Financial Instruments 
December 31, 1995                                       Book value   Fair value
_______________________________________________________________________________ 
(in thousands) 

Financial Assets 
Cash and due from banks                                    $37,524      $37,524
Securities held for sale                                   146,322      146,322
Securities held for investment                             160,320      165,042
Loans held for sale                                            708          708
Loans receivable, net                                      900,418      944,214
Accrued interest receivable                                  9,392        9,392

Financial Liabilities 
Deposits                                                 1,047,104    1,055,235
Short-term borrowings                                       93,469       93,469
Long-term borrowings                                         7,757        7,721
Accrued interest payable                                     6,875        6,875






                                                                             62






Item 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND 
         FINANCIAL DISCLOSURE 

During the years ended December 31, 1996, 1995 and 1994 and in the subsequent
interim period, there has been no change in, or disagreements on accounting
matters with, the Company's independent auditors. 















































                                                                             63






PART III 

Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT 

Information with respect to all directors and all persons nominated to become
directors of the registrant appearing in the table and footnotes on pages 3
through 6 and the first narrative paragraph on page 8 of Peoples First
Corporation's definitive proxy statement, filed with the Securities and Exchange
Commission on March 24, 1997, is incorporated herein by reference. 

The following table provides information as of December 31, 1996, with respect
to the executive officers of the registrant: 

                                                                      Shares of 
                                                                   common stock 
Executive Officers                                     Officer     beneficially 
Name and age             Principal positions             since            owned 
_______________________________________________________________________________ 

Aubrey W. Lippert,       Chairman of the Board,           1983       222,537(1) 
age 56                   President and Chief 
                         Executive of the registrant; 
                         Chairman of the Board and  
                         Chief Executive Officer of 
                         Peoples Bank 

Allan B. Kleet,          Principal Accounting Officer,    1986        77,705(2) 
age 48                   Treasurer and Director of 
                         the registrant 

George Shaw,             Director and President of        1993         9,044(3) 
age 51                   Peoples Bank; formerly Presi- 
                         dent and Chief Executive Officer 
                         of Bowling Green Bank & Trust  
                         Company (1982-05/93) 


(1) Represents 2.1% of the class of stock.  Includes 133,871 shares subject to 
    currently exercisable stock options, and 210 shares held by Mr. Lippert as 
    custodian, and 24,277 shares held in Mr. Lippert's ESOP account for which 
    he has voting but no dispositive power. 

(2) Represents less than 1.0% of the class of stock.  Includes 753 shares 
    held individually by Mr. Kleet's wife, 71,530 shares subject to currently 
    exercisable stock options and 3,825 shares held in Mr. Kleet's ESOP 
    account for which he has voting but no dispositive power. 

(3) Represents less than 1.0% of the class of stock.  Includes 8,764 shares 
    subject to currently exercisable stock options and 49 shares held in Mr. 
    Shaw's ESOP account for which he has voting but no dispositive power. 



                                                                             64






Item 11.  EXECUTIVE COMPENSATION 

The information concerning compensation appearing on pages 9 through 12 of  
Peoples First Corporation's definitive proxy statement, filed with the  
Securities and Exchange Commission on March 24, 1997, is incorporated herein 
by reference. 

Item 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 

Information with respect to any person who is known to the registrant to be the
beneficial owner of more than five percent of any class of the registrant's
voting securities appearing in the tables and footnotes on page 2 and pages 3
through 6 of Peoples First Corporation's definitive proxy statement, filed with
the Securities and Exchange Commission on March 24, 1997, is incorporated herein
by reference. 

Item 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 

The information on pages 6 through 8 of Peoples First Corporation's definitive
proxy statement, filed with the Securities and Exchange Commission on March 24,
1997, is incorporated herein by reference. 


PART IV 

Item 14.  EXHIBITS, FINANCIAL STATEMENTS SCHEDULES AND REPORTS ON FORM 8-K 

     (a)  (1)   Financial Statements are incorporated herein by reference,  
                and listed in Item 8 hereof. 

          (2)   Financial Statement Schedules - None 

          (3)   List of Exhibits filed with original: 

          (3.1) Amended and Restated Articles of Incorporation of Peoples 
                First Corporation are incorporated herein by reference to 
                Exhibit 3(1) to the Registrant's Form 10-K for the year 
                ended December 31, 1994. 

          (3.2) Bylaws and Amendments of Peoples First Corporation are 
                incorporated herein by reference to Exhibit 3(b) to the 
                Registrant's Form 10-K for the year ended December 31, 1992. 

          (4)   May, 1992 indenture, from Peoples First Corporation to The 
                Paducah Bank & Trust Company, relating to the 7.25% Subord- 
                inated Short-Term Notes due 1994, is incorporated herein 
                by reference to Exhibit 4.1 of Form S-4, registration No. 
                33-44235 as filed with the Securities and Exchange Commis- 
                sion on January 8, 1992. 

          (10.1)Peoples First Corporation 1986 Stock Option Plan is 
                incorporated herein by reference to Exhibit 10 to Form 
                10-Q/A for the quarter ended March 31, 1994. 
                                                                             65






          (10.2)Employment agreement between First Kentucky Federal 
                Savings Bank and Dennis W. Kirtley is herein incorporated 
                by reference to Exhibit 10.1 of Form S-4, registration 
                #33-51741 as filed with the Securities and Exchange 
                Commission on December 29, 1993. 

          (10.3)Consulting agreement between Bank of Murray and Mr. Joe 
                Dick is herein incorporated by reference to Exhibit 10.1 
                of Form S-4, registration #33-44235 as filed with the 
                Securities and Exchange Commission on January 8, 1992. 

          (10.4)Employment agreement among the Company, Liberty Bank 
                & Trust Co. and Steve Story is herein incorporated 
                by reference to Exhibit 99.1 of Form S-4, registration 
                #33-54535 as filed with the Securities and Exchange 
                Commission on July 12, 1994. 

          (21)  Subsidiaries of Registrant. 
 
          (23)  Consent of KPMG Peat Marwick LLP, independent public 
                accountants. 

          (27)  Financial Data Schedules (SEC use only). 
 
          (99)  Undertakings. 
 
     (b)  Reports on Form 8-K 

          Peoples First Corporation filed a current report on Form 
          8-K dated January 21, 1997 on January 21, 1997 to report the 
          Board of Director's declaration of a 5% stock dividend payable 
          March 20, 1997 to shareholders of record on February 21, 1997;  





















                                                                             66






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

                                                  PEOPLES FIRST CORPORATION 
 

                              Date:  03/25/97     /s/ Aubrey W. Lippert 
                                                  Aubrey W. Lippert 
                                                  President and Chairman 
                                                  of the Board 

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, in
the capacities and on the dated indicated. 
 

Signature                          Title                              Date 
_____________________              ______________________             ________ 


/s/ Aubrey W. Lippert              President and Chairman             03/25/97 
Aubrey W. Lippert                  of the Board 


/s/ Allan B. Kleet                 Principal Accounting Officer       03/25/97 
Allan B. Kleet 


/s/ Walter L. Apperson             Director                           03/25/97 
Walter L. Apperson 


/s/ Glen Berryman                  Director                           03/25/97 
Glen Berryman 


/s/ William R. Dibert              Director                           03/25/97 
William R. Dibert 


/s/ Joe Dick                       Director                           03/25/97 
Joe Dick 


/s/ Richard E. Fairhurst, Jr.      Director                           03/25/97 
Richard E. Fairhurst, Jr. 


/s/ William Rowland Hancock        Director                           03/25/97 
William Rowland Hancock 
                                                                             67






Signature                          Title                              Date 
_____________________              ______________________             ________ 


/s/ James T. Holloway              Director                           03/25/97 
James T. Holloway 


/s/ Dennis W. Kirtley              Director                           03/25/97 
Dennis W. Kirtley 


/s/ Joe Harry Metzger              Director                           03/25/97 
Joe Harry Metzger 


/s/ Jerry L. Page                  Director                           03/25/97 
Jerry L. Page 


/s/ Rufus E. Pugh                  Director                           03/25/97 
Rufus E. Pugh 


/s/ Neal H. Ramage                 Director                           03/25/97 
Neal H. Ramage 


/s/ Allan Rhodes, Jr.              Director                           03/25/97 
Allan Rhodes, Jr. 


/s/ Mary Warren Sanders            Director                           03/25/97 
Mary Warren Sanders 


/s/ Victor F. Speck, Jr.           Director                           03/25/97 
Victor F. Speck, Jr. 


/s/ C. Steve Story                 Director                           03/25/97 
C. Steve Story 











                                                                             68






INDEX TO EXHIBITS                                                          Page 


(21) Subsidiaries of Registrant                                              70

(23)   Consent of KPMG Peat Marwick LLP, independent public 
       accountants                                                           71

(27)   Financial Data Schedules (SEC only)                                   72

(99)   Undertakings                                                          74










































                                                                             69