UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                    FORM 10-Q

              [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                For the quarterly period ended September 30, 2001

                                       or

            [ ] Transition Report Pursuant to Section 13 or 15(d) of
                       the Securities Exchange Act of 1934

                         For the transition period from
                          ____________ to ____________

                         Commission File Number 0-14412

                        Farmers Capital Bank Corporation
                        --------------------------------
             (Exact name of registrant as specified in its charter)

                  Kentucky                           61-1017851
------------------------------------     ---------------------------------------
(State or other jurisdiction of          (I.R.S. Employer Identification Number)
 incorporation or organization)


P.O. Box 309, 202 West Main Street
Frankfort, Kentucky                                           40602
--------------------------------------- ---------------------------------------
(Address of principal executive offices)                   (Zip Code)

       Registrant's telephone number, including area code: (502) 227-1600

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.

                                 Yes |X| No


Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

                    Common stock, par value $0.125 per share
                6,942,062 shares outstanding at November 5, 2001

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                                TABLE OF CONTENTS


Part I - Financial Information                                                         Page No.
------------------------------                                                         --------

<S>                                                                                      <C>
     Item 1 - Financial Statements

         Unaudited Consolidated Balance Sheets -
             September 30, 2001 and December 31, 2000                                      3

         Unaudited Consolidated Statements of Income -
             For the Three Months and Nine Months Ended
             September 30, 2001 and September 30, 2000                                     4

         Unaudited Consolidated Statements of Comprehensive Income -
             For the Three Months and Nine Months Ended
             September 30, 2001 and September 30, 2000                                     5

         Unaudited Consolidated Statements of Cash Flows -
             For the Nine Months Ended
             September 30, 2001 and September 30, 2000                                     6

         Unaudited Consolidated Statements of Changes in Shareholders' Equity -
             For the Nine Months Ended
             September 30, 2001 and September 30, 2000                                     7

         Notes to Unaudited Consolidated Financial Statements                              8

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

     Item 3 - Quantitative and Qualitative Disclosures About Market Risk                  16

Part II - Other Information
---------------------------

     Item 1 - Legal Proceedings                                                           16

     Item 6 - Exhibits and Reports on Form 8-K                                            17
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PART I - FINANCIAL INFORMATION

Item 1. Financial Statements
----------------------------
<TABLE>
<CAPTION>

UNAUDITED CONSOLIDATED BALANCE SHEETS
-----------------------------------------------------------------------------------------------------------
                                                                                September 30,  December 31,
(In thousands, except share data)                                                   2001           2000
-----------------------------------------------------------------------------------------------------------
<S>                                                                             <C>            <C>
ASSETS
Cash and cash equivalents:
    Cash and due from banks                                                     $    79,931    $   162,034
    Interest bearing deposits in other banks                                          4,094          1,912
    Federal funds sold and securities purchased
         under agreements to resell                                                  80,152         65,925
-----------------------------------------------------------------------------------------------------------
         Total cash and cash equivalents                                            164,177        229,871
-----------------------------------------------------------------------------------------------------------
Investment securities:
    Available for sale, amortized cost of $242,002 (2001) and $210,575 (2000)       246,618        211,419
    Held to maturity, fair value of $40,833 (2001) and $50,013 (2000)                39,259         49,390
-----------------------------------------------------------------------------------------------------------
         Total investment securities                                                285,877        260,809
-----------------------------------------------------------------------------------------------------------
Loans, net of unearned income                                                       710,406        683,349
Allowance for loan losses                                                           (10,697)       (10,249)
-----------------------------------------------------------------------------------------------------------
         Loans, net                                                                 699,709        673,100
-----------------------------------------------------------------------------------------------------------
Premises and equipment, net                                                          25,240         24,916
Other assets                                                                         17,471         16,056
-----------------------------------------------------------------------------------------------------------
         Total assets                                                           $ 1,192,474    $ 1,204,752
-----------------------------------------------------------------------------------------------------------
LIABILITIES
Deposits:
    Noninterest bearing                                                         $   165,837    $   231,483
    Interest bearing                                                                745,554        737,714
-----------------------------------------------------------------------------------------------------------
         Total deposits                                                             911,391        969,197
-----------------------------------------------------------------------------------------------------------
Securities sold under agreements to repurchase                                      118,761         90,004
Other borrowed funds                                                                 25,058         11,678
Dividends payable                                                                     2,085          2,155
Other liabilities                                                                    10,347          6,257
-----------------------------------------------------------------------------------------------------------
         Total liabilities                                                        1,067,642      1,079,291
-----------------------------------------------------------------------------------------------------------
Commitments and contingencies

SHAREHOLDERS' EQUITY
Common stock, par value $0.125 per share
    9,608,000 shares authorized; 8,055,390 and 8,031,552
    shares issued at September 30, 2001 and
    December 31, 2000, respectively                                                   1,007          1,004
Capital surplus                                                                      14,896         13,634
Retained earnings                                                                   135,539        131,021
Treasury stock, at cost
    1,112,598 and 859,898 shares at September 30, 2001 and
    December 31, 2000, respectively                                                 (29,633)       (20,755)
Accumulated other comprehensive income                                                3,023            557
-----------------------------------------------------------------------------------------------------------
         Total shareholders' equity                                                 124,832        125,461
-----------------------------------------------------------------------------------------------------------
         Total liabilities and shareholders' equity                             $ 1,192,474    $ 1,204,752
-----------------------------------------------------------------------------------------------------------
See accompanying notes to unaudited consolidated financial statements.
</TABLE>


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<TABLE>
<CAPTION>


UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
-------------------------------------------------------------------------------------------------------------------
                                                              Three Months Ended              Nine Months Ended
                                                                 September 30,                  September 30,
(In thousands, except per share data)                       2001              2000           2001           2000
-------------------------------------------------------------------------------------------------------------------
<S>                                                       <C>               <C>            <C>             <C>
INTEREST INCOME
Interest and fees on loans                                $14,960           $15,519        $45,667         $44,901
Interest on investment securities:
    Taxable                                                 2,555             2,140          7,720           6,521
    Nontaxable                                                847               859          2,474           2,620
Interest on deposits in other banks                            31               (38)            78              (3)
Interest on federal funds sold and securities
    purchased under agreements to resell                      761               666          2,836           1,514
-------------------------------------------------------------------------------------------------------------------
       Total interest income                               19,154            19,146         58,775          55,553
-------------------------------------------------------------------------------------------------------------------
INTEREST EXPENSE
Interest on deposits                                        7,356             7,371         23,018          20,988
Interest on securities sold under agreements to repurchase  1,028               849          3,255           1,923
Interest on other borrowed funds                              164               150            443             329
-------------------------------------------------------------------------------------------------------------------
       Total interest expense                               8,548             8,370         26,716          23,240
-------------------------------------------------------------------------------------------------------------------
    Net interest income                                    10,606            10,776         32,059          32,313
-------------------------------------------------------------------------------------------------------------------
Provision for loan losses                                     836               460          2,109           1,887
-------------------------------------------------------------------------------------------------------------------
    Net interest income after provision for loan losses     9,770            10,316         29,950          30,426
-------------------------------------------------------------------------------------------------------------------
NONINTEREST INCOME
Service charges and fees on deposits                        1,672             1,316          4,973           3,884
Other service charges, commissions, and fees                  972             1,038          2,865           3,174
Data processing income                                        327               340          1,035           1,016
Trust income                                                  360               406          1,253           1,225
Investment securities gains, net                                                               465
Gain on sale of mortgage loans                                 56                13            153              28
Other                                                          49                33            118             151
-------------------------------------------------------------------------------------------------------------------
       Total noninterest income                             3,436             3,146         10,862           9,478
-------------------------------------------------------------------------------------------------------------------
NONINTEREST EXPENSE
Salaries and employee benefits                              4,976             4,547         14,475          14,053
Occupancy expenses, net                                       577               546          1,770           1,655
Equipment expenses                                            849               708          2,430           2,060
Bank franchise tax                                            309               289            902             863
Other                                                       2,356             2,063          6,293           6,311
-------------------------------------------------------------------------------------------------------------------
       Total noninterest expense                            9,067             8,153         25,870          24,942
-------------------------------------------------------------------------------------------------------------------
       Income before income taxes                           4,139             5,309         14,942          14,962
-------------------------------------------------------------------------------------------------------------------
Income tax expense                                          1,109             1,522          4,110           4,225
-------------------------------------------------------------------------------------------------------------------
Net income                                                 $3,030            $3,787        $10,832         $10,737
-------------------------------------------------------------------------------------------------------------------
NET INCOME PER COMMON SHARE
    Basic                                                    $.44              $.52          $1.55           $1.46
    Diluted                                                   .43               .52           1.54            1.46
-------------------------------------------------------------------------------------------------------------------
WEIGHTED AVERAGE SHARES OUTSTANDING
    Basic                                                   6,950             7,263          6,999           7,343
    Diluted                                                 7,012             7,279          7,038           7,346
-------------------------------------------------------------------------------------------------------------------
See accompanying notes to unaudited consolidated financial statements.
</TABLE>


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<CAPTION>


UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
-------------------------------------------------------------------------------------------------------------------
                                                              Three Months Ended              Nine Months Ended
                                                                 September 30,                  September 30,
(In thousands)                                            2001                 2000           2001            2000
-------------------------------------------------------------------------------------------------------------------
<S>                                                       <C>               <C>            <C>             <C>
NET INCOME                                                $3,030            $3,787         $10,832         $10,737
Other comprehensive income:
    Unrealized holding gain on available for sale
    securities arising during the period, net of tax
    of $827, $617 $1,369, and $412, respectively           1,605             1,198           2,658             800
Reclassification adjustment for prior period
    unrealized gain recognized during current period,
    net of tax of $23 and $(99), respectively                 44                              (192)
-------------------------------------------------------------------------------------------------------------------
Other comprehensive income                                 1,649            1,198            2,466             800
-------------------------------------------------------------------------------------------------------------------
COMPREHENSIVE INCOME                                      $4,679            $4,985         $13,298         $11,537
-------------------------------------------------------------------------------------------------------------------
See accompanying notes to unaudited consolidated financial statements.
</TABLE>

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<TABLE>
<CAPTION>



UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
--------------------------------------------------------------------------------------------------------------------
                                                                        Nine Months Ended          Nine Months Ended
                                                                          September 30,              September 30,
 (In thousands)                                                               2001                       2000
--------------------------------------------------------------------------------------------------------------------
<S>                                                                         <C>                        <C>
CASH FLOWS FROM OPERATING ACTIVITIES
    Net income                                                              $10,832                    $10,737
    Adjustments to reconcile net income to net cash
       provided by operating activities:
       Depreciation and amortization                                          2,231                      1,961
       Net amortization of investment security
          premiums and discounts:
             Available for sale                                                (155)                      (364)
             Held to maturity                                                   (13)                        (8)
       Provision for loan losses                                              2,109                      1,887
       Noncash compensation expense                                             675                        726
       Mortgage loans originated for sale                                   (26,004)                    (8,069)
       Proceeds from sale of mortgage loans                                  25,314                      7,700
       Deferred income tax expense                                              125                         61
       Gain on sale of available for sale investment securities, net           (465)
       Gain on sale of mortgage loans                                          (153)                       (28)
       Gain on sale of premises and equipment                                   (12)                        (4)
       Decrease (increase) in accrued interest receivable                       351                       (775)
       Increase in other assets                                              (2,008)                      (551)
       (Decrease) increase in accrued interest payable                           (1)                       486
       Increase in other liabilities                                          2,664                      1,268
--------------------------------------------------------------------------------------------------------------------
    Net cash provided by operating activities                                15,490                     15,027
--------------------------------------------------------------------------------------------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES
    Proceeds from maturities and calls of investment securities:
       Available for sale                                                   249,484                    110,413
       Held to maturity                                                      10,478                      6,992
    Proceeds from sale of available for sale investment securities           33,289
    Purchases of investment securities:
       Available for sale                                                  (313,580)                   (99,540)
       Held to maturity                                                        (334)
    Loans originated for investment, net of principal collected             (27,875)                   (36,333)
    Purchases of premises and equipment                                      (2,322)                    (2,273)
    Proceeds from sale of premises and equipment                                 21                         26
--------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities                                       (50,839)                   (20,715)
--------------------------------------------------------------------------------------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES
    Net decrease in deposits                                                (57,806)                   (17,473)
    Net increase in securities sold under agreements to repurchase           28,757                     35,787
    Proceeds from long term debt                                              8,000                      8,000
    Repayments of long-term debt                                             (6,213)                      (811)
    Net increase in other borrowed funds                                     11,593                        116
    Dividends paid                                                           (6,384)                    (6,437)
    Purchase of common stock                                                 (8,878)                    (7,859)
    Stock options exercised                                                     586                        271
--------------------------------------------------------------------------------------------------------------------
    Net cash (used in) provided by financing activities                     (30,345)                    11,594
--------------------------------------------------------------------------------------------------------------------
Net (decrease) increase in cash and cash equivalents                        (65,694)                     5,906
--------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at beginning of year                              229,871                    135,360
--------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period                                 $164,177                   $141,266
--------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURES
Cash paid during the period for:
    Interest                                                                $26,717                    $22,753
    Income taxes                                                              3,100                      4,150
Cash dividend declared and unpaid                                             2,085                      2,102
--------------------------------------------------------------------------------------------------------------------
See accompanying notes to unaudited consolidated financial statements.
</TABLE>


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<TABLE>
<CAPTION>


UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
------------------------------------------------------------------------------------------------------------------------------------
(In thousands)                                                                                        Accumulated
                                                                                                         Other             Total
Nine Months ended                       Common Stock       Capital    Retained      Treasury Stock   Comprehensive     Shareholders'
September 30, 2001 and 2000         Shares     Amount      Surplus    Earnings   Shares     Amount   Income (Loss)        Equity
------------------------------------------------------------------------------------------------------------------------------------
<S>                                  <C>       <C>         <C>        <C>             <C>   <C>         <C>               <C>
  Balance at December 31, 2000       8,032     $1,004      $13,634    $131,021        860   $(20,755)    $  557           $125,461
Net income                                                              10,832                                              10,832
Other comprehensive income                                                                                2,466              2,466
Cash dividends declared,
  $.90 per share                                                        (6,314)                                             (6,314)
Purchase of common stock                                                              253     (8,878)                       (8,878)
Stock options exercised, including
related tax benefits                    24          3          587                                                             590
Noncash compensation expense
  attributed to stock option grants                            675                                                             675
-----------------------------------------------------------------------------------------------------------------------------------
  Balance at September 30, 2001      8,056     $1,007      $14,896    $135,539      1,113   $(29,633)    $3,023           $124,832
-----------------------------------------------------------------------------------------------------------------------------------


-----------------------------------------------------------------------------------------------------------------------------------
  Balance at December 31, 1999       8,020     $1,002      $12,370    $125,173        582   $(11,498)    $(1,941)         $125,106
Net income                                                              10,737                                              10,737
Other comprehensive income                                                                                   800               800
Cash dividends declared,
  $.87 per share                                                        (6,377)                                             (6,377)
Purchase of common stock                                                              238     (7,859)                       (7,859)
Stock options exercised                 11          2          269                                                             271
Noncash compensation expense
  attributed to stock option grants                            726                                                             726
-----------------------------------------------------------------------------------------------------------------------------------
  Balance at September 30, 2000      8,031     $1,004      $13,365    $129,533        820   $(19,357)    $(1,141)         $123,404
-----------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to unaudited consolidated financial statements.
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<PAGE>


  NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1.   BASIS OF PRESENTATION

The consolidated  financial  statements  include the accounts of Farmers Capital
Bank  Corporation  (the  "Company"),   a  financial  holding  company,  and  its
subsidiaries,  including its principal subsidiary,  Farmers Bank & Capital Trust
Company.  All  significant  intercompany  transactions  and  accounts  have been
eliminated in consolidation.

The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States of America requires  management to make
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities  and disclosure of contingent  assets and liabilities as of the date
of the financial  statements  and the reported  amounts of revenues and expenses
during the reporting period.  Estimates used in the preparation of the financial
statements  are based on various  factors  including  the current  interest rate
environment  and the  general  strength  of the local  economy.  Changes  in the
overall  interest rate  environment can  significantly  affect the Company's net
interest  income and the value of its recorded  assets and  liabilities.  Actual
results  could  differ  from  those  estimates  used in the  preparation  of the
financial statements.

The  financial  information  presented as of any date other than December 31 has
been  prepared  from the books  and  records  without  audit.  The  accompanying
consolidated  financial  statements  have been prepared in  accordance  with the
instructions  to Form 10-Q and Rule 10-01 of  Regulation  S-X and do not include
all of the  information  and the  footnotes  required by  accounting  principles
generally  accepted  in the United  States of  America  for  complete  financial
statements. In the opinion of management, all adjustments,  consisting of normal
recurring  adjustments,  necessary  for a fair  presentation  of such  financial
statements,  have been  included.  The  results of  operations  for the  interim
periods are not  necessarily  indicative  of the results to be expected  for the
full year.

For further  information,  refer to the  consolidated  financial  statements and
footnotes  thereto  included in the Company's Annual Report on Form 10-K for the
year ended December 31, 2000.

2.   RECLASSIFICATIONS

Certain   reclassifications   have  been  made  to  the  consolidated  financial
statements of prior periods to conform to the current period presentation.  Such
reclassifications have no effect on previously reported net income.


<PAGE>

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

of Operations
-------------

FORWARD-LOOKING STATEMENTS

This report contains  forward-looking  statements  under the Private  Securities
Litigation Reform Act of 1995 that involve risks and uncertainties. Although the
Company believes that the assumptions underlying the forward-looking  statements
contained herein are reasonable, any of the assumptions could be inaccurate, and
therefore,  there  can  be no  assurance  that  the  forward-looking  statements
included  herein will prove to be  accurate.  Factors  that could  cause  actual
results to differ from the results discussed in the  forward-looking  statements
include,  but are not limited to: economic  conditions  (both generally and more
specifically in the markets in which the Company and its subsidiaries  operate);
competition  for the  Company's  customers  from other  providers  of  financial
services; government legislation and regulation (which changes from time to time
and over which the Company has no control);  changes in interest rates; material
unforeseen  changes  in the  liquidity,  results  of  operations,  or  financial
condition of the Company's customers;  and other risks detailed in the Company's
filings with the Securities and Exchange Commission,  all of which are difficult
to predict and many of which are beyond the control of the Company.

RESULTS OF OPERATIONS

                    Third Quarter 2001 vs. Third Quarter 2000
                    -----------------------------------------

Basic net income per share for the third quarter of 2001 was $.44, a decrease of
$.08 or 15.4% compared to the same period in 2000. On a diluted per share basis,
net income  decreased $.09 or 17.3%. Net income for the current quarter was $3.0
million compared to $3.8 million for the same period in 2000, a decrease of $757
thousand  or 20.0%.  Noninterest  income  increased  $290  thousand or 9.2% as a
result of increased income from service charges and fees on deposits. A decrease
in net interest  income of $170  thousand or 1.6%,  an increase in the provision
for loan  losses of $376  thousand  or 81.7%,  and an  increase  in  noninterest
expense of $914  thousand  or 11.2% all had a negative  impact on net income for
the current quarter.

Return on average  assets was 1.04% for the  current  quarter  compared to 1.48%
reported for the same period in 2000.  The decrease in return on average  assets
is due primarily to a 66 basis point decline in the net interest margin.  Return
on average  equity was 9.79% for the third quarter of 2001 compared to 12.18% in
the same period of 2000.

Net Interest Income
-------------------

The interest rate  environment  has been extremely  volatile  during the current
period.  Actions  taken by the  Federal  Reserve  Board  (the  "Fed")  to reduce
short-term  interest  rates by an  additional  75 basis  points  in the  current
quarter have  affected the  Company's  net interest  margin,  as well as the net
interest margin of many banks in the industry.  Market interest rates in general
have  dropped  significantly  since the  third  quarter  of 2000 as well.  Since
January 1, 2001,  the Fed has acted to reduce  short-term  interest rates by 350
basis  points.  The effect of the Fed's  actions has  generally  led to interest
rates on earning  assets  declining  more  rapidly  than rates paid on  interest
bearing  liabilities.  During a falling rate  environment,  the  challenge is to
reduce the rates paid on interest bearing  liabilities  (primarily  deposits) to
offset the decline in the yield on variable rate assets  (primarily loans) while
remaining  competitive in our markets. The Company's yield on earning assets for
the current  quarter was 7.39%,  a reduction  of 106 basis  points from the same
period a year ago and 45 basis points from the prior quarter.  The cost of funds
for the current  quarter was 3.86%, a decline of 61 basis points compared to the
same period a year ago and 33 basis points from the prior  quarter.  The Company
has  attempted  to mitigate  the impact of the lower  market  interest  rates by
increasing the amount of its earning assets and by decreasing the interest rates
paid on interest bearing liabilities.  Average earning assets as a percentage of
average  total assets were 91.3% for the three months ended  September 30, 2001,
an increase of 42 basis points compared to the same period in 2000.

Net  interest  income  totaled  $10.6  million for the third  quarter of 2001, a
decrease of $170 thousand or 1.6%  compared to the third quarter of 2000.  Total
interest  income was $19.2  million  for the third  quarter  of 2001,  virtually
unchanged  from the third  quarter  of 2000.  Total  interest  expense  was $8.5
million for the current  quarter,  an increase of $178 thousand or 2.1% compared
to the same period in 2000. The average  interest rate paid on interest  bearing
liabilities  decreased 61 basis points,  partially  offsetting the impact from a
$134.6 million or 18.1% increase in the average balance.

Interest and fees on loans  decreased  $559 thousand or 3.6%  primarily due to a
decrease in the average rate earned.  Average loans  increased  $30.0 million or
4.4% while the yield  decreased  69 basis  points to 8.52%.  Interest on taxable
securities  increased $415 thousand or 19.4% primarily due to a $51.2 million or
38.0%  increase  in the  average  balance.  The  average  rate earned on taxable
securities decreased 87 basis points to 5.46%. Interest on nontaxable securities
decreased $12 thousand or 1.4% due to a slight  decline in the average rate of 5
basis points. Interest on short-term  investments,  primarily federal funds sold
and securities purchased under agreements to resell,  increased $164 thousand or
26.1% due primarily to an increase in the average balance of $52.2 million.

The $178  thousand  or 2.1%  increase  in total  interest  expense is  primarily
attributed  to an increase in interest on time  deposits of $616 thousand and an
increase in interest on securities  sold under  agreements to repurchase of $179
thousand. These increases were largely due to an increase in the average balance
outstanding  of $46.7 million and $57.3 million for time deposits and securities
sold under agreements to repurchase,  respectively. Interest expense on interest
bearing  demand  deposits and savings  deposits  declined $326 thousand and $305
thousand,  respectively.  The  average  rate  paid on  interest  bearing  demand
deposits  declined  80 basis  points to 1.57%  while  the rate  paid on  savings
deposits declined 108 basis points to 2.46%.

The net interest  margin on a tax equivalent  basis decreased 66 basis points to
4.18% during the third  quarter of 2001  compared to the third  quarter of 2000.
The decrease in net interest margin is primarily  attributed to a decline in the
spread between rates earned and paid of 44 basis points to 3.54% for the current
quarter. The impact of noninterest bearing sources of funds contributed 65 basis
points to the net interest margin of the current quarter, a decrease of 22 basis
points compared to the same quarter a year earlier.

Noninterest Income
------------------

Noninterest income was $3.4 million for the current quarter, an increase of $290
thousand or 9.2% compared to the same period of the prior year.  Service charges
and fees on deposits,  the largest  component of noninterest  income,  increased
$356 thousand or 27.1%  primarily  due to a change in NSF fee  structure  during
2001. The Company allows checking account customers meeting specific criteria to
overdraw their checking  account up to a  predetermined  limit.  The customer is
charged a  standard  fee for each  check  paid that  creates  or  increases  the
overdraft  balance.  Guidelines have been established  addressing the time frame
that  repayment of the overdraft and related fees are to be made.  Other service
charges, commissions, and fees decreased $66 thousand or 6.4% due primarily to a
decrease in custodial  safekeeping fees from the Commonwealth of Kentucky.  Data
processing  income  decreased $13 thousand or 3.8% to $327 thousand.  Trust fees
decreased $46 thousand or 11.3% to $360 thousand due principally to nonrecurring
transactions  occurring in the prior  period.  Net gains on the sale of mortgage
loans  totaled  $56  thousand,  an increase  of $43  thousand as mortgage  loans
originated for sale increased $2.8 million or 60.1% in the comparison.

Noninterest Expense
-------------------

Total  noninterest  expense  increased  $914  thousand  or 11.2%  from the third
quarter of 2000 and totaled $9.1 million.  Salaries and employee  benefits,  the
largest component of noninterest  expense,  increased $429 thousand or 9.4%. The
increase in  salaries  and  employee  benefits is  attributed  to normal  salary
increases and unusually low health insurance costs in the prior year.  Occupancy
expense,  net of rental  income,  increased $31 thousand in the  comparison  and
totaled $577 thousand.  Equipment expense totaled $849 thousand,  an increase of
$141  thousand or 19.9%.  The  increase is  primarily  the result of  additional
depreciation  and  maintenance  on  new  asset  purchases.  Bank  franchise  tax
increased $20 thousand to $309 thousand.  Other  noninterest  expense  increased
$293 thousand to $2.4 million resulting  primarily from a $207 thousand increase
in legal fees incurred in the normal course of business.



Income Taxes
------------

Income tax expense for the third quarter of 2001 was $1.1 million, a decrease of
$413  thousand or 27.1% from the third  quarter of 2000.  The effective tax rate
was 26.79% for the  current  quarter,  a decrease  of 188 basis  points from the
third  quarter of 2000.  The decrease in the effective tax rate is due primarily
to a  combination  of increased low income  housing tax credits,  an increase in
nontaxable interest income on loans, and a decrease in goodwill amortization.

                            First Nine Months of 2001
                            -------------------------

The Company  reported a $.09 or 6.2%  increase in basic net income per share for
the first nine months of 2001  compared to the same period in 2000. On a diluted
per share  basis,  net  income  increased  $.08 or 5.5% in the  comparison.  The
increase  in net  income  per share is  primarily  attributed  to the  Company's
treasury  share  buy-back  program  that has been in effect for  several  years.
During the first nine months of 2001, the Company  purchased 253 thousand shares
of its common stock at a cost of $8.9  million.  Net income for the current nine
months was $10.8 an increase of $95 thousand or 0.9% compared to the prior year.
Noninterest  income  increased  $1.4  million or 14.6%  primarily as a result of
increased  service  charges on deposits of $1.1 million or 28.0% and  securities
gains  of $465  thousand.  The  increase  in  noninterest  income  offset a $254
thousand  or 0.8%  decline in net  interest  income,  a $222  thousand  or 11.8%
increase in the  provision  for loan  losses,  and an  increase  in  noninterest
expense of $928 thousand or 3.7%.

Return on average assets was 1.29% for the nine months ended September 30, 2001,
a decrease  of 13 basis  points from the same  period in 2000.  The  decrease in
return on average  assets is due  primarily  to a 61 basis point  decline in net
interest  margin,  which offset a 23 basis point  positive  effect  related to a
decrease in noninterest expenses to average assets. Return on average equity was
11.83%, an increase of 28 basis points from the first nine months of 2000.

Net Interest Income
-------------------

The interest rate  environment  has been extremely  volatile  during the current
period,  as general market interest rates have dropped  significantly  since the
third quarter of 2000.  Actions taken by the Fed to reduce  short-term  interest
rates by 350 basis points in the current nine months have affected the Company's
net interest  margin,  as well as the net  interest  margin of many banks in the
industry. The effect of the Fed's actions has generally led to interest rates on
earning  assets  declining  more  rapidly  than rates paid on  interest  bearing
liabilities.  During a falling rate environment,  the challenge is to reduce the
rates paid on interest bearing  liabilities  (primarily  deposits) to offset the
decline in the yield on variable rate assets  (primarily  loans) while remaining
competitive  in our  markets.  The  Company's  yield on  earning  assets for the
current  nine  months was 7.80%,  a reduction  of 56 basis  points from the same
period a year ago.  The cost of funds for the current  nine months was 4.21%,  a
decline of 3 basis  points  compared to the same period a year ago.  The Company
has  attempted  to mitigate  the impact of the lower  market  interest  rates by
increasing the amount of its earning assets and by decreasing the interest rates
paid on interest bearing liabilities.  Average earning assets as a percentage of
average total assets were 91.7% for the nine months ended September 30, 2001, an
increase of 11 basis points compared to a year earlier.

Net interest  income  totaled $32.1 million for the nine months ended  September
30, 2001, a modest  decrease from $32.3 million  reported for the same period in
2000. Total interest income grew $3.2 million or 5.8% to $58.8 million,  but was
offset by a $3.5 million or 15.0% increase in total interest expense.

Interest and fees on loans  increased  $766 thousand or 1.7%  primarily due to a
$31.8 million or 4.8% increase in the average balance of loans outstanding.  The
yield on the loan  portfolio  decreased  23 basis  points to 8.86%.  Interest on
taxable  securities  increased $1.2 million or 18.4%.  The increase is primarily
the result of a $39.0 million increase in the average balance outstanding, which
offset a decline in yield of 48 basis points.  Interest on nontaxable securities
decreased  $146  thousand or 5.6% due to a decrease in both the average  balance
outstanding and the yield. Interest on short-term investments, primarily federal
funds sold and securities  purchased under agreements to resell,  increased $1.4
million due to a $54.0  million  increase in the  average  balance  outstanding,
which offset a 165 basis point decline in the yield.

Total  interest  expense  increased  $3.5  million  or 15.0%  to $26.7  million.
Interest  expense on interest  bearing  demand  deposits  and  savings  deposits
declined  $624  thousand  and  $588  thousand,  respectively  due  primarily  to
reductions  in the average  rate paid on interest  bearing  deposits of 46 basis
points and savings  deposits of 60 basis points.  These decreases were offset by
an  increase  in interest  expense on time  deposits  of $3.2  million or 23.6%,
securities  sold under  agreements to  repurchase of $1.3 million or 69.4%,  and
other borrowed funds of $114 thousand or 34.7%. The increase in interest on time
deposits is due to a $51.5  million or 15.5%  increase  in the  average  balance
outstanding and a 40 basis point increase in the average rate paid. The increase
in interest on securities sold under agreements to repurchase and other borrowed
funds is  primarily  attributed  to an  increase  in their  average  outstanding
balance of $53.0 million and $3.1 million, respectively.

The net interest  margin on a tax equivalent  basis decreased 61 basis points to
4.34% during the first nine months of 2001  compared to the same period of 2000.
The decrease in net interest margin is primarily  attributed to a decline in the
spread between rates earned and paid of 52 basis points to 3.59% for the current
quarter. The impact of noninterest bearing sources of funds contributed 75 basis
points to the net interest  margin for the nine months ended September 30, 2001,
a decrease of 8 basis points compared to the same period a year earlier.

Noninterest Income
------------------

Noninterest  income  was $10.9  million  for the first nine  months of 2001,  an
increase of $1.4 million or 14.6%  compared to the same period in 2000.  Service
charges and fees on  deposits,  the largest  component  of  noninterest  income,
increased $1.1 million or 28.0% primarily due to the change in NSF fee structure
as  described  above  in  the  quarterly  comparison.   Other  service  charges,
commissions, and fees decreased $309 thousand to $2.9 million primarily due to a
decrease  in  custodial  safekeeping  fees from the  Commonwealth  of  Kentucky.
Related  correspondent  bank fees have  decreased  proportionately  as described
below. Trust fees increased $28 thousand or 2.3% to a total of $1.3 million. Net
gains on the sale of available for sale investment  securities,  which were zero
during 2000,  totaled $465 thousand in the current period. Net gains on the sale
of mortgage  loans  totaled  $153  thousand,  an  increase  of $125  thousand as
mortgage loans originated for sale increased $17.9 million to $26.0 million.

Noninterest Expense
-------------------

Total  noninterest  expense was $25.9 million for the first nine months of 2001,
an increase of $928  thousand or 3.7% compared to the first nine months of 2000.
Salaries and employee  benefits,  the largest component of noninterest  expense,
increased  $422 thousand or 3.0% to $14.5  million.  Occupancy  expense,  net of
rental  income,  increased $115 thousand or 6.9% in the  comparison.  Additional
depreciation and the cost of utilities account for a significant  portion of the
increase.  Equipment  expenses increased $370 thousand or 18.0% primarily due to
additional  depreciation and maintenance on new asset purchases.  Bank franchise
tax expense  increased  $39 thousand or 4.5% to $902  thousand.  The decrease in
other  noninterest   expense  is  primarily   attributable  to  a  reduction  in
correspondent  bank fees of $217  thousand and other real estate  expense of $60
thousand.  Reductions  in  correspondent  bank  fees  are  primarily  due to our
relationship  with the Commonwealth of Kentucky.  The decreases in correspondent
bank fees and other real estate  expense are offset by  increases  in  telephone
expenses  of $107  thousand  and legal fees  incurred  in the  normal  course of
business of $106 thousand.

Income Taxes
------------

Income  tax  expense  for the  first  nine  months of 2001 was $4.1  million,  a
decrease  $115  thousand  or 2.7%  compared  to the same  period  in  2000.  The
effective  tax rate was 27.51% for the first nine months of 2001,  a decrease of
73 basis points from the prior year.



FINANCIAL CONDITION

Total  assets  were $1.2  billion on  September  30,  2001,  a decrease of $12.3
million or 1.0% from December 31, 2000.  Fluctuations in assets and deposits are
typical due to the  relationship  between the  Company's  principal  subsidiary,
Farmers Bank & Capital Trust Company, and the Commonwealth of Kentucky.  Farmers
Bank provides  various  services to state agencies of the  Commonwealth.  As the
depository  for the  Commonwealth,  these agencies issue checks drawn on Farmers
Bank,  including  paychecks  and state  income tax  refunds.  Farmers  Bank also
processes  vouchers of the WIC (Women,  Infants  and  Children)  program for the
Cabinet for Human  Resources.  The Bank's  investment  department  also provides
services  to the  Teacher's  Retirement  systems.  As  the  depository  for  the
Commonwealth,  large  fluctuations  in  deposits  are likely to occur on a daily
basis.  On an average  basis,  total assets were $1.1 billion for the first nine
months of 2001, an increase of $97.5 million or 9.5% from year-end 2000. Average
earning  assets were 91.7% of average  total  assets at September  30, 2001,  an
increase of 160 basis points compared to year-end 2000.

Loans
-----

Loans, net of unearned income,  totaled $710.4 million at September 30, 2001, an
increase of $27.1 million or 4.0% from year-end  2000.  The increase in loans is
primarily  attributed  to a $10.1  million or 2.2%  increase in loans secured by
real estate and an increase in lease financing of $6.0 million or 17.6%. Average
net loans  for the  nine-month  period  ended  September  30,  2001 were  $695.3
million,  an increase of $28.0  million or 4.2%  compared to the  year-end  2000
average. On average, loans represented 67.4% of earning assets compared to 72.0%
for year-end 2000. As loan demand fluctuates, the available funds are redirected
between either temporary investments or investment securities.

Allowance for Loan Losses
-------------------------

The  allowance  for loan losses was $10.7  million at  September  30,  2001,  an
increase of $448 thousand  from the prior  year-end.  The  allowance  represents
1.51% of net loans at September 30, 2001. In management's opinion, the allowance
for loan losses is adequate to cover losses inherent in the loan portfolio.  The
provision for loan losses increased $376 thousand and $222 thousand in the three
and nine-month  comparison for the period ended  September 30, 2001. The Company
had net  charge-offs  of $652 thousand and $1.7 million in the current three and
nine  months  of 2001,  respectively,  an  increase  of $281  thousand  and $292
thousand compared to the same periods in 2000. A significant  portion of the net
charge offs in the  current  quarter  relate  primarily  to a single  commercial
credit.  Annualized net charge offs represented 0.37% and 0.32% of average loans
for the current three and nine month periods, respectively, compared to 0.20% at
year  end  2000.  Management  continues  to  emphasize  collection  efforts  and
evaluation of risks within the portfolio.

Nonperforming Assets
--------------------

Nonperforming  assets for the Company include  nonperforming  loans,  other real
estate owned,  and other  foreclosed  assets.  Nonperforming  loans  consists of
nonaccrual loans,  restructured loans, and loans past due ninety days or more on
which interest in still accruing.  Nonperforming  assets totaled $7.2 million at
September  30, 2001,  an increase of $1.9  compared to the prior  year-end and a
decrease of $561  thousand  compared to the prior  quarter  end. The increase in
nonperforming  assets in the nine month period is primarily attributed to a $996
thousand  increase  in  other  real  estate  owned,   which  also  represents  a
significant  portion of the remaining  balance of one commercial credit that was
partially charged off.  Nonperforming  loans increased $755 thousand compared to
the prior  year-end.  Loans past due ninety  days or more on which  interest  is
still accruing  increased $566 thousand in the comparison.  Nonperforming  loans
decreased $1.6 million in the current quarter, led by a decrease of $1.6 million
in nonaccrual loans.  Nonperforming loans as a percentage of net loans increased
from 0.67% at year-end to 0.75% at September 30, 2001. This  percentage  totaled
0.99% at the end of the prior quarter, a decrease of 24 basis points.

Temporary Investments
---------------------

Interest  bearing  deposits with other banks,  federal funds sold and securities
purchased  under  agreements to resell averaged $86.9 million for the first nine
months of 2001, an increase of $49.3  million from year end 2000.  This increase
is  primarily  a result of the  relationship  between  the  Company's  principal
subsidiary and the  Commonwealth of Kentucky as described in preceding  sections
of this report.  Temporary  investments  are reallocated as loan demand presents
the opportunity.

Investment Securities
---------------------

Investment  securities were $285.9 million on September 30, 2001, an increase of
$25.1  million  or 9.6%  from  year-end  2000.  Available  for  sale and held to
maturity  securities  were  $246.6  million  and  $39.3  million,  respectively.
Investment securities averaged $249.1 million for the first nine months of 2001,
an increase of $27.7  million or 12.5% from  year-end  2000.  The Company had an
unrealized gain on available for sale  investment  securities of $4.6 million at
September 30, 2001 compared to $844 thousand at year-end  2000.  Typically,  the
value of a bond  portfolio  and  interest  rates have an  inverse  relationship;
therefore,  in the current falling interest rate  environment,  the value of the
available for sale portfolio has increased.

Deposits
--------

Total  deposits  were $911.4  million at September 30, 2001, a decrease of $57.8
million or 6.0% from year-end 2000. Noninterest bearing deposits decreased $65.6
million in the  comparison.  This decrease is primarily due to the  relationship
between the Company's  principal  subsidiary and the Commonwealth of Kentucky as
described in preceding sections of this report. On average,  noninterest bearing
deposits were $148.7 million during the current  nine-month  period, an increase
of $2.8 million or 1.9% compared to the prior year-end average. Interest bearing
deposits  increased $7.8 million during the nine months ended September 30, 2001
compared to year-end  2000. On average,  interest  bearing  deposits were $739.0
million in the current  period,  an increase of $53.8  million or 7.9% from year
end 2000.  Time deposits  accounted for $45.8 million of the increase in average
interest bearing deposits.  Total deposits averaged $887.7 million,  an increase
of $56.6 million or 6.8% from year-end 2000.

Borrowed Funds
--------------

Borrowed  funds  totaled  $143.8  million at September  30, 2001, an increase of
$42.1 million from year-end  2000.  The increase in borrowed funds is attributed
to an  increase in  securities  sold under  agreements  to  repurchase  of $28.8
million and additional  net borrowings  from the Federal Home Loan Bank of $14.0
million.  The fluctuation in securities  sold under  agreements to repurchase is
primarily due to the relationship between the Company's principal subsidiary and
the Commonwealth of Kentucky as described in preceding  sections of this report.
Total borrowed funds averaged $108.5 million,  an increase of $47.8 million from
year-end 2000.

LIQUIDITY

Liquidity  of the  Parent  Company  is  primarily  affected  by the  receipt  of
dividends  from  its  subsidiary  banks  and  cash  balances  maintained.  As of
September 30, 2001 combined retained earnings of the subsidiary banks were $58.6
million,  of which $11.6  million was  available for the payment of dividends to
the  Parent  Company  without  obtaining  prior  approval  from bank  regulatory
agencies. As a practical matter,  payment of future dividends is also subject to
the maintenance of other capital ratio requirements.  Management expects that in
the  aggregate,  its  subsidiary  banks  will  continue  to have the  ability to
dividend  adequate funds to the Parent Company during the remainder of 2001. The
Parent Company had cash balances of $17.9 million at September 30, 2001.

The Company's  objective as it relates to liquidity is to insure that subsidiary
banks  have funds  available  to meet  deposit  withdrawals  and credit  demands
without unduly penalizing profitability.  In order to maintain a proper level of
liquidity,  the banks have several  sources of funds  available on a daily basis
that  can be used for  liquidity  purposes.  These  sources  of funds  primarily
include the  subsidiary  banks' core  deposits,  consisting of both business and
nonbusiness  deposits;  cash flow  generated by repayment of loan  principal and
interest;  and federal funds purchased and securities  sold under  agreements to
repurchase.

For the longer term, the liquidity position is managed by balancing the maturity
structure of the balance sheet. This process allows for an orderly flow of funds
over an extended period of time.

Liquid assets consist of cash and due from banks,  short-term  investments,  and
available for sale  investment  securities.  At September 30, 2001,  such assets
totaled $410.8 million,  a decrease of $30.5 million or 6.9% from year-end 2000.
Net cash  provided by operating  activities  totaled  $15.5  million in the nine
months ended  September  30, 2001  compared to $15.0 million for the same period
last year. Net cash used in investing  activities was $50.8 million, an increase
of $30.1  million.  The  increase in net cash used in  investing  activities  is
attributed to additional purchases of available for sale investment  securities.
Net cash used in  financing  activities  was $30.3  million  for the nine months
ended  September  30,  2001,  an  increase  of $41.9  million  in the prior year
comparison.  The  increase  in net  cash  used in  financing  activities  is due
primarily  to a  decrease  in  deposits  of  $40.3  million  in  the  nine-month
comparison.

CAPITAL RESOURCES

Shareholders' equity was $124.8 million on September 30, 2001. This represents a
decrease of $629 thousand or 0.5% from year-end 2000. The Company  purchased 253
thousand shares of its outstanding  common stock during the first nine months of
2001 for a total cost of $8.9 million.

The Company  announced a stock purchase plan on July 25, 2000, which states that
it intends to purchase up to 500,000  shares of its  outstanding  common  stock.
This is an addition to the plan  announced on November 9, 1998 to purchase up to
400,000 shares.  The purchases will be dependent on market  conditions and there
is no guarantee as to the exact number of shares to be purchased by the Company.
Shares repurchased will be used for general corporate purposes.  Consistent with
the  objective  of  maximizing  shareholder  value,  the Company  considers  the
purchase  of  its  outstanding  shares  in a  given  price  range  to be a  good
investment of the Company's available funds.

The Company  issued  23,838  shares of common stock during the first nine months
pursuant to its  nonqualified  stock option  plan.  Dividends of $6.3 million or
$.90 per share were  declared  during the first nine months of 2001, an increase
of 3.4% per share compared to the prior year.  Accumulated  other  comprehensive
income,  consisting of unrealized holding gains on available for sale investment
securities (net of tax) increased $2.5 million from year-end 2000.

Consistent with the objective of operating a sound financial  organization,  the
Company's goal is to maintain  capital ratios well above the regulatory  minimum
requirements.  The  Company's  capital  ratios as of  September  30,  2001,  the
regulatory  minimums  and  the  regulatory  standard  for a  "well  capitalized"
institution are as follows:


                          Farmers Capital        Regulatory         Well
                         Bank Corporation          Minimum       Capitalized
------------------------------------------------------------------------------
Tier 1 risk based              16.20%               4.00%            6.00%

Total risk based               17.46%               8.00%           10.00%

Leverage                       10.82%               4.00%            5.00%

The capital ratios of all the subsidiary  banks, on an individual basis, were in
excess of the  applicable  minimum  regulatory  capital  ratio  requirements  at
September 30, 2001.

EFFECT OF IMPLEMENTING RECENTLY ISSUED ACCOUNTING STANDARDS

In July 2001,  the  Financial  Accounting  Standards  Board issued  Statement of
Financial Accounting Standards ("SFAS") No. 141, Business Combinations, and SFAS
No. 142,  Goodwill and Other Intangible  Assets.  SFAS No. 141 requires that the
purchase  method of accounting be used for all business  combinations  initiated
after  June  30,  2001 as  well as all  purchase  method  business  combinations
completed after June 30, 2001. SFAS No. 141 also specifies  criteria  intangible
assets  acquired  in a  purchase  method  business  combination  must meet to be
recognized and reported apart from goodwill. SFAS No. 142 requires that goodwill
and intangible assets with indefinite  useful lives no longer be amortized,  but
instead  be tested for  impairment  at least  annually  in  accordance  with the
provisions of Statement  142.  Statement  142 will also require that  intangible
assets with definite useful lives be amortized over their  respective  estimated
useful lives to their estimated  residual values, and reviewed for impairment in
accordance with SFAS No. 121, Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of.

The Company is required to adopt the provisions of SFAS No. 141  immediately and
SFAS No. 142 effective January 1, 2002.

As of the date of adoption,  the Company expects to have no unamortized goodwill
or  other  unamortized  identifiable  intangible  assets.  Amortization  expense
related to  goodwill  was $495  thousand  and $242  thousand  for the year ended
December 31, 2000 and the nine months ended September 30, 2001, respectively.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk
-------------------------------------------------------------------

The Company's market risk is comprised primarily of interest rate risk. Interest
rate risk occurs when interest earning assets and interest  bearing  liabilities
mature or reprice at  different  times or on a different  basis.  The  Company's
Asset and Liability  Committee ("ALCO") meets to assess and monitor this risk on
a regular  basis.  Gap  reports are one of the tools used by the ALCO to measure
the Company's  interest rate risk. Gap reports  identify  maturity and repricing
mismatches  between assets and  liabilities  over various time periods.  The gap
position is the difference  between the rate sensitive assets and rate sensitive
liabilities  within a given time period. A positive gap results when more assets
mature or reprice than liabilities  within the given time period. A negative gap
results when more liabilities mature or reprice than assets. Risk is measured by
the size of the gap and the length of time the gap exists.  The preparation of a
gap report  requires  significant  assumptions.  Therefore,  future  results may
differ from the trends indicated in the gap report. Assumptions include, but are
not limited to, repricing and maturities  within the given time period occurring
simultaneously and all interest rates moving the same amount.

The following  table  presents the  Company's  one-year gap position and related
information as of the dates indicated.


                                         9/30/01       6/30/01     12/31/00
                                      -----------------------------------------

Gap position (in millions)               $ (2.5)        $ 5.5     $ (21.0)

Rate sensitive assets
  to rate sensitive liabilities            1.00          1.01        0.97

Gap to total assets                        (0.2)%         0.5%       (1.7)%


At September  30, 2001 the Company was in a slightly  negative gap position with
$2.5 million more in rate sensitive  liabilities  scheduled to reprice than rate
sensitive assets, indicating that net interest income would not be significantly
impacted by a change in interest rates over the next twelve months.  The Company
is well  within  the  standards  established  by its  ALCO  for each of the time
periods presented.

PART II - OTHER INFORMATION

Item 1.  Legal Proceedings
--------------------------

As of  September  30,  2001,  there had been no  material  changes  to the cases
previously reported, and no new significant cases have emerged.

There were various  other  pending  legal  actions and  proceedings  against the
Company  arising  from the normal  course of  business  and in which  claims for
damages are asserted.  Management, after discussion with legal counsel, believes
that these actions are without merit and that the ultimate  liability  resulting
from these  legal  actions  and  proceedings,  if any,  will not have a material
adverse effect upon the consolidated financial statements of the Company.




Item 6.  Exhibits and Reports on Form 8-K
-----------------------------------------

a)       List of Exhibits
         ----------------

         11    Statement re computation of per share earnings

b)       Reports on Form 8-K
         -------------------

         None.










                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.





Date:       11/06/01          /s/ Charles S. Boyd
      --------------------   -----------------------------------------------
                             Charles Scott Boyd,
                             President and CEO (Principal Executive Officer)


Date:       11-7-01           /s/ Cecil Douglas Carpenter
      --------------------   -----------------------------------------------
                             Cecil Douglas Carpenter,
                             Vice President, Secretary, and CFO (Principal
                             Financial and Accounting Officer)

<PAGE>



Exhibit 11
                 STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
                 ----------------------------------------------


-------------------------------------------------------------------------------
                                       Three Months Ended     Nine Months Ended
                                           September 30,        September 30,
(In thousands, except per share data)     2001      2000       2001       2000
-------------------------------------------------------------------------------
Net income, basic and diluted           $3,030     $3,787    $10,832    $10,737
-------------------------------------------------------------------------------

Average shares outstanding               6,950      7,263      6,999      7,343
Effect of dilutive stock options            62         16         39          3
-------------------------------------------------------------------------------
Average diluted shares outstanding       7,012      7,279      7,038      7,346
-------------------------------------------------------------------------------

Net income per share, basic             $  .44     $  .52     $ 1.55     $ 1.46
Net income per share, diluted           $  .43     $  .52     $ 1.54     $ 1.46
-------------------------------------------------------------------------------
[{"type": "10-Q", "sequence": "1", "filename": "a10q093001.txt", "description": "FARMERS CAPITAL BANK CORPORATION 9/30/01 10-Q", "secsgml_size_bytes": 70916}]
{"company-data": {"conformed-name": "FARMERS CAPITAL BANK CORP", "cik": "0000713095", "assigned-sic": "6021", "irs-number": "611017851", "state-of-incorporation": "KY", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "10-Q", "act": "34", "file-number": "000-14412", "film-number": "1778521"}, "business-address": {"street1": "PO BOX 309", "street2": "202 W MAIN ST", "city": "FRANKFORT", "state": "KY", "zip": "40602", "phone": "5022271668"}, "mail-address": {"street1": "P O BOX 309", "street2": "202 WEST MAIN STREET", "city": "FRANKFORT", "state": "KY", "zip": "40602"}}
UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                    FORM 10-Q

              [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                For the quarterly period ended September 30, 2001

                                       or

            [ ] Transition Report Pursuant to Section 13 or 15(d) of
                       the Securities Exchange Act of 1934

                         For the transition period from
                          ____________ to ____________

                         Commission File Number 0-14412

                        Farmers Capital Bank Corporation
                        --------------------------------
             (Exact name of registrant as specified in its charter)

                  Kentucky                           61-1017851
------------------------------------     ---------------------------------------
(State or other jurisdiction of          (I.R.S. Employer Identification Number)
 incorporation or organization)

P.O. Box 309, 202 West Main Street
Frankfort, Kentucky                                           40602
--------------------------------------- ---------------------------------------
(Address of principal executive offices)                   (Zip Code)

       Registrant's telephone number, including area code: (502) 227-1600

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.

                                 Yes |X| No

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

                    Common stock, par value $0.125 per share
                6,942,062 shares outstanding at November 5, 2001
TABLE OF CONTENTS

Part I - Financial Information                                                         Page No.
------------------------------                                                         --------
Item 1 - Financial Statements

         Unaudited Consolidated Balance Sheets -
             September 30, 2001 and December 31, 2000                                      3

         Unaudited Consolidated Statements of Income -
             For the Three Months and Nine Months Ended
             September 30, 2001 and September 30, 2000                                     4

         Unaudited Consolidated Statements of Comprehensive Income -
             For the Three Months and Nine Months Ended
             September 30, 2001 and September 30, 2000                                     5

         Unaudited Consolidated Statements of Cash Flows -
             For the Nine Months Ended
             September 30, 2001 and September 30, 2000                                     6

         Unaudited Consolidated Statements of Changes in Shareholders' Equity -
             For the Nine Months Ended
             September 30, 2001 and September 30, 2000                                     7

         Notes to Unaudited Consolidated Financial Statements                              8

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

     Item 3 - Quantitative and Qualitative Disclosures About Market Risk                  16

Part II - Other Information
---------------------------

     Item 1 - Legal Proceedings                                                           16

     Item 6 - Exhibits and Reports on Form 8-K                                            17
PART I - FINANCIAL INFORMATION

Item 1. Financial Statements
----------------------------
UNAUDITED CONSOLIDATED BALANCE SHEETS
-----------------------------------------------------------------------------------------------------------
                                                                                September 30,  December 31,
(In thousands, except share data)                                                   2001           2000
-----------------------------------------------------------------------------------------------------------
ASSETS
Cash and cash equivalents:
    Cash and due from banks                                                     $    79,931    $   162,034
    Interest bearing deposits in other banks                                          4,094          1,912
    Federal funds sold and securities purchased
         under agreements to resell                                                  80,152         65,925
-----------------------------------------------------------------------------------------------------------
         Total cash and cash equivalents                                            164,177        229,871
-----------------------------------------------------------------------------------------------------------
Investment securities:
    Available for sale, amortized cost of $242,002 (2001) and $210,575 (2000)       246,618        211,419
    Held to maturity, fair value of $40,833 (2001) and $50,013 (2000)                39,259         49,390
-----------------------------------------------------------------------------------------------------------
         Total investment securities                                                285,877        260,809
-----------------------------------------------------------------------------------------------------------
Loans, net of unearned income                                                       710,406        683,349
Allowance for loan losses                                                           (10,697)       (10,249)
-----------------------------------------------------------------------------------------------------------
         Loans, net                                                                 699,709        673,100
-----------------------------------------------------------------------------------------------------------
Premises and equipment, net                                                          25,240         24,916
Other assets                                                                         17,471         16,056
-----------------------------------------------------------------------------------------------------------
         Total assets                                                           $ 1,192,474    $ 1,204,752
-----------------------------------------------------------------------------------------------------------
LIABILITIES
Deposits:
    Noninterest bearing                                                         $   165,837    $   231,483
    Interest bearing                                                                745,554        737,714
-----------------------------------------------------------------------------------------------------------
         Total deposits                                                             911,391        969,197
-----------------------------------------------------------------------------------------------------------
Securities sold under agreements to repurchase                                      118,761         90,004
Other borrowed funds                                                                 25,058         11,678
Dividends payable                                                                     2,085          2,155
Other liabilities                                                                    10,347          6,257
-----------------------------------------------------------------------------------------------------------
         Total liabilities                                                        1,067,642      1,079,291
-----------------------------------------------------------------------------------------------------------
Commitments and contingencies

SHAREHOLDERS' EQUITY
Common stock, par value $0.125 per share
    9,608,000 shares authorized; 8,055,390 and 8,031,552
    shares issued at September 30, 2001 and
    December 31, 2000, respectively                                                   1,007          1,004
Capital surplus                                                                      14,896         13,634
Retained earnings                                                                   135,539        131,021
Treasury stock, at cost
    1,112,598 and 859,898 shares at September 30, 2001 and
    December 31, 2000, respectively                                                 (29,633)       (20,755)
Accumulated other comprehensive income                                                3,023            557
-----------------------------------------------------------------------------------------------------------
         Total shareholders' equity                                                 124,832        125,461
-----------------------------------------------------------------------------------------------------------
         Total liabilities and shareholders' equity                             $ 1,192,474    $ 1,204,752
-----------------------------------------------------------------------------------------------------------
See accompanying notes to unaudited consolidated financial statements.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
-------------------------------------------------------------------------------------------------------------------
                                                              Three Months Ended              Nine Months Ended
                                                                 September 30,                  September 30,
(In thousands, except per share data)                       2001              2000           2001           2000
-------------------------------------------------------------------------------------------------------------------
INTEREST INCOME
Interest and fees on loans                                $14,960           $15,519        $45,667         $44,901
Interest on investment securities:
    Taxable                                                 2,555             2,140          7,720           6,521
    Nontaxable                                                847               859          2,474           2,620
Interest on deposits in other banks                            31               (38)            78              (3)
Interest on federal funds sold and securities
    purchased under agreements to resell                      761               666          2,836           1,514
-------------------------------------------------------------------------------------------------------------------
       Total interest income                               19,154            19,146         58,775          55,553
-------------------------------------------------------------------------------------------------------------------
INTEREST EXPENSE
Interest on deposits                                        7,356             7,371         23,018          20,988
Interest on securities sold under agreements to repurchase  1,028               849          3,255           1,923
Interest on other borrowed funds                              164               150            443             329
-------------------------------------------------------------------------------------------------------------------
       Total interest expense                               8,548             8,370         26,716          23,240
-------------------------------------------------------------------------------------------------------------------
    Net interest income                                    10,606            10,776         32,059          32,313
-------------------------------------------------------------------------------------------------------------------
Provision for loan losses                                     836               460          2,109           1,887
-------------------------------------------------------------------------------------------------------------------
    Net interest income after provision for loan losses     9,770            10,316         29,950          30,426
-------------------------------------------------------------------------------------------------------------------
NONINTEREST INCOME
Service charges and fees on deposits                        1,672             1,316          4,973           3,884
Other service charges, commissions, and fees                  972             1,038          2,865           3,174
Data processing income                                        327               340          1,035           1,016
Trust income                                                  360               406          1,253           1,225
Investment securities gains, net                                                               465
Gain on sale of mortgage loans                                 56                13            153              28
Other                                                          49                33            118             151
-------------------------------------------------------------------------------------------------------------------
       Total noninterest income                             3,436             3,146         10,862           9,478
-------------------------------------------------------------------------------------------------------------------
NONINTEREST EXPENSE
Salaries and employee benefits                              4,976             4,547         14,475          14,053
Occupancy expenses, net                                       577               546          1,770           1,655
Equipment expenses                                            849               708          2,430           2,060
Bank franchise tax                                            309               289            902             863
Other                                                       2,356             2,063          6,293           6,311
-------------------------------------------------------------------------------------------------------------------
       Total noninterest expense                            9,067             8,153         25,870          24,942
-------------------------------------------------------------------------------------------------------------------
       Income before income taxes                           4,139             5,309         14,942          14,962
-------------------------------------------------------------------------------------------------------------------
Income tax expense                                          1,109             1,522          4,110           4,225
-------------------------------------------------------------------------------------------------------------------
Net income                                                 $3,030            $3,787        $10,832         $10,737
-------------------------------------------------------------------------------------------------------------------
NET INCOME PER COMMON SHARE
    Basic                                                    $.44              $.52          $1.55           $1.46
    Diluted                                                   .43               .52           1.54            1.46
-------------------------------------------------------------------------------------------------------------------
WEIGHTED AVERAGE SHARES OUTSTANDING
    Basic                                                   6,950             7,263          6,999           7,343
    Diluted                                                 7,012             7,279          7,038           7,346
-------------------------------------------------------------------------------------------------------------------
See accompanying notes to unaudited consolidated financial statements.
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
-------------------------------------------------------------------------------------------------------------------
                                                              Three Months Ended              Nine Months Ended
                                                                 September 30,                  September 30,
(In thousands)                                            2001                 2000           2001            2000
-------------------------------------------------------------------------------------------------------------------
NET INCOME                                                $3,030            $3,787         $10,832         $10,737
Other comprehensive income:
    Unrealized holding gain on available for sale
    securities arising during the period, net of tax
    of $827, $617 $1,369, and $412, respectively           1,605             1,198           2,658             800
Reclassification adjustment for prior period
    unrealized gain recognized during current period,
    net of tax of $23 and $(99), respectively                 44                              (192)
-------------------------------------------------------------------------------------------------------------------
Other comprehensive income                                 1,649            1,198            2,466             800
-------------------------------------------------------------------------------------------------------------------
COMPREHENSIVE INCOME                                      $4,679            $4,985         $13,298         $11,537
-------------------------------------------------------------------------------------------------------------------
See accompanying notes to unaudited consolidated financial statements.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
--------------------------------------------------------------------------------------------------------------------
                                                                        Nine Months Ended          Nine Months Ended
                                                                          September 30,              September 30,
 (In thousands)                                                               2001                       2000
--------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
    Net income                                                              $10,832                    $10,737
    Adjustments to reconcile net income to net cash
       provided by operating activities:
       Depreciation and amortization                                          2,231                      1,961
       Net amortization of investment security
          premiums and discounts:
             Available for sale                                                (155)                      (364)
             Held to maturity                                                   (13)                        (8)
       Provision for loan losses                                              2,109                      1,887
       Noncash compensation expense                                             675                        726
       Mortgage loans originated for sale                                   (26,004)                    (8,069)
       Proceeds from sale of mortgage loans                                  25,314                      7,700
       Deferred income tax expense                                              125                         61
       Gain on sale of available for sale investment securities, net           (465)
       Gain on sale of mortgage loans                                          (153)                       (28)
       Gain on sale of premises and equipment                                   (12)                        (4)
       Decrease (increase) in accrued interest receivable                       351                       (775)
       Increase in other assets                                              (2,008)                      (551)
       (Decrease) increase in accrued interest payable                           (1)                       486
       Increase in other liabilities                                          2,664                      1,268
--------------------------------------------------------------------------------------------------------------------
    Net cash provided by operating activities                                15,490                     15,027
--------------------------------------------------------------------------------------------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES
    Proceeds from maturities and calls of investment securities:
       Available for sale                                                   249,484                    110,413
       Held to maturity                                                      10,478                      6,992
    Proceeds from sale of available for sale investment securities           33,289
    Purchases of investment securities:
       Available for sale                                                  (313,580)                   (99,540)
       Held to maturity                                                        (334)
    Loans originated for investment, net of principal collected             (27,875)                   (36,333)
    Purchases of premises and equipment                                      (2,322)                    (2,273)
    Proceeds from sale of premises and equipment                                 21                         26
--------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities                                       (50,839)                   (20,715)
--------------------------------------------------------------------------------------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES
    Net decrease in deposits                                                (57,806)                   (17,473)
    Net increase in securities sold under agreements to repurchase           28,757                     35,787
    Proceeds from long term debt                                              8,000                      8,000
    Repayments of long-term debt                                             (6,213)                      (811)
    Net increase in other borrowed funds                                     11,593                        116
    Dividends paid                                                           (6,384)                    (6,437)
    Purchase of common stock                                                 (8,878)                    (7,859)
    Stock options exercised                                                     586                        271
--------------------------------------------------------------------------------------------------------------------
    Net cash (used in) provided by financing activities                     (30,345)                    11,594
--------------------------------------------------------------------------------------------------------------------
Net (decrease) increase in cash and cash equivalents                        (65,694)                     5,906
--------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at beginning of year                              229,871                    135,360
--------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period                                 $164,177                   $141,266
--------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURES
Cash paid during the period for:
    Interest                                                                $26,717                    $22,753
    Income taxes                                                              3,100                      4,150
Cash dividend declared and unpaid                                             2,085                      2,102
--------------------------------------------------------------------------------------------------------------------
See accompanying notes to unaudited consolidated financial statements.
UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
------------------------------------------------------------------------------------------------------------------------------------
(In thousands)                                                                                        Accumulated
                                                                                                         Other             Total
Nine Months ended                       Common Stock       Capital    Retained      Treasury Stock   Comprehensive     Shareholders'
September 30, 2001 and 2000         Shares     Amount      Surplus    Earnings   Shares     Amount   Income (Loss)        Equity
------------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 2000       8,032     $1,004      $13,634    $131,021        860   $(20,755)    $  557           $125,461
Net income                                                              10,832                                              10,832
Other comprehensive income                                                                                2,466              2,466
Cash dividends declared,
  $.90 per share                                                        (6,314)                                             (6,314)
Purchase of common stock                                                              253     (8,878)                       (8,878)
Stock options exercised, including
related tax benefits                    24          3          587                                                             590
Noncash compensation expense
  attributed to stock option grants                            675                                                             675
-----------------------------------------------------------------------------------------------------------------------------------
  Balance at September 30, 2001      8,056     $1,007      $14,896    $135,539      1,113   $(29,633)    $3,023           $124,832
-----------------------------------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------------------------------
  Balance at December 31, 1999       8,020     $1,002      $12,370    $125,173        582   $(11,498)    $(1,941)         $125,106
Net income                                                              10,737                                              10,737
Other comprehensive income                                                                                   800               800
Cash dividends declared,
  $.87 per share                                                        (6,377)                                             (6,377)
Purchase of common stock                                                              238     (7,859)                       (7,859)
Stock options exercised                 11          2          269                                                             271
Noncash compensation expense
  attributed to stock option grants                            726                                                             726
-----------------------------------------------------------------------------------------------------------------------------------
  Balance at September 30, 2000      8,031     $1,004      $13,365    $129,533        820   $(19,357)    $(1,141)         $123,404
-----------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to unaudited consolidated financial statements.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1.   BASIS OF PRESENTATION

The consolidated  financial  statements  include the accounts of Farmers Capital
Bank  Corporation  (the  "Company"),   a  financial  holding  company,  and  its
subsidiaries,  including its principal subsidiary,  Farmers Bank & Capital Trust
Company.  All  significant  intercompany  transactions  and  accounts  have been
eliminated in consolidation.

The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States of America requires  management to make
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities  and disclosure of contingent  assets and liabilities as of the date
of the financial  statements  and the reported  amounts of revenues and expenses
during the reporting period.  Estimates used in the preparation of the financial
statements  are based on various  factors  including  the current  interest rate
environment  and the  general  strength  of the local  economy.  Changes  in the
overall  interest rate  environment can  significantly  affect the Company's net
interest  income and the value of its recorded  assets and  liabilities.  Actual
results  could  differ  from  those  estimates  used in the  preparation  of the
financial statements.

The  financial  information  presented as of any date other than December 31 has
been  prepared  from the books  and  records  without  audit.  The  accompanying
consolidated  financial  statements  have been prepared in  accordance  with the
instructions  to Form 10-Q and Rule 10-01 of  Regulation  S-X and do not include
all of the  information  and the  footnotes  required by  accounting  principles
generally  accepted  in the United  States of  America  for  complete  financial
statements. In the opinion of management, all adjustments,  consisting of normal
recurring  adjustments,  necessary  for a fair  presentation  of such  financial
statements,  have been  included.  The  results of  operations  for the  interim
periods are not  necessarily  indicative  of the results to be expected  for the
full year.

For further  information,  refer to the  consolidated  financial  statements and
footnotes  thereto  included in the Company's Annual Report on Form 10-K for the
year ended December 31, 2000.

2.   RECLASSIFICATIONS

Certain   reclassifications   have  been  made  to  the  consolidated  financial
statements of prior periods to conform to the current period presentation.  Such
reclassifications have no effect on previously reported net income.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
-------------------------------------------------------------------------------

of Operations
-------------

FORWARD-LOOKING STATEMENTS

This report contains  forward-looking  statements  under the Private  Securities
Litigation Reform Act of 1995 that involve risks and uncertainties. Although the
Company believes that the assumptions underlying the forward-looking  statements
contained herein are reasonable, any of the assumptions could be inaccurate, and
therefore,  there  can  be no  assurance  that  the  forward-looking  statements
included  herein will prove to be  accurate.  Factors  that could  cause  actual
results to differ from the results discussed in the  forward-looking  statements
include,  but are not limited to: economic  conditions  (both generally and more
specifically in the markets in which the Company and its subsidiaries  operate);
competition  for the  Company's  customers  from other  providers  of  financial
services; government legislation and regulation (which changes from time to time
and over which the Company has no control);  changes in interest rates; material
unforeseen  changes  in the  liquidity,  results  of  operations,  or  financial
condition of the Company's customers;  and other risks detailed in the Company's
filings with the Securities and Exchange Commission,  all of which are difficult
to predict and many of which are beyond the control of the Company.

RESULTS OF OPERATIONS

                    Third Quarter 2001 vs. Third Quarter 2000
                    -----------------------------------------

Basic net income per share for the third quarter of 2001 was $.44, a decrease of
$.08 or 15.4% compared to the same period in 2000. On a diluted per share basis,
net income  decreased $.09 or 17.3%. Net income for the current quarter was $3.0
million compared to $3.8 million for the same period in 2000, a decrease of $757
thousand  or 20.0%.  Noninterest  income  increased  $290  thousand or 9.2% as a
result of increased income from service charges and fees on deposits. A decrease
in net interest  income of $170  thousand or 1.6%,  an increase in the provision
for loan  losses of $376  thousand  or 81.7%,  and an  increase  in  noninterest
expense of $914  thousand  or 11.2% all had a negative  impact on net income for
the current quarter.

Return on average  assets was 1.04% for the  current  quarter  compared to 1.48%
reported for the same period in 2000.  The decrease in return on average  assets
is due primarily to a 66 basis point decline in the net interest margin.  Return
on average  equity was 9.79% for the third quarter of 2001 compared to 12.18% in
the same period of 2000.

Net Interest Income
-------------------

The interest rate  environment  has been extremely  volatile  during the current
period.  Actions  taken by the  Federal  Reserve  Board  (the  "Fed")  to reduce
short-term  interest  rates by an  additional  75 basis  points  in the  current
quarter have  affected the  Company's  net interest  margin,  as well as the net
interest margin of many banks in the industry.  Market interest rates in general
have  dropped  significantly  since the  third  quarter  of 2000 as well.  Since
January 1, 2001,  the Fed has acted to reduce  short-term  interest rates by 350
basis  points.  The effect of the Fed's  actions has  generally  led to interest
rates on earning  assets  declining  more  rapidly  than rates paid on  interest
bearing  liabilities.  During a falling rate  environment,  the  challenge is to
reduce the rates paid on interest bearing  liabilities  (primarily  deposits) to
offset the decline in the yield on variable rate assets  (primarily loans) while
remaining  competitive in our markets. The Company's yield on earning assets for
the current  quarter was 7.39%,  a reduction  of 106 basis  points from the same
period a year ago and 45 basis points from the prior quarter.  The cost of funds
for the current  quarter was 3.86%, a decline of 61 basis points compared to the
same period a year ago and 33 basis points from the prior  quarter.  The Company
has  attempted  to mitigate  the impact of the lower  market  interest  rates by
increasing the amount of its earning assets and by decreasing the interest rates
paid on interest bearing liabilities.  Average earning assets as a percentage of
average  total assets were 91.3% for the three months ended  September 30, 2001,
an increase of 42 basis points compared to the same period in 2000.

Net  interest  income  totaled  $10.6  million for the third  quarter of 2001, a
decrease of $170 thousand or 1.6%  compared to the third quarter of 2000.  Total
interest  income was $19.2  million  for the third  quarter  of 2001,  virtually
unchanged  from the third  quarter  of 2000.  Total  interest  expense  was $8.5
million for the current  quarter,  an increase of $178 thousand or 2.1% compared
to the same period in 2000. The average  interest rate paid on interest  bearing
liabilities  decreased 61 basis points,  partially  offsetting the impact from a
$134.6 million or 18.1% increase in the average balance.

Interest and fees on loans  decreased  $559 thousand or 3.6%  primarily due to a
decrease in the average rate earned.  Average loans  increased  $30.0 million or
4.4% while the yield  decreased  69 basis  points to 8.52%.  Interest on taxable
securities  increased $415 thousand or 19.4% primarily due to a $51.2 million or
38.0%  increase  in the  average  balance.  The  average  rate earned on taxable
securities decreased 87 basis points to 5.46%. Interest on nontaxable securities
decreased $12 thousand or 1.4% due to a slight  decline in the average rate of 5
basis points. Interest on short-term  investments,  primarily federal funds sold
and securities purchased under agreements to resell,  increased $164 thousand or
26.1% due primarily to an increase in the average balance of $52.2 million.

The $178  thousand  or 2.1%  increase  in total  interest  expense is  primarily
attributed  to an increase in interest on time  deposits of $616 thousand and an
increase in interest on securities  sold under  agreements to repurchase of $179
thousand. These increases were largely due to an increase in the average balance
outstanding  of $46.7 million and $57.3 million for time deposits and securities
sold under agreements to repurchase,  respectively. Interest expense on interest
bearing  demand  deposits and savings  deposits  declined $326 thousand and $305
thousand,  respectively.  The  average  rate  paid on  interest  bearing  demand
deposits  declined  80 basis  points to 1.57%  while  the rate  paid on  savings
deposits declined 108 basis points to 2.46%.

The net interest  margin on a tax equivalent  basis decreased 66 basis points to
4.18% during the third  quarter of 2001  compared to the third  quarter of 2000.
The decrease in net interest margin is primarily  attributed to a decline in the
spread between rates earned and paid of 44 basis points to 3.54% for the current
quarter. The impact of noninterest bearing sources of funds contributed 65 basis
points to the net interest margin of the current quarter, a decrease of 22 basis
points compared to the same quarter a year earlier.

Noninterest Income
------------------

Noninterest income was $3.4 million for the current quarter, an increase of $290
thousand or 9.2% compared to the same period of the prior year.  Service charges
and fees on deposits,  the largest  component of noninterest  income,  increased
$356 thousand or 27.1%  primarily  due to a change in NSF fee  structure  during
2001. The Company allows checking account customers meeting specific criteria to
overdraw their checking  account up to a  predetermined  limit.  The customer is
charged a  standard  fee for each  check  paid that  creates  or  increases  the
overdraft  balance.  Guidelines have been established  addressing the time frame
that  repayment of the overdraft and related fees are to be made.  Other service
charges, commissions, and fees decreased $66 thousand or 6.4% due primarily to a
decrease in custodial  safekeeping fees from the Commonwealth of Kentucky.  Data
processing  income  decreased $13 thousand or 3.8% to $327 thousand.  Trust fees
decreased $46 thousand or 11.3% to $360 thousand due principally to nonrecurring
transactions  occurring in the prior  period.  Net gains on the sale of mortgage
loans  totaled  $56  thousand,  an increase  of $43  thousand as mortgage  loans
originated for sale increased $2.8 million or 60.1% in the comparison.

Noninterest Expense
-------------------

Total  noninterest  expense  increased  $914  thousand  or 11.2%  from the third
quarter of 2000 and totaled $9.1 million.  Salaries and employee  benefits,  the
largest component of noninterest  expense,  increased $429 thousand or 9.4%. The
increase in  salaries  and  employee  benefits is  attributed  to normal  salary
increases and unusually low health insurance costs in the prior year.  Occupancy
expense,  net of rental  income,  increased $31 thousand in the  comparison  and
totaled $577 thousand.  Equipment expense totaled $849 thousand,  an increase of
$141  thousand or 19.9%.  The  increase is  primarily  the result of  additional
depreciation  and  maintenance  on  new  asset  purchases.  Bank  franchise  tax
increased $20 thousand to $309 thousand.  Other  noninterest  expense  increased
$293 thousand to $2.4 million resulting  primarily from a $207 thousand increase
in legal fees incurred in the normal course of business.

Income Taxes
------------

Income tax expense for the third quarter of 2001 was $1.1 million, a decrease of
$413  thousand or 27.1% from the third  quarter of 2000.  The effective tax rate
was 26.79% for the  current  quarter,  a decrease  of 188 basis  points from the
third  quarter of 2000.  The decrease in the effective tax rate is due primarily
to a  combination  of increased low income  housing tax credits,  an increase in
nontaxable interest income on loans, and a decrease in goodwill amortization.

                            First Nine Months of 2001
                            -------------------------

The Company  reported a $.09 or 6.2%  increase in basic net income per share for
the first nine months of 2001  compared to the same period in 2000. On a diluted
per share  basis,  net  income  increased  $.08 or 5.5% in the  comparison.  The
increase  in net  income  per share is  primarily  attributed  to the  Company's
treasury  share  buy-back  program  that has been in effect for  several  years.
During the first nine months of 2001, the Company  purchased 253 thousand shares
of its common stock at a cost of $8.9  million.  Net income for the current nine
months was $10.8 an increase of $95 thousand or 0.9% compared to the prior year.
Noninterest  income  increased  $1.4  million or 14.6%  primarily as a result of
increased  service  charges on deposits of $1.1 million or 28.0% and  securities
gains  of $465  thousand.  The  increase  in  noninterest  income  offset a $254
thousand  or 0.8%  decline in net  interest  income,  a $222  thousand  or 11.8%
increase in the  provision  for loan  losses,  and an  increase  in  noninterest
expense of $928 thousand or 3.7%.

Return on average assets was 1.29% for the nine months ended September 30, 2001,
a decrease  of 13 basis  points from the same  period in 2000.  The  decrease in
return on average  assets is due  primarily  to a 61 basis point  decline in net
interest  margin,  which offset a 23 basis point  positive  effect  related to a
decrease in noninterest expenses to average assets. Return on average equity was
11.83%, an increase of 28 basis points from the first nine months of 2000.

Net Interest Income
-------------------

The interest rate  environment  has been extremely  volatile  during the current
period,  as general market interest rates have dropped  significantly  since the
third quarter of 2000.  Actions taken by the Fed to reduce  short-term  interest
rates by 350 basis points in the current nine months have affected the Company's
net interest  margin,  as well as the net  interest  margin of many banks in the
industry. The effect of the Fed's actions has generally led to interest rates on
earning  assets  declining  more  rapidly  than rates paid on  interest  bearing
liabilities.  During a falling rate environment,  the challenge is to reduce the
rates paid on interest bearing  liabilities  (primarily  deposits) to offset the
decline in the yield on variable rate assets  (primarily  loans) while remaining
competitive  in our  markets.  The  Company's  yield on  earning  assets for the
current  nine  months was 7.80%,  a reduction  of 56 basis  points from the same
period a year ago.  The cost of funds for the current  nine months was 4.21%,  a
decline of 3 basis  points  compared to the same period a year ago.  The Company
has  attempted  to mitigate  the impact of the lower  market  interest  rates by
increasing the amount of its earning assets and by decreasing the interest rates
paid on interest bearing liabilities.  Average earning assets as a percentage of
average total assets were 91.7% for the nine months ended September 30, 2001, an
increase of 11 basis points compared to a year earlier.

Net interest  income  totaled $32.1 million for the nine months ended  September
30, 2001, a modest  decrease from $32.3 million  reported for the same period in
2000. Total interest income grew $3.2 million or 5.8% to $58.8 million,  but was
offset by a $3.5 million or 15.0% increase in total interest expense.

Interest and fees on loans  increased  $766 thousand or 1.7%  primarily due to a
$31.8 million or 4.8% increase in the average balance of loans outstanding.  The
yield on the loan  portfolio  decreased  23 basis  points to 8.86%.  Interest on
taxable  securities  increased $1.2 million or 18.4%.  The increase is primarily
the result of a $39.0 million increase in the average balance outstanding, which
offset a decline in yield of 48 basis points.  Interest on nontaxable securities
decreased  $146  thousand or 5.6% due to a decrease in both the average  balance
outstanding and the yield. Interest on short-term investments, primarily federal
funds sold and securities  purchased under agreements to resell,  increased $1.4
million due to a $54.0  million  increase in the  average  balance  outstanding,
which offset a 165 basis point decline in the yield.

Total  interest  expense  increased  $3.5  million  or 15.0%  to $26.7  million.
Interest  expense on interest  bearing  demand  deposits  and  savings  deposits
declined  $624  thousand  and  $588  thousand,  respectively  due  primarily  to
reductions  in the average  rate paid on interest  bearing  deposits of 46 basis
points and savings  deposits of 60 basis points.  These decreases were offset by
an  increase  in interest  expense on time  deposits  of $3.2  million or 23.6%,
securities  sold under  agreements to  repurchase of $1.3 million or 69.4%,  and
other borrowed funds of $114 thousand or 34.7%. The increase in interest on time
deposits is due to a $51.5  million or 15.5%  increase  in the  average  balance
outstanding and a 40 basis point increase in the average rate paid. The increase
in interest on securities sold under agreements to repurchase and other borrowed
funds is  primarily  attributed  to an  increase  in their  average  outstanding
balance of $53.0 million and $3.1 million, respectively.

The net interest  margin on a tax equivalent  basis decreased 61 basis points to
4.34% during the first nine months of 2001  compared to the same period of 2000.
The decrease in net interest margin is primarily  attributed to a decline in the
spread between rates earned and paid of 52 basis points to 3.59% for the current
quarter. The impact of noninterest bearing sources of funds contributed 75 basis
points to the net interest  margin for the nine months ended September 30, 2001,
a decrease of 8 basis points compared to the same period a year earlier.

Noninterest Income
------------------

Noninterest  income  was $10.9  million  for the first nine  months of 2001,  an
increase of $1.4 million or 14.6%  compared to the same period in 2000.  Service
charges and fees on  deposits,  the largest  component  of  noninterest  income,
increased $1.1 million or 28.0% primarily due to the change in NSF fee structure
as  described  above  in  the  quarterly  comparison.   Other  service  charges,
commissions, and fees decreased $309 thousand to $2.9 million primarily due to a
decrease  in  custodial  safekeeping  fees from the  Commonwealth  of  Kentucky.
Related  correspondent  bank fees have  decreased  proportionately  as described
below. Trust fees increased $28 thousand or 2.3% to a total of $1.3 million. Net
gains on the sale of available for sale investment  securities,  which were zero
during 2000,  totaled $465 thousand in the current period. Net gains on the sale
of mortgage  loans  totaled  $153  thousand,  an  increase  of $125  thousand as
mortgage loans originated for sale increased $17.9 million to $26.0 million.

Noninterest Expense
-------------------

Total  noninterest  expense was $25.9 million for the first nine months of 2001,
an increase of $928  thousand or 3.7% compared to the first nine months of 2000.
Salaries and employee  benefits,  the largest component of noninterest  expense,
increased  $422 thousand or 3.0% to $14.5  million.  Occupancy  expense,  net of
rental  income,  increased $115 thousand or 6.9% in the  comparison.  Additional
depreciation and the cost of utilities account for a significant  portion of the
increase.  Equipment  expenses increased $370 thousand or 18.0% primarily due to
additional  depreciation and maintenance on new asset purchases.  Bank franchise
tax expense  increased  $39 thousand or 4.5% to $902  thousand.  The decrease in
other  noninterest   expense  is  primarily   attributable  to  a  reduction  in
correspondent  bank fees of $217  thousand and other real estate  expense of $60
thousand.  Reductions  in  correspondent  bank  fees  are  primarily  due to our
relationship  with the Commonwealth of Kentucky.  The decreases in correspondent
bank fees and other real estate  expense are offset by  increases  in  telephone
expenses  of $107  thousand  and legal fees  incurred  in the  normal  course of
business of $106 thousand.

Income Taxes
------------

Income  tax  expense  for the  first  nine  months of 2001 was $4.1  million,  a
decrease  $115  thousand  or 2.7%  compared  to the same  period  in  2000.  The
effective  tax rate was 27.51% for the first nine months of 2001,  a decrease of
73 basis points from the prior year.

FINANCIAL CONDITION

Total  assets  were $1.2  billion on  September  30,  2001,  a decrease of $12.3
million or 1.0% from December 31, 2000.  Fluctuations in assets and deposits are
typical due to the  relationship  between the  Company's  principal  subsidiary,
Farmers Bank & Capital Trust Company, and the Commonwealth of Kentucky.  Farmers
Bank provides  various  services to state agencies of the  Commonwealth.  As the
depository  for the  Commonwealth,  these agencies issue checks drawn on Farmers
Bank,  including  paychecks  and state  income tax  refunds.  Farmers  Bank also
processes  vouchers of the WIC (Women,  Infants  and  Children)  program for the
Cabinet for Human  Resources.  The Bank's  investment  department  also provides
services  to the  Teacher's  Retirement  systems.  As  the  depository  for  the
Commonwealth,  large  fluctuations  in  deposits  are likely to occur on a daily
basis.  On an average  basis,  total assets were $1.1 billion for the first nine
months of 2001, an increase of $97.5 million or 9.5% from year-end 2000. Average
earning  assets were 91.7% of average  total  assets at September  30, 2001,  an
increase of 160 basis points compared to year-end 2000.

Loans
-----

Loans, net of unearned income,  totaled $710.4 million at September 30, 2001, an
increase of $27.1 million or 4.0% from year-end  2000.  The increase in loans is
primarily  attributed  to a $10.1  million or 2.2%  increase in loans secured by
real estate and an increase in lease financing of $6.0 million or 17.6%. Average
net loans  for the  nine-month  period  ended  September  30,  2001 were  $695.3
million,  an increase of $28.0  million or 4.2%  compared to the  year-end  2000
average. On average, loans represented 67.4% of earning assets compared to 72.0%
for year-end 2000. As loan demand fluctuates, the available funds are redirected
between either temporary investments or investment securities.

Allowance for Loan Losses
-------------------------

The  allowance  for loan losses was $10.7  million at  September  30,  2001,  an
increase of $448 thousand  from the prior  year-end.  The  allowance  represents
1.51% of net loans at September 30, 2001. In management's opinion, the allowance
for loan losses is adequate to cover losses inherent in the loan portfolio.  The
provision for loan losses increased $376 thousand and $222 thousand in the three
and nine-month  comparison for the period ended  September 30, 2001. The Company
had net  charge-offs  of $652 thousand and $1.7 million in the current three and
nine  months  of 2001,  respectively,  an  increase  of $281  thousand  and $292
thousand compared to the same periods in 2000. A significant  portion of the net
charge offs in the  current  quarter  relate  primarily  to a single  commercial
credit.  Annualized net charge offs represented 0.37% and 0.32% of average loans
for the current three and nine month periods, respectively, compared to 0.20% at
year  end  2000.  Management  continues  to  emphasize  collection  efforts  and
evaluation of risks within the portfolio.

Nonperforming Assets
--------------------

Nonperforming  assets for the Company include  nonperforming  loans,  other real
estate owned,  and other  foreclosed  assets.  Nonperforming  loans  consists of
nonaccrual loans,  restructured loans, and loans past due ninety days or more on
which interest in still accruing.  Nonperforming  assets totaled $7.2 million at
September  30, 2001,  an increase of $1.9  compared to the prior  year-end and a
decrease of $561  thousand  compared to the prior  quarter  end. The increase in
nonperforming  assets in the nine month period is primarily attributed to a $996
thousand  increase  in  other  real  estate  owned,   which  also  represents  a
significant  portion of the remaining  balance of one commercial credit that was
partially charged off.  Nonperforming  loans increased $755 thousand compared to
the prior  year-end.  Loans past due ninety  days or more on which  interest  is
still accruing  increased $566 thousand in the comparison.  Nonperforming  loans
decreased $1.6 million in the current quarter, led by a decrease of $1.6 million
in nonaccrual loans.  Nonperforming loans as a percentage of net loans increased
from 0.67% at year-end to 0.75% at September 30, 2001. This  percentage  totaled
0.99% at the end of the prior quarter, a decrease of 24 basis points.

Temporary Investments
---------------------

Interest  bearing  deposits with other banks,  federal funds sold and securities
purchased  under  agreements to resell averaged $86.9 million for the first nine
months of 2001, an increase of $49.3  million from year end 2000.  This increase
is  primarily  a result of the  relationship  between  the  Company's  principal
subsidiary and the  Commonwealth of Kentucky as described in preceding  sections
of this report.  Temporary  investments  are reallocated as loan demand presents
the opportunity.

Investment Securities
---------------------

Investment  securities were $285.9 million on September 30, 2001, an increase of
$25.1  million  or 9.6%  from  year-end  2000.  Available  for  sale and held to
maturity  securities  were  $246.6  million  and  $39.3  million,  respectively.
Investment securities averaged $249.1 million for the first nine months of 2001,
an increase of $27.7  million or 12.5% from  year-end  2000.  The Company had an
unrealized gain on available for sale  investment  securities of $4.6 million at
September 30, 2001 compared to $844 thousand at year-end  2000.  Typically,  the
value of a bond  portfolio  and  interest  rates have an  inverse  relationship;
therefore,  in the current falling interest rate  environment,  the value of the
available for sale portfolio has increased.

Deposits
--------

Total  deposits  were $911.4  million at September 30, 2001, a decrease of $57.8
million or 6.0% from year-end 2000. Noninterest bearing deposits decreased $65.6
million in the  comparison.  This decrease is primarily due to the  relationship
between the Company's  principal  subsidiary and the Commonwealth of Kentucky as
described in preceding sections of this report. On average,  noninterest bearing
deposits were $148.7 million during the current  nine-month  period, an increase
of $2.8 million or 1.9% compared to the prior year-end average. Interest bearing
deposits  increased $7.8 million during the nine months ended September 30, 2001
compared to year-end  2000. On average,  interest  bearing  deposits were $739.0
million in the current  period,  an increase of $53.8  million or 7.9% from year
end 2000.  Time deposits  accounted for $45.8 million of the increase in average
interest bearing deposits.  Total deposits averaged $887.7 million,  an increase
of $56.6 million or 6.8% from year-end 2000.

Borrowed Funds
--------------

Borrowed  funds  totaled  $143.8  million at September  30, 2001, an increase of
$42.1 million from year-end  2000.  The increase in borrowed funds is attributed
to an  increase in  securities  sold under  agreements  to  repurchase  of $28.8
million and additional  net borrowings  from the Federal Home Loan Bank of $14.0
million.  The fluctuation in securities  sold under  agreements to repurchase is
primarily due to the relationship between the Company's principal subsidiary and
the Commonwealth of Kentucky as described in preceding  sections of this report.
Total borrowed funds averaged $108.5 million,  an increase of $47.8 million from
year-end 2000.

LIQUIDITY

Liquidity  of the  Parent  Company  is  primarily  affected  by the  receipt  of
dividends  from  its  subsidiary  banks  and  cash  balances  maintained.  As of
September 30, 2001 combined retained earnings of the subsidiary banks were $58.6
million,  of which $11.6  million was  available for the payment of dividends to
the  Parent  Company  without  obtaining  prior  approval  from bank  regulatory
agencies. As a practical matter,  payment of future dividends is also subject to
the maintenance of other capital ratio requirements.  Management expects that in
the  aggregate,  its  subsidiary  banks  will  continue  to have the  ability to
dividend  adequate funds to the Parent Company during the remainder of 2001. The
Parent Company had cash balances of $17.9 million at September 30, 2001.

The Company's  objective as it relates to liquidity is to insure that subsidiary
banks  have funds  available  to meet  deposit  withdrawals  and credit  demands
without unduly penalizing profitability.  In order to maintain a proper level of
liquidity,  the banks have several  sources of funds  available on a daily basis
that  can be used for  liquidity  purposes.  These  sources  of funds  primarily
include the  subsidiary  banks' core  deposits,  consisting of both business and
nonbusiness  deposits;  cash flow  generated by repayment of loan  principal and
interest;  and federal funds purchased and securities  sold under  agreements to
repurchase.

For the longer term, the liquidity position is managed by balancing the maturity
structure of the balance sheet. This process allows for an orderly flow of funds
over an extended period of time.

Liquid assets consist of cash and due from banks,  short-term  investments,  and
available for sale  investment  securities.  At September 30, 2001,  such assets
totaled $410.8 million,  a decrease of $30.5 million or 6.9% from year-end 2000.
Net cash  provided by operating  activities  totaled  $15.5  million in the nine
months ended  September  30, 2001  compared to $15.0 million for the same period
last year. Net cash used in investing  activities was $50.8 million, an increase
of $30.1  million.  The  increase in net cash used in  investing  activities  is
attributed to additional purchases of available for sale investment  securities.
Net cash used in  financing  activities  was $30.3  million  for the nine months
ended  September  30,  2001,  an  increase  of $41.9  million  in the prior year
comparison.  The  increase  in net  cash  used in  financing  activities  is due
primarily  to a  decrease  in  deposits  of  $40.3  million  in  the  nine-month
comparison.

CAPITAL RESOURCES

Shareholders' equity was $124.8 million on September 30, 2001. This represents a
decrease of $629 thousand or 0.5% from year-end 2000. The Company  purchased 253
thousand shares of its outstanding  common stock during the first nine months of
2001 for a total cost of $8.9 million.

The Company  announced a stock purchase plan on July 25, 2000, which states that
it intends to purchase up to 500,000  shares of its  outstanding  common  stock.
This is an addition to the plan  announced on November 9, 1998 to purchase up to
400,000 shares.  The purchases will be dependent on market  conditions and there
is no guarantee as to the exact number of shares to be purchased by the Company.
Shares repurchased will be used for general corporate purposes.  Consistent with
the  objective  of  maximizing  shareholder  value,  the Company  considers  the
purchase  of  its  outstanding  shares  in a  given  price  range  to be a  good
investment of the Company's available funds.

The Company  issued  23,838  shares of common stock during the first nine months
pursuant to its  nonqualified  stock option  plan.  Dividends of $6.3 million or
$.90 per share were  declared  during the first nine months of 2001, an increase
of 3.4% per share compared to the prior year.  Accumulated  other  comprehensive
income,  consisting of unrealized holding gains on available for sale investment
securities (net of tax) increased $2.5 million from year-end 2000.

Consistent with the objective of operating a sound financial  organization,  the
Company's goal is to maintain  capital ratios well above the regulatory  minimum
requirements.  The  Company's  capital  ratios as of  September  30,  2001,  the
regulatory  minimums  and  the  regulatory  standard  for a  "well  capitalized"
institution are as follows:

                          Farmers Capital        Regulatory         Well
                         Bank Corporation          Minimum       Capitalized
------------------------------------------------------------------------------
Tier 1 risk based              16.20%               4.00%            6.00%

Total risk based               17.46%               8.00%           10.00%

Leverage                       10.82%               4.00%            5.00%

The capital ratios of all the subsidiary  banks, on an individual basis, were in
excess of the  applicable  minimum  regulatory  capital  ratio  requirements  at
September 30, 2001.

EFFECT OF IMPLEMENTING RECENTLY ISSUED ACCOUNTING STANDARDS

In July 2001,  the  Financial  Accounting  Standards  Board issued  Statement of
Financial Accounting Standards ("SFAS") No. 141, Business Combinations, and SFAS
No. 142,  Goodwill and Other Intangible  Assets.  SFAS No. 141 requires that the
purchase  method of accounting be used for all business  combinations  initiated
after  June  30,  2001 as  well as all  purchase  method  business  combinations
completed after June 30, 2001. SFAS No. 141 also specifies  criteria  intangible
assets  acquired  in a  purchase  method  business  combination  must meet to be
recognized and reported apart from goodwill. SFAS No. 142 requires that goodwill
and intangible assets with indefinite  useful lives no longer be amortized,  but
instead  be tested for  impairment  at least  annually  in  accordance  with the
provisions of Statement  142.  Statement  142 will also require that  intangible
assets with definite useful lives be amortized over their  respective  estimated
useful lives to their estimated  residual values, and reviewed for impairment in
accordance with SFAS No. 121, Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of.

The Company is required to adopt the provisions of SFAS No. 141  immediately and
SFAS No. 142 effective January 1, 2002.

As of the date of adoption,  the Company expects to have no unamortized goodwill
or  other  unamortized  identifiable  intangible  assets.  Amortization  expense
related to  goodwill  was $495  thousand  and $242  thousand  for the year ended
December 31, 2000 and the nine months ended September 30, 2001, respectively.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk
-------------------------------------------------------------------

The Company's market risk is comprised primarily of interest rate risk. Interest
rate risk occurs when interest earning assets and interest  bearing  liabilities
mature or reprice at  different  times or on a different  basis.  The  Company's
Asset and Liability  Committee ("ALCO") meets to assess and monitor this risk on
a regular  basis.  Gap  reports are one of the tools used by the ALCO to measure
the Company's  interest rate risk. Gap reports  identify  maturity and repricing
mismatches  between assets and  liabilities  over various time periods.  The gap
position is the difference  between the rate sensitive assets and rate sensitive
liabilities  within a given time period. A positive gap results when more assets
mature or reprice than liabilities  within the given time period. A negative gap
results when more liabilities mature or reprice than assets. Risk is measured by
the size of the gap and the length of time the gap exists.  The preparation of a
gap report  requires  significant  assumptions.  Therefore,  future  results may
differ from the trends indicated in the gap report. Assumptions include, but are
not limited to, repricing and maturities  within the given time period occurring
simultaneously and all interest rates moving the same amount.

The following  table  presents the  Company's  one-year gap position and related
information as of the dates indicated.

                                         9/30/01       6/30/01     12/31/00
                                      -----------------------------------------

Gap position (in millions)               $ (2.5)        $ 5.5     $ (21.0)

Rate sensitive assets
  to rate sensitive liabilities            1.00          1.01        0.97

Gap to total assets                        (0.2)%         0.5%       (1.7)%

At September  30, 2001 the Company was in a slightly  negative gap position with
$2.5 million more in rate sensitive  liabilities  scheduled to reprice than rate
sensitive assets, indicating that net interest income would not be significantly
impacted by a change in interest rates over the next twelve months.  The Company
is well  within  the  standards  established  by its  ALCO  for each of the time
periods presented.

PART II - OTHER INFORMATION

Item 1.  Legal Proceedings
--------------------------

As of  September  30,  2001,  there had been no  material  changes  to the cases
previously reported, and no new significant cases have emerged.

There were various  other  pending  legal  actions and  proceedings  against the
Company  arising  from the normal  course of  business  and in which  claims for
damages are asserted.  Management, after discussion with legal counsel, believes
that these actions are without merit and that the ultimate  liability  resulting
from these  legal  actions  and  proceedings,  if any,  will not have a material
adverse effect upon the consolidated financial statements of the Company.

Item 6.  Exhibits and Reports on Form 8-K
-----------------------------------------

a)       List of Exhibits
         ----------------

         11    Statement re computation of per share earnings

b)       Reports on Form 8-K
         -------------------

         None.

                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

Date:       11/06/01          /s/ Charles S. Boyd
      --------------------   -----------------------------------------------
                             Charles Scott Boyd,
                             President and CEO (Principal Executive Officer)

Date:       11-7-01           /s/ Cecil Douglas Carpenter
      --------------------   -----------------------------------------------
                             Cecil Douglas Carpenter,
                             Vice President, Secretary, and CFO (Principal
                             Financial and Accounting Officer)
Exhibit 11
                 STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
                 ----------------------------------------------

-------------------------------------------------------------------------------
                                       Three Months Ended     Nine Months Ended
                                           September 30,        September 30,
(In thousands, except per share data)     2001      2000       2001       2000
-------------------------------------------------------------------------------
Net income, basic and diluted           $3,030     $3,787    $10,832    $10,737
-------------------------------------------------------------------------------

Average shares outstanding               6,950      7,263      6,999      7,343
Effect of dilutive stock options            62         16         39          3
-------------------------------------------------------------------------------
Average diluted shares outstanding       7,012      7,279      7,038      7,346
-------------------------------------------------------------------------------

Net income per share, basic             $  .44     $  .52     $ 1.55     $ 1.46
Net income per share, diluted           $  .43     $  .52     $ 1.54     $ 1.46
-------------------------------------------------------------------------------