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 MARCH 31, 2004

                                       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 incorporation              (I.R.S. Employer
or organization)                                        Identification Number)

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  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Rule 12b-2 of the Securities Exchange Act of 1934).

                                 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 $.125 per share
                   6,729,791 shares outstanding at May 6, 2004

<PAGE>


                                TABLE OF CONTENTS


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

     Item 1 - Financial Statements

         Unaudited Consolidated Balance Sheets -
             March 31, 2004 and December 31, 2003                            3

         Unaudited Consolidated Statements of Income -
             For the Three Months Ended
             March 31, 2004 and March 31, 2003                               4

         Unaudited Consolidated Statements of Comprehensive Income -
             For the Three Months Ended
             March 31, 2004 and March 31, 2003                               5

         Unaudited Consolidated Statements of Cash Flows -
             For the Three Months Ended
             March 31, 2004 and March 31, 2003                               6

         Unaudited Consolidated Statements of Changes in
             Shareholders' Equity -
             For the Three Months Ended
             March 31, 2004 and March 31, 2003                               7

         Notes to Unaudited Consolidated Financial Statements                8

     Item 2 - Management's Discussion and Analysis of Financial
              Condition and Results of Operations                           10

     Item 3 - Quantitative and Qualitative Disclosures About Market Risk    18

     Item 4 - Controls and Procedures                                       19

Part II - Other Information

     Item 1 - Legal Proceedings                                             19

     Item 2 - Changes in Securities, Use of Proceeds and Issuer Repurchases
              of Equity Securities                                          19

     Item 6 - Exhibits and Reports on Form 8-K                              20

     Signatures                                                             21



<PAGE>


PART I - FINANCIAL INFORMATION

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

UNAUDITED CONSOLIDATED BALANCE SHEETS
-----------------------------------------------------------------------------------------------------------------------------
                                                                                             March 31,       December 31,
(In thousands, except share data)                                                                2004               2003
-----------------------------------------------------------------------------------------------------------------------------
<S>                                                                                        <C>                <C>
ASSETS
Cash and cash equivalents:
     Cash and due from banks                                                               $    73,465        $    99,628
     Interest bearing deposits in other banks                                                    3,066              3,154
     Federal funds sold and securities purchased under
       agreements to resell                                                                     26,159             24,434
-----------------------------------------------------------------------------------------------------------------------------
          Total cash and cash equivalents                                                      102,690            127,216
-----------------------------------------------------------------------------------------------------------------------------
Investment securities:
     Available for sale, amortized cost of $349,676 (2004) and $354,905 (2003)                 353,748            358,169
     Held to maturity, fair value of $ 24,873 (2004) and $26,201 (2003)                         23,548             24,789
-----------------------------------------------------------------------------------------------------------------------------
          Total investment securities                                                          377,296            382,958
-----------------------------------------------------------------------------------------------------------------------------
Loans, net of unearned income                                                                  776,895            755,945
Allowance for loan losses                                                                      (11,294)           (11,292)
-----------------------------------------------------------------------------------------------------------------------------
          Loans, net                                                                           765,601            744,653
-----------------------------------------------------------------------------------------------------------------------------
Premises and equipment, net                                                                     24,167             24,115
Company-owned life insurance                                                                    25,915             25,510
Other assets                                                                                    12,053             14,113
-----------------------------------------------------------------------------------------------------------------------------
          Total assets                                                                     $ 1,307,722        $ 1,318,565
-----------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Deposits:
     Noninterest bearing                                                                   $   171,871        $   226,650
     Interest bearing                                                                          856,530            841,672
-----------------------------------------------------------------------------------------------------------------------------
          Total deposits                                                                     1,028,401          1,068,322
-----------------------------------------------------------------------------------------------------------------------------
Federal funds purchased and securities sold under agreements to repurchase                      86,186             56,698
Other short-term borrowings                                                                        315                418
Long-term debt                                                                                  53,744             56,413
Dividends payable                                                                                2,220              2,215
Other liabilities                                                                                8,220              8,028
-----------------------------------------------------------------------------------------------------------------------------
          Total liabilities                                                                  1,179,086          1,192,094
-----------------------------------------------------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY
Common stock, par value $.125 per share
     9,608,000 shares authorized; 8,172,119 and 8,160,919
     shares issued at March 31, 2004 and December 31, 2003, respectively                         1,022              1,020
Capital surplus                                                                                 19,020             18,670
Retained earnings                                                                              146,777            145,489
Treasury stock, at cost 1,444,739 shares at March 31, 2004 and December 31, 2003               (40,830)           (40,830)
Accumulated other comprehensive income                                                           2,647              2,122
-----------------------------------------------------------------------------------------------------------------------------
          Total shareholders' equity                                                           128,636            126,471
-----------------------------------------------------------------------------------------------------------------------------
          Total liabilities and shareholders' equity                                       $ 1,307,722        $ 1,318,565
-----------------------------------------------------------------------------------------------------------------------------
See accompanying notes to unaudited consolidated financial statements.
</TABLE>

<PAGE>
<TABLE>
<CAPTION>

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
---------------------------------------------------------------------------------------------------------------
(In thousands, except per share data)
Three months ended March 31,                                                     2004                 2003
---------------------------------------------------------------------------------------------------------------
<S>                                                                          <C>                  <C>
INTEREST INCOME
Interest and fees on loans                                                   $ 11,729             $ 12,229
Interest on investment securities:
     Taxable                                                                    1,964                2,299
     Nontaxable                                                                   946                  803
Interest on deposits in other banks                                                10                   15
Interest of federal funds sold and securities purchased under
     agreements to resell                                                          90                  162
---------------------------------------------------------------------------------------------------------------
          Total interest income                                                14,739               15,508
---------------------------------------------------------------------------------------------------------------
INTEREST EXPENSE
Interest on deposits                                                            3,674                4,647
Interest on federal funds purchased and securities sold under
    agreements to repurchase                                                      218                  259
Interest on other borrowed funds                                                  502                  550
---------------------------------------------------------------------------------------------------------------
          Total interest expense                                                4,394                5,456
---------------------------------------------------------------------------------------------------------------
          Net interest income                                                  10,345               10,052
---------------------------------------------------------------------------------------------------------------
Provision for loan losses                                                         365                  385
---------------------------------------------------------------------------------------------------------------
          Net interest income after provision for loan losses                   9,980                9,667
---------------------------------------------------------------------------------------------------------------
NONINTEREST INCOME
Service charges and fees on deposits                                            1,894                1,835
Other service charges, commissions, and fees                                      884                  920
Data processing income                                                            334                  345
Trust income                                                                      414                  399
Investment securities gains, net                                                   82                  147
Gains on sale of mortgage loans, net                                               44                  189
Income from company-owned life insurance                                          405                  265
Other                                                                              30                   66
---------------------------------------------------------------------------------------------------------------
          Total noninterest income                                              4,087                4,166
---------------------------------------------------------------------------------------------------------------
NONINTEREST EXPENSE
Salaries and employee benefits                                                  5,394                5,068
Occupancy expenses, net                                                           662                  658
Equipment expenses                                                                950                  937
Bank franchise tax                                                                341                  334
Other                                                                           2,335                2,142
---------------------------------------------------------------------------------------------------------------
          Total noninterest expense                                             9,682                9,139
---------------------------------------------------------------------------------------------------------------
          Income before income taxes                                            4,385                4,694
---------------------------------------------------------------------------------------------------------------
Income tax expense                                                                877                1,101
---------------------------------------------------------------------------------------------------------------
          Net income                                                          $ 3,508              $ 3,593
---------------------------------------------------------------------------------------------------------------
NET INCOME PER COMMON SHARE
     Basic                                                                    $   .52              $   .53
     Diluted                                                                      .52                  .53
---------------------------------------------------------------------------------------------------------------
WEIGHTED AVERAGE SHARES OUTSTANDING
     Basic                                                                      6,723                6,764
     Diluted                                                                    6,784                6,798
---------------------------------------------------------------------------------------------------------------
See accompanying notes to unaudited consolidated financial statements.
</TABLE>
<PAGE>

<TABLE>
<CAPTION>

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
---------------------------------------------------------------------------------------------------------------
Three months ended March 31, (In thousands)                                      2004                 2003
---------------------------------------------------------------------------------------------------------------
<S>                                                                          <C>                  <C>
NET INCOME                                                                   $  3,508             $  3,593
     Unrealized holding gain (loss) on available for sale
     securities arising during the period on securities held
     at end of period, net of tax of $302 and $(398), respectively                560                 (740)

Reclassification adjustment for prior period unrealized gain
     previously reported in other comprehensive income recognized
     during current period, net of tax of $19 and $61, respectively               (35)                (114)
---------------------------------------------------------------------------------------------------------------
Other comprehensive income (loss)                                                 525                 (854)
---------------------------------------------------------------------------------------------------------------
Comprehensive Income                                                         $  4,033             $  2,739
---------------------------------------------------------------------------------------------------------------
See accompanying notes to unaudited consolidated financial statements.
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
----------------------------------------------------------------------------------------------------------------------------
Three months ended March 31, (In thousands)                                                    2004                 2003
----------------------------------------------------------------------------------------------------------------------------
<S>                                                                                      <C>                  <C>
CASH FLOWS FROM OPERATING ACTIVITIES
     Net income                                                                          $    3,508           $    3,593
          Depreciation and amortization                                                         721                  741
          Net amortization of investment security premiums and (discounts):
                Available for sale                                                              466                  453
                Held to maturity                                                                (11)                 (18)
          Provision for loan losses                                                             365                  385
          Noncash compensation expense                                                           69                  107
          Mortgage loans originated for sale                                                 (3,718)             (15,555)
          Proceeds from sale of mortgage loans                                                2,341               13,483
          Deferred income tax (benefit) expense                                                (519)                  86
          Gains on sale of mortgage loans, net                                                  (44)                (189)
          Gains on sale of premises and equipment, net                                                                (2)
          Gains on sale of available for sale investment securities, net                        (82)                (147)
          Decrease in accrued interest receivable                                                18                  234
          Income from company-owned life insurance                                             (405)                (265)
          Decrease (increase) in other assets                                                 1,556               (2,946)
          Decrease in accrued interest payable                                                  (11)                (186)
          Increase in other liabilities                                                         928                  672
----------------------------------------------------------------------------------------------------------------------------
             Net cash provided by operating activities                                        5,182                  446
----------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
     Proceeds from maturities and calls of investment securities:
          Available for sale                                                                 62,914              134,522
          Held to maturity                                                                    1,254                1,204
     Proceeds from sale of available for sale investment  securities                         22,036               74,137
     Purchase of available for sale investment securities                                   (80,107)             (95,055)
     Loans originated for investment, net of principal collected                            (19,892)               2,339
     Purchase of company-owned life insurance                                                                    (23,949)
     Purchase of premises and equipment                                                        (778)                (785)
     Proceeds from sale of equipment                                                              5                    3
----------------------------------------------------------------------------------------------------------------------------
             Net cash (used in) provided by investing activities                            (14,568)              92,416
----------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
     Net (decrease) increase in deposits                                                    (39,921)               2,764
     Net increase (decrease) in federal funds purchased and securities
           sold under agreements to repurchase                                               29,488              (61,140)
     Proceeds from long-term debt                                                                                  1,683
     Repayments of long-term debt                                                            (2,699)                (665)
     Net decrease in other short-term borrowings                                               (103)                (566)
     Dividends paid                                                                          (2,215)              (2,191)
     Purchase of common stock                                                                                     (2,112)
     Stock options exercised                                                                    280                   71
----------------------------------------------------------------------------------------------------------------------------
             Net cash used in financing activities                                          (15,140)             (62,156)
----------------------------------------------------------------------------------------------------------------------------
             Net (decrease) increase in cash and cash equivalents                           (24,526)              30,706
----------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at beginning of year                                              127,216               67,101
----------------------------------------------------------------------------------------------------------------------------
             Cash and cash equivalents at end of period                                  $  102,690           $   97,807
----------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURES
Cash paid during the period for:
     Interest                                                                            $    4,405           $    5,642
     Income taxes
Transfers from loans to repossessed assets                                                       31                  173
Cash dividend declared and unpaid                                                             2,220                2,158
----------------------------------------------------------------------------------------------------------------------------
See accompanying notes to unaudited consolidated financial statements.
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
------------------------------------------------------------------------------------------------------------------------------------
(In thousands, except per share data)
                                                                                                      Accumulated
                                                                                                         Other             Total
Three months ended                        Common Stock     Capital   Retained      Treasury Stock    Comprehensive     Shareholders'
March 31, 2004 and 2003               Shares     Amount    Surplus   Earnings   Shares     Amount       Income            Equity
------------------------------------------------------------------------------------------------------------------------------------
<S>                                    <C>       <C>       <C>       <C>         <C>     <C>             <C>              <C>
  Balance at January 1, 2004           8,161     $1,020    $18,670   $145,489    1,445   $(40,830)       $2,122           $126,471

Net income                                                              3,508                                                3,508
Other comprehensive income                                                                                  525                525
Cash dividends declared,
  $.33 per share                                                       (2,220)                                              (2,220)
Stock options exercised,
  including related tax benefits          11          2        281                                                             283
Noncash compensation expense
  attributed to stock option grants                             69                                                              69
------------------------------------------------------------------------------------------------------------------------------------
  Balance at March 31, 2004            8,172     $1,022    $19,020   $146,777    1,445   $(40,830)       $2,647           $128,636
------------------------------------------------------------------------------------------------------------------------------------



------------------------------------------------------------------------------------------------------------------------------------
  Balance at January 1, 2003           8,136     $1,017    $17,623   $141,199    1,344   $(37,627)       $3,561           $125,773

Net income                                                              3,593                                                3,593
Other comprehensive loss                                                                                   (854)              (854)
Cash dividends declared,
  $.32 per share                                                       (2,158)                                              (2,158)
Purchase of common stock                                                            68     (2,112)                          (2,112)
Stock options exercised                    3                    71                                                              71
Noncash compensation expense
  attributed to stock option grants                            107                                                             107
------------------------------------------------------------------------------------------------------------------------------------
  Balance at March 31, 2003            8,139     $1,017    $17,801   $142,634    1,412   $(39,739)       $2,707           $124,420
------------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to unaudited consolidated financial statements.
</TABLE>
<PAGE>

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1.   BASIS OF PRESENTATION AND NATURE OF OPERATIONS

The consolidated  financial  statements  include the accounts of Farmers Capital
Bank  Corporation  (the  "Company"),   a  financial  holding  company,  and  its
wholly-owned six bank and one nonbank  subsidiaries.  Bank subsidiaries  include
Farmers Bank & Capital Trust Co. ("Farmers Bank") in Frankfort,  KY; United Bank
& Trust Co. in Versailles,  KY; Lawrenceburg  National Bank in Harrodsburg,  KY;
First  Citizens Bank in  Shepherdsville,  KY;  Farmers Bank and Trust Company in
Georgetown, KY; and Kentucky Banking Centers, Inc. in Glasgow, KY. The Company's
nonbank subsidiary is FCB Services,  Inc., a data processing  subsidiary located
in  Frankfort,  KY.  Intercompany  transactions  and balances are  eliminated in
consolidation. Leasing One Corporation and Farmers Capital Insurance Corporation
are wholly-owned subsidiaries of Farmers Bank.

The Company  provides  financial  services  through its 23 locations  throughout
Central  Kentucky  to  individual,   business,   agriculture,   government,  and
educational customers.  Its primary deposit products are checking,  savings, and
term  certificate  accounts.   Its  primary  lending  products  are  residential
mortgage,  commercial lending and leasing, and installment loans.  Substantially
all loans and  leases are  secured by  specific  items of  collateral  including
business assets,  consumer  assets,  and commercial and residential real estate.
Commercial  loans and  leases  are  expected  to be  repaid  from cash flow from
operations of businesses.  Farmers Bank has served as the general depository for
the Commonwealth of Kentucky for over 70 years and also provides  investment and
other services to the Commonwealth.  Other services include, but are not limited
to,  cash  management  services,  issuing  letters of credit,  safe  deposit box
rental,  and providing funds transfer  services.  Other  financial  instruments,
which  potentially  represent  concentrations  of credit risk,  include  deposit
accounts in other financial institutions and federal funds sold.

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  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, 2003.

2.   RECLASSIFICATIONS

Certain   reclassifications   have  been  made  to  the  consolidated  financial
statements of prior periods to conform to the current period presentation. These
reclassifications  do not  affect net  income or total  shareholders'  equity as
previously reported.

3.   NET INCOME PER COMMON SHARE

Basic net income per common  share is  determined  by dividing net income by the
weighted average total number of shares of common stock outstanding. Diluted net
income  per  common  share is  determined  by  dividing  net income by the total
weighted  average number of shares of common stock  outstanding,  plus the total
weighted average number of shares that would be issued upon exercise of dilutive
stock options  assuming  proceeds are used to repurchase  shares pursuant to the
treasury stock method.  Net income per common share computations were as follows
at March 31, 2004 and 2003.


------------------------------------------------------------------------------
(In thousands, except per share data)
Three months ended March 31,                            2004            2003
------------------------------------------------------------------------------
Net income, basic and diluted                      $   3,508      $    3,593
------------------------------------------------------------------------------

Average shares outstanding                             6,723           6,764
Effect of dilutive stock options                          61              34
------------------------------------------------------------------------------
Average diluted shares outstanding                     6,784           6,798
------------------------------------------------------------------------------

Net income per share, basic                        $     .52        $    .53
Net income per share, diluted                            .52             .53
------------------------------------------------------------------------------


4.   STOCK-BASED COMPENSATION

In 1997, the Company's Board of Directors  approved a nonqualified  stock option
plan that  provides for granting of stock  options to key employees and officers
of the Company. The plan was subsequently ratified by the Company's shareholders
at its annual  shareholders'  meeting held on May 12, 1998, the measurement date
of the plan.  All stock  options are awarded at a price equal to the fair market
value of the  Company's  common stock at the date the options are  granted.  The
Company applies  Accounting  Principles Board ("APB") Opinion No. 25 and related
interpretations  in  accounting  for its plan.  Accordingly,  since options were
granted during 1997 at the fair market value of the Company's stock on the grant
date, and the  measurement  date occurred  during 1998,  the Company  recognizes
noncash  compensation  expense based on the intrinsic value of the stock options
measured on the date of shareholder ratification of the plan.

The Company granted 54,000  additional  options during 2000 in which there is no
compensation  expense being recognized  pursuant to APB No. 25. Had compensation
expense been determined  under the fair value method  described in the Financial
Accounting  Standards Board ("FASB") Statement of Financial Accounting Standards
("SFAS") No. 123,  Accounting for Stock-Based  Compensation,  as amended by SFAS
No. 148, Accounting for Stock-Based  Compensation-Transition and Disclosure, the
Company's net income and income per common share would have been as shown in the
table below.

--------------------------------------------------------------------------------
(In thousands, except per share data)
Three months ended March 31,                                 2004         2003
--------------------------------------------------------------------------------
NET INCOME
  As reported                                             $ 3,508     $  3,593
  Add:  Stock-based employee compensation expense
        included in reported net income, net of
        related tax effects                                    45           70
  Less: Stock-based compensation expense determined
        under fair value based method for all awards,
        net of related tax effects                            (59)         (85)
--------------------------------------------------------------------------------
Proforma                                                  $  3,494    $  3,578
--------------------------------------------------------------------------------
NET INCOME PER COMMON SHARE
  Basic, as reported                                      $    .52    $    .53
  Basic, proforma                                              .52         .53

  Diluted, as reported                                         .52         .53
  Diluted, proforma                                            .52         .53
--------------------------------------------------------------------------------

The fair value of the options granted are estimated as of the  measurement  date
using the Black-Scholes option pricing model with the following weighted average
assumptions  used for grants in 2000 and 1997,  respectively:  dividend yield of
3.12% and 3.18%; expected volatility of 29.6% and 23.4%; risk-free interest rate
of 6.71% and  5.75%;  and  expected  life of seven  years for both  grants.  The
weighted  average fair value of options  granted  during 2000 and 1997 was $9.25
and $16.11 per share, respectively.

The plan  provides for the granting of options to purchase up to 450,000  shares
of the  Company's  common stock at a price equal to the fair market value of the
Company's  common  stock on the  date the  option  is  granted.  The term of the
options  expires after ten years from the date on which the options are granted.
Options  granted  under the plan vest ratably over various time periods  ranging
from four to seven years.  All options granted must be held for a minimum of one
year before they can be  exercised.  Forfeited  options  are  available  for the
granting of additional stock options under the plan.

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.  The Company
expressly  disclaims  any intent or  obligation  to update  any  forward-looking
statements after the date hereof to conform such statements to actual results or
to changes in our opinions or expectations.


RESULTS OF OPERATIONS

                    First Quarter 2004 vs. First Quarter 2003
                    -----------------------------------------

The Company  reported  net income of $3.5  million for the first three months of
2004, a decrease of $85  thousand or 2.4%  compared to $3.6 million for the same
period in 2003.  Basic and diluted net income per share was $.52 for the current
quarter,  a decrease of $.01 or 1.9% compared to $.53 a year  earlier.  The 1.9%
decrease  in net  income  per  share is 50  basis  points  better  than the 2.4%
decrease  reported  in dollar  terms due to the  effect of fewer  common  shares
outstanding pursuant to the Company's stock purchase program.

Net interest  income for the current  quarter was $10.3 million,  an increase of
$293 thousand or 2.9% compared to the same period a year earlier and  represents
the highest level of quarterly net interest  income since the fourth  quarter of
2001.  This is significant  since 2001 was the year in which the Federal Reserve
Board (the "Fed") cut the federal funds rate eleven times, leading to the lowest
overall  market  interest  rates in recent  history.  For the Company,  this has
resulted in lower net interest  margins as, in general,  rates earned on earning
assets  have  decreased  more  rapidly  than  rates  paid  on  interest  bearing
liabilities.

Offsetting  the  increase  in net  interest  income was a $79  thousand  or 1.9%
decrease in noninterest  income coupled with a $543 thousand or 5.9% increase in
noninterest expenses. The decrease in noninterest income is primarily attributed
to a $145 thousand or 76.7%  decrease in gains on the sale of mortgage loans due
to lower  origination  activity and a $65 thousand or 44.2% decrease in gains on
the sale of  investment  securities.  The  increase in  noninterest  expenses is
primarily  attributed  to a $326  thousand  or 6.4%  increase  in  salaries  and
employee benefits.  Employee benefits account for $274 thousand of the increase.
A significant portion of this increase relates to the new postretirement  health
insurance  coverage  initiated  late in the first quarter of 2003. The effective
income tax rate declined to 20.0% from 23.5% in the three month  comparison on a
decline in income tax expense of $224 thousand or 20.3%.

The return on average  assets ("ROA") was 1.10% for the first quarter of 2004, a
decrease of 7 basis  points  compared to 1.17%  reported  for the same period of
2003.  Significant  components  that  positively  affected ROA in the comparison
include the following:  an increase in net interest margin of 12 basis points to
3.83%; a decrease of 2 basis points in the provision for loan losses relative to
average  assets;  and an 8 basis  point  decrease  in income  taxes  relative to
average earning assets. Components that had a negative effect on ROA include the
following:  a decrease in the earning asset ratio  contributing 15 basis points;
an increase of 4 basis points in noninterest expense relative to average assets;
and a 10 basis point decrease in noninterest  income relative to average assets.
The return on average  equity was 11.09% for the first  quarter of 2004 compared
to 11.66% for the same period of 2003.  The  decrease is due to lower net income
reported in the current period combined with a $2.3 million  increase in average
equity compared to the same period a year ago.

NET INTEREST INCOME
-------------------

Although some economic measures are beginning to improve,  continuing weaknesses
in the  overall  economic  environment  remain  present  and have  impacted  the
Company's  net  interest  income  in the  reporting  periods.  The  trend of the
interest  rate  environment  for  2003 was  downward  primarily  as a result  of
previous  short-term  interest rate reductions  taken by the Fed. The effects of
prior rate reductions by the Fed along with intense competition in the Company's
market areas have tightened recent quarterly net interest margins.

The reported increase in net interest income in the current quarterly comparison
represents the first increase in a  quarter-to-quarter  comparison  since a $139
thousand or 1.3% increase reported in the second quarter of 2001 compared to the
second  quarter of 2000.  The  increase  in net  interest  income in the current
quarterly  comparison was driven by a $1.1 million  decrease in interest expense
primarily  attributed to lower interest rates on time deposits.  The decrease in
interest expense more than offset a decline in interest income of $769 thousand.
For the  current  period,  this  reverses  the recent  trend of rates on earning
assets,  in general,  declining more rapidly than rates paid on interest bearing
liabilities associated with the general decline in the interest rate environment
over the past two years. During the falling rate environment,  the challenge has
been 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  tax  equivalent  ("TE") yield on earning  assets for the current
three  months was 5.37%,  a reduction  of 27 basis points from 5.64% in the same
period a year ago. The cost of funds for the current  three months was 1.80%,  a
decline of 51 basis points  compared to 2.31% in the same period a year earlier.
A goal of the Company in the current  interest rate  environment  is to increase
earning  assets  and  decrease  the  interest  rates  paid on  interest  bearing
liabilities. Average earning assets were relatively unchanged at $1.1 billion in
the  quarterly  comparison.  As a percentage of total  average  assets,  earning
assets  decreased  345 basis points to 88.90% from 92.35%.  This  decrease had a
negative 15 basis point effect on ROA in the comparison.

Interest  income totaled $14.7 million for the first quarter of 2004, a decrease
of $769 thousand or 5.0% compared to the same period in the prior year. Interest
expense totaled $4.4 million,  a decrease of $1.1 million or 19.5%. Net interest
income  increased  $293  thousand or 2.9% in the  comparison  and totaled  $10.3
million at March 31, 2004.

Interest and fees on loans  totaled $11.7  million,  a decrease of $500 thousand
mainly due to a decrease in the average rate  earned.  Average  loans  increased
$28.1  million or 3.8% to $764.2  million in the  comparison  due to higher loan
demand in a lower rate environment.  The tax equivalent yield on loans decreased
58 basis  points to 6.2% from 6.8% and  offset  the  effects  of higher  average
balances on interest income.  Interest on taxable securities was $2.0 million, a
decrease of $335  thousand or 14.6% due  primarily  to a $34.6  million or 12.2%
decrease in the average  balance.  An 11 basis point decline in the average rate
to 3.2% from 3.3% also  contributed  to the  decrease  in  interest  on  taxable
securities.  Interest on nontaxable  securities increased $143 thousand or 17.8%
due to a $20.4  million  increase in the average  balance to $92.1  million from
$71.6 million.  This increase offset a decline in the tax equivalent yield of 57
basis points to 6.1% from 6.7%.  Interest on short-term  investments,  including
time deposits in other banks, federal funds sold, and securities purchased under
agreements  to resell,  decreased  $77  thousand,  which is due to both an $18.1
million or 30.7% decrease in the average balance and a 24 basis point decline in
the average rate earned on these investments to 1.0% from 1.2%.

Interest expense on deposits decreased $973 thousand or 20.9% to $3.7 million in
the quarterly  comparison.  This decrease resulted from a general decline in the
average rate paid  throughout  the deposit  portfolio  and  correlates  with the
general decline in market interest rates in the reporting  periods.  The decline
in the average rates paid offset increases in average  balances.  The decline in
interest  expense on deposits was as follows:  time  deposits  $857  thousand or
22.3%;  interest  bearing  demand  deposits $72  thousand or 20.3%;  and savings
deposits  $44  thousand or 9.7%.  The average  rate paid on time  deposits,  the
largest component of interest bearing  deposits,  was 2.8% for the first quarter
of 2004  compared  to 3.7% for the same period of 2003.  The average  balance of
time deposits increased $8.2 million or 2.0% to $425.8 million. The average rate
paid on interest  bearing demand  deposits  declined 16 basis points to .5% from
..6% while the average balance increased $12.2 million or 5.5% to $235.1 million.
The average rate paid on savings deposits  decreased 21 basis points to .9% from
1.1%  while the  average  balance  increased  $19.2  million  or 11.3% to $189.4
million  from  $170.2  million.   Interest  expense  on  overnight   borrowings,
consisting of federal funds  purchased and securities  sold under  agreements to
repurchase,  decreased  $41  thousand  due to an 18 basis  point  decline in the
average rate paid along with a $2.4 million  decline in their  average  balance.
Interest  expense  on  other  borrowed  funds  decreased  $48  thousand  in  the
comparison  as lower  borrowings  from  the  Federal  Home  Loan  Bank  ("FHLB")
decreased the average balance outstanding. The average balance of other borrowed
funds  totaled  $55.1  million,  a  decrease  of $10.6  million  or 16.1% in the
comparison.  The average rate paid on other  borrowed  funds  increased 27 basis
points to 3.7% from 3.4%.

The net interest margin (TE) increased 12 basis points to 3.83% during the first
quarter of 2004 compared to 3.71% in the first quarter of 2003.  The increase in
net interest margin is primarily  attributed to a 24 basis point increase in the
spread  between  rates  earned on earning  assets and the rates paid on interest
bearing  liabilities  to 3.57% in the  current  quarter  from 3.33% in the first
quarter of 2003.  A 12 basis point  reduction  from the  benefit of  noninterest
bearing sources of funds offset the 24 basis point increase in spread, resulting
in the increased net interest margin. The effect of noninterest  bearing sources
of  funds  on  net  interest  margin  typically   declines  in  a  falling  rate
environment.

<PAGE>

The  following  tables  present  an  analysis  of net  interest  income  for the
quarterly periods ended March 31.
<TABLE>
<CAPTION>

DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY:  INTEREST RATES AND INTEREST DIFFERENTIAL
-----------------------------------------------------------------------------------------------------------------------------------
Three months ended March 31,                                   2004                                         2003
                                              Average                         Average         Average                    Average
(In thousands)                                Balance         Interest          Rate          Balance      Interest       Rate
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                          <C>                <C>                <C>      <C>             <C>              <C>
EARNING ASSETS
Investment securities
  Taxable                                    $   247,953        $  1,964           3.19%    $   282,563     $  2,299         3.30%
  Nontaxable1                                     92,073           1,398           6.11          71,648        1,181         6.68
Time deposits with banks,
  federal funds sold and
  securities purchased
  under agreements to resell                      40,879             100            .98          59,027          177         1.22
Loans1,2,3                                       764,161          11,818           6.22         736,039       12,339         6.80
-----------------------------------------------------------------------------------------------------------------------------------
     Total earning assets                      1,145,066        $ 15,280           5.37%      1,149,277     $ 15,996         5.64%
-----------------------------------------------------------------------------------------------------------------------------------
Allowance for loan losses                        (11,404)                                       (11,279)
-----------------------------------------------------------------------------------------------------------------------------------
     Total earning assets, net
     of allowance for loan losses              1,133,662                                      1,137,998
-----------------------------------------------------------------------------------------------------------------------------------
NONEARNING ASSETS
Cash and due from banks                           93,893                                         64,383
Premises and equipment, net                       24,191                                         24,045
Other assets                                      36,363                                         18,109
-----------------------------------------------------------------------------------------------------------------------------------
     Total assets                            $ 1,288,109                                    $ 1,244,535
-----------------------------------------------------------------------------------------------------------------------------------
INTEREST BEARING LIABILITIES
Deposits
  Interest bearing demand                    $   235,050        $    282            .48%    $   222,879     $    354          .64%
  Savings                                        189,426             409            .87         170,183          453         1.08
  Time                                           425,781           2,983           2.82         417,581        3,840         3.73
Federal funds purchased
  and securities sold
  under agreements to repurchase                  78,427             218           1.12          80,828          259         1.30
Other borrowed funds                              55,050             502           3.67          65,609          550         3.40
-----------------------------------------------------------------------------------------------------------------------------------
     Total interest bearing liabilities          983,734        $  4,394           1.80%        957,080     $  5,456         2.31%
-----------------------------------------------------------------------------------------------------------------------------------
NONINTEREST BEARING LIABILITIES
Commonwealth of Kentucky deposits                 36,384                                         32,918
Other demand deposits                            132,825                                        121,013
Other liabilities                                  7,914                                          8,535
-----------------------------------------------------------------------------------------------------------------------------------
     Total liabilities                         1,160,857                                      1,119,546
-----------------------------------------------------------------------------------------------------------------------------------
     Shareholders' equity                        127,252                                        124,989
-----------------------------------------------------------------------------------------------------------------------------------
     Total liabilities and
     shareholders' equity                    $ 1,288,109                                    $ 1,244,535
-----------------------------------------------------------------------------------------------------------------------------------
Net interest income                                               10,886                                      10,540
TE basis adjustment                                                 (541)                                       (488)
-----------------------------------------------------------------------------------------------------------------------------------
     Net interest income                                        $ 10,345                                    $ 10,052
-----------------------------------------------------------------------------------------------------------------------------------
Net interest spread                                                                3.57%                                     3.33%
Impact of noninterest bearing
  sources of funds                                                                  .26                                       .38
-----------------------------------------------------------------------------------------------------------------------------------
Net interest margin                                                                3.83%                                     3.71%
-----------------------------------------------------------------------------------------------------------------------------------
1Income and yield  stated at a fully tax  equivalent  basis  using the  marginal corporate Federal tax rate of 35%.
2Loan balances  include  principal  balances  on  nonaccrual  loans.
3Loan  fees included in interest  income amounted to $619 thousand and $521 thousand in 2004 and 2003, respectively.
</TABLE>

<PAGE>
<TABLE>
<CAPTION>

ANALYSIS OF CHANGES IN NET INTEREST INCOME (TAX EQUIVALENT BASIS)
--------------------------------------------------------------------------------------------------------
(In thousands)                                               Variance         Variance Attributed to
Three months ended March 31,                                2004/20031         Volume          Rate
--------------------------------------------------------------------------------------------------------
<S>                                                         <C>             <C>            <C>
INTEREST INCOME
Taxable investment securities                               $   (335)       $  (263)       $    (72)
Nontaxable investment securities2                                217            795            (578)
Time deposits with banks, federal funds sold and
   securities purchased under agreements to resell               (77)           (47)            (30)
Loans2                                                          (521)         2,480          (3,001)
--------------------------------------------------------------------------------------------------------
     Total interest income                                      (716)         2,965          (3,681)
--------------------------------------------------------------------------------------------------------
INTEREST EXPENSE
Interest bearing demand deposits                                 (72)           115            (187)
Savings deposits                                                 (44)           247            (291)
Time deposits                                                   (857)           503          (1,360)
Federal funds purchased and securities sold under
   agreements to repurchase                                      (41)            (7)            (34)
Other borrowed funds                                             (48)          (269)            221
--------------------------------------------------------------------------------------------------------
     Total interest expense                                   (1,062)           589          (1,651)
--------------------------------------------------------------------------------------------------------
Net interest income                                         $    346        $ 2,376        $ (2,030)
--------------------------------------------------------------------------------------------------------
Percentage change                                              100.0%        686.7%         (586.7)%
--------------------------------------------------------------------------------------------------------
1The changes  that are not  solely  due to rate or  volume  are  allocated  on a
 percentage  basis using the absolute values of rate and volume variances as a
 basis for allocation.
2Income stated at fully tax equivalent basis using the marginal corporate
 Federal tax rate of 35%.
</TABLE>


NONINTEREST INCOME
------------------

Noninterest  income was $4.1 million for the current quarter,  a decrease of $79
thousand or 1.9%  compared to the first  quarter of the prior year.  The largest
component of noninterest income,  service charges and fees on deposits,  totaled
$1.9  million at March 31,  2004,  an  increase  of $59  thousand or 3.2% due to
increased overdraft volumes. Other service charges,  commissions,  and fees were
$884 thousand,  a decline of $36 thousand or 3.9%. Leading the decrease in other
service charges, commissions, and fees was a $24 thousand decline in credit life
insurance  fees.  Data  processing  fees were $334  thousand,  a decrease of $11
thousand  from  $345  thousand  in the prior  year.  Trust  income  grew to $414
thousand from $399 thousand,  an increase of $15 thousand or 3.8% as a result of
an increase in assets under  management.  Net gains on the sale of available for
sale  securities  for the current  quarter  were $82  thousand  compared to $147
thousand in the prior year as the Company  continually  seeks to properly manage
its balance sheet composition in the current economic environment.  Net gains on
the sale of mortgage  loans were $44 thousand,  a decrease of $145 thousand from
$189  thousand in the prior year.  Mortgage  loans  originated  for sale,  which
declined sharply in the fourth quarter of 2003,  declined $11.8 million or 76.1%
in the  current  quarterly  comparison.  Mortgage  loan  activity in the current
quarter is reflective of lower refinancing  activity.  Income from company-owned
life insurance, purchased during the first quarter of 2003, was $405 thousand in
the current period,  an increase of $140 thousand or 52.8%.  The increase is the
result of a full  quarter  of income  being  recognized  in the  current  period
compared to a partial quarter of income in the prior period due to the timing of
the purchase.  Other noninterest income totaled $30 thousand,  a decrease of $36
thousand compared to a year earlier.

NONINTEREST EXPENSE
-------------------

Total  noninterest  expenses were $9.7 million for the first quarter of 2004, an
increase  of $543  thousand  or 5.9%  compared  to the  first  quarter  of 2003.
Salaries  and  employee  benefits  account  for a  significant  portion  of  the
increase.  Driven mainly by an increase in employee benefit  expenses,  salaries
and  employee  benefits  increased a total of $326  thousand  or 6.4%.  Employee
benefit related  expenses were $274 thousand higher in the current period mainly
due to an increase related to the new  postretirement  health insurance coverage
initiated late in the first quarter of 2003.  Salaries and related payroll taxes
increased  $87  thousand  or 2.1% to $4.2  million  mainly due to normal  salary
increases.  Noncash compensation  expense related to the Company's  nonqualified
stock option plan  declined  $36  thousand or 34.3% due to the  structure of the
vesting  schedule.  The  number  of full  time  equivalent  employees  was  455,
relatively unchanged from the same period a year earlier. Occupancy expense, net
of rental income,  was also  relatively  unchanged at $662 thousand as increased
utilities  costs  were  offset  by lower  depreciation  and  maintenance  costs.
Equipment  expenses  totaled  $950  thousand,  up $13  thousand  or 1.4%.  Other
noninterest  expenses,  including bank franchise  taxes,  were $2.7 million,  an
increase  of $200  thousand  or 8.1% from $2.5  million in the prior  year.  The
increase in other  noninterest  expenses was lead by a $100 thousand increase in
losses attributed to (non real estate) foreclosed assets.

INCOME TAXES
------------

Income tax expense for the first quarter of 2004 was $877  thousand,  a decrease
of $224 thousand or 20.3% from the same period a year earlier. The effective tax
rate  decreased 346 basis points to 20.0% from 23.5% in 2003.  The change in the
effective  tax rate is due to lower  forecasted  annualized  net  income  in the
current three months compared to the same period a year ago combined with higher
nontaxable  interest income from municipal bonds and nontaxable  income from the
increase in cash surrender value of company-owned life insurance.

FINANCIAL CONDITION

Total assets were $1.3 billion on March 31, 2004, a decrease of $10.8 million or
..8% from December 31, 2003.  The decrease in assets  primarily  includes a $24.5
million or 19.3% lower  balance in cash and cash  equivalents  and a decrease in
investment securities of $5.7 million or 1.5% offset by an increase in net loans
of $21.0  million  or 2.8%.  The  decrease  in total  assets  relates to a $39.9
million or 3.7% decline in deposits  offset by a $26.7 million or 23.5% increase
in other borrowings and a $2.2 million or 1.7% increase in shareholders' equity.
The makeup of the balance sheet  continually  changes as the Company responds to
extremely competitive market forces.

Management of the Company considers it noteworthy to understand the relationship
between the Company's  principal  subsidiary,  Farmers Bank & Capital Trust Co.,
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.  Therefore,  reviewing average balances is
also important to understanding the financial condition of the Company.

On an average  basis,  total assets were $1.3 billion for the first three months
of 2004,  an  increase  of $37.4  million or 3.0% from  year-end  2003.  Average
earning assets,  primarily loans and securities,  were $1.1 billion at March 31,
2004, an increase of $17.7 million or 1.6% from year-end 2003.  Average  earning
assets  represent 88.9% of total average assets on March 31, 2004, a decrease of
124 basis points compared to 90.1% at year-end 2003.

LOANS
-----

Loans,  net of unearned  income,  totaled  $776.9  million at March 31, 2004, an
increase of $21.0 million or 2.8% from year-end  2003.  The  composition  of the
loan portfolio is summarized in the table below.

--------------------------------------------------------------------------------
                                       March 31, 2004         December 31, 2003
(Dollars in thousands)                 Amount      %            Amount       %
--------------------------------------------------------------------------------

Commercial, financial,
  and agriculture                  $  122,441     15.7%    $  110,657      14.6%
Real estate - construction             48,063      6.2         45,390       6.0
Real estate mortgage - residential    275,534     35.5        270,638      35.8
Real estate mortgage farmland and
 other commercial enterprises         225,269     29.0        222,100      29.4
Installment                            70,568      9.1         71,565       9.5
Lease financing                        35,020      4.5         35,595       4.7
--------------------------------------------------------------------------------
     Total                         $  776,895    100.0%    $  755,945     100.0%
--------------------------------------------------------------------------------


On average,  loans represented 66.7% of earning assets during the current period
compared to 65.8% for year-end  2003. As loan demand  fluctuates,  the available
funds are reallocated  between loans and lower earning temporary  investments or
investment  securities,  which  typically  involve a decrease in credit risk and
lower yields.

ALLOWANCE FOR LOAN LOSSES
-------------------------

The allowance  for loan losses was $11.3  million at March 31, 2004,  relatively
unchanged  from the prior  year-end.  The allowance for loan losses was 1.45% of
loans net of unearned  income at March 31,  2004,  a decrease of 4 basis  points
compared to December 31,  2003.  The  provision  for loan losses  decreased  $20
thousand or 5.2% in the current  three-month  period compared to the same period
in 2003.  The Company had net  charge-offs  of $363  thousand in the first three
months of 2004 compared to net  charge-offs  of $317 thousand in the same period
of 2003,  an  increase  of $46  thousand or 14.5%.  Annualized  net  charge-offs
represent  .19% and .17% of average net loans for three  months  ended March 31,
2004 and 2003 respectively,  as compared to .32% at year-end 2003. The allowance
for loan losses as a percentage of nonperforming loans totaled 121.1% and 123.9%
at March 31, 2004 and December 31, 2003,  respectively.  Management continues to
emphasize collection efforts and evaluation of risks within the loan portfolio.

NONPERFORMING ASSETS
--------------------

Nonperforming  assets for the Company include  nonperforming  loans,  other real
estate  owned,  and other  foreclosed  assets.  Nonperforming  loans  consist of
nonaccrual loans,  restructured loans, and loans past due ninety days or more on
which interest is still accruing.  Nonperforming assets totaled $10.7 million at
March 31,  2004,  a decrease of $508  thousand or 4.5% from the prior  year-end.
Nonperforming  loans  totaled $9.3 million at March 31, 2004, a $212 thousand or
2.3% increase compared to year-end 2003.  Nonperforming  loans include a pool of
constructions loans secured by residential real estate to a financially troubled
builder.  This pool of loans totaled $4.1 million at March 31, 2004 a decline of
$100  thousand from year-end  2003.  Nonperforming  loans as a percentage of net
loans were 1.2% at March 31,  2004,  a decrease  of 1 basis  point  compared  to
year-end 2003.

Other real estate owned,  which had a balance of $1.8 million at year-end  2003,
decreased $580 thousand or 32.2% to $1.2 million on March 31, 2004.

TEMPORARY INVESTMENTS
---------------------

Temporary  investments  consist of interest  bearing  deposits with other banks,
federal funds sold,  and  securities  purchased  under  agreements to resell and
totaled  $29.2  million at March 31,  2004,  an increase of $1.6 million or 5.9%
from year-end 2003.  Temporary  investments averaged $40.9 million for the first
three months of 2004, a decrease of $18.5 million or 31.2% from  year-end  2003.
The decrease is primarily a result of the Company's net funding position and the
relationship  between its principal  subsidiary and the Commonwealth of Kentucky
as described in preceding  sections of this report.  Temporary  investments  are
reallocated  as loan  demand  and  other  investment  alternatives  present  the
opportunity.

INVESTMENT SECURITIES
---------------------

Investment  securities were $377.3 million on March 31, 2004, a decrease of $5.7
million or 1.5% from  year-end  2003.  Available  for sale and held to  maturity
securities  were $353.7  million  and $23.5  million,  respectively.  Investment
securities averaged $340.0 million for the first quarter of 2004, an increase of
$14.3 million or 4.4% from  year-end  2003.  The increase in average  investment
securities is attributable to the Company's  continued efforts to manage its net
interest margin during a period of low market interest rates. The Company had an
unrealized gain on available for sale  investment  securities of $4.1 million at
March 31, 2004  compared to $3.3 million at year-end  2003.  The increase is due
primarily  to the impact of  changing  economic  conditions  and  changes in the
market interest rates on the Company's available for sale investment portfolio.

COMPANY-OWNED LIFE INSURANCE
----------------------------

The Company  purchased  life insurance  policies on certain key employees,  with
their  knowledge and consent,  during the first  quarter of 2003.  Company-owned
life insurance is recorded at its cash surrender value, i.e. the amount that can
be realized,  on the  consolidated  balance  sheets.  The related change in cash
surrender  value and  proceeds  received  under the policies are reported on the
consolidated  statements of income under the caption "Income from  company-owned
life  insurance".  Expected  income from the purchase of the insurance  policies
will be used to offset the rising costs of the Company's  various  benefit plans
as well as the additional  costs of implementing the new  postretirement  health
insurance  program  during 2003.  Company-owned  life  insurance  totaled  $25.9
million at March 31, 2004,  an increase of $405  thousand or 1.6% from  year-end
2003.

DEPOSITS
--------

Total  deposits were $1.0 billion at March 31, 2004, a decrease of $39.9 million
or 3.7% from year-end 2003.  Noninterest bearing deposits declined $54.8 million
or 24.2% in the  comparison.  This decline 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 $169.2  million  during the current  period,  an increase of $7.2
million or 4.5%. End of period interest bearing deposit balances increased $14.9
million or 1.8% during the three  months ended March 31,  2004.  Increases  were
seen in each of the deposit  categories  as  follows:  interest  bearing  demand
deposits of $7.4 million or 3.2%,  money market deposit accounts of $2.0 million
or 1.7%, and time deposits of $6.5 million or 1.5%.  Savings  deposits  declined
$1.0 million or 1.4% in the comparison.  On average,  interest  bearing deposits
were $850.3 million in the current period,  an increase of $28.3 million or 3.5%
from  year-end  2003.  The  increase  in average  interest  bearing  deposits is
attributable to increases in all deposit categories as follows: interest bearing
demand  deposits of $7.8 million or 3.5%,  time deposits of $3.0 million or .7%,
money market deposit accounts of $11.7 million or 10.9%, and savings deposits of
$5.8 million or 9.0%. Total deposits averaged $1.0 billion, an increase of $35.6
million or 3.6% from year-end 2003.

BORROWED FUNDS
--------------

Borrowed  funds totaled  $140.2  million at March 31, 2004, an increase of $26.7
million or 23.5% from $113.5  million at year-end  2003.  A $2.7 million or 4.7%
decrease in long-term borrowings was offset by a $29.4 million or 51.4% increase
in short-term  borrowings.  Federal funds  purchased and  securities  sold under
agreements  to  repurchase  increased  $29.5  million or 52.0% due  primarily to
increased correspondent banking activity.  Other short-term borrowings decreased
$103 thousand or 24.6% due to net repayments of other short-term borrowings. The
$2.7 million decrease in long-term borrowings is mainly attributed to repayments
of borrowed funds from the FHLB.  Total borrowed funds averaged  $133.5 million,
relatively unchanged from $133.2 million from year-end 2003.

LIQUIDITY

The Parent  Company's  primary use of cash consists of dividend  payments to its
common shareholders,  purchases of its common stock, corporate acquisitions, and
other  general  operating  purposes.  Liquidity  of the Parent  Company  depends
primarily  on the  receipt  of  dividends  from its  subsidiary  banks  and cash
balances  maintained.  As of March 31, 2004  combined  retained  earnings of the
subsidiary banks were $45.9 million, of which $1.5 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 pay dividends in order to provide funds to the Parent  Company during
the remainder of 2004 sufficient to meet its liquidity needs. The Parent Company
had cash balances of $26.8 million at March 31, 2004, a decrease of $2.4 million
or 8.4% from year-end 2003.

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,
which 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; FHLB borrowings; and federal funds purchased and securities sold under
agreements  to  repurchase.  As of March 31, 2004 the Company had  approximately
$184.5  million in additional  borrowing  capacity  under various FHLB,  federal
funds, and other borrowing agreements.  There is no guarantee that these sources
of  funds  will  continue  to be  available  to the  Company,  or  that  current
borrowings can be refinanced upon maturity, although the Company is not aware of
any events or uncertainties that are likely to cause a decrease in our liquidity
from these sources.

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. The Company's  Asset and Liability  Management
Committee  meets  regularly and monitors the composition of the balance sheet to
ensure comprehensive management of interest rate risk and liquidity.

Liquid assets consist of cash, cash  equivalents,  and securities  available for
sale. At March 31, 2004, such assets totaled $456.4 million, a decrease of $28.9
million or 6.0% from year-end  2003. The decrease in liquid assets is attributed
to the overall funding  position of the Company,  including  deposit activity of
the Commonwealth of Kentucky. Net cash provided by operating activities was $5.2
million in the first three months of 2004, an increase of $4.7 million  compared
to the same period last year.  Net cash used in investing  activities  was $14.6
million in the current  period  compared to net cash inflows of $92.4 million in
the same  period last year.  The most  significant  item  included in the $107.0
million  decline in cash flows from investing  activities is a net decrease from
investment  securities  transactions of $108.7 million. The prior year investing
activity  also  included a net cash outflow from  investing  activities of $23.4
million for the purchase of  company-owned  life  insurance  while there were no
purchases  in the  current  year.  Activity  related  to  loans  originated  for
investment,  net of  principal  payments  collected,  used an  additional  $22.2
million in cash in the  comparison.  Net cash used in financing  activities  was
$15.1  million  for the three  months  ended  March 31,  2004  compared to $62.2
million in the same period a year  earlier.  This  represents  a decline of cash
outflows of $47.0 million and is related to federal funds  purchased and deposit
activity in the comparable periods.

Commitments  to  extend  credit  are  considered  in  addressing  the  Company's
liquidity  management.   The  Company  does  not  expect  these  commitments  to
significantly effect the liquidity position in future periods.

CAPITAL RESOURCES

Shareholders'  equity was $128.6  million on March 31, 2004, an increase of $2.2
million or 1.7% from year-end 2003  primarily due to a $1.3 million  increase in
retained  earnings.  Retained earnings  increased as a result of $3.5 million in
net income offset by $2.2  million,  or $0.33 per share,  in dividends  declared
during the first  quarter of 2004.  The  Company  issued 11  thousand  shares of
common stock during the first three months of 2004 pursuant to its  nonqualified
stock option plan. The issuance of these shares increased  shareholders'  equity
by  $283  thousand.   Accumulated  other  comprehensive  income,  consisting  of
unrealized  holding gains on available for sale  investment  securities  (net of
tax), increased shareholders' equity $525 thousand from year-end 2003 due to the
impact of changing  economic  conditions and changes in market interest rates on
the  Company's  available for sale  portfolio.  The Company did not purchase any
shares of its outstanding common stock during the first three months of 2004.


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 March 31, 2004, 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             15.02%            4.00%            6.00%
Total risk based              16.28%            8.00%           10.00%
Leverage                       9.78%            4.00%            5.00%
----------------------------------------------------------------------------

As of March 31, 2004,  all of the Company's  subsidiary  banks were in excess of
the   well-capitalized   regulatory  ratio   requirements  as  calculated  under
guidelines established by federal banking agencies.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
-------------------------------------------------------------------

The Company uses a simulation  model as a tool to monitor and evaluate  interest
rate risk  exposure.  The model is designed to measure  the  sensitivity  of net
interest  income and net income to  changing  interest  rates over  future  time
periods.  Forecasting  net  interest  income and its  sensitivity  to changes in
interest  rates  requires the Company to make  assumptions  about the volume and
characteristics  of  many  attributes,  including  assumptions  relating  to the
replacement  of  maturing  earning  assets and  liabilities.  Other  assumptions
include,  but are not limited to, projected  prepayments,  projected new volume,
and the predicted  relationship  between  changes in market  interest  rates and
changes in  customer  account  balances.  These  effects are  combined  with the
Company's  estimate of the most likely rate environment to produce a forecast of
net interest income and net income. The forecasted results are then adjusted for
the effect of a gradual  increase and decrease in market  interest  rates on the
Company's net interest income and net income. Because assumptions are inherently
uncertain, the model cannot precisely estimate net interest income or net income
or the effect of interest  rate changes on net  interest  income and net income.
Actual results could differ significantly from simulated results.

At March 31, 2004, the model indicated that if rates were to gradually  increase
by 150 basis points during the calendar year,  then net interest  income and net
income would increase 1.6% and 3.6%,  respectively  for the year ending December
31, 2004. The model  indicated  that if rates were to gradually  decrease by 150
basis points over the same period, then net interest income and net income would
decrease 3.3% and 7.5%, respectively.

In the current low interest rate environment, it is not practical or possible to
reduce certain  deposit rates by the same magnitude as rates on earning  assets.
The average rate paid on some of the Company's deposits is well below 1.5%. This
situation  magnifies the model's  predicted  results when modeling a decrease in
interest rates, as earning assets with higher yields have more of an opportunity
to reprice at lower rates than lower-rate deposits.

ITEM 4.  CONTROLS AND PROCEDURES
--------------------------------

The  Registrant's  Chief  Executive  Officer and Chief  Financial  Officer  have
reviewed and evaluated the effectiveness of the Registrant's disclosure controls
and  procedures  as of the end of the period  covered by this  report,  and have
concluded that the Registrant's disclosure controls and procedures were adequate
and effective to ensure that all material  information  required to be disclosed
in this annual report has been made known to them in a timely fashion.

There were no significant  changes in the Registrant's  internal  controls or in
other factors that could  significantly  affect these controls subsequent to the
date of the Chief Executive Officer and Chief Financial Officers evaluation, nor
were there any significant  deficiencies or material  weaknesses in the controls
which required corrective action.

PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS
--------------------------

As of March 31, 2004,  there were various  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  effect  upon  the  consolidated  financial  statements  of the
Company.

ITEM 2 - CHANGES IN SECURITIES, USE OF PROCEEDS AND ISSUER REPURCHASES OF EQUITY
--------------------------------------------------------------------------------
SECURITIES
----------

The following table provides  information with respect to shares of common stock
repurchased by the Company during the quarter ended March 31, 2004.

<TABLE>
<CAPTION>

--------------------------------------------------------------------------------------------------------------------------------
                                                                         Total Number of Shares    Maximum Number of Shares
                                                                           Purchased as Part of          that May Yet Be
                              Total Number of      Average Price Paid    Publicly Announced Plans      Purchased Under the
          Period              Shares Purchased         per Share               or Programs              Plans or Programs
--------------------------------------------------------------------------------------------------------------------------------
<S>                                  <C>                   <C>                      <C>                      <C>
January, 2004
(January 1, 2004 through
January 31, 2004)                                                                                            201,321
--------------------------------------------------------------------------------------------------------------------------------
February, 2004
(February 1, 2004 through
February 29, 2004)                                                                                           201,321
--------------------------------------------------------------------------------------------------------------------------------
March, 2004
(March 1, 2004 through
March 31, 2004)                                                                                              201,321
--------------------------------------------------------------------------------------------------------------------------------
      Total                          0                     0                        0
--------------------------------------------------------------------------------------------------------------------------------

On January 27, 2003, the Company's Board of Directors authorized the purchase of up to  300,000  shares of the  Company's
outstanding  common  stock.  No stated expiration date was established under this plan.

</TABLE>





ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K
-----------------------------------------

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

          3i.  Amended and Restated Articles of Incorporation of Farmers Capital
               Bank  Corporation  (incorporated by reference to Quarterly Report
               on Form 10-Q for the quarterly period ended June 30, 1998).

          3ii. Amended and Restated  By-Laws of Farmers Capital Bank Corporation
               (incorporated  by reference to Annual Report of Form 10-K for the
               fiscal year ended December 31, 1997.

          3iia Amendments  to  By-Laws  of  Farmers  Capital  Bank   Corporation
               (incorporated  by reference to Quarterly  Report on Form 10-Q for
               the quarterly period ended March 31, 2003).

          31.1 CEO Certification  Pursuant to Section 302 of the  Sarbanes-Oxley
               Act of 2002 (page 22)

          31.2 CFO Certification  Pursuant to Section 302 of the  Sarbanes-Oxley
               Act of 2002 (page 23)

          32   CEO  and  CFO  Certification  Pursuant  to  Section  906  of  the
               Sarbanes-Oxley Act of 2002 (Page 24)

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

          On January 20, 2004, the  Registrant  filed a report on Form 8-K under
          Item 12 reporting  its earnings for the twelve  months ended  December
          31, 2003. There were no financial statements filed with this Form 8-K.

          On February 20, 2004, the Registrant  filed a report on Form 8-K under
          Item 7 reporting it had reached an agreement to acquire  Citizens Bank
          (Kentucky),  Inc. There were no financial  statements  filed with this
          Form 8-K.

          On April 20,  2004,  the  Registrant  filed a report on Form 8-K under
          Item 12 reporting  its earnings for the first  quarter of 2004.  There
          were no financial statements filed with this Form 8-K.



<PAGE>






                                   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:  May 7, 2004               /s/ G. Anthony Busseni
      --------------------       -----------------------------------------------
                                 G. Anthony Busseni,
                                 President and CEO (Principal Executive Officer)


Date:  5-7-04                    /s/ C Douglas Carpenter
      --------------------       -----------------------------------------------
                                 C. Douglas Carpenter,
                                 Vice President, Secretary, and CFO
                                 (Principal Financial and Accounting Officer)
[{"type": "10-Q", "sequence": "1", "filename": "a10q033104.txt", "description": "FORM 10-Q 3-31-04", "secsgml_size_bytes": 93813}]
{"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": "04789048"}, "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 MARCH 31, 2004

                                       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 incorporation              (I.R.S. Employer
or organization)                                        Identification Number)

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  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Rule 12b-2 of the Securities Exchange Act of 1934).

                                 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 $.125 per share
                   6,729,791 shares outstanding at May 6, 2004
TABLE OF CONTENTS

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

     Item 1 - Financial Statements

         Unaudited Consolidated Balance Sheets -
             March 31, 2004 and December 31, 2003                            3

         Unaudited Consolidated Statements of Income -
             For the Three Months Ended
             March 31, 2004 and March 31, 2003                               4

         Unaudited Consolidated Statements of Comprehensive Income -
             For the Three Months Ended
             March 31, 2004 and March 31, 2003                               5

         Unaudited Consolidated Statements of Cash Flows -
             For the Three Months Ended
             March 31, 2004 and March 31, 2003                               6

         Unaudited Consolidated Statements of Changes in
             Shareholders' Equity -
             For the Three Months Ended
             March 31, 2004 and March 31, 2003                               7

         Notes to Unaudited Consolidated Financial Statements                8

     Item 2 - Management's Discussion and Analysis of Financial
              Condition and Results of Operations                           10

     Item 3 - Quantitative and Qualitative Disclosures About Market Risk    18

     Item 4 - Controls and Procedures                                       19

Part II - Other Information

     Item 1 - Legal Proceedings                                             19

     Item 2 - Changes in Securities, Use of Proceeds and Issuer Repurchases
              of Equity Securities                                          19

     Item 6 - Exhibits and Reports on Form 8-K                              20

     Signatures                                                             21
PART I - FINANCIAL INFORMATION

Item 1. Financial Statements
----------------------------
UNAUDITED CONSOLIDATED BALANCE SHEETS
-----------------------------------------------------------------------------------------------------------------------------
                                                                                             March 31,       December 31,
(In thousands, except share data)                                                                2004               2003
-----------------------------------------------------------------------------------------------------------------------------
ASSETS
Cash and cash equivalents:
     Cash and due from banks                                                               $    73,465        $    99,628
     Interest bearing deposits in other banks                                                    3,066              3,154
     Federal funds sold and securities purchased under
       agreements to resell                                                                     26,159             24,434
-----------------------------------------------------------------------------------------------------------------------------
          Total cash and cash equivalents                                                      102,690            127,216
-----------------------------------------------------------------------------------------------------------------------------
Investment securities:
     Available for sale, amortized cost of $349,676 (2004) and $354,905 (2003)                 353,748            358,169
     Held to maturity, fair value of $ 24,873 (2004) and $26,201 (2003)                         23,548             24,789
-----------------------------------------------------------------------------------------------------------------------------
          Total investment securities                                                          377,296            382,958
-----------------------------------------------------------------------------------------------------------------------------
Loans, net of unearned income                                                                  776,895            755,945
Allowance for loan losses                                                                      (11,294)           (11,292)
-----------------------------------------------------------------------------------------------------------------------------
          Loans, net                                                                           765,601            744,653
-----------------------------------------------------------------------------------------------------------------------------
Premises and equipment, net                                                                     24,167             24,115
Company-owned life insurance                                                                    25,915             25,510
Other assets                                                                                    12,053             14,113
-----------------------------------------------------------------------------------------------------------------------------
          Total assets                                                                     $ 1,307,722        $ 1,318,565
-----------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Deposits:
     Noninterest bearing                                                                   $   171,871        $   226,650
     Interest bearing                                                                          856,530            841,672
-----------------------------------------------------------------------------------------------------------------------------
          Total deposits                                                                     1,028,401          1,068,322
-----------------------------------------------------------------------------------------------------------------------------
Federal funds purchased and securities sold under agreements to repurchase                      86,186             56,698
Other short-term borrowings                                                                        315                418
Long-term debt                                                                                  53,744             56,413
Dividends payable                                                                                2,220              2,215
Other liabilities                                                                                8,220              8,028
-----------------------------------------------------------------------------------------------------------------------------
          Total liabilities                                                                  1,179,086          1,192,094
-----------------------------------------------------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY
Common stock, par value $.125 per share
     9,608,000 shares authorized; 8,172,119 and 8,160,919
     shares issued at March 31, 2004 and December 31, 2003, respectively                         1,022              1,020
Capital surplus                                                                                 19,020             18,670
Retained earnings                                                                              146,777            145,489
Treasury stock, at cost 1,444,739 shares at March 31, 2004 and December 31, 2003               (40,830)           (40,830)
Accumulated other comprehensive income                                                           2,647              2,122
-----------------------------------------------------------------------------------------------------------------------------
          Total shareholders' equity                                                           128,636            126,471
-----------------------------------------------------------------------------------------------------------------------------
          Total liabilities and shareholders' equity                                       $ 1,307,722        $ 1,318,565
-----------------------------------------------------------------------------------------------------------------------------
See accompanying notes to unaudited consolidated financial statements.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
---------------------------------------------------------------------------------------------------------------
(In thousands, except per share data)
Three months ended March 31,                                                     2004                 2003
---------------------------------------------------------------------------------------------------------------
INTEREST INCOME
Interest and fees on loans                                                   $ 11,729             $ 12,229
Interest on investment securities:
     Taxable                                                                    1,964                2,299
     Nontaxable                                                                   946                  803
Interest on deposits in other banks                                                10                   15
Interest of federal funds sold and securities purchased under
     agreements to resell                                                          90                  162
---------------------------------------------------------------------------------------------------------------
          Total interest income                                                14,739               15,508
---------------------------------------------------------------------------------------------------------------
INTEREST EXPENSE
Interest on deposits                                                            3,674                4,647
Interest on federal funds purchased and securities sold under
    agreements to repurchase                                                      218                  259
Interest on other borrowed funds                                                  502                  550
---------------------------------------------------------------------------------------------------------------
          Total interest expense                                                4,394                5,456
---------------------------------------------------------------------------------------------------------------
          Net interest income                                                  10,345               10,052
---------------------------------------------------------------------------------------------------------------
Provision for loan losses                                                         365                  385
---------------------------------------------------------------------------------------------------------------
          Net interest income after provision for loan losses                   9,980                9,667
---------------------------------------------------------------------------------------------------------------
NONINTEREST INCOME
Service charges and fees on deposits                                            1,894                1,835
Other service charges, commissions, and fees                                      884                  920
Data processing income                                                            334                  345
Trust income                                                                      414                  399
Investment securities gains, net                                                   82                  147
Gains on sale of mortgage loans, net                                               44                  189
Income from company-owned life insurance                                          405                  265
Other                                                                              30                   66
---------------------------------------------------------------------------------------------------------------
          Total noninterest income                                              4,087                4,166
---------------------------------------------------------------------------------------------------------------
NONINTEREST EXPENSE
Salaries and employee benefits                                                  5,394                5,068
Occupancy expenses, net                                                           662                  658
Equipment expenses                                                                950                  937
Bank franchise tax                                                                341                  334
Other                                                                           2,335                2,142
---------------------------------------------------------------------------------------------------------------
          Total noninterest expense                                             9,682                9,139
---------------------------------------------------------------------------------------------------------------
          Income before income taxes                                            4,385                4,694
---------------------------------------------------------------------------------------------------------------
Income tax expense                                                                877                1,101
---------------------------------------------------------------------------------------------------------------
          Net income                                                          $ 3,508              $ 3,593
---------------------------------------------------------------------------------------------------------------
NET INCOME PER COMMON SHARE
     Basic                                                                    $   .52              $   .53
     Diluted                                                                      .52                  .53
---------------------------------------------------------------------------------------------------------------
WEIGHTED AVERAGE SHARES OUTSTANDING
     Basic                                                                      6,723                6,764
     Diluted                                                                    6,784                6,798
---------------------------------------------------------------------------------------------------------------
See accompanying notes to unaudited consolidated financial statements.
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
---------------------------------------------------------------------------------------------------------------
Three months ended March 31, (In thousands)                                      2004                 2003
---------------------------------------------------------------------------------------------------------------
NET INCOME                                                                   $  3,508             $  3,593
     Unrealized holding gain (loss) on available for sale
     securities arising during the period on securities held
     at end of period, net of tax of $302 and $(398), respectively                560                 (740)

Reclassification adjustment for prior period unrealized gain
     previously reported in other comprehensive income recognized
     during current period, net of tax of $19 and $61, respectively               (35)                (114)
---------------------------------------------------------------------------------------------------------------
Other comprehensive income (loss)                                                 525                 (854)
---------------------------------------------------------------------------------------------------------------
Comprehensive Income                                                         $  4,033             $  2,739
---------------------------------------------------------------------------------------------------------------
See accompanying notes to unaudited consolidated financial statements.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
----------------------------------------------------------------------------------------------------------------------------
Three months ended March 31, (In thousands)                                                    2004                 2003
----------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
     Net income                                                                          $    3,508           $    3,593
          Depreciation and amortization                                                         721                  741
          Net amortization of investment security premiums and (discounts):
                Available for sale                                                              466                  453
                Held to maturity                                                                (11)                 (18)
          Provision for loan losses                                                             365                  385
          Noncash compensation expense                                                           69                  107
          Mortgage loans originated for sale                                                 (3,718)             (15,555)
          Proceeds from sale of mortgage loans                                                2,341               13,483
          Deferred income tax (benefit) expense                                                (519)                  86
          Gains on sale of mortgage loans, net                                                  (44)                (189)
          Gains on sale of premises and equipment, net                                                                (2)
          Gains on sale of available for sale investment securities, net                        (82)                (147)
          Decrease in accrued interest receivable                                                18                  234
          Income from company-owned life insurance                                             (405)                (265)
          Decrease (increase) in other assets                                                 1,556               (2,946)
          Decrease in accrued interest payable                                                  (11)                (186)
          Increase in other liabilities                                                         928                  672
----------------------------------------------------------------------------------------------------------------------------
             Net cash provided by operating activities                                        5,182                  446
----------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
     Proceeds from maturities and calls of investment securities:
          Available for sale                                                                 62,914              134,522
          Held to maturity                                                                    1,254                1,204
     Proceeds from sale of available for sale investment  securities                         22,036               74,137
     Purchase of available for sale investment securities                                   (80,107)             (95,055)
     Loans originated for investment, net of principal collected                            (19,892)               2,339
     Purchase of company-owned life insurance                                                                    (23,949)
     Purchase of premises and equipment                                                        (778)                (785)
     Proceeds from sale of equipment                                                              5                    3
----------------------------------------------------------------------------------------------------------------------------
             Net cash (used in) provided by investing activities                            (14,568)              92,416
----------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
     Net (decrease) increase in deposits                                                    (39,921)               2,764
     Net increase (decrease) in federal funds purchased and securities
           sold under agreements to repurchase                                               29,488              (61,140)
     Proceeds from long-term debt                                                                                  1,683
     Repayments of long-term debt                                                            (2,699)                (665)
     Net decrease in other short-term borrowings                                               (103)                (566)
     Dividends paid                                                                          (2,215)              (2,191)
     Purchase of common stock                                                                                     (2,112)
     Stock options exercised                                                                    280                   71
----------------------------------------------------------------------------------------------------------------------------
             Net cash used in financing activities                                          (15,140)             (62,156)
----------------------------------------------------------------------------------------------------------------------------
             Net (decrease) increase in cash and cash equivalents                           (24,526)              30,706
----------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at beginning of year                                              127,216               67,101
----------------------------------------------------------------------------------------------------------------------------
             Cash and cash equivalents at end of period                                  $  102,690           $   97,807
----------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURES
Cash paid during the period for:
     Interest                                                                            $    4,405           $    5,642
     Income taxes
Transfers from loans to repossessed assets                                                       31                  173
Cash dividend declared and unpaid                                                             2,220                2,158
----------------------------------------------------------------------------------------------------------------------------
See accompanying notes to unaudited consolidated financial statements.
UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
------------------------------------------------------------------------------------------------------------------------------------
(In thousands, except per share data)
                                                                                                      Accumulated
                                                                                                         Other             Total
Three months ended                        Common Stock     Capital   Retained      Treasury Stock    Comprehensive     Shareholders'
March 31, 2004 and 2003               Shares     Amount    Surplus   Earnings   Shares     Amount       Income            Equity
------------------------------------------------------------------------------------------------------------------------------------
Balance at January 1, 2004           8,161     $1,020    $18,670   $145,489    1,445   $(40,830)       $2,122           $126,471

Net income                                                              3,508                                                3,508
Other comprehensive income                                                                                  525                525
Cash dividends declared,
  $.33 per share                                                       (2,220)                                              (2,220)
Stock options exercised,
  including related tax benefits          11          2        281                                                             283
Noncash compensation expense
  attributed to stock option grants                             69                                                              69
------------------------------------------------------------------------------------------------------------------------------------
  Balance at March 31, 2004            8,172     $1,022    $19,020   $146,777    1,445   $(40,830)       $2,647           $128,636
------------------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------------------
  Balance at January 1, 2003           8,136     $1,017    $17,623   $141,199    1,344   $(37,627)       $3,561           $125,773

Net income                                                              3,593                                                3,593
Other comprehensive loss                                                                                   (854)              (854)
Cash dividends declared,
  $.32 per share                                                       (2,158)                                              (2,158)
Purchase of common stock                                                            68     (2,112)                          (2,112)
Stock options exercised                    3                    71                                                              71
Noncash compensation expense
  attributed to stock option grants                            107                                                             107
------------------------------------------------------------------------------------------------------------------------------------
  Balance at March 31, 2003            8,139     $1,017    $17,801   $142,634    1,412   $(39,739)       $2,707           $124,420
------------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to unaudited consolidated financial statements.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1.   BASIS OF PRESENTATION AND NATURE OF OPERATIONS

The consolidated  financial  statements  include the accounts of Farmers Capital
Bank  Corporation  (the  "Company"),   a  financial  holding  company,  and  its
wholly-owned six bank and one nonbank  subsidiaries.  Bank subsidiaries  include
Farmers Bank & Capital Trust Co. ("Farmers Bank") in Frankfort,  KY; United Bank
& Trust Co. in Versailles,  KY; Lawrenceburg  National Bank in Harrodsburg,  KY;
First  Citizens Bank in  Shepherdsville,  KY;  Farmers Bank and Trust Company in
Georgetown, KY; and Kentucky Banking Centers, Inc. in Glasgow, KY. The Company's
nonbank subsidiary is FCB Services,  Inc., a data processing  subsidiary located
in  Frankfort,  KY.  Intercompany  transactions  and balances are  eliminated in
consolidation. Leasing One Corporation and Farmers Capital Insurance Corporation
are wholly-owned subsidiaries of Farmers Bank.

The Company  provides  financial  services  through its 23 locations  throughout
Central  Kentucky  to  individual,   business,   agriculture,   government,  and
educational customers.  Its primary deposit products are checking,  savings, and
term  certificate  accounts.   Its  primary  lending  products  are  residential
mortgage,  commercial lending and leasing, and installment loans.  Substantially
all loans and  leases are  secured by  specific  items of  collateral  including
business assets,  consumer  assets,  and commercial and residential real estate.
Commercial  loans and  leases  are  expected  to be  repaid  from cash flow from
operations of businesses.  Farmers Bank has served as the general depository for
the Commonwealth of Kentucky for over 70 years and also provides  investment and
other services to the Commonwealth.  Other services include, but are not limited
to,  cash  management  services,  issuing  letters of credit,  safe  deposit box
rental,  and providing funds transfer  services.  Other  financial  instruments,
which  potentially  represent  concentrations  of credit risk,  include  deposit
accounts in other financial institutions and federal funds sold.

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  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, 2003.

2.   RECLASSIFICATIONS

Certain   reclassifications   have  been  made  to  the  consolidated  financial
statements of prior periods to conform to the current period presentation. These
reclassifications  do not  affect net  income or total  shareholders'  equity as
previously reported.

3.   NET INCOME PER COMMON SHARE

Basic net income per common  share is  determined  by dividing net income by the
weighted average total number of shares of common stock outstanding. Diluted net
income  per  common  share is  determined  by  dividing  net income by the total
weighted  average number of shares of common stock  outstanding,  plus the total
weighted average number of shares that would be issued upon exercise of dilutive
stock options  assuming  proceeds are used to repurchase  shares pursuant to the
treasury stock method.  Net income per common share computations were as follows
at March 31, 2004 and 2003.

------------------------------------------------------------------------------
(In thousands, except per share data)
Three months ended March 31,                            2004            2003
------------------------------------------------------------------------------
Net income, basic and diluted                      $   3,508      $    3,593
------------------------------------------------------------------------------

Average shares outstanding                             6,723           6,764
Effect of dilutive stock options                          61              34
------------------------------------------------------------------------------
Average diluted shares outstanding                     6,784           6,798
------------------------------------------------------------------------------

Net income per share, basic                        $     .52        $    .53
Net income per share, diluted                            .52             .53
------------------------------------------------------------------------------

4.   STOCK-BASED COMPENSATION

In 1997, the Company's Board of Directors  approved a nonqualified  stock option
plan that  provides for granting of stock  options to key employees and officers
of the Company. The plan was subsequently ratified by the Company's shareholders
at its annual  shareholders'  meeting held on May 12, 1998, the measurement date
of the plan.  All stock  options are awarded at a price equal to the fair market
value of the  Company's  common stock at the date the options are  granted.  The
Company applies  Accounting  Principles Board ("APB") Opinion No. 25 and related
interpretations  in  accounting  for its plan.  Accordingly,  since options were
granted during 1997 at the fair market value of the Company's stock on the grant
date, and the  measurement  date occurred  during 1998,  the Company  recognizes
noncash  compensation  expense based on the intrinsic value of the stock options
measured on the date of shareholder ratification of the plan.

The Company granted 54,000  additional  options during 2000 in which there is no
compensation  expense being recognized  pursuant to APB No. 25. Had compensation
expense been determined  under the fair value method  described in the Financial
Accounting  Standards Board ("FASB") Statement of Financial Accounting Standards
("SFAS") No. 123,  Accounting for Stock-Based  Compensation,  as amended by SFAS
No. 148, Accounting for Stock-Based  Compensation-Transition and Disclosure, the
Company's net income and income per common share would have been as shown in the
table below.

--------------------------------------------------------------------------------
(In thousands, except per share data)
Three months ended March 31,                                 2004         2003
--------------------------------------------------------------------------------
NET INCOME
  As reported                                             $ 3,508     $  3,593
  Add:  Stock-based employee compensation expense
        included in reported net income, net of
        related tax effects                                    45           70
  Less: Stock-based compensation expense determined
        under fair value based method for all awards,
        net of related tax effects                            (59)         (85)
--------------------------------------------------------------------------------
Proforma                                                  $  3,494    $  3,578
--------------------------------------------------------------------------------
NET INCOME PER COMMON SHARE
  Basic, as reported                                      $    .52    $    .53
  Basic, proforma                                              .52         .53

  Diluted, as reported                                         .52         .53
  Diluted, proforma                                            .52         .53
--------------------------------------------------------------------------------

The fair value of the options granted are estimated as of the  measurement  date
using the Black-Scholes option pricing model with the following weighted average
assumptions  used for grants in 2000 and 1997,  respectively:  dividend yield of
3.12% and 3.18%; expected volatility of 29.6% and 23.4%; risk-free interest rate
of 6.71% and  5.75%;  and  expected  life of seven  years for both  grants.  The
weighted  average fair value of options  granted  during 2000 and 1997 was $9.25
and $16.11 per share, respectively.

The plan  provides for the granting of options to purchase up to 450,000  shares
of the  Company's  common stock at a price equal to the fair market value of the
Company's  common  stock on the  date the  option  is  granted.  The term of the
options  expires after ten years from the date on which the options are granted.
Options  granted  under the plan vest ratably over various time periods  ranging
from four to seven years.  All options granted must be held for a minimum of one
year before they can be  exercised.  Forfeited  options  are  available  for the
granting of additional stock options under the plan.

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.  The Company
expressly  disclaims  any intent or  obligation  to update  any  forward-looking
statements after the date hereof to conform such statements to actual results or
to changes in our opinions or expectations.

RESULTS OF OPERATIONS

                    First Quarter 2004 vs. First Quarter 2003
                    -----------------------------------------

The Company  reported  net income of $3.5  million for the first three months of
2004, a decrease of $85  thousand or 2.4%  compared to $3.6 million for the same
period in 2003.  Basic and diluted net income per share was $.52 for the current
quarter,  a decrease of $.01 or 1.9% compared to $.53 a year  earlier.  The 1.9%
decrease  in net  income  per  share is 50  basis  points  better  than the 2.4%
decrease  reported  in dollar  terms due to the  effect of fewer  common  shares
outstanding pursuant to the Company's stock purchase program.

Net interest  income for the current  quarter was $10.3 million,  an increase of
$293 thousand or 2.9% compared to the same period a year earlier and  represents
the highest level of quarterly net interest  income since the fourth  quarter of
2001.  This is significant  since 2001 was the year in which the Federal Reserve
Board (the "Fed") cut the federal funds rate eleven times, leading to the lowest
overall  market  interest  rates in recent  history.  For the Company,  this has
resulted in lower net interest  margins as, in general,  rates earned on earning
assets  have  decreased  more  rapidly  than  rates  paid  on  interest  bearing
liabilities.

Offsetting  the  increase  in net  interest  income was a $79  thousand  or 1.9%
decrease in noninterest  income coupled with a $543 thousand or 5.9% increase in
noninterest expenses. The decrease in noninterest income is primarily attributed
to a $145 thousand or 76.7%  decrease in gains on the sale of mortgage loans due
to lower  origination  activity and a $65 thousand or 44.2% decrease in gains on
the sale of  investment  securities.  The  increase in  noninterest  expenses is
primarily  attributed  to a $326  thousand  or 6.4%  increase  in  salaries  and
employee benefits.  Employee benefits account for $274 thousand of the increase.
A significant portion of this increase relates to the new postretirement  health
insurance  coverage  initiated  late in the first quarter of 2003. The effective
income tax rate declined to 20.0% from 23.5% in the three month  comparison on a
decline in income tax expense of $224 thousand or 20.3%.

The return on average  assets ("ROA") was 1.10% for the first quarter of 2004, a
decrease of 7 basis  points  compared to 1.17%  reported  for the same period of
2003.  Significant  components  that  positively  affected ROA in the comparison
include the following:  an increase in net interest margin of 12 basis points to
3.83%; a decrease of 2 basis points in the provision for loan losses relative to
average  assets;  and an 8 basis  point  decrease  in income  taxes  relative to
average earning assets. Components that had a negative effect on ROA include the
following:  a decrease in the earning asset ratio  contributing 15 basis points;
an increase of 4 basis points in noninterest expense relative to average assets;
and a 10 basis point decrease in noninterest  income relative to average assets.
The return on average  equity was 11.09% for the first  quarter of 2004 compared
to 11.66% for the same period of 2003.  The  decrease is due to lower net income
reported in the current period combined with a $2.3 million  increase in average
equity compared to the same period a year ago.

NET INTEREST INCOME
-------------------

Although some economic measures are beginning to improve,  continuing weaknesses
in the  overall  economic  environment  remain  present  and have  impacted  the
Company's  net  interest  income  in the  reporting  periods.  The  trend of the
interest  rate  environment  for  2003 was  downward  primarily  as a result  of
previous  short-term  interest rate reductions  taken by the Fed. The effects of
prior rate reductions by the Fed along with intense competition in the Company's
market areas have tightened recent quarterly net interest margins.

The reported increase in net interest income in the current quarterly comparison
represents the first increase in a  quarter-to-quarter  comparison  since a $139
thousand or 1.3% increase reported in the second quarter of 2001 compared to the
second  quarter of 2000.  The  increase  in net  interest  income in the current
quarterly  comparison was driven by a $1.1 million  decrease in interest expense
primarily  attributed to lower interest rates on time deposits.  The decrease in
interest expense more than offset a decline in interest income of $769 thousand.
For the  current  period,  this  reverses  the recent  trend of rates on earning
assets,  in general,  declining more rapidly than rates paid on interest bearing
liabilities associated with the general decline in the interest rate environment
over the past two years. During the falling rate environment,  the challenge has
been 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  tax  equivalent  ("TE") yield on earning  assets for the current
three  months was 5.37%,  a reduction  of 27 basis points from 5.64% in the same
period a year ago. The cost of funds for the current  three months was 1.80%,  a
decline of 51 basis points  compared to 2.31% in the same period a year earlier.
A goal of the Company in the current  interest rate  environment  is to increase
earning  assets  and  decrease  the  interest  rates  paid on  interest  bearing
liabilities. Average earning assets were relatively unchanged at $1.1 billion in
the  quarterly  comparison.  As a percentage of total  average  assets,  earning
assets  decreased  345 basis points to 88.90% from 92.35%.  This  decrease had a
negative 15 basis point effect on ROA in the comparison.

Interest  income totaled $14.7 million for the first quarter of 2004, a decrease
of $769 thousand or 5.0% compared to the same period in the prior year. Interest
expense totaled $4.4 million,  a decrease of $1.1 million or 19.5%. Net interest
income  increased  $293  thousand or 2.9% in the  comparison  and totaled  $10.3
million at March 31, 2004.

Interest and fees on loans  totaled $11.7  million,  a decrease of $500 thousand
mainly due to a decrease in the average rate  earned.  Average  loans  increased
$28.1  million or 3.8% to $764.2  million in the  comparison  due to higher loan
demand in a lower rate environment.  The tax equivalent yield on loans decreased
58 basis  points to 6.2% from 6.8% and  offset  the  effects  of higher  average
balances on interest income.  Interest on taxable securities was $2.0 million, a
decrease of $335  thousand or 14.6% due  primarily  to a $34.6  million or 12.2%
decrease in the average  balance.  An 11 basis point decline in the average rate
to 3.2% from 3.3% also  contributed  to the  decrease  in  interest  on  taxable
securities.  Interest on nontaxable  securities increased $143 thousand or 17.8%
due to a $20.4  million  increase in the average  balance to $92.1  million from
$71.6 million.  This increase offset a decline in the tax equivalent yield of 57
basis points to 6.1% from 6.7%.  Interest on short-term  investments,  including
time deposits in other banks, federal funds sold, and securities purchased under
agreements  to resell,  decreased  $77  thousand,  which is due to both an $18.1
million or 30.7% decrease in the average balance and a 24 basis point decline in
the average rate earned on these investments to 1.0% from 1.2%.

Interest expense on deposits decreased $973 thousand or 20.9% to $3.7 million in
the quarterly  comparison.  This decrease resulted from a general decline in the
average rate paid  throughout  the deposit  portfolio  and  correlates  with the
general decline in market interest rates in the reporting  periods.  The decline
in the average rates paid offset increases in average  balances.  The decline in
interest  expense on deposits was as follows:  time  deposits  $857  thousand or
22.3%;  interest  bearing  demand  deposits $72  thousand or 20.3%;  and savings
deposits  $44  thousand or 9.7%.  The average  rate paid on time  deposits,  the
largest component of interest bearing  deposits,  was 2.8% for the first quarter
of 2004  compared  to 3.7% for the same period of 2003.  The average  balance of
time deposits increased $8.2 million or 2.0% to $425.8 million. The average rate
paid on interest  bearing demand  deposits  declined 16 basis points to .5% from
..6% while the average balance increased $12.2 million or 5.5% to $235.1 million.
The average rate paid on savings deposits  decreased 21 basis points to .9% from
1.1%  while the  average  balance  increased  $19.2  million  or 11.3% to $189.4
million  from  $170.2  million.   Interest  expense  on  overnight   borrowings,
consisting of federal funds  purchased and securities  sold under  agreements to
repurchase,  decreased  $41  thousand  due to an 18 basis  point  decline in the
average rate paid along with a $2.4 million  decline in their  average  balance.
Interest  expense  on  other  borrowed  funds  decreased  $48  thousand  in  the
comparison  as lower  borrowings  from  the  Federal  Home  Loan  Bank  ("FHLB")
decreased the average balance outstanding. The average balance of other borrowed
funds  totaled  $55.1  million,  a  decrease  of $10.6  million  or 16.1% in the
comparison.  The average rate paid on other  borrowed  funds  increased 27 basis
points to 3.7% from 3.4%.

The net interest margin (TE) increased 12 basis points to 3.83% during the first
quarter of 2004 compared to 3.71% in the first quarter of 2003.  The increase in
net interest margin is primarily  attributed to a 24 basis point increase in the
spread  between  rates  earned on earning  assets and the rates paid on interest
bearing  liabilities  to 3.57% in the  current  quarter  from 3.33% in the first
quarter of 2003.  A 12 basis point  reduction  from the  benefit of  noninterest
bearing sources of funds offset the 24 basis point increase in spread, resulting
in the increased net interest margin. The effect of noninterest  bearing sources
of  funds  on  net  interest  margin  typically   declines  in  a  falling  rate
environment.
The  following  tables  present  an  analysis  of net  interest  income  for the
quarterly periods ended March 31.
DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY:  INTEREST RATES AND INTEREST DIFFERENTIAL
-----------------------------------------------------------------------------------------------------------------------------------
Three months ended March 31,                                   2004                                         2003
                                              Average                         Average         Average                    Average
(In thousands)                                Balance         Interest          Rate          Balance      Interest       Rate
-----------------------------------------------------------------------------------------------------------------------------------
EARNING ASSETS
Investment securities
  Taxable                                    $   247,953        $  1,964           3.19%    $   282,563     $  2,299         3.30%
  Nontaxable1                                     92,073           1,398           6.11          71,648        1,181         6.68
Time deposits with banks,
  federal funds sold and
  securities purchased
  under agreements to resell                      40,879             100            .98          59,027          177         1.22
Loans1,2,3                                       764,161          11,818           6.22         736,039       12,339         6.80
-----------------------------------------------------------------------------------------------------------------------------------
     Total earning assets                      1,145,066        $ 15,280           5.37%      1,149,277     $ 15,996         5.64%
-----------------------------------------------------------------------------------------------------------------------------------
Allowance for loan losses                        (11,404)                                       (11,279)
-----------------------------------------------------------------------------------------------------------------------------------
     Total earning assets, net
     of allowance for loan losses              1,133,662                                      1,137,998
-----------------------------------------------------------------------------------------------------------------------------------
NONEARNING ASSETS
Cash and due from banks                           93,893                                         64,383
Premises and equipment, net                       24,191                                         24,045
Other assets                                      36,363                                         18,109
-----------------------------------------------------------------------------------------------------------------------------------
     Total assets                            $ 1,288,109                                    $ 1,244,535
-----------------------------------------------------------------------------------------------------------------------------------
INTEREST BEARING LIABILITIES
Deposits
  Interest bearing demand                    $   235,050        $    282            .48%    $   222,879     $    354          .64%
  Savings                                        189,426             409            .87         170,183          453         1.08
  Time                                           425,781           2,983           2.82         417,581        3,840         3.73
Federal funds purchased
  and securities sold
  under agreements to repurchase                  78,427             218           1.12          80,828          259         1.30
Other borrowed funds                              55,050             502           3.67          65,609          550         3.40
-----------------------------------------------------------------------------------------------------------------------------------
     Total interest bearing liabilities          983,734        $  4,394           1.80%        957,080     $  5,456         2.31%
-----------------------------------------------------------------------------------------------------------------------------------
NONINTEREST BEARING LIABILITIES
Commonwealth of Kentucky deposits                 36,384                                         32,918
Other demand deposits                            132,825                                        121,013
Other liabilities                                  7,914                                          8,535
-----------------------------------------------------------------------------------------------------------------------------------
     Total liabilities                         1,160,857                                      1,119,546
-----------------------------------------------------------------------------------------------------------------------------------
     Shareholders' equity                        127,252                                        124,989
-----------------------------------------------------------------------------------------------------------------------------------
     Total liabilities and
     shareholders' equity                    $ 1,288,109                                    $ 1,244,535
-----------------------------------------------------------------------------------------------------------------------------------
Net interest income                                               10,886                                      10,540
TE basis adjustment                                                 (541)                                       (488)
-----------------------------------------------------------------------------------------------------------------------------------
     Net interest income                                        $ 10,345                                    $ 10,052
-----------------------------------------------------------------------------------------------------------------------------------
Net interest spread                                                                3.57%                                     3.33%
Impact of noninterest bearing
  sources of funds                                                                  .26                                       .38
-----------------------------------------------------------------------------------------------------------------------------------
Net interest margin                                                                3.83%                                     3.71%
-----------------------------------------------------------------------------------------------------------------------------------
1Income and yield  stated at a fully tax  equivalent  basis  using the  marginal corporate Federal tax rate of 35%.
2Loan balances  include  principal  balances  on  nonaccrual  loans.
3Loan  fees included in interest  income amounted to $619 thousand and $521 thousand in 2004 and 2003, respectively.
ANALYSIS OF CHANGES IN NET INTEREST INCOME (TAX EQUIVALENT BASIS)
--------------------------------------------------------------------------------------------------------
(In thousands)                                               Variance         Variance Attributed to
Three months ended March 31,                                2004/20031         Volume          Rate
--------------------------------------------------------------------------------------------------------
INTEREST INCOME
Taxable investment securities                               $   (335)       $  (263)       $    (72)
Nontaxable investment securities2                                217            795            (578)
Time deposits with banks, federal funds sold and
   securities purchased under agreements to resell               (77)           (47)            (30)
Loans2                                                          (521)         2,480          (3,001)
--------------------------------------------------------------------------------------------------------
     Total interest income                                      (716)         2,965          (3,681)
--------------------------------------------------------------------------------------------------------
INTEREST EXPENSE
Interest bearing demand deposits                                 (72)           115            (187)
Savings deposits                                                 (44)           247            (291)
Time deposits                                                   (857)           503          (1,360)
Federal funds purchased and securities sold under
   agreements to repurchase                                      (41)            (7)            (34)
Other borrowed funds                                             (48)          (269)            221
--------------------------------------------------------------------------------------------------------
     Total interest expense                                   (1,062)           589          (1,651)
--------------------------------------------------------------------------------------------------------
Net interest income                                         $    346        $ 2,376        $ (2,030)
--------------------------------------------------------------------------------------------------------
Percentage change                                              100.0%        686.7%         (586.7)%
--------------------------------------------------------------------------------------------------------
1The changes  that are not  solely  due to rate or  volume  are  allocated  on a
 percentage  basis using the absolute values of rate and volume variances as a
 basis for allocation.
2Income stated at fully tax equivalent basis using the marginal corporate
 Federal tax rate of 35%.
NONINTEREST INCOME
------------------

Noninterest  income was $4.1 million for the current quarter,  a decrease of $79
thousand or 1.9%  compared to the first  quarter of the prior year.  The largest
component of noninterest income,  service charges and fees on deposits,  totaled
$1.9  million at March 31,  2004,  an  increase  of $59  thousand or 3.2% due to
increased overdraft volumes. Other service charges,  commissions,  and fees were
$884 thousand,  a decline of $36 thousand or 3.9%. Leading the decrease in other
service charges, commissions, and fees was a $24 thousand decline in credit life
insurance  fees.  Data  processing  fees were $334  thousand,  a decrease of $11
thousand  from  $345  thousand  in the prior  year.  Trust  income  grew to $414
thousand from $399 thousand,  an increase of $15 thousand or 3.8% as a result of
an increase in assets under  management.  Net gains on the sale of available for
sale  securities  for the current  quarter  were $82  thousand  compared to $147
thousand in the prior year as the Company  continually  seeks to properly manage
its balance sheet composition in the current economic environment.  Net gains on
the sale of mortgage  loans were $44 thousand,  a decrease of $145 thousand from
$189  thousand in the prior year.  Mortgage  loans  originated  for sale,  which
declined sharply in the fourth quarter of 2003,  declined $11.8 million or 76.1%
in the  current  quarterly  comparison.  Mortgage  loan  activity in the current
quarter is reflective of lower refinancing  activity.  Income from company-owned
life insurance, purchased during the first quarter of 2003, was $405 thousand in
the current period,  an increase of $140 thousand or 52.8%.  The increase is the
result of a full  quarter  of income  being  recognized  in the  current  period
compared to a partial quarter of income in the prior period due to the timing of
the purchase.  Other noninterest income totaled $30 thousand,  a decrease of $36
thousand compared to a year earlier.

NONINTEREST EXPENSE
-------------------

Total  noninterest  expenses were $9.7 million for the first quarter of 2004, an
increase  of $543  thousand  or 5.9%  compared  to the  first  quarter  of 2003.
Salaries  and  employee  benefits  account  for a  significant  portion  of  the
increase.  Driven mainly by an increase in employee benefit  expenses,  salaries
and  employee  benefits  increased a total of $326  thousand  or 6.4%.  Employee
benefit related  expenses were $274 thousand higher in the current period mainly
due to an increase related to the new  postretirement  health insurance coverage
initiated late in the first quarter of 2003.  Salaries and related payroll taxes
increased  $87  thousand  or 2.1% to $4.2  million  mainly due to normal  salary
increases.  Noncash compensation  expense related to the Company's  nonqualified
stock option plan  declined  $36  thousand or 34.3% due to the  structure of the
vesting  schedule.  The  number  of full  time  equivalent  employees  was  455,
relatively unchanged from the same period a year earlier. Occupancy expense, net
of rental income,  was also  relatively  unchanged at $662 thousand as increased
utilities  costs  were  offset  by lower  depreciation  and  maintenance  costs.
Equipment  expenses  totaled  $950  thousand,  up $13  thousand  or 1.4%.  Other
noninterest  expenses,  including bank franchise  taxes,  were $2.7 million,  an
increase  of $200  thousand  or 8.1% from $2.5  million in the prior  year.  The
increase in other  noninterest  expenses was lead by a $100 thousand increase in
losses attributed to (non real estate) foreclosed assets.

INCOME TAXES
------------

Income tax expense for the first quarter of 2004 was $877  thousand,  a decrease
of $224 thousand or 20.3% from the same period a year earlier. The effective tax
rate  decreased 346 basis points to 20.0% from 23.5% in 2003.  The change in the
effective  tax rate is due to lower  forecasted  annualized  net  income  in the
current three months compared to the same period a year ago combined with higher
nontaxable  interest income from municipal bonds and nontaxable  income from the
increase in cash surrender value of company-owned life insurance.

FINANCIAL CONDITION

Total assets were $1.3 billion on March 31, 2004, a decrease of $10.8 million or
..8% from December 31, 2003.  The decrease in assets  primarily  includes a $24.5
million or 19.3% lower  balance in cash and cash  equivalents  and a decrease in
investment securities of $5.7 million or 1.5% offset by an increase in net loans
of $21.0  million  or 2.8%.  The  decrease  in total  assets  relates to a $39.9
million or 3.7% decline in deposits  offset by a $26.7 million or 23.5% increase
in other borrowings and a $2.2 million or 1.7% increase in shareholders' equity.
The makeup of the balance sheet  continually  changes as the Company responds to
extremely competitive market forces.

Management of the Company considers it noteworthy to understand the relationship
between the Company's  principal  subsidiary,  Farmers Bank & Capital Trust Co.,
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.  Therefore,  reviewing average balances is
also important to understanding the financial condition of the Company.

On an average  basis,  total assets were $1.3 billion for the first three months
of 2004,  an  increase  of $37.4  million or 3.0% from  year-end  2003.  Average
earning assets,  primarily loans and securities,  were $1.1 billion at March 31,
2004, an increase of $17.7 million or 1.6% from year-end 2003.  Average  earning
assets  represent 88.9% of total average assets on March 31, 2004, a decrease of
124 basis points compared to 90.1% at year-end 2003.

LOANS
-----

Loans,  net of unearned  income,  totaled  $776.9  million at March 31, 2004, an
increase of $21.0 million or 2.8% from year-end  2003.  The  composition  of the
loan portfolio is summarized in the table below.

--------------------------------------------------------------------------------
                                       March 31, 2004         December 31, 2003
(Dollars in thousands)                 Amount      %            Amount       %
--------------------------------------------------------------------------------

Commercial, financial,
  and agriculture                  $  122,441     15.7%    $  110,657      14.6%
Real estate - construction             48,063      6.2         45,390       6.0
Real estate mortgage - residential    275,534     35.5        270,638      35.8
Real estate mortgage farmland and
 other commercial enterprises         225,269     29.0        222,100      29.4
Installment                            70,568      9.1         71,565       9.5
Lease financing                        35,020      4.5         35,595       4.7
--------------------------------------------------------------------------------
     Total                         $  776,895    100.0%    $  755,945     100.0%
--------------------------------------------------------------------------------

On average,  loans represented 66.7% of earning assets during the current period
compared to 65.8% for year-end  2003. As loan demand  fluctuates,  the available
funds are reallocated  between loans and lower earning temporary  investments or
investment  securities,  which  typically  involve a decrease in credit risk and
lower yields.

ALLOWANCE FOR LOAN LOSSES
-------------------------

The allowance  for loan losses was $11.3  million at March 31, 2004,  relatively
unchanged  from the prior  year-end.  The allowance for loan losses was 1.45% of
loans net of unearned  income at March 31,  2004,  a decrease of 4 basis  points
compared to December 31,  2003.  The  provision  for loan losses  decreased  $20
thousand or 5.2% in the current  three-month  period compared to the same period
in 2003.  The Company had net  charge-offs  of $363  thousand in the first three
months of 2004 compared to net  charge-offs  of $317 thousand in the same period
of 2003,  an  increase  of $46  thousand or 14.5%.  Annualized  net  charge-offs
represent  .19% and .17% of average net loans for three  months  ended March 31,
2004 and 2003 respectively,  as compared to .32% at year-end 2003. The allowance
for loan losses as a percentage of nonperforming loans totaled 121.1% and 123.9%
at March 31, 2004 and December 31, 2003,  respectively.  Management continues to
emphasize collection efforts and evaluation of risks within the loan portfolio.

NONPERFORMING ASSETS
--------------------

Nonperforming  assets for the Company include  nonperforming  loans,  other real
estate  owned,  and other  foreclosed  assets.  Nonperforming  loans  consist of
nonaccrual loans,  restructured loans, and loans past due ninety days or more on
which interest is still accruing.  Nonperforming assets totaled $10.7 million at
March 31,  2004,  a decrease of $508  thousand or 4.5% from the prior  year-end.
Nonperforming  loans  totaled $9.3 million at March 31, 2004, a $212 thousand or
2.3% increase compared to year-end 2003.  Nonperforming  loans include a pool of
constructions loans secured by residential real estate to a financially troubled
builder.  This pool of loans totaled $4.1 million at March 31, 2004 a decline of
$100  thousand from year-end  2003.  Nonperforming  loans as a percentage of net
loans were 1.2% at March 31,  2004,  a decrease  of 1 basis  point  compared  to
year-end 2003.

Other real estate owned,  which had a balance of $1.8 million at year-end  2003,
decreased $580 thousand or 32.2% to $1.2 million on March 31, 2004.

TEMPORARY INVESTMENTS
---------------------

Temporary  investments  consist of interest  bearing  deposits with other banks,
federal funds sold,  and  securities  purchased  under  agreements to resell and
totaled  $29.2  million at March 31,  2004,  an increase of $1.6 million or 5.9%
from year-end 2003.  Temporary  investments averaged $40.9 million for the first
three months of 2004, a decrease of $18.5 million or 31.2% from  year-end  2003.
The decrease is primarily a result of the Company's net funding position and the
relationship  between its principal  subsidiary and the Commonwealth of Kentucky
as described in preceding  sections of this report.  Temporary  investments  are
reallocated  as loan  demand  and  other  investment  alternatives  present  the
opportunity.

INVESTMENT SECURITIES
---------------------

Investment  securities were $377.3 million on March 31, 2004, a decrease of $5.7
million or 1.5% from  year-end  2003.  Available  for sale and held to  maturity
securities  were $353.7  million  and $23.5  million,  respectively.  Investment
securities averaged $340.0 million for the first quarter of 2004, an increase of
$14.3 million or 4.4% from  year-end  2003.  The increase in average  investment
securities is attributable to the Company's  continued efforts to manage its net
interest margin during a period of low market interest rates. The Company had an
unrealized gain on available for sale  investment  securities of $4.1 million at
March 31, 2004  compared to $3.3 million at year-end  2003.  The increase is due
primarily  to the impact of  changing  economic  conditions  and  changes in the
market interest rates on the Company's available for sale investment portfolio.

COMPANY-OWNED LIFE INSURANCE
----------------------------

The Company  purchased  life insurance  policies on certain key employees,  with
their  knowledge and consent,  during the first  quarter of 2003.  Company-owned
life insurance is recorded at its cash surrender value, i.e. the amount that can
be realized,  on the  consolidated  balance  sheets.  The related change in cash
surrender  value and  proceeds  received  under the policies are reported on the
consolidated  statements of income under the caption "Income from  company-owned
life  insurance".  Expected  income from the purchase of the insurance  policies
will be used to offset the rising costs of the Company's  various  benefit plans
as well as the additional  costs of implementing the new  postretirement  health
insurance  program  during 2003.  Company-owned  life  insurance  totaled  $25.9
million at March 31, 2004,  an increase of $405  thousand or 1.6% from  year-end
2003.

DEPOSITS
--------

Total  deposits were $1.0 billion at March 31, 2004, a decrease of $39.9 million
or 3.7% from year-end 2003.  Noninterest bearing deposits declined $54.8 million
or 24.2% in the  comparison.  This decline 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 $169.2  million  during the current  period,  an increase of $7.2
million or 4.5%. End of period interest bearing deposit balances increased $14.9
million or 1.8% during the three  months ended March 31,  2004.  Increases  were
seen in each of the deposit  categories  as  follows:  interest  bearing  demand
deposits of $7.4 million or 3.2%,  money market deposit accounts of $2.0 million
or 1.7%, and time deposits of $6.5 million or 1.5%.  Savings  deposits  declined
$1.0 million or 1.4% in the comparison.  On average,  interest  bearing deposits
were $850.3 million in the current period,  an increase of $28.3 million or 3.5%
from  year-end  2003.  The  increase  in average  interest  bearing  deposits is
attributable to increases in all deposit categories as follows: interest bearing
demand  deposits of $7.8 million or 3.5%,  time deposits of $3.0 million or .7%,
money market deposit accounts of $11.7 million or 10.9%, and savings deposits of
$5.8 million or 9.0%. Total deposits averaged $1.0 billion, an increase of $35.6
million or 3.6% from year-end 2003.

BORROWED FUNDS
--------------

Borrowed  funds totaled  $140.2  million at March 31, 2004, an increase of $26.7
million or 23.5% from $113.5  million at year-end  2003.  A $2.7 million or 4.7%
decrease in long-term borrowings was offset by a $29.4 million or 51.4% increase
in short-term  borrowings.  Federal funds  purchased and  securities  sold under
agreements  to  repurchase  increased  $29.5  million or 52.0% due  primarily to
increased correspondent banking activity.  Other short-term borrowings decreased
$103 thousand or 24.6% due to net repayments of other short-term borrowings. The
$2.7 million decrease in long-term borrowings is mainly attributed to repayments
of borrowed funds from the FHLB.  Total borrowed funds averaged  $133.5 million,
relatively unchanged from $133.2 million from year-end 2003.

LIQUIDITY

The Parent  Company's  primary use of cash consists of dividend  payments to its
common shareholders,  purchases of its common stock, corporate acquisitions, and
other  general  operating  purposes.  Liquidity  of the Parent  Company  depends
primarily  on the  receipt  of  dividends  from its  subsidiary  banks  and cash
balances  maintained.  As of March 31, 2004  combined  retained  earnings of the
subsidiary banks were $45.9 million, of which $1.5 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 pay dividends in order to provide funds to the Parent  Company during
the remainder of 2004 sufficient to meet its liquidity needs. The Parent Company
had cash balances of $26.8 million at March 31, 2004, a decrease of $2.4 million
or 8.4% from year-end 2003.

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,
which 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; FHLB borrowings; and federal funds purchased and securities sold under
agreements  to  repurchase.  As of March 31, 2004 the Company had  approximately
$184.5  million in additional  borrowing  capacity  under various FHLB,  federal
funds, and other borrowing agreements.  There is no guarantee that these sources
of  funds  will  continue  to be  available  to the  Company,  or  that  current
borrowings can be refinanced upon maturity, although the Company is not aware of
any events or uncertainties that are likely to cause a decrease in our liquidity
from these sources.

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. The Company's  Asset and Liability  Management
Committee  meets  regularly and monitors the composition of the balance sheet to
ensure comprehensive management of interest rate risk and liquidity.

Liquid assets consist of cash, cash  equivalents,  and securities  available for
sale. At March 31, 2004, such assets totaled $456.4 million, a decrease of $28.9
million or 6.0% from year-end  2003. The decrease in liquid assets is attributed
to the overall funding  position of the Company,  including  deposit activity of
the Commonwealth of Kentucky. Net cash provided by operating activities was $5.2
million in the first three months of 2004, an increase of $4.7 million  compared
to the same period last year.  Net cash used in investing  activities  was $14.6
million in the current  period  compared to net cash inflows of $92.4 million in
the same  period last year.  The most  significant  item  included in the $107.0
million  decline in cash flows from investing  activities is a net decrease from
investment  securities  transactions of $108.7 million. The prior year investing
activity  also  included a net cash outflow from  investing  activities of $23.4
million for the purchase of  company-owned  life  insurance  while there were no
purchases  in the  current  year.  Activity  related  to  loans  originated  for
investment,  net of  principal  payments  collected,  used an  additional  $22.2
million in cash in the  comparison.  Net cash used in financing  activities  was
$15.1  million  for the three  months  ended  March 31,  2004  compared to $62.2
million in the same period a year  earlier.  This  represents  a decline of cash
outflows of $47.0 million and is related to federal funds  purchased and deposit
activity in the comparable periods.

Commitments  to  extend  credit  are  considered  in  addressing  the  Company's
liquidity  management.   The  Company  does  not  expect  these  commitments  to
significantly effect the liquidity position in future periods.

CAPITAL RESOURCES

Shareholders'  equity was $128.6  million on March 31, 2004, an increase of $2.2
million or 1.7% from year-end 2003  primarily due to a $1.3 million  increase in
retained  earnings.  Retained earnings  increased as a result of $3.5 million in
net income offset by $2.2  million,  or $0.33 per share,  in dividends  declared
during the first  quarter of 2004.  The  Company  issued 11  thousand  shares of
common stock during the first three months of 2004 pursuant to its  nonqualified
stock option plan. The issuance of these shares increased  shareholders'  equity
by  $283  thousand.   Accumulated  other  comprehensive  income,  consisting  of
unrealized  holding gains on available for sale  investment  securities  (net of
tax), increased shareholders' equity $525 thousand from year-end 2003 due to the
impact of changing  economic  conditions and changes in market interest rates on
the  Company's  available for sale  portfolio.  The Company did not purchase any
shares of its outstanding common stock during the first three months of 2004.

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 March 31, 2004, 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             15.02%            4.00%            6.00%
Total risk based              16.28%            8.00%           10.00%
Leverage                       9.78%            4.00%            5.00%
----------------------------------------------------------------------------

As of March 31, 2004,  all of the Company's  subsidiary  banks were in excess of
the   well-capitalized   regulatory  ratio   requirements  as  calculated  under
guidelines established by federal banking agencies.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
-------------------------------------------------------------------

The Company uses a simulation  model as a tool to monitor and evaluate  interest
rate risk  exposure.  The model is designed to measure  the  sensitivity  of net
interest  income and net income to  changing  interest  rates over  future  time
periods.  Forecasting  net  interest  income and its  sensitivity  to changes in
interest  rates  requires the Company to make  assumptions  about the volume and
characteristics  of  many  attributes,  including  assumptions  relating  to the
replacement  of  maturing  earning  assets and  liabilities.  Other  assumptions
include,  but are not limited to, projected  prepayments,  projected new volume,
and the predicted  relationship  between  changes in market  interest  rates and
changes in  customer  account  balances.  These  effects are  combined  with the
Company's  estimate of the most likely rate environment to produce a forecast of
net interest income and net income. The forecasted results are then adjusted for
the effect of a gradual  increase and decrease in market  interest  rates on the
Company's net interest income and net income. Because assumptions are inherently
uncertain, the model cannot precisely estimate net interest income or net income
or the effect of interest  rate changes on net  interest  income and net income.
Actual results could differ significantly from simulated results.

At March 31, 2004, the model indicated that if rates were to gradually  increase
by 150 basis points during the calendar year,  then net interest  income and net
income would increase 1.6% and 3.6%,  respectively  for the year ending December
31, 2004. The model  indicated  that if rates were to gradually  decrease by 150
basis points over the same period, then net interest income and net income would
decrease 3.3% and 7.5%, respectively.

In the current low interest rate environment, it is not practical or possible to
reduce certain  deposit rates by the same magnitude as rates on earning  assets.
The average rate paid on some of the Company's deposits is well below 1.5%. This
situation  magnifies the model's  predicted  results when modeling a decrease in
interest rates, as earning assets with higher yields have more of an opportunity
to reprice at lower rates than lower-rate deposits.

ITEM 4.  CONTROLS AND PROCEDURES
--------------------------------

The  Registrant's  Chief  Executive  Officer and Chief  Financial  Officer  have
reviewed and evaluated the effectiveness of the Registrant's disclosure controls
and  procedures  as of the end of the period  covered by this  report,  and have
concluded that the Registrant's disclosure controls and procedures were adequate
and effective to ensure that all material  information  required to be disclosed
in this annual report has been made known to them in a timely fashion.

There were no significant  changes in the Registrant's  internal  controls or in
other factors that could  significantly  affect these controls subsequent to the
date of the Chief Executive Officer and Chief Financial Officers evaluation, nor
were there any significant  deficiencies or material  weaknesses in the controls
which required corrective action.

PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS
--------------------------

As of March 31, 2004,  there were various  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  effect  upon  the  consolidated  financial  statements  of the
Company.

ITEM 2 - CHANGES IN SECURITIES, USE OF PROCEEDS AND ISSUER REPURCHASES OF EQUITY
--------------------------------------------------------------------------------
SECURITIES
----------

The following table provides  information with respect to shares of common stock
repurchased by the Company during the quarter ended March 31, 2004.
--------------------------------------------------------------------------------------------------------------------------------
                                                                         Total Number of Shares    Maximum Number of Shares
                                                                           Purchased as Part of          that May Yet Be
                              Total Number of      Average Price Paid    Publicly Announced Plans      Purchased Under the
          Period              Shares Purchased         per Share               or Programs              Plans or Programs
--------------------------------------------------------------------------------------------------------------------------------
January, 2004
(January 1, 2004 through
January 31, 2004)                                                                                            201,321
--------------------------------------------------------------------------------------------------------------------------------
February, 2004
(February 1, 2004 through
February 29, 2004)                                                                                           201,321
--------------------------------------------------------------------------------------------------------------------------------
March, 2004
(March 1, 2004 through
March 31, 2004)                                                                                              201,321
--------------------------------------------------------------------------------------------------------------------------------
      Total                          0                     0                        0
--------------------------------------------------------------------------------------------------------------------------------

On January 27, 2003, the Company's Board of Directors authorized the purchase of up to  300,000  shares of the  Company's
outstanding  common  stock.  No stated expiration date was established under this plan.
ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K
-----------------------------------------

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

          3i.  Amended and Restated Articles of Incorporation of Farmers Capital
               Bank  Corporation  (incorporated by reference to Quarterly Report
               on Form 10-Q for the quarterly period ended June 30, 1998).

          3ii. Amended and Restated  By-Laws of Farmers Capital Bank Corporation
               (incorporated  by reference to Annual Report of Form 10-K for the
               fiscal year ended December 31, 1997.

          3iia Amendments  to  By-Laws  of  Farmers  Capital  Bank   Corporation
               (incorporated  by reference to Quarterly  Report on Form 10-Q for
               the quarterly period ended March 31, 2003).

          31.1 CEO Certification  Pursuant to Section 302 of the  Sarbanes-Oxley
               Act of 2002 (page 22)

          31.2 CFO Certification  Pursuant to Section 302 of the  Sarbanes-Oxley
               Act of 2002 (page 23)

          32   CEO  and  CFO  Certification  Pursuant  to  Section  906  of  the
               Sarbanes-Oxley Act of 2002 (Page 24)

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

          On January 20, 2004, the  Registrant  filed a report on Form 8-K under
          Item 12 reporting  its earnings for the twelve  months ended  December
          31, 2003. There were no financial statements filed with this Form 8-K.

          On February 20, 2004, the Registrant  filed a report on Form 8-K under
          Item 7 reporting it had reached an agreement to acquire  Citizens Bank
          (Kentucky),  Inc. There were no financial  statements  filed with this
          Form 8-K.

          On April 20,  2004,  the  Registrant  filed a report on Form 8-K under
          Item 12 reporting  its earnings for the first  quarter of 2004.  There
          were no financial statements filed with this Form 8-K.
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:  May 7, 2004               /s/ G. Anthony Busseni
      --------------------       -----------------------------------------------
                                 G. Anthony Busseni,
                                 President and CEO (Principal Executive Officer)

Date:  5-7-04                    /s/ C Douglas Carpenter
      --------------------       -----------------------------------------------
                                 C. Douglas Carpenter,
                                 Vice President, Secretary, and CFO
                                 (Principal Financial and Accounting Officer)