The Louisville metropolitan area includes the consolidated Louisville/Jefferson County and 12 surrounding Kentucky and Southern Indiana counties with an estimated 1.2 million residents in 2005 according to Claritas. As a whole, these counties are experiencing rapid growth as more Louisville-based workers move to counties surrounding the city, according to the Report on the State of the Regional Workforce 2003 by the University of Louisville.

The same Report noted that the Louisville regional economy posted a 22% growth in jobs from 1990 to 2000, a rate 2% higher than the United States as a whole, while population in the region grew at close to the national rate. The area’s employers are diversified across many industries and include the air hub for United Parcel Service (“UPS”), two Ford assembly plants, General Electric’s Consumer and Industrial division, Humana, Brown-Forman and YUM! Brands.

Bowling Green, the home of Western Kentucky University, is Kentucky’s fourth largest city and the economic hub of a 425,000 person labor market in 2004 according to the Kentucky Cabinet of Economic Development. Major employers in Barren and Warren Counties include GM’s Corvette plant and several other automotive facilities and R.R. Donnelley’s regional printing facility.

Loans secured by real estate are the primary component of the Company’s loan portfolio. To increase the likelihood of the ultimate repayment of the loan, the Company obtains a security interest in the real estate whenever possible, in addition to the other available collateral.

The Company offers adjustable and fixed rate residential and commercial construction loans to builders and developers and to consumers desiring to build their own homes. The duration of the Company’s construction and development loans generally is limited to 12 months, although payments may be structured on a longer amortization basis. Construction and development loans generally carry a higher degree of risk than long-term financing of existing properties because repayment depends on the ultimate completion of the project and usually on the sale of the property.

Commercial real estate loans include various types of business purpose loans secured by farmland and nonresidential commercial real estate. These loans are not concentrated in any particular industry or geographically within any of the Company’s market areas. These loans generally have terms of five years or less, although payments can be structured over a longer amortization period.

The Company’s residential real estate loans consist primarily of loans secured by one-to-four family residences. These loans are generally amortized over 15 to 30 years.

The Company makes loans for commercial purposes to various lines of businesses. Commercial loans are generally considered to have greater risk than first or second mortgages on real estate because commercial loans may be unsecured or, if they are secured, the value of the collateral may be difficult to assess and more likely to decrease in value than real estate. Repayment of secured commercial loans depends substantially on the borrower’s underlying business, financial condition and cash flows, as well as the sufficiency of the collateral.

The Company makes a variety of loans to individuals for personal and household purposes, including secured and unsecured installment and term loans, home equity loans and lines of credit and revolving lines of credit such as credit cards. Consumer loans are underwritten based on the individual borrower’s income, current debt level, past credit history and the value of any available collateral.

The Company provides various kinds of operating and term loans to agricultural producers in its market areas, including annual crop production loans, equipment financing loans and satellite secured loans. These notes are normally secured by, as appropriate, crops, equipment, accounts, various kinds of support payments, cattle and hedge accounts.

Non-interest income increased by $880,000 to $5.4 million for 2005 compared with $4.6 million for 2004.

Non-interest expense increased $2.3 million, or 13.1%, to $20.0 million for 2005 compared with 2004.

Income tax expense was $2.2 million for 2005 compared with $2.8 million for 2004.