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Interview With The President And CEO: Farmers Capital Bank Corporation (FFKT) - Lloyd C. Hillard Jr.

67 WALL STREET, New York - May 2, 2012 - The Wall Street Transcript has just published its U.S. Banking Report: An Investor's Guide offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Money Center Bank Balance Sheets - Dodd-Frank Act, Volcker Rule and Durbin Amendment - Cost Reduction and Consolidation Activity - Macroeconomic Cyclical Recovery

Companies include: 1st United (FUBC); BBCN Bancorp (BBCN); Bar Harbor Bankshares (BHB); Central Pacific Financial (CPF); and many more.

In the following brief excerpt from the U.S. Banking Report: An Investor's Guide, expert analysts discuss the outlook for the sector and for investors.

Lloyd C. Hillard Jr., President and Chief Executive Officer of Farmers Capital Bank Corporation, has more than 44 years of experience in banking and finance. He recently took the helm of Farmers Capital, which is an independent $1.9 billion multibank-holding company based in Frankfort, Ky. Mr. Hillard served 18 years as President and CEO of First Citizens Bank, a bank affiliate of Farmers Capital. During his tenure at First Citizens, he was instrumental in establishing and expanding FirstNet as an allotment company serving the needs of U.S. servicemen and women worldwide. FirstNet is now the largest provider in the U.S. of this niche of allotment and bill payment services. Mr. Hillard began his banking and accounting career with First Security National Bank and Trust Company in Lexington, Ky., where he worked from a Staff Accountant position to Senior Vice President, Chief Financial Officer and Secretary. Mr. Hillard was also the CFO and Senior Vice President for Citizens Fidelity Bank in Lexington, Ky., before his career with Farmers Capital.

TWST: What is Farmers Capital Bank Corporation?

Mr. Hillard: Farmers Capital Bank Corporation (FFKT), which is headquartered in Frankfort, Ky., is a $1.9 billion bank holding company with four subsidiary banks plus a data-processing company and a captive property and casualty insurance company. The business model for Farmers Capital Bank Corporation is somewhat different than other community banking organizations. Our individual banks have separate charters and their own boards of directors. This allows local decision making, which is welcomed by our consumer and small business customers. Our community banking organization provides a broad range of financial services, and we operate 36 locations in 23 different communities throughout central and northern Kentucky.

Our footprint stretches from Newport in northern Kentucky, which is just across the river from Cincinnati, Ohio, and stretches down I-75 to central Kentucky and west to I-65 at Elizabethtown, Ky. Our mission is to be the preferred provider of high-quality community banking services in Kentucky and our core values are based on the word, service. Not just service, but extraordinary service, going beyond what is expected. We are about respect, and we are about vigilance. We are proactive in meeting the expectations of our constituents. We are about integrity and honesty. We do what we say we will do. We are about confidence, commitment and collaboration. Those are keys to successful growth. We are also about empowerment to create an atmosphere for all of our employees to succeed. As we continue to enhance and build a culture of excellence in our company, it brings focus to our internal culture, service culture, as well as our credit culture.

TWST: What's the economic outlook for the part of the country in which Farmers Capital operates? How have your customers fared over the past year, and what is your outlook for the next 12 to 24 months?

Mr. Hillard: Our market area in central and northern Kentucky has been impacted like many communities across our country by this unprecedented economic environment, which has resulted in higher unemployment rates and a glut of residential lots and significantly decreased housing sales. Many of our small businesses customers are uncertain and lack the confidence to step forward and make investments, which will be instrumental to the turnaround in our markets. The key to success in the next few years will be an improving economy. Although the unemployment rates in our markets are lower than what we see in other sections of our country, any time unemployment rates reach the 8% to 9% level, it has a tremendous impact on local communities.

This creates a lot of foreclosures, which means community banks will experience increased levels of nonperforming assets. The challenges will continue. We are hoping, based on recent results in our markets, that the turnaround has begun but we have a long way to go. We're probably looking at a two- to three-year period before we can get back to some type of normalcy. That, obviously, has been greatly impacted by what has been going on in Congress and this administration, and until that changes, we're not anticipating any quick results. We remain vigilant in working daily on these issues as well as focusing on new opportunities. That will be evident in 2012 as we continue to work to attract higher-quality and higher-earning assets.

TWST: Are there any specific trends emerging that are going to help steer the bank's focus to maintain and improve its position?

Mr. Hillard: The real factors are housing and unemployment, and creating certainty. Let's look at our markets for specific trends. First Citizens Bank is located in Hardin County, Ky., which is also home to Fort Knox. In the last two years, they have been bolstered by BRAC, which is the Department of Defense's Base Realignment and Closure. Fort Knox picked up several new missions, which brought in new people. In fact, the entire Human Resource Command for the United States Army has been brought to Fort Knox, which will employ over 3,000 people in a new 800,000-square-foot building.

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