UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities

Exchange Act of 1934 (Amendment No. )

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Farmers Capital Bank Corporation

202 West Main Street

Frankfort, Kentucky 40601

Notice of Annual Meeting of Shareholders

to be held May 13, 201412, 2015

April 1, 20142015

It is desirable that as many shareholders as possible be represented at the meeting. Consequently, whether or not you now expect to be present, please execute and return the enclosed proxy. You may revoke the proxy at any time before it is voted at the annual meeting of shareholders.

	By order of the Board of Directors,
	Mark A. Hampton
	C. Douglas Carpenter
	Executive Vice President, Secretary,
	and Chief Financial Officer

Your Vote Is Important

Farmers Capital Bank Corporation

202 West Main Street

Frankfort, Kentucky 40601

Proxy Statement

Annual Shareholders’ Meeting-May 13, 201412, 2015

This proxy statement is furnished in connection with the solicitation of proxies by the Board of Directors of Farmers Capital Bank Corporation (“Corporation”) for use at our Annual Meeting of Shareholders to be held on May 13, 2014,12, 2015, and at any adjournments (the “Meeting”).

*****Important Notice Regarding the Availability of Proxy Materials for the

ShareholderShareholder Meeting to be Held onMay 13, 2014*12, 2015*****

This proxy statement, the form of proxy,proxy, our Annual Report to ShareholdersShareholders and our Annual Report onon Form 10-K for the fiscal year ended December 31, 2013,2014, are available at www.farmerscapital.com.www.farmerscapital.com.

Annual Report to Shareholders; Multiple Households

The 20132014 Annual Report to Shareholders, including financial statements, is being mailed to shareholders together with these proxy materials on or about April 1, 2014.2015. One annual report and one proxy statement are being delivered to multiple shareholders sharing an address unless we have received contrary instructions from one or more shareholders. Upon request, we will furnish the shareholder a separate copy of an annual report or proxy statement, as applicable. Requests should be directed to our corporate secretary at the address shown at the top of this page or by phone at 502-227-1668.

Who Can Vote

One Vote per Share; Outstanding Number of Shares.Each share of our common stock that you held on the record date entitles you to one vote at the Meeting. On the record date, there were 7,479,6147,490,158 shares of common stock outstanding.

Voting Rights

Votes Required.Our corporate secretary will count votes cast at the Meeting. Our directors are elected by the affirmative vote of a “plurality” of shares voted. A “plurality” means that the individuals with the largest number of votes are elected as directors up to the maximum number of directors (i.e., four) to be chosen at the Meeting. Under our bylaws, all other matters require the affirmative vote of the holders of a majority of the shares of our common stock present in person or by proxy at the Meeting, except as otherwise provided by statute, our articles of incorporation or our bylaws. Abstentions as to all such matters to come before the Meeting will not be counted as votes for or against and will not be included in calculating the number of votes necessary for approval of those matters.

Effect of Not Voting by Beneficial Owners; Broker Non-Votes.If your shares are held in a stock brokerage account, by a bank, broker, trustee, or other nominee, you are considered the beneficial owner of shares held in “street name”. Brokers holding shares in “street name” generally are not entitled to vote on certain matters unless they receive voting instructions from their customers. When brokers do not receive voting instructions from their customers, they notify us on the proxy form that they lack voting authority. The votes that could have been cast on the matter in question by brokers who did not receive voting instructions are called “broker non-votes”.

If you are a beneficial owner and do not provide voting instructions, your bank, broker or other holder of record is permitted to vote your sharesfor the ratification of our independent registered public accounting firm but isnot permitted tovote your shares on the election of directors.

Shares subject to broker non-votes will not be counted as votes for or against and will not be included in calculating the number of votes necessary for the approval of such matters to be presented at the meeting; however, shares represented by proxies containing both broker non-votes and a vote on any matter will be considered present at the annual meeting for purposes of determining the existence of a quorum.

Quorum

A quorum at the Meeting is a majority of the shares of our common stock entitled to vote present in person or represented by proxy. Shares of our common stock represented by properly executed and returned proxies will be treated as present. Shares of our common stock present at the Meeting that abstain from voting or that are the subject of broker non-votes will be counted as present for purposes of determining a quorum.

How Your Proxy Will Be Voted

The Board of Directors is soliciting a proxy in the enclosed form to provide you with an opportunity to vote on all matters scheduled to come before the Meeting, whether or not you attend in person. 

Voting By Shareholders of Record.If.If at the close of business on March 25, 2014,2015, your shares are registered directly in your name with our transfer agent, American Stock Transfer & Trust Company, you are considered the shareholder of record of those shares and we have mailed these proxy materials to you. You may vote your shares by Internet, telephone, or by mail as further described below. Your vote authorizes each ofLloydofLloyd C. Hillard, Jr. and R. Terry Bennett as proxies, each with the power to appoint his or her substitute, to represent and vote your shares as you directed.

Only the latest dated proxy received from you, whether by Internet, telephone or mail, will be voted at the Meeting. If you vote by Internet or telephone, please do not mail your proxy card.

Voting By Beneficial Owners of Record (“Street Name”).If at the close of business on March 25, 2014,2015, and if your shares are held in a stock brokerage account, by a bank, broker, trustee, or other nominee, you are considered the beneficial owner of shares held in street name. These proxy materials are being made available to you by your bank, broker, trustee or nominee that is considered the shareholder of record of those shares. As the beneficial owner, you have the right to direct your bank, broker, trustee or nominee on how to vote your shares via the Internet or by telephone if the bank, broker, trustee or nominee offers these options or by signing and returning a proxy card. Your bank, broker, trustee or nominee will send you instructions for voting your shares.

If you wish to vote in person at the Meeting but hold your stock in street name (that is, in the name of a bank, broker, or other institution),then you must have a proxy from thebank,broker, or institution in order to vote at the meeting.

How YourProxies Will Be Voted.If you vote by Internet, telephone or by signing and returning the enclosed proxy card, your proxy will be voted in accordance with the instructions you provide. If you vote without providing contrary instructions, your proxy will be voted in the following manner:

The proxies being solicited may be exercised only at the Meeting and any adjournment and will not be used for any other meeting.

We expect no matters to be presented for action at the Meeting other than the items described in this proxy statement. If, however, you vote by Internet, telephone, or by signing and returning the enclosed proxy, you will give to the persons named as proxies therein discretionary voting authority with respect to any other matter that may properly come before the Meeting, and they intend to vote on any such other matter in accordance with their best judgment.

Revoking Your Proxy. If you submit a proxy, you may subsequently revoke it or submit a revised proxy at any time before it is voted. You may also attend the Meeting in person and vote by ballot, which would cancel any proxy that you previously submitted. If you wish to vote in person at the Meeting but hold your stock in street name (that is, in the name of a bank, broker, or other institution),then you must have a proxy from thebank,broker, or institution in order to vote at the Meeting.

No Appraisal Rights. Under Kentucky law, there is no appraisal or similar rights of dissenters with respect to any matter to be acted upon at the Meeting.

Directions to 20142015 Annual Meeting of Shareholders

Our Meeting will be held at 11:00 a.m., Eastern Daylight Time, on Tuesday, May 13, 201412, 2015 at Farmers Bank & Capital Trust Company, 125 West Main Street, Frankfort, Kentucky 40601. If you need directions, please contact our corporate secretary, C. Douglas CarpenterMark A. Hampton by calling 502-227-1668.

Proxy Solicitation

We will pay all of the expenses of this solicitation of proxies. Solicitations will be made by the use of mails, except that proxies may be solicited by telephone by our directors and officers. We do not expect to pay any other compensation for the solicitation of proxies, but will reimburse brokers and other persons holding our common stock in their names, or in the name of nominees, for their expenses in sending proxy materials to their principals.

Shareholders’ Proposals for 20152016 Annual Meeting

We presently contemplate that the 20152016 Annual Meeting of Shareholders will be held on or about May 12, 2015.10, 2016. If you want us to consider including a proposal in next year’s proxy statement, you must deliver it in writing no later than December 2, 20143, 2015 (the date 120 days prior to the first anniversary of the date of the 20142015 annual meeting proxy statement) to: Secretary, Farmers Capital Bank Corporation, 202 West Main Street, Frankfort, Kentucky 40601, Attention: C. Douglas Carpenter.Mark A. Hampton. We recommend that you send any proposals by certified mail, return receipt requested.

If you want to present a proposal at next year’s Annual Meeting but do not wish to have it included in our proxy statement, you do not need to contact us in advance. Our bylaws do not contain any requirement for shareholders to provide advance notice of proposals or nominations they intend to present at the Meeting. However, if you do not notify us on or before February 15, 201516, 2016 of any matter that you wish to present at next year’s annual meeting, then the shareholders’ proxies that we solicit in connection with our 20152016 Annual Meeting of Shareholders will confer on the proxyholders’ discretionary authority to vote on the matter that you present at our 20152016 Annual Meeting.

Corporate Governance

Code of Ethics. Ethical business conduct is a shared value of our Board of Directors, management and employees. Our Code of Ethics applies to our Board of Directors as well as all employees and officers, including the principal executive officer and principal financial and accounting officer.     

Our Code of Ethics covers all areas of professional conduct, including, but not limited to, conflicts of interest, disclosure obligations, insider trading and confidential information, as well as compliance with all laws, rules and regulations applicable to our business. We encourage all employees, officers and directors to promptly report any violations of the Code of Ethics to the appropriate persons identified in the Code. A copy of our Code of Ethics is available at our website under the tab entitled: “Corporate Policies” at the following address: www.farmerscapital.com.     

Board Structure and Committees. As of the date of this proxy statement, our Board of Directors consists of twelve members. We also have twoone advisory directorsdirector who dodoes not vote. Our Board of Directors held seveneight meetings during 2013.2014. All directors except Mr. Farris attended at least 75% of the total number of board meetings and the meetings of the committees to which they belonged. Our Board of Directors does not have a specific policy for director attendance at our annual meeting of shareholders. All but one directordirectors attended our 20132014 annual meeting.

Our Board of Directors has a standing Audit Committee, Compensation Committee and a newly created Nominating Committee that began October 2013.Committee.

Committee Charters. Both the Audit Committee and the Compensation committeeCommittee have charters, which are available under the tab entitled “Corporate Policies” at our website at the following address: www.farmerscapital.com. Both committees were in compliance during 20132014 with their written charter. The Board of Directors does not limit the number of audit committees for other corporations on which its audit committee members may serve. NoneMr. Parker is the only member of the audit committee members currently serveserving on anotherthe audit committee for aanother publicly-held entity.     

Board and Committee Independence. The Board has determined that each of its members is independent as defined by the rules of NASDAQ, except for Mr. Sutterlin and its employee director Mr. Hillard. Further, our Board has determined that Mr. Bennett and Mr. Crawford are both independent under the rules of NASDAQ after considering the Corporation’s 2014, 2013 and 2012 payments to both a law

firm and a real estate company of which Mr. Bennett is a partial owner and insurance commissions 

paid during 2014, 2013 and 2012 to the insurance agency of which Mr. Crawford was a partial owner. The aggregate amounts the Corporation paid to each of Mr. Bennett’s and Mr. Crawford’s companies were below the $120,000 threshold set by NASDAQ. However, Mr. Sutterlin is not considered independent due to the fact that he received $139,601 in 2012 in the normal course of business involving the sale of a significant piece of repossessed real estate and fees related to the management of two other pieces of repossessed real estate.

Audit Committee Financial Expert. Our Board of Directors has determined (in accordance with Securities and Exchange Commission Regulation S-K 407(d)) that Mr. O’Bryan satisfies the qualifications of financial expert and Mr. O’Bryan accordingly has been designated as the Audit Committee financial expert. The Board has also determined that Mr. O’Bryan is independent as defined by the rules of NASDAQ for audit committee members.

Consideration of Director Nominees. A nominating committee was created in October 2013. All four of the members of the Nominating Committee are independent directors under NASDAQ rules. They determine the nominees for director to be presented for election based upon their review of all proposed nominees for the Board, including those proposed by shareholders. The Nominating Committee selects qualified candidates based upon the criteria set forth below and reviews their recommendations with the full Board, which decides whether to invite the candidate to be a nominee for election to the Board. The Board desires to maintain a diversity of experiences and skills in the members that represent the shareholders.

The factors to be considered, include, but are not limited to, the following (collectively, the “Evaluation Guidelines”):

For a shareholder to submit a candidate for consideration as a director, a shareholder must notify our corporate secretary. To be considered for nomination and inclusion in our proxy statement at the 20152016 Annual Meeting, a shareholder must notify our corporate secretary no later than December 2, 20143, 2015 (the date 120 days prior to the first anniversary of the date of the 20142015 annual meeting proxy statement). Notices should be sent to: Farmers Capital Bank Corporation, 202 West Main Street, Frankfort, Kentucky 40601, Attention: C. Douglas Carpenter,Mark A. Hampton, Secretary.     

Executive Sessions of the Board. Independent directors meet in executive sessions without management and non-independent directors. Executive sessions are held at least twice annually in conjunction with regularly scheduled board meetings.

Communications with the Board. Our Board of Directors has established a process for shareholders to communicate with the Board or an individual director. Shareholders may contact the Board or an individual director by writing to the attention of one or more directors at our principal executive offices at 202 West Main Street, Frankfort, Kentucky 40601, Attention: C. Douglas Carpenter,Mark A. Hampton, Secretary. Each communication intended for the Board of Directors or an individual director will be forwarded to the specified party.

Board Leadership Structure and Role in Risk Oversight

We are a bank holding company that was formed in 1982 under the Bank Holding Company Act of 1956, as amended. We are the parent company for four separately chartered commercial bank subsidiaries and sixfive separate non-bank subsidiary companies.

Our Board is currently comprised of ten independent directors, one director that is not independent due to the amount of compensation received in 2012 and one employee director. We are committed to a strong, independent Board and believe that objective oversight of the performance of our management is a critical aspect of effective governance. Accordingly, the role of Chairman of the Board and Chief Executive Officer are held by different individuals. We believe this separation permits our Chief Executive Officer to focus on our day-to-day business operations and our Chairman to focus on leading our Board in overseeing the strategic direction of the Corporation and providing overall guidance and oversight of our business and management.

Our Chairman is an independent director and has the following duties:

Our Board of Directors, together with the Audit and Compensation Committees of the Board, coordinate with each other to provide enterprise-wide oversight of our management and handling of risk. These committees report regularly to the entire Board of Directors on risk-related matters and provide our

Board of Directors with integrated insight about our management of strategic, credit, interest rate, financial reporting, technology, liquidity, compliance, operational and reputational risks.

In addition, each of our subsidiaries have their own board of directors, and each bank subsidiary has audit and asset liability management committees, both of which provide risk management at each of their respective companies. Our CEO serves on the board of each directly owned subsidiary. One of the key responsibilities of each subsidiary board is to manage strategic, credit, interest rate, financial reporting, technology, liquidity, compliance, operational and reputational risks. Our Board of Directors believes that sound credit underwriting to manage credit risk and a conservative investment portfolio to manage liquidity and interest rate risk contribute to an effective oversight of the Corporation’s risk and we require our subsidiaries to follow this philosophy.

The structure of separate chartered banks allows each bank the ability to operate quickly and efficiently without going through unnecessary levels of management. The structure of internal controls, processes and examinations allow the necessary oversight and protection. Our Board of Directors and each subsidiary board of directors meet on a regular basis and are presented reports from management to evaluate performance and the opportunity to relay refined directions. Our structure gives us a competitive advantage over larger financial institutions with less hometown connection and unwieldy chains of command.

Principal Beneficial Owners           

The following table gives information as to all persons or entities known to us to be beneficial owners of more than five percent (5%) of the shareshares of our common stock.

¹    Based on the Schedule 13G13G/A filed with the SEC on February 12, 2014,17, 2015, Basswood, Matthew Lindenbaum and Bennett Lindenbaum share voting power and dispositive power as to 681,451740,566 shares of our common stock outstanding as of December 31, 2013.2014.

²    Based on the Schedule 13G filed with the SEC on January 29, 2014, BlackRock has sole voting power with respect to 469,740 shares of our common stock and sole dispositive power as to 477,453 shares of our common stock outstanding as of December 31, 2013.

Report of the Audit Committee     

General.The Audit Committee is currently made up of five non-employee directors. All members of the Audit Committee are independent directors as defined by the rules of NASDAQ. We operate under a written charter approved by our committee and adopted by the Board of Directors.

We review the Corporation’s financial reporting process on behalf of our Board. The Audit Committee’s responsibility is to monitor this process, but the Audit Committee is not responsible for preparing the Corporation’s financial statements or auditing those financial statements. Those are the responsibilities of management and the Corporation’s independent registered public accounting firm, respectively.

Financial Statement Review. BKD, LLP (“BKD”) was the Corporation’s independent registered public accounting firm for 2013.2014. We have reviewed and discussed the Corporation’s audited consolidated financial statements for the year ended December 31, 20132014 with management and BKD. Management represented to us that the audited consolidated financial statements fairly present, in all material respects, the financial condition, results of operations and cash flows of the Corporation as of and for the periods presented in the consolidated financial statements in accordance with accounting principles generally accepted in the United States, and BKD provided an unqualified audit opinion to the same effect.

BKD has provided us with written assurance of its independence (as required by the Public Company Accounting Oversight Board regarding the independent registered public accounting firm’s communications with the audit committee concerning independence). We also met with BKD and discussed BKD’s independence, the results of its audit and other matters required to be discussed by applicable accounting standards (including Statement on Auditing Standards No. 16,CommunicationsCommunications with Audit Committees, as amended). 

In addition, we have discussed with BKD the overall scope and plans for their audit, and have met with them and management to discuss the results of their examination, their understanding and evaluation of the Corporation’s internal controls they considered necessary to support their opinion on the consolidated financial statements for the year ended December 31, 2013,2014, and various factors affecting the overall quality of accounting principles applied in the Corporation’s financial reporting. BKD also met with us without management being present to discuss these matters.

We have considered whether the provision of services to the Corporation by BKD, beyond those rendered in connection with the audit and review of consolidated financial statements, is compatible with maintaining the independence of such firm.

In reliance on these reviews and discussions, we recommended to the Board of Directors, and the Board of Directors approved, the inclusion of the audited financial statements referred to above in the Corporation’s annual report on Form 10-K for the fiscal year-ended 20132014 to be filed with the SEC.

Dated: March 6, 2015

Fees ofIndependentRegistered Public Accounting Firm     

Pre-approval Policies and Procedures. Except as set forth in the next paragraph, the Audit Committee’s policy is to approve in advance all audit fees and terms and non-audit services permitted by law to be provided by the independent registered public accounting firm. In accordance with that policy, the committee annually pre-approves a list of specific services and categories of services, including audit, audit-related and non-audit services described below, for the upcoming or current fiscal year, subject to specified cost levels. Other services include:

The Audit Committee has authorized the Audit Committee Chairman, David R. O’Bryan or the Vice Chairman of the Board of Directors (who is also an Audit Committee member), J. Barry Banker, to approve additional funds on behalf of the Audit Committee if the independent auditors need to perform additional work which had not been previously approved.

At each regularly-scheduled Audit Committee meeting, management updates the committee on the scope and anticipated cost of (1) any service pre-approved by the Audit Committee Chairman orChairman of the Board since the last meeting of the committee and (2) the projected fees for each service or group of services being provided by the independent auditors. Since the May 2003 effective date of the SEC rules stating that an auditor is not independent of an audit client if the services it provides to the client are not appropriately approved, each service provided by our independent auditors has been approved in advance by the Audit Committee, the Chairman of the Audit Committee or the Vice Chairman of the Board (who is also an Audit Committee member), and none of those services required use of the de minimis exception to pre-approval contained in the SEC’s rules.

Fees and Related Disclosures for Accounting Services. The fees for services provided by the independent registered public accounting firm, BKD were as follows:

Audit fees - Fees for the Corporation’s audit of the annual consolidated financial statements and the review of the Corporation’s Form 10-Qs were $205,425$256,950 for 20132014 and $101,775$249,400 for 2012.2013.

Audit related fees - Aggregate fees for all assurance and related services were none for 20132014 and $5,134none for 2012. These fees were incurred for consulting on accounting topics.2013.

Tax fees - Fees related to tax compliance, advice and planning were $44,000$46,700 for 20132014 and none$45,300 for 2012.2013. These fees were incurred for tax preparation services and consulting on tax related compliance and strategies.

All other fees - None for 20132014 and $31,333none for 2012. The 2012 fees result from consent work for the US Treasury’s auction of our preferred stock.2013.

All services provided by the independent registered public accounting firm in 20132014 and 20122013 were approved by the Audit Committee. All fees were approved in accordance with the pre-approval policy. The Audit Committee has determined that the provision of the services described above is compatible with maintaining independence.

PROPOSAL NO.1

Ratification of IndependentRegistered Public Accounting Firm

Our Audit Committee and Board seek shareholder ratification of the appointment of BKD to act as the independent auditor of our consolidated financial statements for the fiscal year ending December 31, 2014.2015. If the shareholders do not ratify the appointment of BKD, our Audit Committee and Board will reconsider this appointment for 2015.2016. BKDwill have one or more representatives at the Annual Meeting who will have an opportunity to make a statement, if they so desire, and will be available to respond to appropriate questions.OurOur Board of Directors recommends voting FOR this proposal.

Directors

Classified Board Structure; Term; Vacancies. In accordance with our articles of incorporation, our Board of Directors is classified into three classes as nearly equal in number as the then total number of directors constituting the whole Board permits. Each class is to be elected to separate three (3) year terms with each term expiring in different years. At each annual meeting the directors or nominees constituting one class are elected for a three (3) year term. ThreeAll four of our director nominees are currently serving on our Board and their term expires at the annual meeting on May 13, 201412, 2015 and our Nominating Committee recommends them for re-election. Our Nominating Committee also recommended our fourth director nominee. If elected, the four director nominees will serve until the Annual Meeting of Shareholders in 2017.2018. Any vacancies that occur after the directors are elected may be filled by the Board of Directors in accordance with law for the remainder of the full term of the vacant directorship.

Director Qualifications. Our Board of Directors consists of twelve members who are well-qualified to serve on our Board and represent our shareholders’ best interests. Our nominees are selected with a view of establishing a board of directors that meet the criteria for qualified candidates that is set forth above under the caption “Consideration of Director Nominees.” We believe that each of the director nominees and other directors bring these qualifications to our Board of Directors. Together, our director nominees and continuing directors provide our Board with a diverse complement of specific business skills, experience and perspectives, including: extensive financial and accounting expertise, knowledge of the commercial banking industry, experience with companies that serve the same communities that our bank subsidiaries serve, and extensive operational and strategic planning experience. The following describes the key qualifications, business skills, experience and perspectives that each of our directors brings to the Board of Directors, in addition to the general qualifications under “Consideration of Director Nominees” and information included in the biographical summaries provided below for each director. We believe that each individual’s skills and perspectives strengthen our Board’s collective qualifications, skills and experience.

Independence of Directors. In accordance with rules of NASDAQ, all of the nominees for director, and all continuing directors listed below, meet the NASDAQ definition of “independent” except for Mr. Hillard and Mr. Sutterlin.

PROPOSAL NO.2

ELECTION OF DIRECTORS

Our Board of Directors intends to nominate for election as directors the four (4) persons listed below. It is the intention of the persons named in the proxy to vote for the election of all nominees named. If any nominee(s) shall be unable to serve, which is not now contemplated, the proxies will be voted for such substitute nominee(s) as our Board recommends. Nominees receiving the four (4) highest totals of votes cast in the election will be elected as directors. Proxies in the form solicited hereby that are returned to us will be voted in favor of the four (4) nominees specified below unless otherwise instructed by the shareholder. Abstentions and shares not voted by brokers and other entities holding shares on behalf of beneficial owners will not be counted and will have no effect on the outcome of the election.

The following tables set forth information with respect to each nominee for director, and with respect to continuing directors who (by virtue of the classes in which they serve) are not nominees for re-election at the Meeting.

Nominees for Three-Year Terms Ending in 20172018

Continuing Directors Whose Terms Expire in 2015

Continuing DirectorsDirectors Whose Terms Expire in 2016

Dr. William C. Nash (65)(66)

2010

Director; Chairman of the Board of Directors of First Citizens

Orthopaedic Surgeon

Continuing Directors Whose Terms Expire in 2017

¹    All corporations listed in this column other than this Corporation are our subsidiaries.

²    Appointed in 2010 to fill an unexpired term

³    J. Barry Banker is the son-in-law of Dr. John P. Stewart, an advisory director (and Chairman Emeritus) of the  Corporation. The foregoing is the only “family relationships” between any director (or advisory director), executive officer, or person nominated or chosen to become a director or executive officer of the Corporation. “Family relationship” means a relationship by blood, marriage or adoption not more remote than first cousin._____________________________________

Advisory DirectorsDirector. In addition to the nominees and continuing directors listed in the tables above, E. Bruce Dungan and Dr. John P. Stewart serveserves as advisory directorsdirector to the Corporation.

Retirement Policy. The retirement policy for our non-employee directors (which was revised January, 2012) provides that a director shall retire effective as of the end of his or her elected term next following the date on which the director attains age 70. There is no age limitation on the eligibility of the

Chief Executive Officer of the Corporation to be eligible to be elected or appointed as a director of the Corporation.

Prior to January 1, 2004, any retiring director could, at the discretion of the Board of Directors, become an advisory director. Effective January 1, 2004, persons then serving as advisory directors (including

(including the two advisory directorsdirector listed above) may continue to serve in such capacity only at the discretion of the Board of Directors.

The Corporation Board of Directors recommends voting FOR the election of each of the Nominees for Director.

Stock Ownership of Directors and Executive Officers

The table below contains information as to the shares of our common stock beneficially owned by all directors (and director nominees), advisory directors and executive officers, and by all such persons as a group. Unless otherwise indicated, all shares are owned directly and the named persons possess both sole voting power and sole investment power. Unless otherwise indicated, none of the shares have been pledged as security.

 

All Directors (and Nominees),Advisory Directors and Executive Officers as a group

226,740

3.03

Fees Paid to Advisory Directors. During 2013, advisoryAdvisory directors wereare paid 50% of the rate paid to each director for each meeting attended. They do not receive a quarterly fee. All fees paid to advisory directors are in cash.

 

Report of the Compensation Committee      

 

The Compensation Committee of our Board of Directors is composed of fivefour members who are independent, outside directors as defined under NASDAQ rules. The Compensation Committee has furnished the following report:     

 

We determine the total compensation of the Corporation’s President and Chief Executive Officer. With input from the Corporation’s President and Chief Executive Officer, we also determine the total short-term and long-term compensation of the directors and other executive officers. We do not have power to delegate our authority. We do have a charter.     

 

To determine the compensation for the President and Chief Executive Officer, other executive officers and directors, we review the following items, if applicable:

 

●

the individual’s current total compensation package;

●

the Corporation’s financial performance;

●

the importance of the individual to the Corporation’s financial performance;

●

industry surveys and other information regarding compensation paid to executives and directors performing similar duties for financial institutions in the Corporation’s market area or financial institutions of a size comparable to the Corporation wherever located; and

●

the size of the Corporation and the complexity of its operations.

  

We periodically review each component of the Corporation’s executive compensation program to ensure that pay levels and incentive opportunities are competitive and that incentive opportunities are linked to Corporation performance targets such as: income, expenses, asset quality, operating margins, return on assets and return on equity. We place significant weight on the recommendations of our President and Chief Executive Officer, as well as economic conditions and our own experience and knowledge of market conditions and peer group compensation surveys to provide additional information to support the compensation planning process. The CorporationWe have not engaged Amalfi Consulting in 2008 to conduct an executivea compensation review of the executive management team. The Corporation requested Amalfi Consulting to benchmark our executive’s compensation using data only from nationally published survey sources and public findings. We considered the results of the report by Amalfi Consulting in evaluating the Corporation’s compensation programs in 2008 for the Corporation’s senior executives, including the named executive officers. Based upon the report of Amalfi Consulting, the compensation of some of our senior executives was low and warranted adjustment. However, we chose not to make any significant adjustments because of the current condition of the economy. A consulting firm has not been usedconsultant since 2008.

 

Please refer to “Compensation Discussion and Analysis” above for a more thorough discussion of the Corporation’s philosophy and procedures. We have reviewed and discussed the Compensation Discussion and Analysis with management. Based on our review of the Compensation Discussion and Analysis and discussions with management, we recommended to the Board of Directors that the Compensation Discussion andAnalysis be included in the Corporation’s proxy statement for its 20142015 Annual Shareholders’ Meeting.

 

Dated: March 6, 2015

Dated: March 7, 2014
		J. Barry Banker, Compensation Committee Chairman
		Dr. William C. Nash
		Fred N. Parker
		David Y. Phelps
		Shelley S. Sweeney

 

Transactions with Related Persons     

 

Our bank subsidiaries have had and expect in the future to have banking transactions in the ordinary course of business with our directors and executive officers and their affiliates. All loans to and deposits from such persons or their affiliates have been on substantially the same terms, including interest rates and collateral on loans, as those prevailing at the same time for comparable transactions with others not related to the lender, and have not involved more than the normal risk of collectability or other unfavorable features.

 

Additional information concerning transactions with related persons is hereby incorporated by reference to Note 1 on page 91,90, Note 34 on page 99 and Note 67 on page 107 of the Corporation’s December 31, 20132014 audited consolidated financial statements filed on Form 10-K.

 

Approval Policies for Transactions with Related Persons 

 

Our policies and procedures with respect to related party transactions are set forth in our Code of Ethics and our Audit Committee Charter.

 

Our employees, officers, and directors may participate in a purchase, sale or lease transaction involving either real or personal property which would be owned, leased, rented or financed by one of our subsidiaries only with the prior consent of our Chief Executive Officer if such transaction complies with provisionprovisions of the law dealing with insiders (Federal Reserve Regulation O (12 CFR 215)), and the transaction does not involve terms which are more favorable than those offered to any person not associated with us or our subsidiaries.

 

Any transaction between our, and our subsidiaries’, employees, officers, or directors and us or one of our subsidiaries must always be conducted under terms that are not any more favorable than those accorded customers with similar transactions who do not have any inside relationship with the organization. However, loan discounts and waivers of loan and other service fees may be accepted by employees where such discounts and waivers are given to all similarly situated employees and the transaction is pursuant to an established practice, which has been approved by the Board of Directors of that institution. All transactions of this type must also be in compliance with the provisions of Regulation O, which defines the type of transactions allowed between banks and their officers, directors and principal shareholders, and establishes strict guidelines for these dealings.

 

None of our, or our subsidiaries’, employees, officers, or directors and/or their immediate family may be a regular supplier to, or purchaser from, the organizationCorporation for goods and services without the prior consent of our Chief Executive Officer.

 

Loans to, deposits from, and payments for services from related persons are coded accordingly on the appropriate data processing systems. The Corporation’s internal audit group monitors these activities on a quarterly basis and reports the findings to the Audit Committee as stipulated within the charter of the Audit Committee of the Board of Directors.

 

Whenever one of our, or one of our subsidiaries’, employees, officers or directors becomes involved in a potential conflict of interest or gives an appearance of a conflict of interest between the individual's self-interest and his duty to us (each a “Related Party Transaction”) that is not described above, then disclosure and permission or a wavier must be obtained from our Board of Directors. If a director of our Board is involved in a related Party Transaction, then he or she must recuse himself/herself from any discussion or decision regarding the Related Party Transaction.

 

Section 16(a) Beneficial Ownership Reporting Compliance     

 

Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), requires our directors and executive officers and persons who own more than 10% of our common stock to file reports of ownership and changes in ownership with the SEC. Based solely upon our review of the Forms 3, 4 and 5 filed during 2013,2014, and written representations from certain reporting persons that no Forms 5 were required, we reasonably believe that all required reports were timely filed.filed with the exception of one Form 4 for Marilyn Ford (President of First Citizens) for one sale transaction which was filed after the prescribed due date.

 

Advisory Approval of the Corporation’s Overall Executive Compensation Programs

 

Section 14A of the Exchange Act requires that we include in our proxy statement a resolution subject to non-binding shareholder vote on the compensation paid to our Named Executive Officers as disclosed in this proxy statement (commonly referred to as “Say-on-Pay”) on a frequency as determined by the shareholders. Our shareholders have had the opportunity to vote on our executive compensation programs in each of the last five years.annually from 2009 through 2013. We were pleased that in all five of the previous years the shareholders approved our executive compensation programs by a significant margin.

 

In accordance with the results of the non-binding vote from the 2013 shareholder meeting, we will submit a proposal regarding the approval of the Corporation’s overall executive compensation programs every three years. Unless circumstances change, we do not plan on submitting the “say on pay” vote again until the 2016 shareholder meeting.

 

Determining the Frequency of the Advisory Vote on the Corporation’s Overall Executive Compensation Programs

 

Section 14A of the Exchange Act requires that shareholders vote at least every six calendar years, on a non-binding, advisory basis, to determine the frequency of the advisory vote on the Corporation’s overall executive compensation programs with a choice for future votes to be held every one, two or three years. In accordance with the results of the non-binding vote from the 2013 shareholder meeting, the next frequency vote will be held at the 2019 shareholder meeting.

 

 

 

 

 

 

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