The first Bank of Kentucky was chartered by the General Assembly on December 27, 1806. Its charter was promoted by a young Henry Clay, who was serving in Frankfort at the time. One-half of the bank's capital stock was owned by the Commonwealth of Kentucky, with the parent bank located in Frankfort. The charter also granted the right to establish branch banks. Branches were shortly established in Lexington, Louisville, Paris, Washington, Richmond, Danville, Bardstown, Shelbyville, Hartford and Russellville.
The Bank of Kentucky operated successfully until the Panic of 1819, when it was forced to suspend the redemption of banknotes. During 1822, the legislature repealed the bank's charter and forbade extending new loans. The Bank of Kentucky's branch at Lexington was assumed by the private banking concern of D. A. Sayre & Company during 1829.
