Attached files
Exhibit 99.1
October 30, 2012
Earnings Report
September 30, 2012
We are pleased to announce year to date net income increased 14.3% to
$5.09 million as of September 30, 2012 from $4.46 million as of September
30, 2011. Year to date diluted earnings per share increased 13.9% to
$1.88 from $1.65 during the same period in 2011. The increase in year to
date earnings is largely attributable to higher net interest income,
lower provision for loan losses, and higher non-interest income.
Third quarter net income decreased from $1.77 million for the period
ended September 30, 2011 to $1.70 million for that same period in 2012.
Quarterly diluted earnings per share decreased 6.0% to $0.63 from $0.67
during the same period in 2011. The decrease in quarterly earnings is
primarily due to higher provision for loan losses relative to the same
period last year.
Total assets were $672.4 million at September 30, 2012, which represents
a 6.1% increase from the period ended September 30, 2011. The overall net
increase in total assets was driven by a 15.8% increase in securities and
a 4.5% increase in net loans which were funded by a 6.4% increase in
deposits.
As previously reported, we underwent an interest cost savings initiative
in 2010 and 2011 to reduce our overall cost of deposit funding. This
initiative resulted in substantially lower interest expense which greatly
improved our overall net interest income. We continue to benefit from
this initiative as represented in the 34.7% decrease in year to date
interest expense compared to the same period last year.
As always, we continue to pursue strategic growth through effective
relationship management and new products or services. As an example, we
released our mobile banking application in September. This app has
already been well received by our customers, and we believe it
demonstrates our ability to stay in the forefront of the banking
industry.
After many months of diminished loan demand due to trying economic
conditions, we are finally seeing an increase in lending opportunities
which is reflected in the 4.5% increase in net loans compared to the same
period last year. While this increase is gratifying, the outlook on loan
demand and overall economic conditions remain uncertain. The Bureau of
Labor Statistics released a preliminary unemployment rate for Kentucky of
8.4% for September 2012, which is an improvement from 9.5% in September
2011. The unemployment rates in many of the counties in which we have
locations are experiencing similar trends. These decreases are
promising, but may not indicate the full picture because of the inclusion
of individuals no longer seeking work.
As articulated throughout the campaign, the presidential candidates have
differing views on regulation in general. Regardless of the outcome of
the election, banking regulations will no doubt be impacted, including
the possibility of affecting the various Dodd Frank driven regulations.
In the meantime, we continue to provide written commentary on proposed
regulations to the appropriate governing bodies, in an effort to
proactively voice our opinion on those banking regulations that would
affect us.
We are approaching the end of the year and will be doing everything
possible to accomplish what is in the long term best interest of our
shareholders, customers, and employees.
As always, we appreciate your support.
/s/Louis Prichard
Louis Prichard
President, CEO
UNAUDITED
CONSOLIDATED BALANCE SHEET
Percentage
9/30/2012 9/30/2011 Change
Assets
Cash & Due From Banks $ 13,606,239 $ 14,677,443 -7.3%
Securities 182,976,084 158,068,053 15.8
Loans Held for Sale 245,962 961,500 -74.4
Loans 426,517,073 408,201,940 4.5
Reserve for Loan Losses 6,016,762 5,664,000 6.2
Net Loans 420,500,311 402,537,940 4.5
Federal Funds Sold 178,000 143,000 24.5
Other Assets 54,929,020 57,339,335 -4.2
Total Assets $ 672,435,616 $ 633,727,271 6.1%
Liabilities & Stockholders Equity
Deposits
Demand $ 139,934,470 $ 130,414,479 7.3%
Savings & Interest Checking 214,873,754 170,598,268 26.0
Certificates of Deposit 185,773,119 207,064,303 -10.3
Total Deposits 540,581,343 508,077,050 6.4
Repurchase Agreements 3,344,098 3,404,337 -1.8
Other Borrowed Funds 42,777,399 49,013,166 -12.7
Other Liabilities 12,029,791 5,127,415 134.6
Total Liabilities 598,732,631 565,621,968 5.9
Stockholders Equity 73,702,985 68,105,303 8.2
Total Liabilities & Stockholders Equity $ 672,435,616 $ 633,727,271 6.1%
CONSOLIDATED INCOME STATEMENT
Nine Months Ending Three Months Ending
Percentage Percentage
9/30/2012 9/30/2011 Change 9/30/2012 9/30/2011 Change
Interest Income $ 21,420,654 $ 22,604,734 -5.2% $ 6,937,395 $ 7,465,534 -7.1%
Interest Expense 2,873,985 4,403,672 -34.7 859,629 1,300,470 -33.9
Net Interest Income 18,546,669 18,201,062 1.9 6,077,766 6,165,064 -1.4
Loan Loss Provision 1,600,000 1,900,000 -15.8 600,000 450,000 33.3
Net Interest Income After Provision 16,946,669 16,301,062 4.0 5,477,766 5,715,064 -4.2
Other Income 8,066,286 6,491,430 24.3 3,088,695 2,390,438 29.2
Other Expenses 18,782,978 17,553,553 7.0 6,490,424 5,993,105 8.3
Income Before Taxes 6,229,977 5,238,939 18.9 2,076,037 2,112,397 -1.7
Income Taxes 1,135,995 781,633 45.3 377,960 338,283 11.7
Net Income $ 5,093,982 $ 4,457,306 14.3 $ 1,698,077 $ 1,774,114 -4.3
Net Change in Unrealized Gain (loss)
on Securities 1,519,478 4,711,313 -67.7 242,673 1,609,627 -84.9
Comprehensive Income $ 6,613,460 $ 9,168,619 -27.9% $ 1,940,750 $ 3,383,741 -42.6%
Selected Ratios
Return on Average Assets 1.00% 0.91% 1.00% 1.09%
Return on Average Equity 9.50 9.28 9.26 10.74
Earnings Per Share $ 1.88 $ 1.65 $ 0.63 $ 0.67
Earnings Per Share - assuming dilution $ 1.88 1.65 $ 0.63 0.67
Cash Dividends Per Share 0.69 0.66 0.23 0.22
Book Value Per Share 27.10 25.02
Market Price High Low Close
Third Quarter '12 $23.00 $20.27 $21.10
Second Quarter '12 $23.90 $20.20 $21.00
