Attached files
Exhibit 99.1
October 30, 2015
Earnings Report
September 30, 2015
Dear Shareholders:
We are pleased to announce continued growth for Kentucky Bancshares, Inc.
Total assets were $933.5 million as of September 30, 2015 compared to
$794.1 million as of September 30, 2014. Year-to-date net income was
$5.2 million for the period ending September 30, 2015 compared to $5.4
million for the same period in 2014.
The overall increase in total assets was driven by the merger of Madison
Bank with Kentucky Bank on July 24, 2015. We are honored to be welcomed
by such wonderful customers and a vibrant and thriving community. While
all mergers present unique opportunities and challenges, we continue to
work hard to finalize the transition and expand the relationships
fostered by Madison Bank throughout the years.
Year-to-date diluted earnings per share was $1.85 for the period ending
September 30, 2015 compared to $1.99 for the same period last year. The
change from year-to-year is attributable to a larger number of shares
outstanding and driven by higher loan loss provision and higher non-
interest expense, partially offset by higher net interest income and
lower tax expense. Provision expense is higher due to the growth in our
loan portfolio. While our credit quality remains strong and favorable to
peers, we feel it is prudent to increase our provision because of our
recent loan growth. Non-interest expense increased due, in part, to
merger related expenses associated with the acquisition of Madison
Financial Corporation, which closed on July 24, 2015. Net interest
income is higher due to our loan and investment growth. Tax expense is
lower due to purchased tax credits and increased exemptions associated
with our captive insurance subsidiary.
The third quarter of 2015 was a productive quarter for us. In addition
to the Madison Bank merger, we were privileged to retain the title
sponsorship of the Kentucky Bank Tennis Championships, which is a USTA
Pro Circuit tournament. This is the only professional tennis event held
in Kentucky and includes singles and doubles play, as well as community
outreach programs. In addition, we have been partnering with the
Breeders' Cup Festival as a sponsor for the events leading up to the 2015
Breeders' Cup. These and other partnerships illustrate our commitment to
our local communities and the state as a whole.
Considering our industry's continued challenges, we are proud of our
recent growth and expansion. Interest rates remain low and are influenced
by both national and global forces. These low rates, combined with
significant price competition, caused both investing and lending rates to
be less than optimal. In addition, we continue to face new and complex
regulatory requirements. These factors exert downward pressure on
revenues and upward pressure on costs, and require us to identify new
ways for deeper market penetration and further diversification of revenue
sources. To that end, our customers will see product upgrades and
delivery channel enhancements in the coming months. We will continue to
do 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
(in thousands)
Percentage
9/30/2015 9/30/2014 Change
Assets
Cash & Due From Banks $ 19,752 $ 15,822 24.8%
Interest Bearing Time Deposits 4,874 1,280 280.8
Securities 238,600 214,143 11.4
Trading Assets 5,480 5,325 2.9
Loans Held for Sale 1,520 754 101.6
Loans 612,504 510,994 19.9
Reserve for Loan Losses 6,142 5,706 7.6
Net Loans 606,362 505,288 20.0
Federal Funds Sold 3,129 140 2135.0
Other Assets 53,825 51,372 4.8
Total Assets $ 933,542 $ 794,124 17.6%
Liabilities & Stockholders' Equity
Deposits
Demand $ 201,644 $ 161,174 25.1%
Savings & Interest Checking 305,273 251,508 21.4
Certificates of Deposit 204,088 175,636 16.2
Total Deposits 711,005 588,318 20.9
Repurchase Agreements 19,918 11,289 76.4
Other Borrowed Funds 107,508 110,430 -2.6
Other Liabilities 6,522 7,988 -18.3
Total Liabilities 844,953 718,025 17.7
Stockholders' Equity 88,589 76,099 16.4
Total Liabilities & Stockholders' Equity $ 933,542 $ 794,124 17.6%
CONSOLIDATED INCOME STATEMENT
(in thousands)
Nine Months Ending Three Months Ending
Percentage Percentage
9/30/2015 9/30/2014 Change 9/30/2015 9/30/2014 Change
Interest Income $ 24,207 $ 22,170 9.2% $ 8,641 $ 7,482 15.5%
Interest Expense 2,983 2,804 6.4 1,043 944 10.5
Net Interest Income 21,224 19,366 9.6 7,598 6,538 16.2
Loan Loss Provision 1,025 500 105.0 375 300 25.0
Net Interest Income After Provision 20,199 18,866 7.1 7,223 6,238 15.8
Other Income 8,882 7,427 19.6 2,990 2,490 20.1
Other Expenses 23,494 20,194 16.3 8,569 6,965 23.0
Income Before Taxes 5,587 6,099 -8.4 1,644 1,763 -6.7
Income Taxes 409 704 -41.9 103 43 -140.0
Net Income $ 5,178 $ 5,395 -4.0% $ 1,541 $ 1,720 -10.4%
Net Change in Unrealized Gain (Loss)
on Securities 766 5,080 -84.9 1,989 99 1909.1
Comprehensive Income (Loss) $ 5,944 $ 10,475 -43.3% $ 3 530 $ 1,819 94.1%
Selected Ratios
Return on Average Assets 0.78% 0.91% 0.66% 0.85%
Return on Average Equity 8.47 9.81 7.14 9.06
Earnings Per Share $ 1.85 $ 1.99 $ 0.52 $ 0.63
Earnings Per Share - assuming dilution 1.85 1.99 0.52 0.63
Cash Dividends Per Share 0.78 0.75 0.26 0.25
Book Value Per Share 29.65 27.97
Market Price High Low Close
Third Quarter '15 $33.00 $30.05 $30.16
Second Quarter '15 32.35 27.75 31.40
