Attached files
Exhibit 99.1
January 29, 2016
Earnings Report
December 31, 2015
Dear Shareholders:
We are pleased to announce record total assets for Kentucky Bancshares,
Inc. of $973.7 million as of December 31, 2015 compared to $855.2 million
as of December 31, 2014, reflecting an increase of $118.5 million driven
by the merger with Madison Bank in July of 2015 as well as organic growth
from our existing branches. Components of the change include an increase
in net loans of $85.3 million or 16%, an increase in investment
securities of $17.4 million or 7%, and an increase in total deposits of
$104.1 million or 16%.
Quarter to date net income was $1.71 million in the fourth quarter of
2015, compared to $1.68 million in the same period as prior year,
reflecting a 1.8% increase. The increase in quarterly net income is
primarily due to higher net interest income associated with loan and
investment growth, offset by lower non-interest income and higher non-
interest expense. Quarter to date diluted earnings per share was $0.57 in
the fourth quarter of 2015, compared to $0.61 during the same period last
year.
Year to date net income was $6.9 million for the period ended December
31, 2015 compared to $7.1 million for December 31, 2014. The change in
net earnings is largely due to the anticipated one-time expenses
associated with the acquisition of Madison Bank. Year to date diluted
earnings per share was $2.42 as of December 31, 2015, compared to $2.60
during 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 anticipated merger related
expenses. 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 global, national, and statewide economies remain uncertain and our
industry continues to face challenges including narrowing interest rate
spreads, heightened competition, and increased regulations. These all
exert downward pressure on revenues and upward pressure on costs. Despite
these challenges, we will continue to explore opportunities for
profitable growth and efficiency improvements 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
12/31/2015 12/31/2014 Change
Assets
Cash & Due From Banks $ 26,546 $ 16,771 58.3%
Interest Bearing Time Deposits 4,874 1,280 280.8
Securities 264,212 246,861 7.0
Trading Assets 5,531 5,370 3.0
Loans Held for Sale 624 776 -19.6
Loans 624,120 538,305 15.9
Reserve for Loan Losses 6,521 6,012 8.5
Net Loans 617,599 532,293 16.0
Federal Funds Sold 1,502 398 277.4
Other Assets 52,847 51,460 2.7
Total Assets $ 973,735 $ 855,209 13.9%
Liabilities & Stockholders' Equity
Deposits
Demand $ 209,289 $ 176,743 18.4%
Savings & Interest Checking 349,183 294,169 18.7
Certificates of Deposit 200,509 183,957 9.0
Total Deposits 758,981 654,869 15.9
Repurchase Agreements 18,514 12,457 48.6
Other Borrowed Funds 99,844 101,002 -1.1
Other Liabilities 7,868 8,939 -12.0
Total Liabilities 885,207 777,267 13.9
Stockholders' Equity 88,528 77,942 13.6
Total Liabilities & Stockholders' Equity $ 973,735 $ 855,209 13.9%
CONSOLIDATED INCOME STATEMENT
(in thousands)
Twelve Months Ending Three Months Ending
Percentage Percentage
12/31/2015 12/31/2014 Change 12/31/2015 12/31/2014 Change
Interest Income $ 33,185 $ 29,731 11.6% $ 8,978 $ 7,560 18.8%
Interest Expense 4,050 3,756 7.8 1,067 951 12.2
Net Interest Income 29,135 25,975 12.2 7,911 6,609 19.7
Loan Loss Provision 1,450 950 52.6 425 450 -5.6
Net Interest Income After Provision 27,685 25,025 10.6 7,486 6,159 21.5
Other Income 11,535 10,158 13.6 2,653 2,731 -2.9
Other Expenses 31,807 27,215 16.9 8,313 7,021 18.4
Income Before Taxes 7,413 7,968 -7.0 1,826 1,869 -2.3
Income Taxes 530 897 -40.9 121 194 -37.7
Net Income $ 6,883 $ 7,071 -2.7% $ 1,705 $ 1,675 1.8%
Net Change in Unrealized Gain (Loss)
on Securities (432) 5,917 -107.3 (1,198) 838 -243.0
Comprehensive Income (Loss) $ 6,451 $ 12,988 -50.3% $ 507 $ 2,513 -79.8%
Selected Ratios
Return on Average Assets 0.76% 0.89% 0.71% 0.83%
Return on Average Equity 8.26 9.50 7.62 8.58
Earnings Per Share $ 2.42 $ 2.60 $ 0.57 $ 0.61
Earnings Per Share - assuming dilution 2.42 2.60 0.57 0.61
Cash Dividends Per Share 1.04 1.00 0.26 0.25
Book Value Per Share 29.62 28.65
Market Price High Low Close
Fourth Quarter '15 $30.19 $29.54 $29.65
Third Quarter '15 33.00 30.05 30.16
