Attached files
Exhibit 99.1
July 22, 2011
Quarterly Report
Second Quarter 2011
We are pleased to report that through the second quarter ended June 30,
2011, earnings for your company were up 26.2% when compared to the June
30, 2010 earnings. On a year to date basis, we earned $2.68 million
compared to $2.13 million for the six months ended June 30, 2010. We
reported $1.42 million in profit for the second quarter of 2011, compared
to $1.18 million for the second quarter of 2010, a 20.3% increase.
Earnings per share on a fully diluted basis, increased from $0.78 per
share to $0.98 per share through the six months ended June 30, 2011.
A significant contributor to this improvement in our bottom line has been
a strategy that we began implementing in August, 2010 to improve our net
interest margin. We have increased the margin from 3.46% for June, 2010
to 4.48% through June, 2011. As a result, our net interest income has
totaled $12.04 million through the second quarter of 2011, which is a
20.3% increase over the June, 2010 net interest income figure.
Loan demand continues to remain soft as the economies in our markets
continue to be somewhat uncertain. As has been said in prior reports,
both the national and Kentucky economies continue to be sluggish. In
many of the markets in which we do business, there has been some
improvement in unemployment, along with some slight improvement in loan
demand. The housing and home construction sectors, both locally and
nationally, continue to struggle. Economists continue to forecast that
we will have a significant number of unsold homes in inventory.
Congress?s continual inability, at least at the time of this letter, to
resolve our debt ceiling issues has left the markets in a bit of a
tenuous position. We are hopeful that they will come to a resolution
prior to your receiving this letter. Finally, it has been a year since
the Dodd-Frank bill passed. The implications of this legislation are
still incomplete other than the banking industry?s concerns about the
increased cost of regulation.
In our Wealth Management Department, we have added two additional
employees to help us better service our clients as well as grow that area
of your bank. Eric McAnallen has joined us as a financial consultant and
will be working with our bank?s brokerage team. Eric is a graduate of
the University of Kentucky and Regis University, and has most recently
been working for Edward D. Jones, Co. His primary area of focus will be
the Jessamine, Woodford, and Scott markets. Additionally, in the Wealth
Management area, Jason Gresham has joined us as the newest member of our
team. Jason comes to us with a background in financial planning, first
at J.P. Morgan Chase, and more recently with TIAA-CREF where he was an
accredited Wealth Management advisor. He is a graduate of the University
of Kentucky with a degree in economics. We look forward to both of these
gentlemen?s contributions to the growth of our Wealth Management area.
Judy Taylor, who has been the head of our Human Resources Department for
the last sixteen years, has announced her retirement. In anticipation of
that, we have recently added Carol Caskey as a Senior Vice-President and
Director of Human Resources. Carol has been in the Human Resources field
for over twenty years. She worked most recently for Humana and prior to
that, for a large restaurant franchise. She has both her Bachelor?s and
Master?s Degrees from Morehead State University. I would be remiss if I
did not thank Judy for her twenty-four years of commitment to Kentucky
Bank. We wish Judy well with her retirement, and we certainly appreciate
her immense contribution and dedication to make our bank a wonderful
environment in which to work.
The economic challenges and uncertainty that have existed over the last
three and a half years will still be facing us over the next twelve to
eighteen months. Your company is still committed to meet those
challenges head on, and to provide a return on investment that you should
expect. We will continue to do everything possible to accomplish what is
in the long term best interest of our customers, employees, communities,
and our shareholders.
As always, we appreciate your support.
/s/Louis Prichard
Louis Prichard
President, CEO
UNAUDITED
CONSOLIDATED BALANCE SHEET
Percentage
6/30/2011 6/30/2010 Change
Assets
Cash & Due From Banks $ 13,547,467 $ 13,566,766 -0.1%
Securities 173,611,167 191,625,562 -9.4
Loans Held for Sale 513,900 294,800 74.3
Loans 408,515,863 416,474,796 -1.9
Reserve for Loan Losses 5,641,760 6,460,927 -12.7
Net Loans 402,874,103 410,013,869 -1.7
Federal Funds Sold 106,000 16,837,000 -99.4
Other Assets 57,507,552 54,816,975 4.9
Total Assets $ 648,160,189 $ 687,154,972 -5.7%
Liabilities & Stockholders' Equity
Deposits
Demand $ 126,399,413 $ 117,022,918 8.0%
Savings & Interest Checking 180,542,318 160,874,631 12.2
Certificates of Deposit 210,051,532 277,033,341 -24.2
Total Deposits 516,993,263 554,930,890 -6.8
Repurchase Agreements 4,488,530 4,340,585 3.4
Other Borrowed Funds 56,109,788 58,830,688 -4.6
Other Liabilities 5,032,243 6,193,764 -18.8
Total Liabilities 582,623,824 624,295,927 -6.7
Stockholders' Equity 65,536,365 62,859,045 4.3
Total Liabilities & Stockholders? Equity $ 648,160,189 $ 687,154,972 -5.7%
CONSOLIDATED INCOME STATEMENT
Six Months Ending Three Months Ending
Percentage Percentage
6/30/2011 6/30/2010 Change 6/30/2011 6/30/2010 Change
Interest Income $ 15,139,200 $ 15,448,422 -2.0% $ 7,681,644 $ 7,876,830 -2.5%
Interest Expense 3,103,202 5,447,301 -43.0 1,465,720 2,745,055 -46.6
Net Interest Income 12,035,998 10,001,121 20.3 6,215,924 5,131,775 21.1
Loan Loss Provision 1,450,000 1,250,000 16.0 700,000 800,000 -12.5
Net Interest Income After Provision 10,585,998 8,751,121 21.0 5,515,924 4,331,775 27.3
Other Income 4,100,992 4,116,720 -0.4 2,273,525 2,369,947 -4.1
Other Expenses 11,560,448 10,507,694 10.0 6,130,935 5,335,341 14.9
Income Before Taxes 3,126,542 2,360,147 32.5 1,658,514 1,366,381 21.4
Income Taxes 443,350 234,628 89.0 237,731 185,281 28.3
Net Income $ 2,683,192 $ 2,125,519 26.2 $ 1,420,783 $ 1,181,100 20.3
Net Change in Unrealized Gain (loss)
on Securities 3,101,686 891,283 248.0 1,807,535 685,050 163.9
Comprehensive Income $ 5,784,878 $ 3,016,802 91.8% $ 3,228,318 $ 1,866,150 73.0%
Selected Ratios
Return on Average Assets 0.82% 0.60% 0.87% 0.66%
Return on Average Equity 8.5 6.9 8.9 7.6
Earnings Per Share $ 0.98 $ 0.78 $ 0.52 $ 0.43
Earnings Per Share - assuming dilution 0.98 0.78 0.52 0.43
Cash Dividends Per Share 0.44 0.42 0.22 0.21
Book Value Per Share 23.96 22.92
Market Price High Low Close
Second Quarter '11 $17.00 $15.83 $16.50
First Quarter '11 $17.50 $16.50 $16.50
