Attached files
Exhibit 99.1
January 31, 2014
Earnings Report
December 31, 2013
Dear Shareholders:
We are pleased to announce the total assets of your company, Kentucky
Bancshares, Inc., reached a record high at $769.4 million as of December
31, 2013. That figure represents a $68 million or 9.8% increase from
December 31, 2012. Loans increased by 9.3% and investment securities
increased by 19.5%, with both funded by a 4.6% increase in deposits and a
158% increase in other borrowings. Borrowings increased dramatically in
an effort to strategically lock in longer term funding at fixed rates,
for anticipated growth and to minimize rate sensitivity in anticipation
of an increasing rate environment.
Year to date net income was $6.29 million for the period ended December
31, 2013 compared to $7.01 million for December 31, 2012. The year
ending December 31, 2012 was a record year in earnings. Year to date
diluted earnings per share was $2.33 and $2.59 for 2013 and 2012,
respectively. The decrease in year to date earnings is largely
attributable to lower gains on investment sales and higher compensation
expense, which were both partially offset by lower provision expense. The
decline in investment gains is a result of increasing interest rates. The
increase in compensation expense is due to additional full time employees
hired in association with our new branches, as well as the loan and
deposit growth reflected on our balance sheet, and increased incentive
compensation. Provision for loan loss expense is lower due to continued
improving loan quality.
Quarter to date net income was $1.43 million for the period ended
December 31, 2013 compared to $1.91 million for December 31, 2012.
Quarter to date diluted earnings per share was $0.53 and $0.71 for 2013
and 2012, respectively. The decrease in quarterly earnings is primarily
due to the same factors impacting year to date earnings.
We are pleased also to announce the opening of our newest branch located
in Richmond, Kentucky at 5008 Atwood Drive, Suite 3. This is our second
branch expansion in the past 12 months and aligns with our objective to
grow franchise value while increasing our ability to provide Premier
Customer Service to current and future customers in Central and Eastern
Kentucky.
While both of our new branches will increase expenses in the short term,
we believe these markets to be key locations for future growth,
profitability, and company value. Our view should always be a long term
one. Expansionary investments, such as those made in Fayette County and
Madison County, can result in short term pressures on earnings. However,
over time, we expect these investments to enhance earnings. As always, we
will continue to consider opportunities for further branch expansion,
including possible acquisition opportunities that advance our growth
objectives while maintaining our ability to provide Premier Customer
Service.
In addition, we will continue to pursue strategic growth through
effective relationship management and new products and services. As an
example, we released our tablet banking app on November 15, 2013, our
mobile deposit service on December 12, 2013, and our online chat support
on January 6, 2014. These services increase customer convenience and
highlight some of our recent efforts to enhance customer experience.
We continue to see an increase in lending opportunities which is
reflected in the increase in net loans compared to the same period last
year. While this increase is encouraging, the outlook on loan demand and
overall economic conditions remains uncertain which, when combined with
heightened regulatory pressure, continues to make for a challenging
banking environment. That said, we are moving forward with strategic
opportunities such as branch expansion, loan growth, and increased
service offerings in a measured manner to build and reaffirm a strong
foundation for future growth. 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
Percentage
12/31/2013 12/31/2012 Change
Assets
Cash & Due From Banks $ 22,650,487 $ 31,579,930 -28.3%
Securities 230,396,296 192,780,473 19.5
Loans Held for Sale 223,250 485,845 -54.0
Loans 468,654,972 429,975,099 9.0
Reserve for Loan Losses 5,440,720 6,047,343 -10.0
Net Loans 463,214,252 423,927,756 9.3
Federal Funds Sold 510,000 184,000 177.2
Other Assets 52,439,817 52,052,306 0.7
Total Assets $ 769,434,102 $ 701,010,310 9.8%
Liabilities & Stockholders' Equity
Deposits
Demand $ 152,052,558 $ 144,574,752 5.2%
Savings & Interest Checking 276,186,464 256,588,854 7.6
Certificates of Deposit 189,161,410 189,260,978 -0.1
Total Deposits 617,400,432 590,424,584 4.6
Repurchase Agreements 12,867,341 3,815,384 237.2
Other Borrowed Funds 65,063,833 25,165,932 158.5
Other Liabilities 5,959,739 7,595,750 -21.5
Total Liabilities 701,291,345 627,001,650 11.8
Stockholders' Equity 68,142,757 74,008,660 -7.9
Total Liabilities & Stockholders' Equity $ 769,434,102 $ 701,010,310 9.8%
CONSOLIDATED INCOME STATEMENT
Twelve Months Ending Three Months Ending
Percentage Percentage
12/31/2013 12/31/2012 Change 12/31/2013 12/31/2012 Change
Interest Income $ 28,167,788 $ 28,232,911 -0.2% $ 7,269,586 $ 6,812,257 6.7%
Interest Expense 3,455,771 3,715,640 -7.0 957,514 841,655 13.8
Net Interest Income 24,712,017 24,517,271 0.8 6,312,072 5,970,602 5.7
Loan Loss Provision 1,050,000 2,050,000 -48.8 200,000 450,000 -55.6
Net Interest Income After Provision 23,662,017 22,467,271 5.3 6,112,072 5,520,602 10.7
Other Income 10,221,644 11,869,972 -13.9 2,442,270 3,803,686 -35.8
Other Expenses 26,229,898 25,686,008 2.1 6,873,356 6,903,030 -0.4
Income Before Taxes 7,653,763 8,651,235 -11.5 1,680,986 2,421,258 -30.6
Income Taxes 1,361,630 1,643,673 -17.2 249,972 507,678 -50.8
Net Income $ 6,292,133 $ 7,007,562 -10.2% $ 1,431,014 $ 1,913,580 -25.2%
Net Change in Unrealized Gain (Loss)
on Securities (9,409,430) 513,513 -1932.4 (1,878,644) (1,005,965) -86.8
Comprehensive Income (Loss) $ (3,117,297) $ 7,521,075 -141.4% $ (447,630) $ 907,615 -149.3%
Selected Ratios
Return on Average Assets 0.86% 1.03% 0.74% 1.11%
Return on Average Equity 8.77 9.70 8.22 10.31
Earnings Per Share $ 2.33 $ 2.59 $ 0.53 $ 0.71
Earnings Per Share - assuming dilution 2.33 2.59 0.53 0.71
Cash Dividends Per Share 0.96 0.92 0.24 0.23
Book Value Per Share 25.08 27.21
Market Price High Low Close
Fourth Quarter '13 $26.25 $24.15 $24.24
Third Quarter '13 $27.67 $24.75 $26.25
