Attached files
Exhibit 99.1
July 31, 2015
Earnings Report
June 30, 2015
Dear Shareholders:
We are pleased to announce continued balance sheet growth for Kentucky
Bancshares, Inc. Total assets were $853.0 million as of June 30, 2015
compared to $785.3 million as of June 30, 2014 reflecting growth of 8.6%.
Year-to-date net income was $3.6 million for the period ending June 30,
2015 compared to $3.7 million for the period ending June 30, 2014.
The overall increase in total assets was driven by a 10.1% increase in
total loans, which was funded by a 7.8% increase in deposits and an 18.0%
increase in other borrowed funds. Similar to prior periods, borrowings
increased 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 diluted earnings per share was $1.33 for the period ending
June 30, 2015 compared to $1.36 for the same period last year. The change
from year-to-year is largely attributable to 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, management feels 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, lower income,
and increased exemptions associated with our captive insurance
subsidiary.
The second quarter of 2015 was a busy and productive one for us. In
addition to the loan and deposit growth in the second quarter, we worked
diligently on the merger of Madison Bank with Kentucky Bank. We are
extremely pleased to report their three branching centers opened as
Kentucky Bank branches on July 27, 2015. We are privileged to unite with
such a good group of bankers and look forward to solidifying our presence
in Madison County, while expanding the retail and commercial
relationships Madison Bank has fostered throughout the years. John
Hamilton, a long-time Madison County banker, is leading our efforts in
Madison County as the Market President. He is well positioned with a
fantastic team of experienced bankers, to ensure the transition goes
smoothly for our combined customers.
Our view should always be a long term one and we will continue to
consider opportunities for further franchise expansion, including
possible acquisition opportunities, which advance our growth objectives
while maintaining our ability to provide Premier Customer Service. 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
6/30/2015 6/30/2014 Change
Assets
Cash & Due From Banks $ 16,143 $ 14,651 10.2%
Interest Bearing Time Deposits 1,280 300 326.7
Securities 237,476 224,168 5.9
Trading Assets 5,400 5,242 3.0
Loans Held for Sale 1,719 495 247.3
Loans 546,085 496,134 10.1
Reserve for Loan Losses 5,950 5,614 6.0
Net Loans 540,135 490,520 10.1
Federal Funds Sold 205 88 133.0
Other Assets 50,596 49,832 1.5
Total Assets $ 852,954 $ 785,296 8.6%
Liabilities & Stockholders' Equity
Deposits
Demand $ 179,909 $ 157,988 13.9%
Savings & Interest Checking 280,409 257,259 9.0
Certificates of Deposit 183,698 182,162 0.8
Total Deposits 644,016 597,409 7.8
Repurchase Agreements 13,690 11,297 21.2
Other Borrowed Funds 110,090 93,280 18.0
Other Liabilities 6,161 8,379 -26.5
Total Liabilities 773,957 710,365 9.0
Stockholders' Equity 78,997 74,931 5.4
Total Liabilities & Stockholders' Equity $ 852,954 $ 785,296 8.6%
CONSOLIDATED INCOME STATEMENT
(in thousands)
Six Months Ending Three Months Ending
Percentage Percentage
6/30/2015 6/30/2014 Change 6/30/2015 6/30/2014 Change
Interest Income $ 15,566 $ 14,688 6.0% $ 7,835 $ 7,405 5.8%
Interest Expense 1,940 1,860 4.3 972 926 5.0
Net Interest Income 13,626 12,828 6.2 6,863 6,479 5.9
Loan Loss Provision 650 200 225.0 350 100 250.0
Net Interest Income After Provision 12,976 12,628 2.8 6,513 6,379 2.1
Other Income 5,892 4,937 19.3 3,622 2,669 35.7
Other Expenses 14,925 13,229 12.8 7,708 6,776 13.7
Income Before Taxes 3,943 4,336 -9.1 2,427 2,272 6.8
Income Taxes 306 661 -53.7 305 368 17.0
Net Income $ 3,637 $ 3,675 -1.0% $ 2,122 $ 1,904 11.5%
Net Change in Unrealized Gain (Loss)
on Securities (1,223) 4,981 -124.5 (2,159) 1,729 -244.9
Comprehensive Income (Loss) $ 2,414 $ 8,656 -72.1% $ (37) $ 3,633 -101.0%
Selected Ratios
Return on Average Assets 0.84% 0.94% 0.99% 0.97%
Return on Average Equity 9.14 10.18 10.64 10.33
Earnings Per Share $ 1.33 $ 1.36 $ 0.77 $ 0.70
Earnings Per Share - assuming dilution 1.33 1.36 0.77 0.70
Cash Dividends Per Share 0.52 0.50 0.26 0.25
Book Value Per Share 28.98 27.54
Market Price High Low Close
Second Quarter '15 $32.35 $27.75 $31.40
First Quarter '15 28.15 27.00 28.15
