EX-99 2 form8k113ex99.txt EXHIBIT 99.1 Exhibit 99.1 October 21, 2011 Quarterly Report Third Quarter 2011 We are pleased to report for the nine months ended September 30, 2011, earnings for your company were up 20.5% when compared to the earnings for the nine months ended September 30, 2010. We reported $4.46 million in profit on a year to date basis, compared to $3.70 million through September 30, 2010. For the quarter ended September 30, 2011 your company had net income of $1.77 million compared $1.57 million for the third quarter of 2010. This was a 12.7% increase. Year to date earnings per share on a fully diluted basis, increased from $1.35 per share in 2010 to $1.65 per share in 2011, which represents a 22.2% increase. Total assets of Kentucky Bancshares, Inc. were $633.7 million at September 30, 2011, which represents a 4.9% decrease from the period ended September 30, 2010. A decline in Securities, Federal Funds Sold, and the slight decrease in loans contributed to that total. Deposits also declined 5.7%, as a result of a significant decline in higher cost certificates of deposit. However, we did experience an increase in Demand Deposits, Savings, and Interest Bearing Checking accounts. As a result of this successful strategy of managing our balance sheet, our core earnings have improved significantly. Our net interest income has increased from $14.9 million to $18.2 million, a 22.1% increase. Loan demand is sporadic in nature. We have seen some increase in commercial borrowers looking for opportunities. However, that demand is inconsistent. On the consumer side, we have recently seen a significant increase in homeowners interested in refinancing mortgages. This has been spurred by the Federal Reserve?s recent actions in lowering longer term rates. However, the interest shown in home purchases is still minimal at this time. The national economy is still running at a stalled speed. We are not necessarily in a recession but we are not recovering with much force. The Federal Reserve has indicated that it intends to keep rates purposefully low for the next two years in an effort to spur the economy. However, until employment recovers we may still see little or no growth. Kentucky?s revenues have seen some increase through September of 2011, which is an indication of some recovery but employment is still sluggish. The stock of your company has recently had some positive movement. We have not only seen some recent increased activity in the level of trading, but the stock price in the third quarter has increased from a low of $16.00 per share to a high of $19.25 per share. With our current dividend payout, the yield on the stock in that trading range is in excess of 4.50%. We are continuing our efforts to move market share in those areas where troubled banks continue to struggle. We are pursuing this strategy by calling on businesses and individuals, providing Premier Customer Service at every opportunity, and by ensuring we have the products available to our customers that will fit their needs. We are approaching the end of the year and we will be doing everything possible so that we can 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 9/30/2011 9/30/2010 Change Assets Cash & Due From Banks $ 14,677,443 $ 18,115,061 -19.0% Securities 158,068,053 176,487,078 -10.4 Loans Held for Sale 961,500 148,800 546.2 Loans 408,201,940 415,416,551 -1.7 Reserve for Loan Losses 5,664,000 7,371,721 -23.2 Net Loans 402,537,940 408,044,830 -1.3 Federal Funds Sold 143,000 7,855,000 -98.2 Other Assets 57,339,335 55,455,793 3.4 Total Assets $ 633,727,271 $ 666,106,562 -4.9% Liabilities & Stockholders' Equity Deposits Demand $ 130,414,479 $ 112,889,900 15.5% Savings & Interest Checking 170,598,268 158,127,111 7.9 Certificates of Deposit 207,064,303 267,837,125 -22.7 Total Deposits 508,077,050 538,854,136 -5.7 Repurchase Agreements 3,404,337 4,118,278 -17.3 Other Borrowed Funds 49,013,166 53,102,552 -7.7 Other Liabilities 5,127,415 5,341,603 -4.0 Total Liabilities 565,621,968 601,416,569 -6.0 Stockholders' Equity 68,105,303 64,689,993 5.3 Total Liabilities & Stockholders? Equity $ 633,727,271 $ 666,106,562 -4.9%
CONSOLIDATED INCOME STATEMENT Nine Months Ending Three Months Ending Percentage Percentage 9/30/2011 9/30/2010 Change 9/30/2011 9/30/2010 Change Interest Income $ 22,604,734 $ 22,924,210 -1.4% $ 7,465,534 $ 7,475,788 -0.1% Interest Expense 4,403,672 8,012,451 -45.0 1,300,470 2,565,150 -49.3 Net Interest Income 18,201,062 14,911,759 22.1 6,165,064 4,910,638 25.5 Loan Loss Provision 1,900,000 1,950,000 -2.6 450,000 700,000 -35.7 Net Interest Income After Provision 16,301,062 12,961,759 25.8 5,715,064 4,210,638 35.7 Other Income 6,491,430 7,422,952 -12.5 2,390,438 3,306,232 -27.7 Other Expenses 17,553,553 16,217,355 8.2 5,993,105 5,709,661 5.0 Income Before Taxes 5,238,939 4,167,356 25.7 2,112,397 1,807,209 16.9 Income Taxes 781,633 467,301 67.3 338,283 232,673 45.4 Net Income $ 4,457,306 $ 3,700,055 20.5 $ 1,774,114 $ 1,574,536 12.7 Net Change in Unrealized Gain (loss) on Securities 4,711,313 1,679,934 180.4 1,609,627 788,651 104.1 Comprehensive Income $ 9,168,619 $ 5,379,989 70.4% $ 3,383,741 $ 2,363,187 43.2% Selected Ratios Return on Average Assets 0.91% 0.70% 1.09% 0.91% Return on Average Equity 9.3 7.9 10.7 10.0 Earnings Per Share $ 1.65 $ 1.35 $ 0.67 $ 0.57 Earnings Per Share - assuming dilution 1.65 1.35 0.67 0.57 Cash Dividends Per Share 0.66 0.63 0.22 0.21 Book Value Per Share 25.02 23.59
Market Price High Low Close Third Quarter '11 $19.25 $16.00 $18.10 Second Quarter '11 $17.00 $15.83 $16.50