8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  October 30, 2019

KENTUCKY BANCSHARES, INC.

(Exact Name of Registrant as specified in Charter)

Kentucky	000-52598	61-0993464
(State or other	(Commission	(IRS Employer
jurisdiction of incorporation)	File Number)	Identification No.)

P.O. Box 157, Paris, Kentucky
(Address of principal executive offices) 40362-0157
(Zip code)

(859)987-1795

(Registrant's telephone number, including area code)

N/A

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐  Written communications pursuant to Rule 425 under the Securities Act (17CFR230.425)

☐  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	KTYB	OTCQX

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ◻

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻

INFORMATION TO BE INCLUDED IN THE REPORT

Item 2.02. Results of Operations and Financial Condition

The Registrant expects to mail to its shareholders the Registrant's quarterly financial information for the third quarter of 2019 on or about November 15, 2019.  A copy of this mailing is attached as Exhibit 99.1.

The information in this Form 8-K and Exhibit 99.1 attached hereto shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference.

Item 9.01. Financial Statements and Exhibits

Exhibit 99.1 - Release dated October 30, 2019 of quarterly financial information as of September 30, 2019.

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Forward-Looking Statements

Except for historical information contained herein, the discussion in this Report may include certain forward looking statements based upon management expectations.  Actual results and experience could differ materially from the anticipated results or other expectations expressed in the forward-looking statements.  Factors which could cause future results to differ from these expectations include the following:  change in economic conditions in the markets we serve; changes in laws or regulatory enforcement; monetary and fiscal policies of the federal government; changes in  interest rates; demand for financial services; the impact of our continuing growth strategy; and other factors, including various “risk factors” set forth in our most recent annual report on Form 10-K and in other reports we file from time to time with the Securities and Exchange Commission.  Our annual report on Form 10-K and these other reports are available publicly on the SEC website, www.sec.gov, and on the Company's website, www.kybank.com.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

April
	KENTUCKY BANCSHARES, INC.
Date: October 30, 2019	By	/s/ Gregory J. Dawson
		Gregory J. Dawson
		Chief Financial Officer

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EX-99.1

Exhibit 99.1

October 30, 2019

Earnings Report – September 30, 2019

Dear Shareholders:

We are pleased to announce earnings for your company.  Year-to-date net income increased to $9.7 million for the period ending September 30, 2019 compared to $9.5 million for the period ending September 30, 2018.  Year-to-date diluted earnings per share was $1.62 and $1.59, for September 30, 2019 and 2018, respectively.  Total assets were $1.08 billion as of September 30, 2019 compared to $1.05 billion as of September 30, 2018.

The increase in year-to-date net income from prior year was driven by the following factors:  an increase in net interest income primarily due to higher average loan balances offset by higher provision expense due to loan growth, and higher non-interest income lifted by gains on securities and offset by higher non-interest expense due to increases in compensation expense and processing expense.

Our strategy of disciplined loan growth paired with the pursuit of incremental income continues to bear fruit as evidenced by the increase in year-to-date earnings.  We view our primary stakeholder groups to include shareholders, customers, employees, and communities.  In addition to funding expansion efforts, higher earnings have allowed us to increase dividends to shareholders, increase products and services to customers, increase benefits for employees, and increase corporate donations to non-profits serving our communities.

Some of our recent and upcoming growth efforts include the following:

· Certificate of deposit specials and a premium money market account to provide funding for loan growth.

· Continued conversion from traditional branch lobbies with tellers and customer service representatives to open-design lobbies with universal bankers, in order to more efficiently serve our customers. 

· New loan products to provide long-term fixed rate options for small farms, residential properties, and commercial borrowers.

· Continued construction on two new branches in Lexington. We expect one to open in early 2020 and the second to open in mid-2020.

· Expansion of our lending production staff to meet loan demand in the markets we serve.

While we are pleased with earnings to date, we recognize there are increasing global economic weaknesses which could ultimately negatively impact growth rates for the communities in which we operate.  The Federal Reserve has decreased rates recently and more rate reductions could be possible in the future.  The reduction of rates, combined with uncertain economic conditions, would likely put downward pressure on earnings.  We intend to focus on meeting our customers’ loan demand needs while paying attention to declining rates and economic uncertainties.  At the same time, we will continue to pursue opportunities for profitable growth, strategic expansion, and improved efficiency to accomplish what is in the long term best interest of our shareholders, customers, and employees. As always, thank you for your continued support.

/s/Louis Prichard

Louis Prichard

President, CEO

UNAUDITED

CONSOLIDATED BALANCE SHEET

(in thousands)

					Percentage
	9/30/2019		9/30/2018		Change
Assets
Cash & Due From Banks	$	25,063	$	25,911	(3.3)	%
Federal Funds Sold		227		186	22.0
Interest Bearing Time Deposits		2,375		2,275	4.4
Securities		246,542		278,575	(11.5)
Loans Held for Sale		5,232		3,699	41.4
Loans		732,267		685,738	6.8
Reserve for Loan Losses		8,266		8,199	0.8
Net Loans		724,001		677,539	6.9
Bank Owned Life Insurance		18,020		10,136	77.8
Other Assets		61,555		54,556	12.8
Total Assets	$	1,083,015	$	1,052,877	2.9	%
Liabilities & Stockholders' Equity
Deposits
Demand	$	241,427	$	244,155	(1.1)	%
Savings & Interest Checking		361,862		375,067	(3.5)
Certificates of Deposit		225,912		201,518	12.1
Total Deposits		829,201		820,740	1.0
Repurchase Agreements		6,037		8,248	(26.8)
Other Borrowed Funds		109,890		113,782	(3.4)
Other Liabilities		20,711		8,742	136.9
Total Liabilities		965,839		951,512	1.5
Stockholders' Equity		117,176		101,365	15.6
Total Liabilities & Stockholders' Equity	$	1,083,015	$	1,052,877	2.9	%

CONSOLIDATED INCOME STATEMENT

(in thousands)

	Nine Months Ending								Three Months Ending
							Percentage								Percentage
	9/30/2019			9/30/2018			Change		9/30/2019			9/30/2018			Change
Interest Income	$	34,051		$	31,511		8.1	%	$	11,512		$	10,741		7.2	%
Interest Expense		6,743			4,742		42.2			2,202			1,799		22.4
Net Interest Income		27,308			26,769		2.0			9,310			8,942		4.1
Loan Loss Provision		825			400		106.3			375			150		150.0
Net Interest Income After Provision		26,483			26,369		0.4			8,935			8,792		1.6
Other Income		10,395			9,991		4.0			4,060			3,517		15.4
Other Expenses		26,273			25,540		2.9			8,730			8,551		2.1
Income Before Taxes		10,605			10,820		(2.0)			4,265			3,758		13.5
Income Taxes		941			1,326		(29.0)			649			480		35.2
Net Income	$	9,664		$	9,494		1.8	%	$	3,616		$	3,278		10.3	%
Net Change in Unrealized Gain (Loss) on Securities		4,839			(5,886)		182.2			(92)			(1,523)		94.0
Comprehensive Income (Loss)	$	14,503		$	3,608		302.0	%	$	3,524		$	1,755		100.8	%
Selected Ratios
Return on Average Assets		1.19	%		1.21	%				1.34	%		1.25	%
Return on Average Equity		11.42			12.67					12.44			12.95
Earnings Per Share	$	1.62		$	1.59				$	0.61		$	0.55
Earnings Per Share - assuming dilution		1.62			1.59					0.61			0.55
Cash Dividends Per Share		0.510			0.465					0.170			0.155
Book Value Per Share		19.81			17.02
Tangible Book Value Per Share		17.42			14.63

Market Price	High		Low		Close
Third Quarter '19	$	24.60	$	23.03	$	23.30
Second Quarter '19	$	24.75	$	24.00	$	24.40