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): April 30, 2018
KENTUCKY BANCSHARES, INC.
(Exact Name of Registrant as specified in Charter)
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Kentucky |
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000-52598 |
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61-0993464 |
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(State or other |
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(Commission |
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(IRS Employer |
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jurisdiction of incorporation) |
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File Number) |
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Identification No.) |
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P.O. Box 157, Paris, Kentucky |
40362-0157 |
(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))
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 first quarter of 2018 on or about May 14, 2018. 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 April 30, 2018 of quarterly financial information as of March 31, 2018.
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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.
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KENTUCKY BANCSHARES, INC. |
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Date: April 30, 2018 |
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By |
/s/ Gregory J. Dawson |
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Gregory J. Dawson |
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Chief Financial Officer |
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Exhibit 99.1
April 30, 2018
Earnings Report – March 31, 2018
Dear Shareholders:
We are pleased to announce first quarter earnings for your company. Year-to-date net income was $3.15 million for the period ending March 31, 2018 compared to $3.14 million for the period ending March 31, 2017, reflecting an increase of 0.4%. Year-to-date diluted earnings per share was $1.06 for both periods. Total assets were $1.04 billion as of March 31, 2018 compared to $1.05 billion as of March 31, 2017.
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 securities balances, a decrease in provision for loan loss expense due to lower loan balances, stable asset quality, and net recoveries in the first quarter, combined with lower tax expense based on the Tax Cuts and Jobs Act signed on December 22, 2017. In the first quarter of 2017 we recorded a gain on the sale of our downtown Winchester branch building, which resulted in an approximate $1.2 million benefit to income. Absent the one-time non-recurring gain in 2017, income before taxes would have been 27% higher in 2018 compared to 2017.
As indicated above, the recent tax changes have reduced our effective tax rate and have provided an opportunity to invest for continued growth. Recent examples of investment include our expansion of debit and credit card customer service support to 24 hours a day, 365 days a year. This service went live in March and has been well received. In addition, effective April 1, we expanded our office space at our Lexington Vine Street branch to accommodate more business development officers in the lending and wealth management areas. We will continue to identify ways to invest the tax savings in our four main stakeholder groups – shareholders, customers, employees, and communities.
Included in the balance sheet change was a decrease in trading assets of $5.6 million and an increase in Bank Owned Life Insurance (BOLI) of $10.0 million. Trading assets were replaced with a historically more stable investment product in BOLI due to the expected consistent yield returns and to reduce the previous volatility in the trading portfolio. The investment in BOLI is intended to assist in offsetting general employee compensation and benefit expenses, as well as provide a nominal split-dollar benefit to the participating employees.
We are pleased with core earnings in the first quarter of 2018 and remain optimistic about the rest of the year. Loan demand remains stable in the markets we serve, but competition is extremely high both in terms of rate and structure. We will continue to pursue opportunities for profitable growth, strategic expansion, and improved efficiency to accomplish what is in the long term best interest of our shareholders, customers, and employees. As always, thank you for your continued support.
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/s/Louis Prichard |
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Louis Prichard |
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President, CEO |
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UNAUDITED
CONSOLIDATED BALANCE SHEET
(in thousands)
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Percentage |
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3/31/2018 |
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3/31/2017 |
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Change |
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Assets |
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Cash & Due From Banks |
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$ |
23,519 |
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$ |
36,135 |
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(34.9) |
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Federal Funds Sold |
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3,266 |
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1,113 |
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193.4 |
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Interest Bearing Time Deposits |
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1,785 |
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4,659 |
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(61.7) |
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Securities |
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305,998 |
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301,927 |
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1.3 |
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Trading Assets |
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— |
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5,644 |
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(100.0) |
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Loans Held for Sale |
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1,221 |
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1,189 |
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2.7 |
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Loans |
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649,845 |
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657,565 |
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(1.2) |
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Reserve for Loan Losses |
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7,905 |
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7,876 |
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0.4 |
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Net Loans |
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641,940 |
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649,689 |
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(1.2) |
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Bank Owned Life Insurance |
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10,007 |
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— |
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n/m |
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Other Assets |
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53,400 |
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49,412 |
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8.1 |
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Total Assets |
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$ |
1,041,136 |
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$ |
1,049,768 |
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(0.8) |
% |
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Liabilities & Stockholders' Equity |
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Deposits |
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Demand |
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$ |
230,692 |
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$ |
218,379 |
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5.6 |
% |
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Savings & Interest Checking |
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411,221 |
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395,596 |
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3.9 |
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Certificates of Deposit |
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174,829 |
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210,370 |
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(16.9) |
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Total Deposits |
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816,742 |
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824,345 |
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(0.9) |
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Repurchase Agreements |
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12,233 |
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21,811 |
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(43.9) |
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Other Borrowed Funds |
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107,013 |
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101,812 |
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5.1 |
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Other Liabilities |
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5,882 |
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5,976 |
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(1.6) |
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Total Liabilities |
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941,870 |
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953,944 |
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(1.3) |
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Stockholders' Equity |
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99,266 |
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95,824 |
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3.6 |
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Total Liabilities & Stockholders' Equity |
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$ |
1,041,136 |
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$ |
1,049,768 |
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(0.8) |
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CONSOLIDATED INCOME STATEMENT
(in thousands)
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Three Months Ending |
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Percentage |
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3/31/2018 |
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3/31/2017 |
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Change |
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Interest Income |
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$ |
10,220 |
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$ |
9,376 |
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9.0 |
% |
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Interest Expense |
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1,426 |
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1,198 |
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19.0 |
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Net Interest Income |
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8,794 |
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8,178 |
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7.5 |
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Loan Loss Provision |
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— |
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350 |
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(100.0) |
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Net Interest Income After Provision |
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8,794 |
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7,828 |
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12.3 |
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Other Income |
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3,051 |
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4,350 |
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(29.9) |
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Other Expenses |
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8,290 |
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8,186 |
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1.3 |
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Income Before Taxes |
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3,555 |
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3,992 |
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(10.9) |
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Income Taxes |
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407 |
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855 |
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(52.4) |
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Net Income |
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$ |
3,148 |
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$ |
3,137 |
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0.4 |
% |
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Net Change in Unrealized Gain (Loss) on Securities |
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(3,397) |
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736 |
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(561.5) |
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Comprehensive Income (Loss) |
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$ |
(249) |
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$ |
3,873 |
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(106.4) |
% |
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Selected Ratios |
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Return on Average Assets |
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1.20 |
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1.20 |
% |
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Return on Average Equity |
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12.73 |
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13.34 |
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Earnings Per Share |
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$ |
1.06 |
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$ |
1.06 |
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Earnings Per Share - assuming dilution |
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1.06 |
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1.06 |
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Cash Dividends Per Share |
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0.31 |
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0.29 |
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Book Value Per Share |
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33.33 |
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32.23 |
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Market Price |
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High |
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Low |
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Close |
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First Quarter '18 |
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$ |
49.00 |
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$ |
45.85 |
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$ |
46.30 |
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Fourth Quarter '17 |
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$ |
46.65 |
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$ |
41.70 |
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$ |
46.05 |
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