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Section 1: 8-K (8-K)

ktyb_Current folio_8K_ER

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):  July 31, 2018

 

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))

 

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 second quarter of 2018 on or about August 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 July  31, 2018 of quarterly financial information as of June 30, 2018.

 

2


 

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.

 

3


 

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: July 31, 2018

 

By

/s/ Gregory J. Dawson

 

 

 

Gregory J. Dawson

 

 

 

Chief Financial Officer

 

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Section 2: EX-99.1 (EX-99.1)

ktyb_Ex99_1

Exhibit 99.1

 

July 31, 2018

 

Earnings Report – June 30, 2018

 

Dear Shareholders:

 

We are pleased to announce earnings for your company.  Year-to-date net income was $6.22 million for the period ending June 30, 2018 compared to $5.55 million for the period ending June 30, 2017, reflecting an increase of 12.1%.  Year-to-date diluted earnings per share was $2.09, and $1.87 for June 30, 2018 and 2017, respectively.  Total assets were $1.05 billion as of June 30, 2018 compared to $1.02 billion as of June 30, 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 larger average security and loan balances, a decrease in provision for loan loss expense due to a modest increase in loan balances, strong asset quality, and year-to-date recoveries, 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 non-interest income.  Absent the one-time non-recurring gain in 2017, income before taxes would have been 24% 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.  In May, we rolled out a fraud text alert service to improve customer security.  In July, we removed our transaction fee for mobile deposits, thus improving customer convenience and experience.  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 fourth quarter 2017 decrease in trading assets of $5.7 million and a first quarter 2018 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 half 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.

 

 

 

 

/s/Louis Prichard

 

Louis Prichard

 

President, CEO

 

 


 

UNAUDITED

CONSOLIDATED BALANCE SHEET

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Percentage

 

 

    

6/30/2018

    

6/30/2017

    

Change

 

 

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

Cash & Due From Banks

 

$

28,765

 

$

15,328

 

87.7

%

Federal Funds Sold

 

 

 5

 

 

809

 

(99.4) 

 

Interest Bearing Time Deposits

 

 

1,785

 

 

5,009

 

(64.4) 

 

Securities

 

 

290,504

 

 

297,786

 

(2.4) 

 

Trading Assets

 

 

 —

 

 

5,702

 

(100.0) 

 

Loans Held for Sale

 

 

2,005

 

 

1,917

 

4.6

 

Loans

 

 

668,778

 

 

650,657

 

2.8

 

Reserve for Loan Losses

 

 

8,184

 

 

7,958

 

2.8

 

Net Loans

 

 

660,594

 

 

642,699

 

2.8

 

Bank Owned Life Insurance

 

 

10,075

 

 

 —

 

n/m

 

Other Assets

 

 

53,374

 

 

51,642

 

3.4

 

Total Assets

 

$

1,047,107

 

$

1,020,892

 

2.6

%

 

 

 

 

 

 

 

 

 

 

Liabilities & Stockholders' Equity

 

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

 

Demand

 

$

238,033

 

$

216,833

 

9.8

%

Savings & Interest Checking

 

 

405,371

 

 

376,956

 

7.5

 

Certificates of Deposit

 

 

159,078

 

 

190,183

 

(16.4) 

 

Total Deposits

 

 

802,482

 

 

783,972

 

2.4

 

Repurchase Agreements

 

 

9,120

 

 

23,950

 

(61.9) 

 

Other Borrowed Funds

 

 

128,580

 

 

99,899

 

28.7

 

Other Liabilities

 

 

6,436

 

 

14,226

 

(54.8) 

 

Total Liabilities

 

 

946,618

 

 

922,047

 

2.7

 

Stockholders' Equity

 

 

100,489

 

 

98,845

 

1.7

 

Total Liabilities & Stockholders' Equity

 

$

1,047,107

 

$

1,020,892

 

2.6

%

 


 

CONSOLIDATED INCOME STATEMENT

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ending

 

Three Months Ending

 

 

    

 

    

 

    

Percentage

    

 

    

 

    

Percentage

 

 

 

6/30/2018

 

6/30/2017

 

Change

 

6/30/2018

 

6/30/2017

 

Change

 

Interest Income

 

$

20,770

 

$

18,960

 

9.5

%  

$

10,550

 

$

9,584

 

10.1

%

Interest Expense

 

 

2,943

 

 

2,421

 

21.6

 

 

1,517

 

 

1,223

 

24.0

 

Net Interest Income

 

 

17,827

 

 

16,539

 

7.8

 

 

9,033

 

 

8,361

 

8.0

 

Loan Loss Provision

 

 

250

 

 

550

 

(54.5) 

 

 

250

 

 

200

 

25.0

 

Net Interest Income After Provision

 

 

17,577

 

 

15,989

 

9.9

 

 

8,783

 

 

8,161

 

7.6

 

Other Income

 

 

6,359

 

 

7,645

 

(16.8) 

 

 

3,308

 

 

3,295

 

0.4

 

Other Expenses

 

 

16,874

 

 

16,735

 

0.8

 

 

8,584

 

 

8,549

 

0.4

 

Income Before Taxes

 

 

7,062

 

 

6,899

 

2.4

 

 

3,507

 

 

2,907

 

20.6

 

Income Taxes

 

 

846

 

 

1,352

 

(37.4) 

 

 

439

 

 

497

 

(11.7) 

 

Net Income

 

$

6,216

 

$

5,547

 

12.1

%  

$

3,068

 

$

2,410

 

27.3

%

Net Change in Unrealized Gain (Loss) on Securities

 

 

(4,363)

 

 

2,169

 

(301.2) 

 

 

(966)

 

 

1,433

 

(167.4) 

 

Comprehensive Income (Loss)

 

$

1,853

 

$

7,716

 

(76.0) 

%  

$

2,102

 

$

3,843

 

(45.3) 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selected Ratios

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on Average Assets

 

 

1.19

%  

 

1.06

%  

 

 

 

1.17

%  

 

0.93

%  

 

 

Return on Average Equity

 

 

12.53

 

 

11.57

 

 

 

 

12.34

 

 

9.81

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings Per Share

 

$

2.09

 

$

1.87

 

 

 

$

1.03

 

$

0.81

 

 

 

Earnings Per Share - assuming dilution

 

 

2.09

 

 

1.87

 

 

 

 

1.03

 

 

0.81

 

 

 

Cash Dividends Per Share

 

 

0.62

 

 

0.58

 

 

 

 

0.31

 

 

0.29

 

 

 

Book Value Per Share

 

 

33.74

 

 

33.26

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Market Price

    

High

    

Low

    

Close

 

Second Quarter '18

 

$

50.10

 

$

46.05

 

$

50.10

 

First Quarter '18

 

$

49.00

 

$

45.85

 

$

46.30

 

 


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