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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):  October 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 third quarter of 2018 on or about November 15, 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 October 31, 2018 of quarterly financial information as of September 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: October 31, 2018

 

By

/s/ Gregory J. Dawson

 

 

 

Gregory J. Dawson

 

 

 

Chief Financial Officer

 

4


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Section 2: EX-99.1 (EX-99.1)

ktyb_Ex99_1

Exhibit 99.1

 

October 31, 2018

 

Earnings Report – September 30, 2018

 

Dear Shareholders:

 

We are pleased to announce earnings for your company.  Year-to-date net income was $9.49 million for the period ending September 30, 2018 compared to $8.14 million for the period ending September 30, 2017, reflecting an increase of 16.6%. Year-to-date diluted earnings per share was $3.19 and $2.74, for September 30, 2018 and 2017, respectively. Total assets were $1.05 billion as of September 30, 2018 compared to $1.01 billion as of September 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 loan balances, a decrease in provision for loan loss expense due to favorable asset quality conditions, 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 22% 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. Examples of our investment this year include our expansion of debit and credit card customer service call support to 24 hours a day, expanding our office at our Lexington Vine Street branch to accommodate more business development officers, a fraud text alert service to improve customer security, and a reduction of certain fees to improve customer convenience and experience. Most recently, we announced in September our intention to locate a full service branch in Lexington on the corner of Man-O-War Boulevard and Polo Club Boulevard. We believe this location to be a key position given its proximity to new households and an ever expanding retail district. 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 nine months 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

 

 

    

9/30/2018

    

9/30/2017

    

Change

 

 

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

Cash & Due From Banks

 

$

25,911

 

$

18,426

 

40.6

%

Federal Funds Sold

 

 

186

 

 

186

 

0.0

 

Interest Bearing Time Deposits

 

 

2,275

 

 

1,830

 

24.3

 

Securities

 

 

278,575

 

 

289,956

 

(3.9) 

 

Trading Assets

 

 

 —

 

 

5,714

 

(100.0) 

 

Loans Held for Sale

 

 

3,699

 

 

1,316

 

181.1

 

Loans

 

 

685,738

 

 

648,965

 

5.7

 

Reserve for Loan Losses

 

 

8,199

 

 

7,755

 

5.7

 

Net Loans

 

 

677,539

 

 

641,210

 

5.7

 

Bank Owned Life Insurance

 

 

10,136

 

 

 —

 

n/m

 

Other Assets

 

 

54,556

 

 

52,120

 

4.7

 

Total Assets

 

$

1,052,877

 

$

1,010,758

 

4.2

%

 

 

 

 

 

 

 

 

 

 

Liabilities & Stockholders' Equity

 

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

 

Demand

 

$

244,155

 

$

220,518

 

10.7

%

Savings & Interest Checking

 

 

375,067

 

 

340,406

 

10.2

 

Certificates of Deposit

 

 

201,518

 

 

187,455

 

7.5

 

Total Deposits

 

 

820,740

 

 

748,379

 

9.7

 

Repurchase Agreements

 

 

8,248

 

 

24,070

 

(65.7) 

 

Other Borrowed Funds

 

 

113,782

 

 

130,476

 

(12.8) 

 

Other Liabilities

 

 

8,742

 

 

7,564

 

15.6

 

Total Liabilities

 

 

951,512

 

 

910,489

 

4.5

 

Stockholders' Equity

 

 

101,365

 

 

100,269

 

1.1

 

Total Liabilities & Stockholders' Equity

 

$

1,052,877

 

$

1,010,758

 

4.2

%

 


 

CONSOLIDATED INCOME STATEMENT

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ending

 

Three Months Ending

 

 

    

 

    

 

    

Percentage

    

 

    

 

    

Percentage

 

 

 

9/30/2018

 

9/30/2017

 

Change

 

9/30/2018

 

9/30/2017

 

Change

 

Interest Income

 

$

31,511

 

$

28,679

 

9.9

%  

$

10,741

 

$

9,719

 

10.5

%

Interest Expense

 

 

4,742

 

 

3,716

 

27.6

 

 

1,799

 

 

1,295

 

38.9

 

Net Interest Income

 

 

26,769

 

 

24,963

 

7.2

 

 

8,942

 

 

8,424

 

6.1

 

Loan Loss Provision

 

 

400

 

 

650

 

(38.5) 

 

 

150

 

 

100

 

50.0

 

Net Interest Income After Provision

 

 

26,369

 

 

24,313

 

8.5

 

 

8,792

 

 

8,324

 

5.6

 

Other Income

 

 

9,842

 

 

10,816

 

(9.0) 

 

 

3,483

 

 

3,171

 

9.8

 

Other Expenses

 

 

25,391

 

 

25,070

 

1.3

 

 

8,517

 

 

8,335

 

2.2

 

Income Before Taxes

 

 

10,820

 

 

10,059

 

7.6

 

 

3,758

 

 

3,160

 

18.9

 

Income Taxes

 

 

1,326

 

 

1,920

 

(30.9) 

 

 

480

 

 

568

 

(15.5) 

 

Net Income

 

$

9,494

 

$

8,139

 

16.6

%  

$

3,278

 

$

2,592

 

26.5

%

Net Change in Unrealized Gain (Loss) on Securities

 

 

(5,886)

 

 

1,821

 

(423.2) 

 

 

(1,523)

 

 

(348)

 

(337.6) 

 

Comprehensive Income (Loss)

 

$

3,608

 

$

9,960

 

(63.8) 

%  

$

1,755

 

$

2,244

 

(21.8) 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selected Ratios

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on Average Assets

 

 

1.21

%  

 

1.05

%  

 

 

 

1.25

%  

 

1.01

%  

 

 

Return on Average Equity

 

 

12.67

 

 

11.16

 

 

 

 

12.95

 

 

10.33

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings Per Share

 

$

3.19

 

$

2.74

 

 

 

$

1.10

 

$

0.87

 

 

 

Earnings Per Share - assuming dilution

 

 

3.19

 

 

2.74

 

 

 

 

1.10

 

 

0.87

 

 

 

Cash Dividends Per Share

 

 

0.93

 

 

0.87

 

 

 

 

0.31

 

 

0.29

 

 

 

Book Value Per Share

 

 

34.04

 

 

33.74

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Market Price

    

High

    

Low

    

Close

 

Third Quarter '18

 

$

52.50

 

$

50.10

 

$

51.85

 

Second Quarter '18

 

$

50.10

 

$

46.05

 

$

50.10

 

 


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