Exhibit 99.1
April 28, 2017
Earnings Report – March 31, 2017
Dear Shareholders:
We are pleased to announce a strong first quarter for your company. Year-to-date net income was $3.1 million for the three months ending March 31, 2017 compared to $1.8 million for the same period ending March 31, 2016, reflecting an increase of 70.8%. Year-to-date diluted earnings per share was $1.06 for the period ending March 31, 2017 compared to $0.61 for the same period last year, an increase of 73.8%.
The increase in year-to-date net income of $1.3 million from prior year was largely driven by a one-time gain for the sale of a branch building located in Winchester, Kentucky, to a non-banking real estate investor. The sale was solely for the building and not for the loans or deposits associated with the branch. Simultaneous to the sale transaction, we entered into a one-year lease with the non-banking real estate investor to allow time for the construction of a smaller, more efficient branch in Winchester. The sale of the building resulted in a pre-tax gain of approximately $1.2 million. Absent the sale of the building, net income would have increased approximately $500 thousand, or 27% compared to the same period last year.
Other changes impacting the increase in net income include a $194 thousand increase in net interest income after provision expense due to the increase in interest-earning assets, a $251 thousand increase in gains on sale of loans due to higher volume, and a $95 thousand decrease in legal and professional expense due to one-time consulting costs incurred in 2016.
Total assets were $1.05 billion as of March 31, 2017 compared to $990.8 million as of March 31, 2016, reflecting growth of 5.9%. The change in assets reflected a $31.5 million increase in securities, a $21.1 million increase in net loans, and a $58.4 million increase in total deposits. The increase in balances reflects our efforts for expanded relationships and deeper market penetration.
We are pleased with the first quarter of 2017 and look forward to what we believe will be a busy and productive year. We will continue to focus on profitable growth, expanding the suite and efficiency of our product and service offerings, and continue to evaluate our franchise footprint for opportunities to expand. We do this as a means of pursuing ongoing success in what continues to be an environment of heightened competition and enhanced supervisory oversight. As always, we will concentrate on what is in the long term best interest of our shareholders, customers, and employees. Thank you for your continued support.
| |
/s/Louis Prichard | |
Louis Prichard | |
President, CEO | |
UNAUDITED
CONSOLIDATED BALANCE SHEET
(in thousands)
| | | | | | | | | |
| | | | | | | | Percentage | |
| | 3/31/2017 | | 3/31/2016 | | Change | |
| | | | | | | | | |
Assets | | | | | | | | | |
Cash & Due From Banks | | $ | 36,135 | | $ | 25,387 | | 42.3 | % |
Interest Bearing Time Deposits | | | 4,659 | | | 4,629 | | 0.6 | |
Securities | | | 301,927 | | | 270,393 | | 11.7 | |
Trading Assets | | | 5,644 | | | 5,612 | | 0.6 | |
Loans Held for Sale | | | 1,189 | | | 1,634 | | (27.2) | |
Loans | | | 657,565 | | | 635,783 | | 3.4 | |
Reserve for Loan Losses | | | 7,876 | | | 7,147 | | 10.2 | |
Net Loans | | | 649,689 | | | 628,636 | | 3.3 | |
Federal Funds Sold | | | 1,113 | | | 1,667 | | (33.2) | |
Other Assets | | | 49,412 | | | 52,876 | | (6.6) | |
Total Assets | | $ | 1,049,768 | | $ | 990,834 | | 5.9 | % |
| | | | | | | | | |
Liabilities & Stockholders' Equity | | | | | | | | | |
Deposits | | | | | | | | | |
Demand | | $ | 218,379 | | $ | 208,715 | | 4.6 | % |
Savings & Interest Checking | | | 395,596 | | | 347,624 | | 13.8 | |
Certificates of Deposit | | | 210,370 | | | 209,603 | | 0.4 | |
Total Deposits | | | 824,345 | | | 765,942 | | 7.6 | |
Repurchase Agreements | | | 21,811 | | | 26,296 | | (17.1) | |
Other Borrowed Funds | | | 101,812 | | | 98,243 | | 3.6 | |
Other Liabilities | | | 5,976 | | | 7,460 | | (19.9) | |
Total Liabilities | | | 953,944 | | | 897,941 | | 6.2 | |
Stockholders' Equity | | | 95,824 | | | 92,893 | | 3.2 | |
Total Liabilities & Stockholders' Equity | | $ | 1,049,768 | | $ | 990,834 | | 5.9 | % |
CONSOLIDATED INCOME STATEMENT
(in thousands)
| | | | | | | | | |
| | Three Months Ending | |
| | | | | | Percentage | |
| | 3/31/2017 | | 3/31/2016 | | Change | |
Interest Income | | $ | 9,376 | | $ | 9,098 | | 3.1 | % |
Interest Expense | | | 1,198 | | | 1,089 | | 10.0 | |
Net Interest Income | | | 8,178 | | | 8,009 | | 2.1 | |
Loan Loss Provision | | | 350 | | | 375 | | (6.7) | |
Net Interest Income After Provision | | | 7,828 | | | 7,634 | | 2.5 | |
Other Income | | | 4,350 | | | 2,747 | | 58.4 | |
Other Expenses | | | 8,186 | | | 8,328 | | (1.7) | |
Income Before Taxes | | | 3,992 | | | 2,053 | | 94.4 | |
Income Taxes | | | 855 | | | 216 | | 295.8 | |
Net Income | | $ | 3,137 | | $ | 1,837 | | 70.8 | % |
Net Change in Unrealized Gain (Loss) on Securities | | | 736 | | | 2,387 | | (69.2) | |
Comprehensive Income (Loss) | | $ | 3,873 | | $ | 4,224 | | (8.3) | % |
| | | | | | | | | |
Selected Ratios | | | | | | | | | |
Return on Average Assets | | | 1.20 | % | | 0.74 | % | | |
Return on Average Equity | | | 13.34 | | | 8.07 | | | |
| | | | | | | | | |
Earnings Per Share | | $ | 1.06 | | $ | 0.61 | | | |
Earnings Per Share - assuming dilution | | | 1.06 | | | 0.61 | | | |
Cash Dividends Per Share | | | 0.29 | | | 0.27 | | | |
Book Value Per Share | | | 32.23 | | | 31.01 | | | |
| | | | | | | | | | |
Market Price | | High | | Low | | Close | |
First Quarter '17 | | $ | 37.04 | | $ | 32.50 | | $ | 37.04 | |
Fourth Quarter '16 | | $ | 32.65 | | $ | 30.01 | | $ | 32.50 | |
