Exhibit 99.1
October 31, 2017
Earnings Report – September 30, 2017
Dear Shareholders:
We are pleased to announce favorable financial results for your company. Year-to-date net income was $8.1 million for the nine months ending September 30, 2017 compared to $6.3 million for the same period ending September 30, 2016, reflecting an increase of 29.5%. Year-to-date diluted earnings per share was $2.74 for the period ending September 30, 2017 compared to $2.10 for the same period last year, an increase of 30.5%.
The increase in year-to-date net income of $1.9 million from prior year was driven by a $1.2 million gain on sale of fixed assets and a $1.0 million increase in net interest income after provision expense. The fixed asset transaction was a one-time gain for the sale of our downtown branch building located in Winchester, Kentucky, to a non-banking real estate investor, in the first quarter of 2017. 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 to allow time for the construction of a smaller, more efficient branch in Winchester. Absent the sale of the building, net income for the year would have increased approximately $1.1 million or 17% when compared to the same period of 2016. The increase in net interest income after provision expense was due to an increase in interest-earning assets and stable asset quality.
Total assets were $1.01 billion as of September 30, 2017 compared to $991.1 million as of September 30, 2016, reflecting growth of 2.0%. The change in assets reflected a $34.3 million increase in securities offset by an $11.4 million decrease in net loans and funded by a $14.2 million increase in total deposits. The change in balances reflects our efforts for expanded relationships and deeper market penetration in a competitive marketplace.
We are pleased with the year-to-date results of 2017 and the corresponding increase in share value and volume. We will continue to focus on profitable growth and also 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 | |
| | 9/30/2017 | | 9/30/2016 | | Change | |
| | | | | | | | | |
Assets | | | | | | | | | |
Cash & Due From Banks | | $ | 18,426 | | $ | 16,558 | | 11.3 | % |
Interest Bearing Time Deposits | | | 1,830 | | | 5,029 | | (63.6) | |
Securities | | | 289,956 | | | 255,618 | | 13.4 | |
Trading Assets | | | 5,714 | | | 5,696 | | 0.3 | |
Loans Held for Sale | | | 1,316 | | | 2,899 | | (54.6) | |
Loans | | | 648,965 | | | 659,970 | | (1.7) | |
Reserve for Loan Losses | | | 7,755 | | | 7,405 | | 4.7 | |
Net Loans | | | 641,210 | | | 652,565 | | (1.7) | |
Federal Funds Sold | | | 186 | | | 551 | | (66.2) | |
Other Assets | | | 52,120 | | | 52,226 | | (0.2) | |
Total Assets | | $ | 1,010,758 | | $ | 991,142 | | 2.0 | % |
| | | | | | | | | |
Liabilities & Stockholders' Equity | | | | | | | | | |
Deposits | | | | | | | | | |
Demand | | $ | 220,518 | | $ | 217,869 | | 1.2 | % |
Savings & Interest Checking | | | 340,406 | | | 319,101 | | 6.7 | |
Certificates of Deposit | | | 187,455 | | | 197,228 | | (5.0) | |
Total Deposits | | | 748,379 | | | 734,198 | | 1.9 | |
Repurchase Agreements | | | 24,070 | | | 23,551 | | 2.2 | |
Other Borrowed Funds | | | 130,476 | | | 128,101 | | 1.9 | |
Other Liabilities | | | 7,564 | | | 8,908 | | (15.1) | |
Total Liabilities | | | 910,489 | | | 894,758 | | 1.8 | |
Stockholders' Equity | | | 100,269 | | | 96,384 | | 4.0 | |
Total Liabilities & Stockholders' Equity | | $ | 1,010,758 | | $ | 991,142 | | 2.0 | % |
CONSOLIDATED INCOME STATEMENT
(in thousands)
| | | | | | | | | | | | | | | | | |
| | Nine Months Ending | | Three Months Ending | |
| | | | | | Percentage | | | | | | Percentage | |
| | 9/30/2017 | | 9/30/2016 | | Change | | 9/30/2017 | | 9/30/2016 | | Change | |
Interest Income | | $ | 28,679 | | $ | 27,390 | | 4.7 | % | $ | 9,719 | | $ | 9,206 | | 5.6 | % |
Interest Expense | | | 3,716 | | | 3,330 | | 11.6 | | | 1,295 | | | 1,140 | | 13.6 | |
Net Interest Income | | | 24,963 | | | 24,060 | | 3.8 | | | 8,424 | | | 8,066 | | 4.4 | |
Loan Loss Provision | | | 650 | | | 775 | | (16.1) | | | 100 | | | 175 | | (42.9) | |
Net Interest Income After Provision | | | 24,313 | | | 23,285 | | 4.4 | | | 8,324 | | | 7,891 | | 5.5 | |
Other Income | | | 10,816 | | | 9,132 | | 18.4 | | | 3,171 | | | 3,099 | | 2.3 | |
Other Expenses | | | 25,070 | | | 25,553 | | (1.9) | | | 8,335 | | | 8,617 | | (3.3) | |
Income Before Taxes | | | 10,059 | | | 6,864 | | 46.5 | | | 3,160 | | | 2,373 | | 33.2 | |
Income Taxes | | | 1,920 | | | 580 | | 231.0 | | | 568 | | | 8 | | 7000.0 | |
Net Income | | $ | 8,139 | | $ | 6,284 | | 29.5 | % | $ | 2,592 | | $ | 2,365 | | 9.6 | % |
Net Change in Unrealized Gain (Loss) on Securities | | | 1,821 | | | 3,243 | | (43.8) | | | (348) | | | (800) | | (56.5) | |
Comprehensive Income (Loss) | | $ | 9,960 | | $ | 9,527 | | 4.5 | % | $ | 2,244 | | $ | 1,565 | | 43.4 | % |
| | | | | | | | | | | | | | | | | |
Selected Ratios | | | | | | | | | | | | | | | | | |
Return on Average Assets | | | 1.05 | % | | 0.84 | % | | | | 1.01 | % | | 0.94 | % | | |
Return on Average Equity | | | 11.16 | | | 8.94 | | | | | 10.33 | | | 9.83 | | | |
| | | | | | | | | | | | | | | | | |
Earnings Per Share | | $ | 2.74 | | $ | 2.10 | | | | $ | 0.87 | | $ | 0.79 | | | |
Earnings Per Share - assuming dilution | | | 2.74 | | | 2.10 | | | | | 0.87 | | | 0.79 | | | |
Cash Dividends Per Share | | | 0.87 | | | 0.81 | | | | | 0.29 | | | 0.27 | | | |
Book Value Per Share | | | 33.74 | | | 32.28 | | | | | | | | | | | |
| | | | | | | | | | |
Market Price | | High | | Low | | Close | |
Third Quarter '17 | | $ | 41.70 | | $ | 39.40 | | $ | 41.70 | |
Second Quarter '17 | | $ | 39.50 | | $ | 36.10 | | $ | 39.40 | |
