Exhibit 99.1
April 30, 2019
Earnings Report – March 31, 2019
Dear Shareholders:
We are pleased to announce first quarter earnings for your company. Year-to-date net income was $2.8 million for the period ending March 31, 2019 compared to $3.1 million for the period ending March 31, 2018. Year-to-date diluted earnings per share was $0.47 and $0.53, for March 31, 2019 and 2018, respectively. Total assets were $1.09 billion as of March 31, 2019 compared to $1.04 billion as of March 31, 2018.
The change 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 average loan balances offset by higher provision expense due to loan growth, and higher non-interest expense due to increases in compensation expense and processing expense. Also, in the first quarter of 2018, we recorded a recovery of $359 thousand on a previously charged off loan. Absent the one-time non-recurring recovery in 2018, net income would have essentially been flat in the first quarter of 2019 compared to 2018.
On March 26, Governor Bevin signed House Bill 354 into law which, among other things, repealed the bank franchise tax structure in Kentucky. The franchise tax structure will be replaced with the state-wide corporate income tax structure starting in 2021. This change will lower our overall relative tax expense. We intend to deploy those future tax savings toward continued growth.
Some of our recent and upcoming growth efforts include the following:
| · | | We launched our online mortgage application in February of 2019 and anticipate launching our improved deposit application in the very near future. These two services expand our ever growing list of digital offerings. |
| · | | We are increasing our customer service availability by constructing a new 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 anticipate the new branch to be open by the end of 2019 or early 2020. |
We are pleased with core earnings in the first quarter of 2019 and remain optimistic about the rest of the year. However, we recognize there are increasing global economic weaknesses continuing to develop, as well as ongoing geopolitical issues which could negatively impact growth rates for the country, state, and ultimately the communities in which we operate. We will continue to focus on meeting our customers’ loan demand needs while paying attention to those uncertainties which may lead to an accelerated economic contraction. At the same time, 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 | |
| | 3/31/2019 | | 3/31/2018 | | Change | |
| | | | | | | | | |
Assets | | | | | | | | | |
Cash & Due From Banks | | $ | 37,676 | | $ | 23,519 | | 60.2 | % |
Federal Funds Sold | | | 230 | | | 3,266 | | (93.0) | |
Interest Bearing Time Deposits | | | 2,175 | | | 1,785 | | 21.8 | |
Securities | | | 297,969 | | | 305,998 | | (2.6) | |
Loans Held for Sale | | | 1,282 | | | 1,221 | | 5.0 | |
Loans | | | 687,484 | | | 649,845 | | 5.8 | |
Reserve for Loan Losses | | | 7,882 | | | 7,905 | | (0.3) | |
Net Loans | | | 679,602 | | | 641,940 | | 5.9 | |
Bank Owned Life Insurance | | | 10,282 | | | 10,007 | | 2.7 | |
Other Assets | | | 57,757 | | | 53,400 | | 8.2 | |
Total Assets | | $ | 1,086,973 | | $ | 1,041,136 | | 4.4 | % |
| | | | | | | | | |
Liabilities & Stockholders' Equity | | | | | | | | | |
Deposits | | | | | | | | | |
Demand | | $ | 241,400 | | $ | 230,692 | | 4.6 | % |
Savings & Interest Checking | | | 417,701 | | | 411,221 | | 1.6 | |
Certificates of Deposit | | | 185,037 | | | 174,829 | | 5.8 | |
Total Deposits | | | 844,138 | | | 816,742 | | 3.4 | |
Repurchase Agreements | | | 6,604 | | | 12,233 | | (46.0) | |
Other Borrowed Funds | | | 111,556 | | | 107,013 | | 4.2 | |
Other Liabilities | | | 12,966 | | | 5,882 | | 120.4 | |
Total Liabilities | | | 975,264 | | | 941,870 | | 3.5 | |
Stockholders' Equity | | | 111,709 | | | 99,266 | | 12.5 | |
Total Liabilities & Stockholders' Equity | | $ | 1,086,973 | | $ | 1,041,136 | | 4.4 | % |
CONSOLIDATED INCOME STATEMENT
(in thousands)
| | | | | | | | | |
| | Three Months Ending | |
| | | | | | Percentage | |
| | 3/31/2019 | | 3/31/2018 | | Change | |
Interest Income | | $ | 11,179 | | $ | 10,220 | | 9.4 | % |
Interest Expense | | | 2,240 | | | 1,426 | | 57.1 | |
Net Interest Income | | | 8,939 | | | 8,794 | | 1.6 | |
Loan Loss Provision | | | 125 | | | — | | n/m | |
Net Interest Income After Provision | | | 8,814 | | | 8,794 | | 0.2 | |
Other Income | | | 3,000 | | | 3,051 | | (1.7) | |
Other Expenses | | | 8,765 | | | 8,290 | | 5.7 | |
Income Before Taxes | | | 3,049 | | | 3,555 | | (14.2) | |
Income Taxes | | | 238 | | | 407 | | (41.5) | |
Net Income | | $ | 2,811 | | $ | 3,148 | | (10.7) | % |
Net Change in Unrealized Gain (Loss) on Securities | | | 2,769 | | | (3,397) | | 181.5 | |
Comprehensive Income (Loss) | | $ | 5,580 | | $ | (249) | | 2341.0 | % |
| | | | | | | | | |
Selected Ratios | | | | | | | | | |
Return on Average Assets | | | 1.04 | % | | 1.20 | % | | |
Return on Average Equity | | | 10.39 | | | 12.73 | | | |
| | | | | | | | | |
Earnings Per Share | | $ | 0.47 | | $ | 0.53 | | | |
Earnings Per Share - assuming dilution | | | 0.47 | | | 0.53 | | | |
Cash Dividends Per Share | | | 0.170 | | | 0.155 | | | |
Book Value Per Share | | | 18.68 | | | 16.67 | | | |
Tangible Book Value Per Share | | | 16.30 | | | 14.24 | | | |
| | | | | | | | | | |
Market Price | | High | | Low | | Close | |
First Quarter '19 | | $ | 24.50 | | $ | 22.70 | | $ | 24.05 | |
Fourth Quarter '18 | | $ | 25.98 | | $ | 22.50 | | $ | 22.70 | |
