Exhibit 99.1
October, 2004
Quarterly Report
Third Quarter 2004
I am pleased to report strong earnings for the most recent quarter.
Earnings after the effects of dilution were up by 25% to $1.58 million
from $1.26 million for the same period a year ago. Earnings per share
were even stronger because of our recently announced share buyback. For
the quarter our earnings per share were 57 cents compared with 45 cents
last year. For the year to date earnings are now up 15%.
Growth in our assets is fueling this improvement in our income. Our loan
portfolio is up 27% from a year ago and now totals over $350 million. A
portion of this came from our acquisition in Cynthiana late in 2003.
However, we have also enjoyed healthy loan growth in each of the other
five counties in which we have offices.
At the end of 2004 Louis Prichard will succeed me as CEO of Kentucky
Bank. I will continue to be bank Chairman, but responsibility for
financial performance will then belong to Louis. In my role as Chairman I
will still be available to assist him. We also have a strong board of
directors and a very capable management team. Louis is well prepared for
his new role. He is an energetic and talented executive with CEO
experience prior to joining our team. He has already made valuable
contributions to our business.
To better address our challenges and opportunities, we have recently made
some changes in bank organization. Nancye Fightmaster was named Bourbon
County Regional Manager. In this role she will be responsible for
business development activities in the market where our business is
largest. Martha Woodford has been named Vice President and Assistant
Director of Operations. In this role she will assist Hugh Crombie, Vice
President and Director of Operations, to provide effective support for
our customer contact people. We continue to prepare for the future as we
build our business in some of Central Kentucky's most attractive
communities.
Buckner Woodford
President
UNAUDITED
CONSOLIDATED BALANCE SHEET
CONSOLIDATED BALANCE SHEET
9/30/2004 9/30/2003 Change
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Assets
Cash & Due From Banks $ 9,444,099 $ 9,995,068 -5.5%
Securities 118,194,820 96,972,712 21.9
Loans Held For Sale 11,848 7,168,394 -99.8
Loans 351,501,657 277,596,182 26.6
Reserve for Loan Losses 4,261,123 3,165,751 34.6
Net Loans 347,240,534 274,430,431 26.5
Federal Funds Sold 7,000 2,302,000 -99.7
Other Assets 32,634,354 20,676,006 57.8
Total Assets $ 507,532,655 $ 411,544,611 23.3%
Liabilities & Stockholders' Equity
Deposits
Demand $ 65,742,450 $ 60,108,956 9.4%
Savings & Interest Checking 121,745,106 105,695,091 15.2
Certificates of Deposit 178,021,222 139,969,011 27.2
Total Deposits 365,508,778 305,773,058 19.5
Repurchase Agreements 19,142,978 1,367,972 1299.4
Other Borrowed Funds 75,182,690 55,098,782 36.5
Other Liabilities 3,325,831 3,329,493 -0.1
Total Liabilities 463,160,277 365,569,305 26.7
Stockholders' Equity 44,372,378 45,975,306 -3.5
Total Liabilities & Stockholders' Equity $ 507,532,655 $ 411,544,611 23.3%
CONSOLIDATED INCOME STATEMENT
Nine Months Ending Three Months Ending
Percentage Percentage
9/30/2004 9/30/2003 Change 9/30/2004 9/30/2003 Change
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Interest Income $ 19,235,472 $ 16,618,233 15.7% $ 6,505,838 $ 5,344,820 21.7%
Interest Expense 6,645,498 5,808,543 14.4 2,253,907 1,840,246 22.5
Net Interest Income 12,589,974 10,809,690 16.5 4,251,931 3,504,574 21.3
Loan Loss Provision 620,000 675,000 -8.1 170,000 225,000 -24.4
Net Interest Income After Provision 11,969,974 10,134,690 18.1 4,081,931 3,279,574 24.5
Other Income 5,120,511 5,161,207 -0.8 1,813,605 1,787,039 1.5
Other Expenses 11,287,667 10,348,039 9.1 3,661,560 3,411,018 7.3
Income Before Taxes 5,802,818 4,947,858 17.3 2,233,976 1,655,595 34.9
Income Taxes 1,634,607 1,331,355 22.8 654,509 394,015 66.1
Net Income 4,168,211 3,616,503 15.3 1,579,467 1,261,580 25.2
Net Change in Unrealized Gain (loss)
on Securities (745,011) (313,331) 1,734,946 (606,247)
Comprehensive Income $ 3,423,200 $ 3,303,172 $ 3,314,413 $ 655,333
Selected Ratios
Return on Average Assets 1.08% 1.17% 1.27% 1.22%
Return on Average Equity 12.0 10.7 14.1 11.0
Earnings Per Share $ 1.50 $ 1.30 $ 0.58 $ 0.45
Earnings Per Share - assuming dilution 1.49 1.29 0.57 0.45
Cash Dividends Per Share 0.63 0.57 0.21 0.19
Book Value Per Share 16.56 16.50
Market Price High Low Close
Third Quarter '04 $33.00 $31.00 $31.50
Second Quarter '04 $34.00 $31.00 $33.00