Exhibit 99.1
January 21, 2005
Quarterly Report
Fourth Quarter 2004
Financial results for the fourth quarter continued on an upward path,
leading to a substantial earnings improvement from 2003. You may recall
that the company repurchased a large block of stock in August, so there
was an even more significant boost to earnings per share.
Growth in our loan portfolio fueled much of this improvement. Loans on
our books increased by over $38 million last year. This helped net
interest income to grow by 16%. At the same time we implemented a number
of measures to keep our costs low, which resulted in limiting the
increase of our non-interest expense by only 4%. The combination of
these two things led to the record earnings.
Two directors retired from our holding company board at year-end. William
R. Stamler has been farsighted and proactive during his tenure and will
be missed. Dr. James L. Ferrell has been a very effective leader as our
Chairman. We are fortunate that Dr. Ferrell will continue to serve as a
director of our subsidiary, Kentucky Bank.
As previously announced, at year-end my own role changed. Louis Prichard
has assumed the positions of President and CEO of both the bank and the
holding company. He is a strong and experienced executive and has my
complete support. I have stepped back and am now Chairman of both
companies. For me, it is not retirement as I still have an office and
continue to work, but on a reduced schedule. My plans are to continue
working with Louis in building our franchise. We have an excellent
management team and attractive markets to serve. I am optimistic that we
can continue to be successful.
Buckner Woodford
President
UNAUDITED
CONSOLIDATED BALANCE SHEET
CONSOLIDATED BALANCE SHEET
Percentage
12/31/2004 12/31/2003 Change
<s> <c> <c> <c>
Assets
Cash & Due From Banks $ 12,248,975 $ 15,224,513 -19.5%
Securities 126,866,861 128,889,830 -1.6
Loans Held For Sale 390,937 7,758,583 -95.0
Loans 357,966,088 312,902,258 14.4
Reserve for Loan Losses 4,163,315 3,819,842 9.0
Net Loans 353,802,773 309,082,416 14.5
Federal Funds Sold 3,206,000 6,163,000 -48.0
Other Assets 32,028,100 34,789,835 -7.9
Total Assets $ 528,543,646 $ 501,908,177 5.3%
Liabilities & Stockholders' Equity
Deposits
Demand $ 74,048,291 $ 64,841,638 14.2%
Savings & Interest Checking 127,936,769 141,081,717 -9.3
Certificates of Deposit 185,969,762 178,675,241 4.1
Total Deposits 387,954,822 384,598,596 0.9
Repurchase Agreements 18,314,138 1,791,478 922.3
Other Borrowed Funds 74,245,372 65,726,076 13.0
Other Liabilities 3,002,503 2,462,353 21.9
Total Liabilities 483,516,835 454,578,503 6.4
Stockholders' Equity 45,026,811 47,329,674 -4.9
Total Liabilities & Stockholders' Equity $ 528,543,646 $ 501,908,177 5.3%
CONSOLIDATED INCOME STATEMENT
Twelve Months Ending Three Months Ending
Percentage Percentage
12/31/2004 12/31/2003 Change 12/31/2004 12/31/2003 Change
<s> <c> <c> <c> <c> <c> <c>
Interest Income $ 25,846,012 $ 22,329,117 15.8% $ 6,610,540 $ 5,710,884 15.8%
Interest Expense 9,067,132 7,875,548 15.1 2,421,634 2,067,005 17.2
Net Interest Income 16,778,880 14,453,569 16.1 4,188,906 3,643,879 15.0
Loan Loss Provision 840,000 1,300,000 -35.4 220,000 625,000 -64.8
Net Interest Income After Provision 15,938,880 13,153,569 21.2 3,968,906 3,018,879 31.5
Other Income 6,796,182 6,707,613 1.3 1,675,671 1,546,406 8.4
Other Expenses 14,755,170 14,171,265 4.1 3,467,503 3,823,226 -9.3
Income Before Taxes 7,979,892 5,689,917 40.2 2,177,074 742,059 193.4
Income Taxes 2,217,783 1,456,540 52.3 583,176 125,185 365.9
Net Income 5,762,109 4,233,377 36.1 1,593,898 616,874 158.4
Net Change in Unrealized Gain (loss)
on Securities (1,195,305) (329,722) (450,294) (16,391)
Comprehensive Income $ 4,566,804 $ 3,903,655 $ 1,143,604 $ 600,483
Selected Ratios
Return on Average Assets 1.11% 1.00% 1.18% 0.65%
Return on Average Equity 12.6 8.8 14.2 5.2
Earnings Per Share $ 2.09 $ 1.52 $ 0.59 $ 0.22
Earnings Per Share - assuming dilution 2.07 1.50 0.58 0.21
Cash Dividends Per Share 0.84 0.76 0.21 0.19
Book Value Per Share 16.77 16.90
Market Price High Low Close
Fourth Quarter '04 $32.50 $30.50 $30.50
Third Quarter '04 $33.00 $31.00 $31.50