Exhibit 99.1
August 3, 2005
Quarterly Report
Second Quarter 2005
We are very pleased to report that our earnings per share on a
diluted basis increased 14% over the first six months of 2005. This
trend is a continuation of the positive earnings that Kentucky Bancshares
experienced for the entire year of 2004.
Our net income for the second quarter was $1.5 million, or 56 cents
per share after the effects of dilution. This is up by 10% from the
results last year. For the same period in 2004, earnings were $1.4
million, or 51 cents per share. For this year to date we have now earned
$1.05 per share versus 92 cents last year.
You will notice that our loans are up by 9.6% and deposits are up
by 1.6% from a year ago. Much of this results from the relative economic
strength of the markets that we currently serve. Credit quality remains
good as reflected by both past dues and loan losses.
Our net interest margin continues to be something we constantly
address. This is partly due to competitive pressures as more banks are
continuing to open offices in the markets in which we already operate.
This increases competition, but also validates our view that these are
growing and very attractive communities in which to do business. The
second factor contributing to the net interest margin issue is the
growing need banks have for deposits in these markets. It is our
anticipation that as interest rates continue to rise, pressure on our
margin will ease somewhat.
Our annual shareholder meeting was held on May 10. This coincides
with the regular rotation of board members at Kentucky Bank. We thank
outgoing board members Dan Brewer (Nicholasville), Dr. Gus Bynum
(Georgetown), Loren Carl (Versailles), Mary Beth Hendricks (Winchester),
and Joel Techau (Cynthiana). New members welcomed to our board for the
next year are Proctor Blair (Bourbon), Tricia Kittinger (Woodford), Betty
Long (Harrison), George Lusby (Scott), Eva McDaniel, (Jessamine), and
John Roche (Clark).
Louis Prichard
President, CEO
UNAUDITED
CONSOLIDATED BALANCE SHEET
Percentage
6/30/2005 6/30/2004 Change
<s> <c> <c> <c>
Assets
Cash & Due From Banks $ 10,976,945 $ 12,186,140 -9.9%
Securities 120,385,001 133,324,406 -9.7
Loans Held for Sale - 6,903,181 -100.0
Loans 366,840,594 334,589,735 9.6
Reserve for Loan Losses 4,431,400 4,093,267 8.3
Net Loans 362,409,194 330,496,468 9.7
Federal Funds Sold 216,000 - n/m
Other Assets 31,812,011 34,181,803 -6.9
Total Assets $ 525,799,151 $ 517,091,998 1.7%
Liabilities & Stockholders' Equity
Deposits
Demand $ 69,855,638 $ 68,640,580 1.8%
Savings & Interest Checking 133,459,608 138,672,346 -3.8
Certificates of Deposit 181,676,937 171,767,657 5.8
Total Deposits 384,992,183 379,080,583 1.6
Repurchase Agreements 15,345,601 20,420,345 -24.9
Other Borrowed Funds 75,468,197 70,178,400 7.5
Other Liabilities 3,686,441 2,380,181 54.9
Total Liabilities 479,492,422 472,059,509 1.6
Stockholders' Equity 46,306,729 45,032,489 2.8
Total Liabilities & Stockholders' Equity $ 525,799,151 $ 517,091,998 1.7%
CONSOLIDATED INCOME STATEMENT
Six Months Ending Three Months Ending
Percentage Percentage
6/30/2005 6/30/2004 Change 6/30/2005 6/30/2004 Change
<s> <c> <c> <c> <c> <c> <c>
Interest Income $ 13,753,086 $ 12,729,634 8.0% $ 7,032,935 $ 6,462,846 8.8%
Interest Expense 5,146,761 4,391,591 17.2 2,648,161 2,195,888 20.6
Net Interest Income 8,606,325 8,338,043 3.2 4,384,774 4,266,958 2.8
Loan Loss Provision 416,500 450,000 -7.4 166,600 195,000 -14.6
Net Interest Income After Provis 8,189,825 7,888,043 3.8 4,218,174 4,071,958 3.6
Other Income 3,388,042 3,306,906 2.5 1,834,185 1,744,442 5.1
Other Expenses 7,773,424 7,626,107 1.9 3,954,071 3,801,974 4.0
Income Before Taxes 3,804,443 3,568,842 6.6 2,098,288 2,014,426 4.2
Income Taxes 955,242 980,098 -2.5 582,340 575,620 1.2
Net Income $ 2,849,201 $ 2,588,744 10.1 $ 1,515,948 $ 1,438,806 5.4
Net Change in Unrealized Gain (loss)
on Securities (181,521) (2,479,957) -92.7 907,629 (2,851,951) -131.8
Comprehensive Income $ 2,667,680 $ 108,787 2352.2% $ 2,423,577 $(1,413,145) -271.5%
Selected Ratios
Return on Average Assets 1.09% 0.99% 1.23% 1.20%
Return on Average Equity 12.6 11.0 14.2 13.7
Earnings Per Share $ 1.06 $ 0.92 $ 0.56 $ 0.51
Earnings Per Share - assuming dilution 1.05 0.92 0.56 0.51
Cash Dividends Per Share 0.46 0.42 0.23 0.21
Book Value Per Share 17.25 16.07
Market Price High Low Close
Second Quarter '05 $30.50 $28.05 $29.75
First Quarter '05 $31.00 $29.25 $30.50