Exhibit 99.1
February 21, 2007
Quarterly Report
Fourth Quarter 2006
We are very pleased to report that our net income for the fourth
quarter ended December 31, 2006 was $1.8 million, which represented a
14.4% increase over the $1.5 million earned for the fourth quarter ended
December 31, 2005. After the effects of dilution, earnings per share for
the quarter equaled 62 cents, which represented an 8.8% increase over the
57 cents per share for the same quarter in 2005.
Net income for the fiscal year was a record high $6.5 million,
which represented an 11.4% increase over the $5.8 million earned through
year-end of 2005. Pre-tax earnings were up 13.4% when compared to the
year ended December 31, 2005. This resulted in an increase in our
earnings per share on a diluted basis from $2.16 to $2.34, an 8.3%
increase.
As of December 31, 2006, total assets reached $629 million, a 10.0%
increase when compared to $573 million as of December 31, 2005. Through
the help of the merger, as well as internal growth, loans totaled $444
million or a 20.0% increase over loans outstanding as of December 31,
2005. Deposits were up 9.0% over the previous year-end and totaled $469
million as of December 31, 2006.
As was mentioned in the previous quarterly report, the merger with
Peoples Bank is now complete, and we continue to be pleased about the
contribution that this transaction has made to the growth in the assets
and earnings of your company. We have developed a number of teams that
are examining the various facets of the operations of our bank, so that
we will be focused on increasing efficiencies and improving the delivery
of our customer service.
At the end of this fiscal year, Dr. James Ferrell retired from
service on our Kentucky Bank Board of Directors. Dr. Ferrell has served
on our board since 1980, and his contributions have been significant, and
have by no small measure contributed to the success of the bank and your
company.
We are pleased to announce that Representative Rocky Adkins,
Majority Floor Leader of the House of Representatives, has agreed to
serve on our Rowan-Elliott regional advisory board. Mr. Adkins is a
resident of Sandy Hook and a graduate of Morehead State University. He is
employed by Appalachian Fuels, LLC as Director of Public Affairs. We
believe that Mr. Adkins will be able to help us tremendously as a new
regional board member.
Louis Prichard
President, CEO
UNAUDITED
CONSOLIDATED BALANCE SHEET
Percentage
12/31/2006 12/31/2005 Change
<s> <c> <c> <c>
Assets
Cash & Due From Banks $ 14,905,672 $ 11,456,496 30.1%
Securities 127,890,612 160,652,346 -20.4
Loans 444,150,390 370,911,882 19.7
Reserve for Loan Losses 4,991,277 4,309,403 15.8
Net Loans 439,159,113 366,602,479 19.8
Federal Funds Sold 4,106,000 2,708,000 51.6
Other Assets 43,480,906 31,330,974 38.8
Total Assets $629,542,303 $572,750,295 9.9%
Liabilities & Stockholders' Equity
Deposits
Demand $ 87,503,263 $ 72,192,661 21.2%
Savings & Interest Checking 159,240,794 174,849,623 -8.9
Certificates of Deposit 222,063,862 184,589,094 20.3
Total Deposits 468,807,919 431,631,378 8.6
Repurchase Agreements 9,627,533 14,346,285 -32.9
Other Borrowed Funds 88,946,663 76,456,929 16.3
Other Liabilities 6,035,134 3,769,460 60.1
Total Liabilities 573,417,249 526,204,052 9.0
Stockholders' Equity 56,125,054 46,546,243 20.6
Total Liabilities & Stockholders' Equity $629,542,303 $572,750,295 9.9%
CONSOLIDATED INCOME STATEMENT
Twelve Months Ending Three Months Ending
Percentage Percentage
12/31/2006 12/31/2005 Change 12/31/2006 12/31/2005 Change
<s> <c> <c> <c> <c> <c> <c>
Interest Income $35,592,847 $28,896,977 23.2% $9,803,621 $7,823,278 25.3%
Interest Expense 16,718,208 11,765,672 42.1 4,765,854 3,543,824 34.5
Net Interest Income 18,874,639 17,131,305 10.2 5,037,767 4,279,454 17.7
Loan Loss Provision 475,000 508,100 -6.5 141,000 (75,000) -288.0
Net Interest Income After Provision 18,399,639 16,623,205 10.7 4,896,767 4,354,454 12.5
Other Income 7,471,110 6,748,653 10.7 2,071,043 1,641,194 26.2
Other Expenses 16,916,884 15,474,017 9.3 4,585,737 3,872,630 18.4
Income Before Taxes 8,953,865 7,897,841 13.4 2,382,073 2,123,018 12.2
Income Taxes 2,467,810 2,077,741 18.8 618,848 581,923 6.3
Net Income 6,486,055 5,820,100 11.4 1,763,225 1,541,095 14.4
Net Change in Unrealized Gain (loss)
on Securities 462,645 (1,256,826) 136.8 (30,721) (453,964) 93.2
Comprehensive Income $ 6,948,700 $ 4,563,274 52.3% $1,732,504 $1,087,131 59.4%
Selected Ratios
Return on Average Assets 1.09% 1.08% 1.11% 1.08%
Return on Average Equity 12.8 12.7 12.7 13.1
Earnings Per Share $ 2.35 $ 2.17 $ 0.62 $ 0.57
Earnings Per Share - assuming dilution 2.34 2.16 0.62 0.57
Cash Dividends Per Share 1.00 0.92 0.25 0.23
Book Value Per Share 19.59 17.45
Market Price High Low Close
Fourth Quarter '06 $32.00 $29.50 $31.00
Third Quarter '06 $30.00 $26.65 $29.50