Exhibit 99.1
April 30, 2008
Quarterly Report
First Quarter 2008
For the first quarter of 2008, earnings for your company were down 23.6%.
We reported a $1.19 million profit for the first quarter of 2008 compared
with $1.56 million in the first quarter of 2007. Assets totaled $633.5
million on March 31, 2008, a 1.2% drop from the March 31, 2007 $641.3
million figure.
Loan demand has softened since the last quarter of 2007. As we have been
made aware through the media, our national economy has weakened
considerably and our regional economy has felt those same effects. Loans
are down 6.9% when compared to the first quarter of 2007. The real
question at this point is how long and how deep this slowdown will
subsist. The longer the downturn takes place the greater the likelihood
that credit quality issues may arise. Because of this unknown,
management has decided to increase the bank's contribution to the loan
loss reserve in the first quarter of 2008, which represents an increase
of $250 thousand over the contribution for the first quarter of 2007. By
taking this action now, we will be positioning ourselves to grow our
earnings when this period of economic weakness ends.
With an eye on the above mentioned strategy, our new Morehead banking
office is open and heretofore we are very pleased by its level of
business activity. Additionally, we are on track to open a new office in
Nicholasville by the end of 2008. With this new facility we will be in a
highly visible location in a very strong market.
In today's economic world, our goal is to approach this environment in a
very cautious manner. Yet, we will always keep an eye on the future by
introducing new products and services, examining appropriate growth
opportunities, and providing premier customer service. By doing these
things, we will be able to provide good returns for our shareholders. As
always we appreciate your support.
/s/Louis Prichard
Louis Prichard
President, CEO
UNAUDITED
CONSOLIDATED BALANCE SHEET
Percentage
3/31/2008 3/31/2007 Change
<s> <c> <c> <c>
Assets
Cash & Due From Banks $ 15,413,464 $ 13,124,989 17.4%
Securities 153,589,900 131,576,630 16.7
Loans 410,840,108 441,488,191 -6.9
Reserve for Loan Losses 5,090,872 5,043,453 0.9
Net Loans 405,749,236 436,444,738 -7.0
Federal Funds Sold 13,451,000 17,363,000 -22.5
Other Assets 45,303,571 42,821,311 5.8
Total Assets $ 633,507,171 $ 641,330,668 -1.2%
Liabilities & Stockholders' Equity
Deposits
Demand $ 91,843,124 $ 86,967,443 5.6%
Savings & Interest Checking 154,230,032 160,465,529 -3.9
Certificates of Deposit 242,833,593 236,923,706 2.5
Total Deposits 488,906,749 484,356,678 0.9
Repurchase Agreements 7,412,755 8,771,336 -15.5
Other Borrowed Funds 70,886,714 85,548,933 -17.1
Other Liabilities 6,746,394 6,574,181 2.6
Total Liabilities 573,952,612 585,251,128 -1.9
Stockholders' Equity 59,554,559 56,079,540 6.2
Total Liabilities & Stockholders' Equity $ 633,507,171 $ 641,330,668 -1.2%
CONSOLIDATED INCOME STATEMENT
Three Months Ending
Percentage
3/31/2008 3/31/2007 Change
<s> <c> <c> <c>
Interest Income $ 9,252,859 $ 9,806,563 -5.6%
Interest Expense 4,357,184 4,834,455 -9.9
Net Interest Income 4,895,675 4,972,108 -1.5
Loan Loss Provision 400,000 150,000 166.7
Net Interest Income After Provision 4,495,675 4,822,108 -6.8
Other Income 2,022,161 1,896,190 6.6
Other Expenses 5,008,446 4,598,097 8.9
Income Before Taxes 1,509,390 2,120,201 -28.8
Income Taxes 316,428 558,632 -43.4
Net Income $ 1,192,962 $ 1,561,569 -23.6
Net Change in Unrealized Gain (loss)
on Securities 491,883 (41,068) 1297.7
Comprehensive Income $ 1,684,845 $ 1,520,501 10.8%
Selected Ratios
Return on Average Assets 0.75% 0.97%
Return on Average Equity 8.0 11.1
Earnings Per Share $ 0.42 $ 0.55
Earnings Per Share - assuming dilution 0.42 0.54
Cash Dividends Per Share 0.28 0.27
Book Value Per Share 20.91 19.53
Market Price High Low Close
First Quarter '08 $31.75 $29.50 $29.50
Fourth Quarter '07 $34.00 $31.75 $31.75