Exhibit 99.1
July 21, 2008
Quarterly Report
Second Quarter 2008
For the second quarter of 2008, earnings for your company were down
22.5%. We reported a $1.49 million profit for the second quarter of
2008, compared with $1.92 million for the second quarter of 2007. On a
year to date basis, earnings for the first six months ended June 30,
2008, were $2.68 million compared to $3.48 million, a 23% drop in
earnings. Assets totaled $636.5 million on June 30, 2008, a 0.9% drop
from the June 30, 2007 $642.3 million figure.
Our national economy still continues to face an ongoing weakness, and to
a large degree our regional economy is facing those same issues.
Evidence of those concerns is the increase in the cost of fuel, the slow
down of home sales, and the decline in home values. Additionally, some
industries have eliminated overtime and others have cut jobs, as demand
for products has diminished.
At Kentucky Bank we have seen some increase in loan demand in the second
quarter of this year. Total loans have increased from $410.8 million at
the end of March 31, 2008 to $418.8 million at the end of June 30, 2008.
While the current economic situation requires us to be more cautious, we
want to be looking to the future when the economy rebounds. Progress is
being made on the construction of our new Nicholasville office. Our new
Morehead office continues to see increased business activity. We are
continuing to look at new products and services, as well as focusing on
our delivery of premier customer service.
Our major focus at this time is to put things in proper perspective while
continuing to do those things that have made us successful in the past.
As always, we appreciate your support and confidence.
/s/Louis Prichard
Louis Prichard
President, CEO
UNAUDITED
CONSOLIDATED BALANCE SHEET
Percentage
6/30/2008 6/30/2007 Change
<s> <c> <c> <c>
Assets
Cash & Due From Banks $ 15,226,169 $ 13,814,495 10.2%
Securities 160,963,442 124,552,170 29.2
Loans Held For Sale 80,000 129,375 -38.2
Loans 418,819,532 430,537,848 -2.7
Reserve for Loan Losses 5,393,760 4,955,675 8.8
Net Loans 413,425,772 425,582,173 -2.9
Federal Funds Sold 98,000 34,336,000 -99.7
Other Assets 46,711,286 43,870,572 6.5
Total Assets $636,504,669 $642,284,785 -0.9%
Liabilities & Stockholders' Equity
Deposits
Demand $ 93,376,264 $ 98,355,042 -5.1%
Savings & Interest Checking 139,022,703 159,365,171 -12.8
Certificates of Deposit 222,800,353 234,284,067 -4.9
Total Deposits 455,199,320 492,004,280 -7.5
Repurchase Agreements 10,031,490 9,986,071 0.5
Other Borrowed Funds 109,114,118 78,451,464 39.1
Other Liabilities 6,058,740 6,306,593 -3.9
Total Liabilities 580,403,668 586,748,408 -1.1
Stockholders' Equity 56,101,001 55,536,377 1.0
Total Liabilities & Stockholders' Equity $ 636,504,669 $ 642,284,785 -0.9%
CONSOLIDATED INCOME STATEMENT
Six Months Ending Three Months Ending
Percentage Percentage
6/30/2008 6/30/2007 Change 6/30/2008 6/30/2007 Change
<s> <c> <c> <c> <c> <c> <c>
Interest Income $17,928,273 $19,840,321 -9.6% $ 8,675,414 $10,033,758 -13.5%
Interest Expense 7,994,715 9,721,220 -17.8 3,637,531 4,886,765 -25.6
Net Interest Income 9,933,558 10,119,101 -1.8 5,037,883 5,146,993 -2.1
Loan Loss Provision 900,000 320,000 181.3 500,000 170,000 194.1
Net Interest Income After Provision 9,033,558 9,799,101 -7.8 4,537,883 4,976,993 -8.8
Other Income 4,034,664 3,937,491 2.5 2,059,536 2,092,206 -1.6
Other Expenses 9,616,147 8,948,426 7.5 4,654,734 4,401,234 5.8
Income Before Taxes 3,452,075 4,788,166 -27.9 1,942,685 2,667,965 -27.2
Income Taxes 773,487 1,308,461 -40.9 457,059 749,829 -39.0
Net Income $ 2,678,588 $ 3,479,705 -23.0 $ 1,485,626 $ 1,918,136 -22.5
Net Change in Unrealized Gain (loss)
on Securities (850,270) (1,380,264) 38.4 (1,342,153) (1,339,196) -0.2
Comprehensive Income $ 1,828,318 $ 2,099,441 -0.1 $ 143,473 $ 578,940 -0.8
Selected Ratios
Return on Average Assets 0.85% 1.08% 0.94% 1.20%
Return on Average Equity 9.1 12.3 10.1 13.6
Earnings Per Share $ 0.95 $ 1.22 $ 0.53 $ 0.67
Earnings Per Share - assuming
Dilution 0.95 1.21 0.53 0.67
Cash Dividends Per Share 0.56 0.54 0.28 0.27
Book Value Per Share 20.34 19.43
Market Price High Low Close
Second Quarter '08 $30.00 $27.00 $27.25
First Quarter '08 $31.75 $29.50 $29.50