Exhibit 99.1
May 13, 2009
Quarterly Report
First Quarter 2009
For the first quarter ended March 31, 2009, earnings for your company
were down 2.2%. We reported a $1.17 million profit for the first quarter
of 2009 compared with a $1.19 million profit in the first quarter of
2008. Assets totaled $679.0 million on March 31, 2009, a 7.2% increase
from the March 31, 2008 figure of $633.5 million. Gross loans increased
1.2% from $410.8 million to $415.6 million. In addition, deposits totaled
$526.4 million on March 31, 2009, which represented a 7.7% increase over
the same period ended in March 2008. Earnings per share increased from
$0.42 per share, assuming dilution, to $0.43 per share through March 31,
2009. Also, we had a slight improvement in our return on average equity
from 8.0% to 8.1%.
Our national and local economies continue to face challenging times.
Unemployment rates, both at the state and national levels are at an all
time high with expectations of that number worsening, and at the state
level, Kentucky's unemployment rate is approximately 10%. At the date of
this letter, the U.S. Commerce Department reported that the gross
domestic product had contracted at a 6.1% annual rate in the first
quarter of 2009. This follows a shrinking of 6.3% in the fourth quarter
of 2008. As we have said in earlier quarterly reports, the large unknown
in today's world is how long the economy will continue to face these
obstacles.
Our goal in today's world is to look for every opportunity to continue to
grow our bank in a conservative and profitable manner. By that, we mean
that we will be looking to invest our money in products, services,
locations, and people so that those investments will provide a long
term return that you, our shareholders, deserve. An example of that
investment is the new Nicholasville office which opened April 20 of this
year. It is well located and staffed with highly capable people. As a
result, we would expect over the short and long term that this new
location will offer a stronger position for Kentucky Bank in the
Jessamine County market.
At the same time however, it is incumbent upon the management of the bank
to examine every operating area of our bank to determine that we are
working in the most efficient manner, so that we can again continue to
provide a return to our shareholders. As a result of that effort, we
have consolidated our downtown Cynthiana location with our newer location
on US 27 in Harrison County, and we will be closing our North Middletown
branch in the third quarter of 2009. We anticipate not only being able to
serve our customers well, but also we will be able to experience some
cost savings as a result. Along these same lines, we terminated our
Defined Benefit Plan in 2008, and final payout should be completed by
October 2009.
In these days of uncertainty, one thing that you can be certain of is
that your Management and Board are committed to the long term best
interests of our customers, employees, and shareholders. With that in
mind, we are optimistic about your company's future. As always, we
appreciate your support.
/s/Louis Prichard
Louis Prichard
President, CEO
UNAUDITED
CONSOLIDATED BALANCE SHEET
Percentage
3/31/2009 3/31/2008 Change
<s> <c> <c> <c>
Assets
Cash & Due From Banks $ 11,559,008 $ 15,413,464 -25.0%
Securities 205,885,961 153,589,900 34.0
Loans 415,638,670 410,840,108 1.2
Reserve for Loan Losses 5,999,272 5,090,872 17.8
Net Loans 409,639,398 405,749,236 1.0
Federal Funds Sold 2,350,000 13,451,000 -82.5
Other Assets 49,599,966 45,303,571 9.5
Total Assets $ 679,034,333 $ 633,507,171 7.2%
Liabilities & Stockholders' Equity
Deposits
Demand $ 96,195,049 $ 91,843,124 4.7%
Savings & Interest Checking 155,623,694 154,230,032 0.9
Certificates of Deposit 274,561,846 242,833,593 13.1
Total Deposits 526,380,589 488,906,749 7.7
Repurchase Agreements 9,730,745 7,412,755 31.3
Other Borrowed Funds 77,754,645 70,886,714 9.7
Other Liabilities 6,445,150 6,746,394 -4.5
Total Liabilities 620,311,129 573,952,612 8.1
Stockholders' Equity 58,723,204 59,554,559 -1.4
Total Liabilities & Stockholders' Equity $ 679,034,333 $ 633,507,171 7.2%
CONSOLIDATED INCOME STATEMENT
Three Months Ending
Percentage
3/31/2009 3/31/2008 Change
<s> <c> <c> <c>
Interest Income $ 8,196,734 $ 9,252,859 -11.4%
Interest Expense 3,445,316 4,357,184 -20.9
Net Interest Income 4,751,418 4,895,675 -2.9
Loan Loss Provision 450,000 400,000 12.5
Net Interest Income After Provision 4,301,418 4,495,675 -4.3
Other Income 2,005,316 1,975,128 1.5
Other Expenses 4,887,704 4,961,413 -1.5
Income Before Taxes 1,419,030 1,509,390 -6.0
Income Taxes 251,720 316,428 -20.4
Net Income $ 1,167,310 $ 1,192,962 -2.2%
Net Change in Unrealized Gain (loss)
on Securities 1,036,471 491,883 110.7
Comprehensive Income $ 2,203,781 $ 1,684,845 30.8%
Selected Ratios
Return on Average Assets 0.68% 0.75%
Return on Average Equity 8.1 8.0
Earnings Per Share $ 0.43 $ 0.42
Earnings Per Share - assuming dilution 0.43 0.42
Cash Dividends Per Share 0.20 0.28
Book Value Per Share 21.36 20.91
Market Price High Low Close
First Quarter '09 $19.50 $16.50 $17.50
Fourth Quarter '08 $26.50 $15.75 $17.15