Exhibit 99.1
August 4, 2010
Quarterly Report
Second Quarter 2010
We are pleased to report for the second quarter ended June 30, 2010,
earnings for your company were up 30.7% when compared to the June 30,
2009 earnings. We reported $1.18 million in profit for the second
quarter of 2010, compared to $903.7 thousand for the second quarter of
2009. On a year to date basis, we earned $2.13 million compared to $2.07
million for the six months ended June 30, 2009, a 2.6% increase.
Earnings per share on a fully diluted basis, increased from $0.76 per
share to $0.78 per share through June 30, 2010.
Additionally, we are pleased to announce that the total assets of
Kentucky Bank reached $687.2 million at June 30, 2010, which represents a
5.9% increase over the period ended June 30, 2009. Deposits increased
12.3% from $494.1 million to $554.9 million.
As has been said in prior quarterly reports, the state of the national
and local economies still provides a large measure of uncertainty as we
prepare for the second half of 2010 and even into 2011. We are now
seeing mixed reports concerning the status of our economy as exemplified
by the national unemployment rate hovering at 9.5% and the Kentucky
unemployment rate at 10.2% as of the date of this letter. The housing
market continues to be difficult in the markets that we serve, and the
manufacturing sector continues to face certain difficulties. However,
recent reports show that retail sales have shown improvement in the month
of May, which may be an indicator of some positive trends. On balance,
all of these factors still indicate that for the remainder of 2010, the
economy is still a bit fragile.
We believe that in today's world there are still opportunities to pursue.
We believe that because of the increased number of troubled banks in our
market areas, we will have an ability to move market share for your bank.
As the result of that belief, we have put into action some strategic
initiatives to accomplish that goal.
Carol Norton is now heading up our Corporate Business Department with
that area focused on providing automated banking services to our business
customers.
In terms of additional people that have joined your company, we have
hired Tom James to manage our Downtown Morehead office. Tom brings with
him thirteen years of banking experience and has served in various civic
capacities related to economic development.
Most recently Nick Woods has joined our Trust and Wealth Management
Department, and his primary responsibilities will be in the area of
business development. Nick brings with him ten years of prior Trust
experience, and has an MBA from the University of Kentucky as well as
having obtained the status of Certified Trust Financial Advisor.
Recently, we have added Regional Board members who, we believe, can help
us with our business opportunities in various markets. We look forward
to their contributions, as well as continued contributions from our
existing regional directors. We are pleased to announce the following
people have agreed to serve in our markets.
Bobby Shiflet, owner of Frames on Main, has joined our Bourbon Market.
Trent Hamilton, owner of Hamilton Incorporated, has joined our East KY
Market.
Ann Getting, Plant Manager at 3M, has joined our Harrison Market.
Katy Prather, Realtor with Keller Williams, has joined our Scott
Market.
Carolyn McDonald, Realtor with Rector Hayden, has joined our Woodford
Market.
Finally, we are also very pleased to announce that U.S. Banker magazine
has recognized Kentucky Bank as one of the nation's top 200 community
banks. With over 6,000 community banks in the country, we believe that
this is a reflection of your bank's long term stability, along with our
efforts to do what is in the long term best interest of our customers,
employees, and shareholders.
As always, we appreciate your support.
/s/Louis Prichard
Louis Prichard
President, CEO
UNAUDITED
CONSOLIDATED BALANCE SHEET
Percentage
6/30/2010 6/30/2009 Change
<s> <c> <c> <c>
Assets
Cash & Due From Banks $ 13,566,766 $ 13,675,111 -0.8%
Securities 191,625,562 172,075,329 11.4
Loans Held For Sale 294,800 0 n/m
Loans 416,474,796 417,555,563 -0.3
Reserve for Loan Losses 6,460,927 6,372,929 1.4
Net Loans 410,013,869 411,182,634 -0.3
Federal Funds Sold 16,837,000 25,000 672.5
Other Assets 54,816,975 51,768,287 5.9
Total Assets $ 687,154,972 $ 648,726,361 5.9%
Liabilities & Stockholders' Equity
Deposits
Demand $ 117,022,918 $ 95,083,873 23.1%
Savings & Interest Checking 160,874,631 139,219,785 15.6
Certificates of Deposit 277,033,341 259,790,859 6.6
Total Deposits 554,930,890 494,094,517 12.3
Repurchase Agreements 4,340,585 8,715,189 -50.2
Other Borrowed Funds 58,830,688 77,537,076 -24.1
Other Liabilities 6,193,764 9,570,083 -35.3
Total Liabilities 624,295,927 589,916,865 5.8
Stockholders' Equity 62,859,045 58,809,496 6.9
Total Liabilities & Stockholders' Equity $ 687,154,972 $648,726,361 5.9%
CONSOLIDATED INCOME STATEMENT
Six Months Ending Three Months Ending
Percentage Percentage
6/30/2010 6/30/2009 Change 6/30/2010 6/30/2009 Change
<s> <c> <c> <c> <c> <c> <c>
Interest Income $ 15,448,422 $ 16,104,728 -4.1% $ 7,876,830 $ 7,907,994 -0.4%
Interest Expense 5,447,301 6,679,492 -18.4 2,745,055 3,234,176 -15.1
Net Interest Income 10,001,121 9,425,236 6.1 5,131,775 4,673,818 9.8
Loan Loss Provision 1,250,000 900,000 38.9 800,000 450,000 77.8
Net Interest Income After Provision 8,751,121 8,525,236 2.6 4,331,775 4,223,818 2.6
Other Income 4,116,720 4,563,703 -10.8 2,369,947 2,562,157 -9.3
Other Expenses 10,507,694 10,848,311 -3.6 5,335,341 5,964,377 -11.3
Income Before Taxes 2,360,147 2,240,628 5.3 1,366,381 821,598 66.3
Income Taxes 234,628 169,644 38.3 185,281 (82,076) 325.7
Net Income $ 2,125,519 $ 2,070,984 2.6 $ 1,181,100 $ 903,674 30.7
Net Change in Unrealized Gain (loss)
on Securities 891,283 818,877 8.8 685,050 (217,594) 414.8
Comprehensive Income $ 3,016,802 $ 2,889,861 4.4% $ 1,866,150 $ 686,080 172.0%
Selected Ratios
Return on Average Assets 0.60% 0.61% 0.66% 0.54%
Return on Average Equity 6.9 7.1 7.6 6.1
Earnings Per Share $ 0.78 $ 0.76 $ 0.43 $ 0.33
Earnings Per Share - assuming dilution 0.78 0.76 0.43 0.33
Cash Dividends Per Share 0.42 0.40 0.21 0.20
Book Value Per Share 22.93 21.43
Market Price High Low Close
Second Quarter '10 $18.00 $15.75 $15.75
First Quarter '10 $18.00 $16.00 $17.50