Kentucky Bancshares Inc. (fka KTYB)

[norweger1979]

2nd qtr 2017 report

July 31, 2017

Earnings Report – June 30, 2017


Dear Shareholders:


We are pleased to announce favorable financial results for your company. Year-to-date net income was $5.5 million for the six months ending June 30, 2017 compared to $3.9 million for the same period ending June 30, 2016, reflecting an increase of 41.5%. Year-to-date diluted earnings per share was $1.87 for the period ending June 30, 2017 compared to $1.31 for the same period last year, an increase of 42.7%.

The increase in year-to-date net income of $1.6 million from prior year was largely driven by a one-time gain for the sale of our downtown branch building located in Winchester, Kentucky, to a non-banking real estate investor, in the first quarter of 2017. The sale was solely for the building and not for the loans or deposits associated with the branch.

Simultaneous to the sale transaction, we entered into a one-year lease with the non-banking real estate investor to allow time for the construction of a smaller, more efficient branch in Winchester. The sale of the building resulted in a pre-tax gain of approximately $1.2 million. Absent the sale of the building, net income for the year would have increased approximately $840 thousand or 21% when compared to the same period of 2016.

Other changes impacting the increase in net income include a $595 thousand increase in net interest income after provision expense due to the increase in interest-earning assets and stable asset quality, a $285 thousand increase in gains on sale of loans due to higher volume, and a $414 thousand decrease in legal and professional expense, primarily due to one-time consulting costs incurred in 2016.

Total assets were $1.02 billion as of June 30, 2017 compared to $994.1 million as of June 30, 2016, reflecting growth of 2.7%. The change in assets reflected a $31.1 million increase in securities and a $32.6 million increase in total deposits. The increase in balances reflects our efforts for expanded relationships and deeper market penetration.

On July 14, 2017, we held the ribbon cutting of our new branch facility on Colby Road in Winchester, Kentucky. We replaced the branch on the same site with a more conveniently designed office, allowing us to serve customers in a more personal and efficient manner. We believe the new facility will allow for continued growth while maintaining comparable staffing levels.

We are pleased with the first half of 2017 and look forward to what we believe will be a busy and productive year. We will continue to focus on profitable growth and continue to evaluate our franchise footprint for opportunities to expand. We do this as a means of pursuing ongoing success in what continues to be an environment of heightened competition and enhanced supervisory oversight.

As always, we will concentrate on what is in the long term best interest of our shareholders, customers, and employees.

Thank you for your continued support.

KENTUCKY BANCSHARES, INC. Date: July 31, 2017 By /s/ Gregory J. Dawson Gregory J. Dawson Chief Financial Officer
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Section 2: EX-99.1 (EX-99.1)
/s/Louis Prichard Louis Prichard President, CEO

http://investorrelations.kybank.com/Doc/Index?did=41490766