2019 Journal of Community Bank Case Studies

Eastern Kentucky University

SECOND PLACE:

fourth in the first 4 years following the passage of Dodd-Frank (McConnell, 00:02:15 - 00:02:24). He emphasized that this issue greatly affects smaller, rural areas, because they may only have community banks in their area. In an effort to provide regulatory relief to community banks, Congress passed the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA) in May 2018. This Act was an attempt to decrease regulation and requirements for smaller financial institutions. The threshold of what was considered a SIFI (Systemically Important Financial Institution) was increased from $50 billion to $100 billion (and eventually will be $250 billion) and only the SIFI’s were still expected to follow the strictest rules (Labonte 2). Additionally, those banks with less than $10 million in assets are now exempt from the Volcker Rule (O’Brien). The 2018 rollback to the Dodd-Frank Act was heralded by countless financial institutions but perhaps was most welcomed by community banks. Regulatory compliance costs were expected to decrease, especially for community banks. The intended outcome was to provide more opportunity for community banks to lend to local market areas and invest more into local communities (ICBA, S. 2155 Has Been Signed 3). We partnered with Kentucky Bank, a $1.2 Billion community bank based in Paris, KY, to conduct a case study that allowed us to explore the real- world impact of the Great Recession, the Dodd Frank Act, the Regulatory Relief Bill as well as opportunities for strengthening the future of

community banking. Our case is summarized below, beginning with a financial analysis of Kentucky Bank. technology to remain competitive in the complex, dynamic financial services industry. The purpose of this study is to observe Central Bank’s activities involving due diligence to ensure the most innovative community banking technologies are integrated, strategically aligned, secure, and compliant with regulations. Part I: Financial Analysis Kentucky Bank, a subsidiary of Kentucky Bancshares, Inc. is a publicly traded community bank headquartered in Paris, Kentucky. Since its inception in 1981, Kentucky Bank has grown to a $1.1 Billion bank by serving its local markets in Central Kentucky with depository services, wealth management and loans. We utilized FFIEC UBPR data to conduct a financial analysis of Kentucky Bank over the last 5 years compared to its peer group of banks across the nation of similar asset size. As noted in the relevant sections, Kentucky Bank’s asset size crossed the threshold from FFIEC peer group 5 to peer group 4 in 2016, causing the peer average comparison to shift. For some portions of the financial analysis, we selected a small group of peer banks with similar size, structure and geographic footprint to Kentucky Bank to provide a more relevant comparison. Earnings Performance Kentucky Bank’s net income has steadily increased over the past five years, breaking its record high with $12.4 million in net income in

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