2019 Journal of Community Bank Case Studies

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2019 COMMUNITY BANK CASE STUDY COMPETITION

2018, or $2.09 per common share, which was expected after an astounding 25.1% increase in 2016. Many factors have contributed to this increase, including a 6% loan growth, higher securities balance, a decrease in provision for loan loss expense, and the reduction in federal tax expense as a result of the Tax Cuts and Jobs Act of 2017. Kentucky Bank has remained competitive with peer group 5 (2014-2015) and 4 (2016-2018) banks throughout the last five years with regard to net income growth. Kentucky Bank’s loan loss provision has been significantly

lower than its peer group, with two consecutive years of .05 compared to .11 (2018) and .12 (2017) of the average peer group 4. Return on Equity (ROE) has remained competitive with peer banks throughout the last five years. ROE has increased significantly the past two years, slightly exceeding the peer group average. Kentucky Bank Return on Assets (ROA) also surpassed peer banks in 2017 after three years of having slightly lower ROA than peer group 4 (2014-2015) and peer group 5 (2016). Kentucky Banks Net Interest Margin has

remained around the 50th percentile of the peer group average since 2014. For a more in-depth analysis we chose 4 peer banks of similar size and structure serving a similar market area to compare with Kentucky Bank, which reveals the same reactions to market fluctuations as regional peers, performing near the 50th percentile for ROE and steadily improving ROA each year to reach 1.0 in 2017 and increase to 1.17 in 2018. Kentucky Bank, as a publicly traded bank had 5,955,242 shares of Common Stock outstanding and 532 holders of record of its Common Stock as of December 31, 2018 (10-K). Kentucky Bank expects record earnings again in 2019. The Banks’ strategic plan for 2019 includes plans to evaluate technology services and to improve profitability through increased wealth management income and other non- interest income.

KY Bank & Regional Peers ROA Comparison

1.6

1.4

Kentucky Bank

1.2

Community Trust Bank

0.8

Central Bank & Trust Company

0.6

ROA

Whitaker Bank, INC

0.4

South Central Bank, INC

0.2

2018 2017 2016 2015 2014 Year

KY Bank & Regional Peers ROE Comparison