8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  April 30, 2020

KENTUCKY BANCSHARES, INC.

(Exact Name of Registrant as specified in Charter)

Kentucky	000-52598	61-0993464
(State or other	(Commission	(IRS Employer
jurisdiction of incorporation)	File Number)	Identification No.)

P.O. Box 157, Paris, Kentucky
(Address of principal executive offices) 40362-0157
(Zip code)

(859)987-1795

(Registrant's telephone number, including area code)

N/A

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐  Written communications pursuant to Rule 425 under the Securities Act (17CFR230.425)

☐  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	KTYB	OTCQX

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ◻

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻

INFORMATION TO BE INCLUDED IN THE REPORT

Item 2.02. Results of Operations and Financial Condition

The Registrant expects to mail to its shareholders the Registrant's quarterly financial information for the first quarter of 2020 on or about May 15, 2020.  A copy of this mailing is attached as Exhibit 99.1.

The information in this Form 8-K and Exhibit 99.1 attached hereto shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference.

Item 9.01. Financial Statements and Exhibits

Exhibit 99.1 - Release dated April 30, 2020 of quarterly financial information as of March 31, 2020.

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Forward-Looking Statements

Except for historical information contained herein, the discussion in this Report may include certain forward looking statements based upon management expectations.  Actual results and experience could differ materially from the anticipated results or other expectations expressed in the forward-looking statements.  Factors which could cause future results to differ from these expectations include the following:  change in economic conditions in the markets we serve; changes in laws or regulatory enforcement; monetary and fiscal policies of the federal government; changes in  interest rates; demand for financial services; the impact of our continuing growth strategy; and other factors, including various “risk factors” set forth in our most recent annual report on Form 10-K and in other reports we file from time to time with the Securities and Exchange Commission.  Our annual report on Form 10-K and these other reports are available publicly on the SEC website, www.sec.gov, and on the Company's website, www.kybank.com.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

April
	KENTUCKY BANCSHARES, INC.
Date: April 30, 2020	By	/s/ Gregory J. Dawson
		Gregory J. Dawson
		Chief Financial Officer

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EX-99.1

Exhibit 99.1

Earnings Report – March 31, 2020

Dear Shareholders:

All aspects of the economy and, quite frankly, most facets of everyday life have recently been thrown into turmoil so it’s challenging to find an appropriate starting point with this quarter’s earnings release. However, the past couple of months have brought perspective and focus on the truly important elements of life so, above all, I hope this report finds you and your family well and healthy. Provided below are our financial results for the quarter and a summary of our response to COVID-19 in the context of our four primary stakeholder groups; shareholders, customers, employees, and communities.

Shareholders: Year-to-date net income was $1.8 million for the period ending March 31, 2020 compared to $2.8 million for the period ending March 31, 2019. Year-to-date diluted earnings per share was $0.30 and $0.47, for March 31, 2020 and 2019, respectively. Total assets were $1.14 billion as of March 31, 2020 compared to $1.09 billion as of March 31, 2019. The primary driver behind the decrease in earnings from year-to-year was a $1.5 million increase in provision for loan loss expense. Absent the increase in provision expense, we would have been approximately flat year-over-year. The increase in the provision expense was a result of our best effort to analyze the negative economic impact of COVID-19. There is a tremendous amount of economic uncertainty which will persist for many months to come and will likely impact loan quality. We remain well capitalized but, like the rest of the banking industry, we do expect downward pressure on earnings for 2020 and potentially beyond, based on indeterminate asset quality and net interest margin compression.

Customers: We recognize COVID-19 is impacting consumer and commercial customers so we designed programs to support both groups during this trying time. In March, we announced a Skip-a-Pay promotion for our consumer loan customers allowing them to defer loan payments for three months. Since mid-March we have worked with commercial and residential loan customers most impacted by this economic recession for principal and/or interest deferments ranging from three to twelve months. Since early April, we have worked with commercial customers applying for the U.S. Small Business Administration Paycheck Protection Program loans. In addition to these loan assistance programs, we have temporarily reduced certain checking account fees. 

Employees: We value the health of our employees and customers and have followed the state and local safety guidelines. In mid-March, we instituted distanced working arrangements which allows certain employees to work remotely and provides more physical space for others while at work. At the same time, we transitioned our branches to drive-thru only service with lobby access by appointment. This combination of remote employees, increased social distancing, and drive-thru service has allowed us to continue operating without interruption while mitigating the spread of COVID-19 within our communities and employees.

Communities: The wellbeing of a community bank is closely tied to the wellbeing of the communities in which it serves. In mid-March we increased our corporate donations to non-profit groups serving those most in need within our communities. In addition, we remain on track to open our newest branch, Tates Creek Centre Lexington, by mid-summer. This will increase our presence in Lexington which is the largest market we serve, providing more convenient access for existing customers and potential customers.

The coming quarters will be challenging quarters from a financial prospective, but as always, we will strive for the long-term best interest of our shareholders, customers, and employees. Thank you for your continued support.

/s/Louis Prichard

Louis Prichard

President, CEO

UNAUDITED

CONSOLIDATED BALANCE SHEET

(in thousands)

					Percentage
	3/31/2020		3/31/2019		Change
Assets
Cash & Due From Banks	$	37,474	$	37,676	(0.5)	%
Federal Funds Sold		292		230	27.0
Interest Bearing Time Deposits		2,375		2,175	9.2
Securities		247,187		297,969	(17.0)
Loans Held for Sale		4,990		1,282	289.2
Loans		778,327		687,484	13.2
Reserve for Loan Losses		9,916		7,882	25.8
Net Loans		768,411		679,602	13.1
Bank Owned Life Insurance		18,308		10,282	78.1
Other Assets		64,341		57,757	11.4
Total Assets	$	1,143,378	$	1,086,973	5.2	%
Liabilities & Stockholders' Equity
Deposits
Demand	$	243,073	$	241,400	0.7	%
Savings & Interest Checking		394,973		417,701	(5.4)
Certificates of Deposit		215,171		185,037	16.3
Total Deposits		853,217		844,138	1.1
Repurchase Agreements		5,410		6,604	(18.1)
Other Borrowed Funds		146,142		111,556	31.0
Other Liabilities		20,822		12,966	60.6
Total Liabilities		1,025,591		975,264	5.2
Stockholders' Equity		117,787		111,709	5.4
Total Liabilities & Stockholders' Equity	$	1,143,378	$	1,086,973	5.2	%

CONSOLIDATED INCOME STATEMENT

(in thousands)

	Three Months Ending
							Percentage
	3/31/2020			3/31/2019			Change
Interest Income	$	11,135		$	11,179		(0.4)	%
Interest Expense		2,143			2,240		(4.3)
Net Interest Income		8,992			8,939		0.6
Loan Loss Provision		1,625			125		1200.0
Net Interest Income After Provision		7,367			8,814		(16.4)
Other Income		3,562			3,000		18.7
Other Expenses		9,230			8,765		5.3
Income Before Taxes		1,699			3,049		(44.3)
Income Taxes		(52)			238		(121.8)
Net Income	$	1,751		$	2,811		(37.7)	%
Selected Ratios
Return on Average Assets		0.62	%		1.04	%
Return on Average Equity		5.77			10.39
Earnings Per Share	$	0.30		$	0.47
Earnings Per Share - assuming dilution		0.30			0.47
Cash Dividends Per Share		0.18			0.17
Book Value Per Share		19.81			18.68
Tangible Book Value Per Share		17.43			16.30

Market Price	High		Low		Close
First Quarter '20	$	24.00	$	15.50	$	17.60
Fourth Quarter '19	$	23.50	$	23.11	$	23.50