THE BANKERS BANK THE ROAD AHEAD HELPING COMMUNITY BANKS SUCCEED 2016 ANNUAL REPORT
TABLE OF CONTENTS 3 Corporate Information 4 Message From The President 5 Shareholder Information 6 Shareholders Equity 7 2015 Highlights 8 Executive Officers & Staff 11 Board of Directors 12 Assets Under Management/Regulation F Ratios 13 Credit Ratings/Financial Performance Ratios/ 14 Statement of Condition
CORPORATE INFORMATION The Bankers Bank of Kentucky was founded in 1988 to provide Correspondent Services exclusively to community banks. It is owned and directed by its customers and operates in Kentucky, Indiana, Tennessee, West Virginia and Ohio. The Bankers Bank is a State-Chartered, Federal Reserve Member Institution headquartered in Frankfort, Kentucky. 3
MESSAGE FROM THE PRESIDENT I am pleased to write my first shareholder communication as President of your Bankers Bank and feel privileged and humbled to serve in that role. The past year was full of developments that continued to make our profession a focal point of the nation s economy. Our industry continues to labor under the additional burden placed on it by regulations promulgated after the financial crisis. This additional burden has caused many community banks to sell out or merge with other institutions to achieve the scale needed to survive. The Bankers Bank of Kentucky has felt the effects of this. Our customer base has decreased, but the remaining banks we have are stronger and should have the resources to serve their markets long into the future. Our management transition plan continues to function as planned. Bill Fallon will retire at the end of 2017 after a long and distinguished career as a bank executive and advocate for Community Banking. I will assume the duties of CEO in January of 2018. Derek Hetherington has assumed the role of Chief Lender and Senior Executive at the bank. The Bank s primary earnings for 2016 was $525,000. After the favorable tax treatment of Mr. Fallon s deferred compensation plan, the total earnings of the bank was $844,000. This represents an ROAA of.90%, compared to.46% for the previous year. Net income was also aided by increased interest income facilitated by net loan bookings of $7.6 million. Noninterest income was down year over year due to less service charge income. The Balance Sheet showed significant growth in demand deposits and loans during the year as the bank s core assets eclipsed $100,000,000 for the first time ending at $107,722,000. Our average assets under management was $468,460,334 for the year, but were diminished to $366,693,972 at the end of year as our federal fund accounts dollars flowed to higher yielding investments. The bank concluded 2016 with $13,652,000 in equity capital, which represents Regulation F ratios of 46.15% Total Equity Capital, 45.11% Tier One Risk based Capital and a 13.01% Leverage Ratio. Asset quality continues to be strong, with no NPAs. 2017 will bring a shift in our marketing strategy as our new correspondent team will focus on helping Community Banks remain competitive. We will visit our customers and prospects more often and seek to tailor products and services that best meet their needs in this dynamic environment. We have collaborated with our trusted partners to bring on products such as merchant services, a surcharge free ATM network and payroll services. We are here to make sure the ROAD AHEAD FOR COMMUNITY BANKS is a much more certain course with fewer bumps. As always, we thank you for the privilege of serving your bank s correspondent needs. Your success is our success. Best regards, John B. Clark, President 4
SHAREHOLDER INFORMATION ANNUAL SHAREHOLDERS MEETING The annual meeting of the Independent Community Bancorp, Inc. will be held Monday, June 5, 2017. SHAREHOLDER CONTACT INFORMATION Kaylene Hicks, Assistant Vice President The Bankers Bank of Kentucky P.O. Box 713 Frankfort, Kentucky 40602-0713 Email: khicks@bbky.com Phone: (800)248-3229 PRIVACY POLICY The Privacy Policy of The Bankers Bank of Kentucky describes how we safeguard our customers privacy. For more information, please visit our website at www.bbky.com 5
SHAREHOLDERS' EQUITY 2016 2015 Shareholders Equity Capital & Surplus Retained Earnings TOTAL SHAREHOLDERS EQUITY $498,000 $4,502,000 $8,652,000 $13,652,000 $498,000 $4,502,000 $7,808,000 $12,808,000 6
2016 HIGHLIGHTS ICBI Welcomes New Standard Bearer Shareholders Mr. Brent Bugg, President, Fredonia Valley Bank, Fredonia, Kentucky Mr. Charles Johnson, President, First Guaranty Bank, Martin, Kentucky Mr. Robert Miles, President, Peoples Bank, Lebanon, Kentucky Mr. Michael Hunt, President, Sacramento Deposit Bank, Sacramento, Kentucky The Bankers Bank Welcomes New Correspondent Banking Officers Mr. Todd Beers, Assistant Vice President Mr. Shawn O Keefe, Vice President The Bankers Bank Welcomes New Board Members Mr. Darryl Traylor, Citizens Union Bank, Shelbyville, Kentucky Mr. David Hawkins, Citizens Bank, Hartford, Kentucky Mr. Mark Wolford, Casey County Bank, Liberty, Kentucky 7
EXECUTIVE OFFICERS & STAFF EXECUTIVE OFFICERS William L. Fallon, CEO John B. Clark, PRESIDENT CORRESPONDENT BANKING Lynn Ellis, FIRST VICE PRESIDENT Shawn O Keefe, VICE PRESIDENT David Fletcher, VICE PRESIDENT Todd Beers, ASSISTANT VICE PRESIDENT LOAN DEPARTMENT Derek Hetherington, SENIOR VICE PRESIDENT Stephanie Oerther, ASSISTANT VICE PRESIDENT Rachel Effinger, CREDIT ANALYST Dede Johnson, LOAN ADMINISTRATIVE ASSISTANT MORTGAGE PROCESSING Missy Harrod, ASSISTANT VICE PRESIDENT Beth Miller, MORTGAGE PROCESSOR Michelle Nearhoof, MORTGAGE PROCESSOR Sierra Budd, MORTGAGE PROCESSOR ADMINISTRATION Janice Smoot, CHIEF FINANCIAL OFFICER Kaylene Hicks, ASSISTANT VICE PRESIDENT Angel Hafley, ADMINISTRATIVE STAFF ASSISTANT OPERATIONS/WIRE DEPARTMENT Becky Sisco, VICE PRESIDENT Carol Brewer, OPERATIONS SUPERVISOR Velta Riddle, CUSTOMER SERVICE REPRESENTATIVE Janet Collins, CUSTOMER SERVICE REPRESENTATIVE Cameron Lee, CUSTOMER SERVICE REPRESENTATIVE Zac Bodenheimer, WIRE OPERATOR Chasity Miley, WIRE OPERATOR Jeanne Kaye Hellard, WIRE OPERATOR / CUSTOMER SERVICE REPRESENTATIVE 8 INVESTMENTS Scott Kimel, SENIOR VICE PRESIDENT Richard Robey, SENIOR VICE PRESIDENT Jeanne Kaye Hellard, INVESTMENT REPRESENTATIVE Maria Wilke, CALLING OFFICER
William L. Fallon, CEO John B. Clark, President Derek Hetherington, Senior Vice President Picture Front Left, Lynn Ellis, First Vice President Pictured Back Left, David Fletcher, Vice President Pictured Right Front, Todd Beers, Assistant Vice President Pictured Back Right, Shawn O Keefe, Vice President 9
Pictured left Kaylene Hicks, Assistant Vice President, Center, Angel Hafley, Administrative Staff Assistant, Pictured Right Janice Smoot, Chief Financial Officer Pictured Left Seated, Velta Riddle, Customer Service Representative, Pictured Left Standing, Cameron Lee, Customer Service Representative, Pictured Right, Jan Collins, Customer Service Representative Pictured Left, Becky Sisco, Vice President and Pictured Right Carol Brewer, Operations Officer Pictured Left Jeanne Kay Hellard, Wire Operator/Customer Service Representative, Pictured Center, Zac Bodenheimer, Wire Operator, Pictured Right Chasity Miley, Wire Operator Pictured Left, Rachel Effinger, Credit Analyst, Pictured Right, Stephanie Oerther, Assistant Vice President Not Pictured Dede Johnson, Loan Administrative Assistant 10 Pictured from Left to Right is Michelle Nearhoof, Mortgage Processor, Beth Miller, Mortgage Processor, Missy Harrod, Assistant Vice President, Sierra Budd, Mortgage Processor.
BOARD OF DIRECTORS Mr. William L. Fallon THE BANKERS BANK OF KENTUCKY Mr. Chris Rodgers THE CITIZENS BANK HICKMAN, KENTUCKY Mr. Darryl Traylor CITIZENS UNION BANK SHELBYVILLE, KENTUCKY Ms. Kathy Samples CITIZENS GUARANTY BANK RICHMOND, KENTUCKY Mr. G. Michael Simpson CUMBERLAND SECURITY BANK SOMERSET, KENTUCKY Mr. Melvin Mac Godby LEXINGTON, KENTUCKY Mr. Corey Craig CITIZENS BANK MOUNT VERNON, KENTUCKY Mr. C. K. Stacy BANK OF THE MOUNTAINS WEST LIBERTY, KENTUCKY Mr. Gary Traughber ELKTON BANK & TRUST ELKTON, KENTUCKY Mr. Randall Snider COMMUNITY BANK PARKERSBURG, WEST VIRGINIA Mr. David Hawkins CITIZENS BANK HARTFORD, KENTUCKY Mr. Orson Oliver THE AL J. SCHNEIDER CO. LOUISVILLE, KENTUCKY Mr. Mark Wolford CASEY COUNTY BANK LIBERTY, KENTUCKY 11
ASSETS UNDER MANAGEMENT DECEMBER 2016 DECEMBER 2015 Total Assets $107,722,000 $86,428,000 Agent Fed Funds $260,676,000 $383,247,000 Total Assets Under Management $368,398,000 $469,675,000 REGULATION F RATIOS DECEMBER 31, 2016 DECEMBER 31, 2015 Leverage Ratio 13.01% 15.96% Tier 1 Capital Ratio 45.11% 45.75% Total Capital Ratio 46.15% 46.77% 12
FINANCIAL PERFORMANCE RATIOS DECEMBER 31, 2016 DECEMBER 31, 2015 Return on Average Assets 0.90% 0.46% Net Interest Margin 3.55% 3.34% Loans/Deposits 30.1 8% 27.91 % NET INCOME / TOTAL EQUITY CAPITAL As of December 31, 2016 Net Income $844,000 Total Equity Capital $13,652,000 13
STATEMENT OF CONDITION ASSETS Due from Bank Securities Net Loans Premises & Fixed Assets Other Assets Federal Funds Sold Total Assets LIABILITIES Demand Deposits Fed Funds Purchased Other Liabilities Total Liabilities EQUITY CAPITAL Common Stock Surplus Undivided Profits Total Capital 2016 $77,102,000 $1,001,000 $27,497,000 $1,135,000 $987,000 $0 $107,722,000 $92,141,000 $1,729,000 $200,000 $94,070,000 $498,000 $4,502,000 $8,652,000 $13,652,000 2015 $49,109,000 $0 $20,010,000 $1,240,000 $1,300,000 $14,769,000 $86,428,000 $72,723,000 $0 $897,000 $73,620,000 $498,000 $4,502,000 $7,808,000 $12,808,000 TOTAL LIABILTIES & EQUITY CAPITAL $107,722,000 $86,428,000 14
2017 JUST AHEAD As we look forward to 2017, we are pleased to give you a glimpse of items that are on our roadmap: ATM DEBIT CARD PROGRAM SURCHARGE FREE ATM NETWORK ATM MANAGED SERVICES QNET ON-LINE REPLACEMENT SYSTEM 15
THE BANKERS BANK 107 Progress Drive Frankfort, KY 40601 800-248-3229 www.bbky.com