To Our Shareholders
I am pleased to report unaudited financial results for Kish Bancorp, Inc., parent company of Kish Bank and related affiliates, for the twelve-month period ending December 31, 2018. Highlights for 2018 include sustained growth in new business, especially as it is reflected in increased loans and deposits, the expansion of new and existing sources of non-bank revenues, lower corporate tax rates, and a record increase in net income.
BALANCE SHEET
The Corporation's total assets ended the period at $851 million, an increase of $39.3 million, or 4.85%, compared to total assets of $811 million as of December 31, 2017. Asset growth continued to be driven by strong growth in lending activities, with loans rising year-over-year by $62.4 million to $637 million, or 10.85%, partially offset by a decrease in investment securities of $10.9 million, or 7.77%. Total deposits grew by $28.7 million to $682 million, an increase of 4.38% from $654 million a year ago. An increase in borrowings to $101 million, compared to $95 million as of December 31, 2017, helped to fund strong loan growth.
NET INCOME
Net income for 2018 was $6.03 million, an increase of $1.89 million, or 45.63%, compared to $4.14 million in 2017. When the 2017 accounting charges associated with the passage of the tax law are eliminated, net income for 2018 increased by $1.47 million, or 32.30%, from $4.56 million in 2017. The increase includes the benefits of lower corporate tax rates, strong expansion in both net interest and noninterest income, well controlled expenses, and very positive credit quality. These categories of higher revenue reflected expanded business levels for the Bank and its affiliates and the addition of a benefits management consulting practice.
NET INTEREST INCOME
Continued growth in loans and core deposits supported the expansion of net interest income to $25.8 million as of December 31, 2018, an increase of $2.66 million, or 11.50%, compared to $23.10 million as of December 31, 2017. Contributions to the loan loss reserve equaled $1.02 million in 2018, supporting the growth in loans, compared to $600 thousand in 2017.
NONINTEREST INCOME
Noninterest income was $7.44 million for the year ending December 31, 2018, an increase of $914 thousand, or 14.01%,from $6.53 million over the same period in 2017. The increase in noninterest income came from fees derived from lending activities, higher insurance agency and wealth management revenue, and the addition of income from the new employee benefits consulting practice.
NONINTEREST EXPENSE
Year over year, noninterest expense increased by $1.63 million, or 6.81%, to $25.51 million as of December 31, 2018, compared to $23.88 million the prior year. In part, the increase reflects higher employee compensation expenses and data processing costs supporting new business levels. Other factors contributing to higher expenses were increased FDIC assessment costs based on rising deposits, higher occupancy costs, and costs related to investments in low income housing projects. All expense categories continued to be well controlled when compared to the prior year.
DIVIDEND
6,110 6,149
The Board of Directors has declared a quarterly dividend in the amount of $0.25 per share, payable January 31, 2019, to shareholders of record as of January 15, 2019. Also during the fourth quarter of 2018, and as previously announced, on October 9, Kish Bancorp affected a two-for-one stock split and announced a post-split increase in the quarterly dividend to $0.25 from $0.23 the previous quarter. On October 23, the up-listing of Kish Bancorp (KISB) shares from OTC pink sheets to OTCQX U.S. Premier platform was announced. This up-listing will provide greater access to information by prospective investors and enhanced liquidity and trading efficiency to buyers and sellers of KISB shares. The releases for each of these actions were posted to the Kish Bancorp investor relations website: ir.kishbancorp.com.
Sincerely,
William P. Hayes
Chairman, President and CEO
Regulatory stock Bank-owned life insurance Accrued interest and other assets TOTAL ASSETS
LIABILITIES: Noninterest-bearing deposits
15,422 15,438
10,978 10,747
$
850,504
$
$ 811,192
93,955
$ 85,526
Interest-bearing deposits 588,396 568,161
Total Deposits 682,351 653,687
Short-term borrowings
22,484 8,931
Other borrowings 78,025 85,932
Accrued interest and other liabilities
7,916 6,303
TOTAL LIABILITIES 790,776 754,853
STOCKHOLDERS' EQUITY:
Common stock, $0.50 par value; 4,000,000 shares authorized,
2,697,500 shares issued Additional paid-in capital Retained earnings
Accumulated other comprehensive income
Treasury stock, at cost (130,609 and 171,584 shares)
TOTAL STOCKHOLDERS' EQUITY
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY
1,349 674
3,486 3,071
59,421 56,291
(840) 426
(3,688) (4,123)
59,728 56,339
$ 850,504 $ 811,192
INTEREST AND DIVIDEND INCOME Interest and fees on loans:
CONSOLIDATED STATEMENT OF INCOME
(Unaudited; in thousands)
Taxable
Exempt from federal income tax Investment securities:
Taxable
Exempt from federal income tax Interest-bearing deposits with other institutions
Other dividend income
TOTAL INTEREST AND DIVIDEND
Twelve Months Ended
Dec. 31, 2018
Dec. 31, 2017
$ 27,895 $ 22,855
1,193 1,337
2,582 2,656
1,066 1,332
592 345
636 602
INCOME 33,964 29,127
INTEREST EXPENSE
Deposits
Short-term borrowings Other borrowings
5,764 3,865 36 23 2,407 2,138
TOTAL INTEREST EXPENSE 8,207 6,026
NET INTEREST INCOME 25,757 23,101
Provision for loan losses
NET INTEREST INCOME AFTER
1,015 600
PROVISION FOR LOAN LOSSES 24,742 22,501
NONINTEREST INCOME Service fees on deposit accounts Investment securities gains, net Gain on sale of loans, net
Earnings on Bank-owned life insurance Insurance commissions
Travel agency commissions Wealth management Benefit management Other
TOTAL NONINTEREST INCOME
NONINTEREST EXPENSE
1,691 1,614
(7) 101
858 867
421 430
1,225 1,128
311 377 Contact: Eugene Bodo 1,516 1,400 1-800-883-1212
474 0 950 608 7,439 6,525
Salaries and employee benefits 15,556 14,633
Occupancy and equipment
2,983 2,878
Data processing 2,294 2,089
Professional fees Advertising
Federal deposit insurance
243 315
266 252
390 237
Other 3,779 3,480
TOTAL NONINTEREST EXPENSE 25,511 23,884
INCOME BEFORE INCOME TAXES Income taxes
NET INCOME BEFORE
ADJUSTMENT
Adjustment due to revaluation of net deferred tax assets due to tax reform NET INCOME AFTER
ADJUSTMENT
6,670 5,142 641 585 6,029 4,557
0 417
$ 6,029 $ 4,140
SELECTED FINANCIAL HIGHLIGHTS
(Unaudited; in thousands, except for per share data)
Net Income | $ | 6,029 | $ | 4,557 |
Total Assets | $ | 850,504 | $ | 811,192 |
Loans Outstanding | $ | 637,082 | $ | 574,708 |
Total Deposits | $ | 682,351 | $ | 653,687 |
ROA (annual) | 0.72% | 0.59% | ||
ROE (annual) | 10.58% | 8.20% | ||
Earnings per Share* | $ | 2.36 | $ | 1.65 |
Dividends per Share* | $ | 0.94 | $ | 0.92 |
*2017 per share data have been adjusted to post stock split levels for comparability.
The highlights above are based on net income before the adjustment required by the enactment of the Tax Cuts and Jobs Act.
Starting in 2018, publicly traded companies are required to adopt FASB pronouncement ASU 2016-1, which requires unrealized gains or losses on equity securities to be included in net income, rather than other comprehensive income.
MARKET MAKERS
Boenning & Scattergood, Inc.
4 Tower Bridge, 200 Barr Harbor Drive, Suite 300 West Conshohocken, PA 19428-2979
Raymond James and Associates, Inc.
Contact: Anthony LanFranca 312-655-2961
222 South Riverside Plaza, 7th Floor Chicago, IL 60606
4255 East Main Street, Belleville, PA 17004 1-888-554-4748 |www.KishBank.com
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Kish Bancorp Inc. published this content on 15 January 2019 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 15 January 2019 19:43:00 UTC