● ●●●●●● ●●●●● ●●●●●● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●●●●● ● ● ● ● ● ●●●●●● ● ● ● ● ● ●●●●● ●●●●●●●●●●●● ● ● ● A N N U A L R E P O R T “Growth is never by chance, it is the result of forces working together.” – James Cash Penney Bancshares, Inc. ● ● ●●●●●● ●●●●● ●●●●●● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ASSETS ($ thousands) 2011 $659,453 ● 2012 $701,010 ● ● ●●●●● ● ● ● ●●●●●● ● ● ● ● ● ● ●●●●●●●●●●●● ●●●●● ANNUAL MEETING The annual meeting of Kentucky Bancshares, Inc. will be held Thursday, May 26, 2016 at 11:00 a.m. in the Corporate Headquarters. INVESTOR INFORMATION Any individual may obtain a copy of the Corporation’s 2015 Form 10-K Report by visiting our website at www.kybank.com or writing to Investor Relations at the Corporate Headquarters. ACQUIRING STOCK - KTYB Kentucky Bancshares, Inc. common stock is available through your broker or Kentucky Bank’s Wealth Management Department. INVESTOR RELATIONS For more information about your investment in Kentucky Bancshares, Inc., please visit www.kybank.com. Here you will find company highlights, dividend history, SEC filings, historical graphs, and other helpful information related to our company and your stock. In addition, you can sign up for email alerts of daily stock updates and public announcements. ● ● ● $6,832 2015 NET INCOME $7,071 $7,008 $5,822 2012 2013 NET INCOME ($ thousands) 2014 $5,687 2011 TECHNOLOGY GROWTH (from 2014 to 2015) CARD SWIPES MOBILE USERS BILL PAY USERS eSTATEMENT ACCOUNTS ONLINE USERS 10% 20% 30% 40% 50% ● ● ●●●●● ● ● ● 2014 $855,209 ● 2013 $770,579 ● ● ● ● ●●●●●● ● ●●●●● ● ●●●●●●●●●●●● ● ● ● ● ● ● ● ● 2015 $974,684 ● ● ● ● ● ●●●●● ●●●●●● ●●●●●● ● PER SHARE DATA ● ● ● PER SHARE EARNINGS (Assuming Dilution) PER SHARE DIVIDEND ● ● LOAN GROWTH (from 2014 to 2015) 20%h 13%h $2.50 $2.00 $1.50 $1.00 $0.50 2011 2012 2013 2014 2015 DEPOSIT GROWTH (from 2014 to 2015) 16% TIME DEPOSITS $250,000 & over ($8.3 Million) 15% OTHER INTEREST BEARING ($63.3 Million) 18% NON-INTEREST BEARING ($32.5 Million) 4%h TOTAL - $104.1 Million (16%) Commercial Personal Real Estate TOTAL - $85.8 Million (16%) TO OUR SHAREHOLDERS We are pleased to report another record year for Kentucky Bancshares, Inc. with nearly $975 million in total assets as of December 31, 2015, reflecting an increase from 2014 of over $119 million. Further, we anticipate surpassing $1 billion in total assets in 2016! This balance sheet growth was driven by the acquisition of Madison Bank in 2015 but also includes our multi-year organic growth strategies coming to fruition. Over the past few years we have expanded our geographic footprint by adding branches, enhanced our market penetration by adding seasoned bankers, and improved our delivery channels by updating our suite of product offerings. These efforts have resulted in increased loans, reduced non-performing assets, and improved profitability. In addition to the balance sheet growth and expansion, we have concentrated on making internal and external improvements. Throughout the year we added exceptional talent to our team of bankers, making our current team even stronger. In November of 2015 we announced our new PaySmart Checking Plan, which enhances our suite of mobile and digital delivery solutions and allows us to make fully compliant consumer loans in just minutes. In January of 2016 we rolled out a new website design which is responsive to all screen sizes, is easier to navigate, and improves our customers’ online experience. It was certainly with mixed feelings that we announced the retirement of Kentucky Bank and Holding Company director Theodore R. “Ted” Kuster, as of the end of December. Ted joined the board of Peoples Deposit Bank in 1979, continuing as a director through our mergers and acquisitions to the present day Kentucky Bank. With his valuable advice and guidance, our service area grew from a single county to ten, and grew in size to just under $1 billion in assets. Ted has always been a constant and enthusiastic promoter of Kentucky Bank, and we are pleased that he will continue his service as a member of our Bourbon County Advisory Board of Directors for the Bank. Wes Omohundro, who is a member of on our Fayette County Advisory Board of Directors, has been named to the Kentucky Bank and Kentucky Bancshares, Inc. Board of Directors. Omohundro is currently the Controller for The Allen Company, Inc. in Winchester. Prior to that he worked as a Senior Audit Manager for eleven years for an accounting firm. He has served on the board of the Kentucky Society of CPA’s and as a Trustee on its Educational Foundation. Wes will add strength and diversity to our Board of Directors. His commitment to our company, knowledge of the markets, and financial experience will help keep us responsive to the best interests and financial needs of our customers. We are pleased with the results of 2015 and are excited about the prospects for the future. One of our driving principles is to enhance shareholder value by disciplined growth on both sides of the balance sheet resulting in stable asset quality, manageable interest rate risk, “We anticipate surpassing $1 billion in total assets in 2016!” and sustainable earnings. We intend to continue pursuing profitable loan and deposit growth through effective relationship management, targeted solicitation efforts, new product offerings, and enhancements to our delivery distribution system. We will also be focused on growing noninterest income and expanding our diversity of revenue sources to meet the financial needs and exceed the expectations of our customers. As we pursue our strategies for 2016, the banking industry continues to be faced with new and complex regulatory requirements and enhanced supervisory oversight. These factors are exerting downward pressure on revenues and upward pressure on required capital levels and the cost of doing business. Despite these challenges, we will continue to explore opportunities for profitable growth and efficiency improvements to accomplish what is in the long term best interest of our shareholders, customers, and employees. As always, we appreciate your support. Louis Prichard President and Chief Executive Officer BOARD OF DIRECTORS BUCKNER WOODFORD IV Chairman, Kentucky Bank Kentucky Bancshares, Inc. LOUIS PRICHARD President and Chief Executive Officer Kentucky Bank, Kentucky Bancshares, Inc. B. PROCTOR CAUDILL, JR. Special Projects Manager, Kentucky Bank HENRY HINKLE President, Hinkle Contracting Company, LLC THEODORE KUSTER Chief Executive Officer Hillside Farm/Shawhan Place, LLC BETTY J. LONG President, Retired First Federal Savings of Cynthiana TED MCCLAIN President, Hopewell Insurance Company EDWIN S. SAUNIER President, Saunier North American, Inc. ROBERT G. THOMPSON Farmer, Thoroughbred Breeder, Snowhill Farm WOODFORD S. VAN METER, MD Professor of Ophthalmology, University of Kentucky REGIONAL DIRECTORS BOURBON PROCTOR W. BLAIR Partner, Ludwig, Blair & Bush, PLLC LONNIE CONLEY Co-Owner, Paris Machining ALLYSON EADS Co-Owner, Eads Hardware JESSAMINE MICHAEL R. BISHOP, DMD Michael R. Bishop, DMD and Associates, PSC TOM BUFORD Kentucky State Senator EVA MCDANIEL Jessamine County Clerk, Retired RODES SHACKELFORD PARRISH President, The Clay Ward Agency, LLC JONAH MITCHELL President, Jonah Mitchell Real Estate and Auction BOBBY L. SHIFLET Owner, Frames on Main Gallery MICHAEL I. WILLIAMS President, CEO, Blue Grass Energy CLARK MARY BETH HENDRICKS Owner, Beech Springs Garden Barn and Beech Springs Farm Market DONALD PACE Executive Director, Retired Central Kentucky Educational Co-op University of Kentucky JOHN G. ROCHE John G. Roche Opticians, Inc. EDWIN S. SAUNIER President, Saunier North American, Inc. KEVIN E. WELSH Alltech, Winchester Operations Manager FAYETTE WILLIAM MILES ARVIN, JR. Attorney, Law Offices of William Miles Arvin ROSE MARY STAMLER DOW President and Secretary, Signal Investments, Inc. GEORGE HOSKINS Managing Director, Wimbledon Farm GREG LADD Founder, Cross Gate Gallery WES OMOHUNDRO Controller, The Allen Company, Inc. HARRISON K. BRUCE FLORENCE Branch Campus Director, Retired Maysville Community and Technical College Licking Valley Campus and Kiser Center BETTY J. LONG President, Retired First Federal Savings of Cynthiana BRAD MARSHALL Farmer, Former Owner Marshall’s Tractor Supply JOEL TECHAU Chief Executive Officer, Techau, Inc. GERRY WHALEN Appraiser, Broker, Whalen and Company SCOTT GUS BYNUM, MD Family Physician, Retired MIKE HOCKENSMITH Owner and President, The Hockensmith Agency, Inc. KATY PRATHER Realtor, Keller Williams Bluegrass Realty RYAN QUARLES Kentucky House of Representatives, Attorney, Farmer WOODFORD LOREN CARL U.S. Marshall, Retired TOMMY HAGGARD Chief Executive Officer Bluegrass Community Hospital JAMES KAY Businessman, Farmer TRICIA N. KITTINGER Circuit Clerk, Woodford County, Retired CAROLYN MCDONALD Realtor, Rector Hayden Realtors EAST KENTUCKY ROCKY ADKINS Majority Floor Leader, House of Representatives TRENT HAMILTON Owner, Hamilton, Inc. G. R. (SONNY) JONES Vice President, Chief Financial Officer St. Claire Regional Medical Center WILLIAM H. REDWINE Assistant Vice President, Auxiliary Services Morehead State University AARON S. ROBERTS Owner, Best One Tire MADONNA WEATHERS Vice President, Student Life Morehead State University LEADERSHIP TEAM SENIOR MANAGEMENT LOUIS PRICHARD President and Chief Executive Officer NORMAN J. FRYMAN Executive Vice President, Chief Credit Officer CREDIT ADMINISTRATION NORMAN J. FRYMAN Executive Vice President, Chief Credit Officer CONNIE FOLEY Administrative Assistant/Consumer Lender JAMES BRADEN Senior Vice President, Chief Administrative Officer LISA HIGHLEY Vice President, Director of Mortgage Lending BRENDA BRAGONIER Senior Vice President Director of Marketing, Customer Service Center, and Treasury Management CAROL CASKEY Senior Vice President, Director of Human Resources GREGORY J. DAWSON Senior Vice President, Chief Financial Officer JAMES L. ELLIOTT Senior Vice President Director of Wealth Management Market President, Fayette County CHRIS GORLEY Senior Vice President, Director of Operations WILLIAM H. HOUGH Senior Vice President, Director of Sales and Service ACCOUNTING GREGORY J. DAWSON Senior Vice President, Chief Financial Officer BRENDA BERRY Assistant Vice President, Senior Accountant BRANDON GILLIAM Assistant Vice President, Controller JANICE HASH Assistant Vice President Senior Accountant/Purchasing Agent COMMERCIAL LENDING DARREN HENRY Vice President, Director of Commercial Lending BENJAMIN CAUDILL Vice President, Commercial Lender SUSAN DEAN Vice President, Commercial Lender KEN DEVASHER Vice President, Commercial Lender SHANE FOLEY Vice President, Commercial Lender MATTHEW JOEFREDA Vice President, Commercial Lender CATHERINE HILL Vice President, Collections Manager SONYA KINCADE Assistant Vice President Loan Data Entry/Escrow Supervisor SHAWN KING Vice President, Loan Operations Director KATHY KUEHNEMAN Direct Endorsement Underwriter JEFF LEHMANN Assistant Vice President Mortgage Servicing Manager KAY WILSON Direct Endorsement Underwriter HUMAN RESOURCES CAROL CASKEY Senior Vice President, Director of Human Resources DEANNA FOLEY Human Resources Supervisor CAROL RASKIN Assistant Vice President Director of Education and Development MARKETING BRENDA BRAGONIER Senior Vice President Director of Marketing, Customer Service Center, and Treasury Management CAROL NORTON Assistant Vice President Treasury Management Officer OPERATIONS CHRIS GORLEY Senior Vice President, Director of Operations KAREN ANDERSON Assistant Vice President Exception Item and Data Management Officer ANDREW BIDDLE Senior Software Administrator MELINDA BIDDLE Assistant Vice President, Bank Support Specialist DIXIE FITE Assistant Vice President, Quality Control Officer ERIC HASH Assistant Vice President Product Development Manager CATE MILBURN Manager of Electronic Services RISK MANAGEMENT JAMES BRADEN Senior Vice President, Chief Administrative Officer CYNTHIA CRISWELL Community Reinvestment Act Officer Assistant Bank Secrecy Act Officer SHERRY GRIFFITH Assistant Vice President Bank Secrecy Act/Security Officer LYDIA SOSBY Vice President, Compliance Officer JENNIFER STIVERS Vice President, Audit Manager WEALTH MANAGEMENT JAMES L. ELLIOTT Senior Vice President Director of Wealth Management Market President, Fayette County MIKE ESTES Financial Advisor JAMES GRAY Financial Consultant JASON GRESHAM Vice President Business Development/Trust Officer CHRISTOPHER MENSER Financial Advisor CLARK NYBERG Vice President, Portfolio Manager MELISSA RITCHIE Certified Securities Operations Officer SELINA SHEPHERD Assistant Vice President Personal Trust Officer HARRISON REGION ALLEN JOHNSON Market President FRED CAUDILL Assistant Vice President Mortgage Lender JESSAMINE REGION BRANDON EASON Market President TEAGUE SIMS Assistant Vice President Mortgage Lender MADISON REGION JOHN HAMILTON Market President NICHOLE EADS-GOODSON Assistant Vice President Retail Manager/Consumer Lender DOUG EVERSOLE Assistant Vice President Mortgage Lender ALAN LUNSFORD Assistant Vice President Mortgage Lender SHAWNA MCWILLIAMS Business Banker ROWAN REGION JEREMY BROWN Market President GABE BROWN Branch Manager/Consumer Lender CONNIE INGRAM Assistant Vice President Mortgage Lender SCOTT REGION MARK SULSKI Market President TAMARA MAYBURY Assistant Vice President Business Banker JOHN (JR) SCHORNICK Assistant Vice President Mortgage Lender WOODFORD REGION DUNCAN GARDINER Market President JUSTIN CARROLL Assistant Vice President Small Business/Mortgage Lender REGIONS WILLIAM H. HOUGH Senior Vice President Director of Sales and Service BOURBON REGION NANCYE FIGHTMASTER Market President WALLIS BROOKS Assistant Vice President, Branch Manager BENSON FRYMAN Assistant Vice President Business Banker CLARK REGION DARRYL M. TERRY Market President CHRISTOPHER J. LEMASTER Assistant Vice President Small Business/Mortgage Lender TERESA SHIMFESSEL Assistant Vice President Branch Manager/Consumer Lender ELLIOTT REGION SHERRY MATHIS Market President FAYETTE REGION JAMES L. ELLIOTT Market President Senior Vice President Director of Wealth Management GLENDA FEATHERSTON Banking Officer, Branch Manager LINDA G. HELM Vice President, Mortgage Loan Originator JEFF ROWLAND Vice President Commercial Lender/Private Banker “We are proud of our recent accomplishments, driven to achieve more, and we look forward to delivering strong results in 2016 and beyond.” For the 5th conSecutive Year 5-Star rating Bauer Financial DOING WHAT WE DO BEST We are fortunate to have multiple paths available to us to create value for our shareholders and customers. The tributaries to Kentucky Bank began in 1851. We would like to think our ancestors would be proud of the decisions we have made and the business we have developed that have led us to this point. The culture of doing things the right way has always been a mantra for this company. Our core business continues to be quite strong as we remain determined to deliver Premier Customer Service for our customers. Our Wealth Management Department is one vital component of our business. Kentucky Bank specializes in delivering exceptional relationship based service, with a solid commitment to responsiveness and action. That assurance with respect to our wealth management, private banking, trust, and 165 Years of Doing Things the Right Way brokerage services resulted in a very strong year in 2015. Our wealth management offerings are quite robust, as demonstrated by our strong client approval rating. Developing a loan portfolio with the right balance of loans and risk is a goal that always has our highest attention. Learning from the economic lessons of the recent past, while being poised to take advantage of upcoming economic opportunities, is a path we plot carefully. We strive to be very competitive for loans with the right balance of risk and reward. In recent years we have grown considerably. We are very close to reaching a key milestone of $1 billion in assets. In July 2015, the acquisition of Madison Bank gave us a strong presence in Madison County. The $116 million dollar addition added three new Kentucky Bank offices in Richmond. With the completion of the transaction, the total assets of Kentucky Bancshares, Inc. were approximately $975 million. Developing and offering the technology that our customers need is an important vehicle for delivering Premier Customer Service. Our website, www.kybank. com, had over a million visitors in 2015, which is more than a 24% increase over 2014. Approximately one- fourth of our visitors use mobile devices to access their banking information. We introduced our redesigned website in 2016, making our site responsive to any electronic device. Our site will continue to bring you information about new products and services as we roll them out. As we enter our 165th year, we are in pursuit of a great number of opportunities. Our strategic plan calls for stronger relationships with our customers, a higher level of profitability, greater efficiency, and a particular focus on quality assets and wealth management growth. We will face our challenges head on and are putting the action plans in place to meet these goals. We believe that banking is a relationship and service business, versus a product business. This philosophy has led us to focus on meeting as many of our clients’ needs as possible. This results in a high number of services per client and strong relationships. Our successful growth will accrue primarily from deep relationships and high client satisfaction. These attributes provide both an expansion of relationships with existing clients and a successful referral business. We are proud of our recent accomplishments, driven to achieve more, and we look forward to delivering strong results in 2016 and beyond. PHOTOS COPYRIGHTED BOBBY SHIFLET - FRAMES ON MAIN GALLERY (pp. 2, 3, 8, 9) LEE THOMAS (inset p. 2) DOING WHAT WE DO BEST Bancshares, Inc. PO Box 157 | Paris, KY 40362-0157 | (800) 467-1939 | www.kybank.com