9 "~. ., ~ A ' ..y ~, 'r; ,r Y; . ~~ '~ ~ a~~~ ~~— 1 ~ / •Y~~ ' ' - ~~ ~~ 1 ~ ~dfU 1~~ mn .; ~~=~~ i _ ,,~~Y ~ ~~,~ ,, . — — 7 t. ~~- (I j ,I I ~; ►.~~~t ~~ / ~ ~u — w ~, .'~ J ~r, i ~ . -. ~_ ~~ , _ '~ ~ , ~ : ~ ` ,-' Ke~tuc Y '~. Bancshares Inc. ASSETS $1,028,447 -------------------------------------------- $974, 684 ASSETS ($thousands) TANGIBLE BOOK VALUE/SHAR E 28.00 26.00 24.00 22.00 20.00 22.19 20.27 19.96 26.50 24.97 23.77 2011 2012 2013 2014 2015 2016 ANNUAL MEETING The annual meeting of Kentucky Bancshares, Inc. will be held Wednesday, May 17, 2017 at 11.00 a.m. in the Corporate Headquarters. INVESTOR INFORMATION Any individual may obtain a copy of the Corporation's 2016 Form 10-K Report by visiting our website at www,kybank.com or writing to Investor Relations at the Corporate Headquarters. 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. PER SHARE DATA ~~ o0 $2.87 $1.08 S2.ao Si.o4 $2.60 $1.00 $2.15 $0.96 $2.59 So.gz S2.os So.as 2Uib 2015 2014 2013 1U 11 2011 Fi --~~i ~;. - t ~ .~ ~ . •, ,~f ~r;.~, ~~~~~~_- .- • . ;n. . Diluted Earnings Per Share .Dividend Per Share ----s J ~ .~ ~~~ ~:~- NETINCOME $7,071 $8,569 ~ .: NET INCOME ($thousands) TO OUR SHAREHOLDERS The year of 2016 was certainly a very active and successful year for your company. We were able to attain not only record earnings of $8.6 million, a 25.4% increase over 2015, but also record earnings per share, on a diluted basis, of $2.87, This was a 19.6% improvement over our previous year-end. Our assets totaled $1,03 billion as of December 31, 2016; again, another record high for your company, While we are pleased with these results, we must remain focused on the future. Our goal is to have a strategy of disciplined and profitable growth, and as we undertake that strategy for 2017, we would like to highlight some of our efforts. • We are currently investing in our Clark County market by building a new branch which will include a more efficient design. This will allow us to serve more customers while also providing for more growth. We expect the new branch to be open mid-2017, • We recently updated our suite of business checking products to provide an emphasis on electronic services and enhanced security features. We anticipate offering "Positive Pay" by mid-2017, which is a service that protects business customers from check and electronic transactional fraud. • We just introduced CardValet, which is a fraud management "app° for smart phones. This allows our personal and business customers, through their own initiative, more control over their Kentucky Bank cards. • We recently announced the sale of one of our branches in Clark County to anon-bank real estate developer, This branch building was larger than we needed, resulting in unused space and higher maintenance costs. Through this transaction, we have recognized apre-tax gain of approximately $1.2 million, which will allow us to reinvest in the Bank to continue to pursue strategic growth opportunities. Over the past few years, we have expanded our geographic footprint and enhanced our market penetration, in spite of increasing regulatory burden and rising business costs. Those successes would not be possible without the great team we have at Kentucky Bank and the opportunities to provide financial services in the communities that we serve. We remain optimistic about our ability to overcome the persistent challenges in our industry, and look forward to continuing to grow with our communities. As always, we appreciate your support, Louis Prichard President and Chief Executive Officer SHARE PRICE AND VOLUME (November 2016 -February 2017) i2,000 10,000 8,000 6,000 ,000 ~,u~~ I ~ ?~ 1 , . ~ J I ,1 _ — 1'~~~~\1~~~~~~\~~ ~"~~1~\~~~~~~~\~~1'~~~~\1~~~~~\~~~`L~~~\~~~~~~\~~~'L~~~\1~ 1~~~\1~ p"~~1~\~~ O"`~~~\~~ ~~~~\1~ Q~`~~1\~~~.~~~\1~ ~'L~1~\~~p`L~~~\1~ 11.~~~\1~ O O ~ Daily Volume ~ Closing Share Price TOTAL NET LOANS (thousands) TOTAL DEPOSITS (thousands) ~oo,000 600,000 500,000 400,000 - 300,000 - 200,000 - 100,000 - 9.8 % - - - - ~ - - - - Compound Annual _Growth Rate ------ - - - -- — -- - - - _ - - - - - - 900,000 800,000 - - - Compound Annual Growth Rate 700,000 - - 8.1 % - - - - - - - - — - - - - - - - - 600,000 - ---------- 500,000 400,000 300,000 200,000 - 100,000 - - - - - - - -- - - -- - - - - - - - - - - - - - - S3~ $36 $35 $34 $33 $32 $31 $30 $29 s28 $27 - - - - - - - - - - - - - 2011 2012 2013 2014 2015 ?016 2011 2012 2013 2014 2015 2016 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 Chief Executive Officer Hinkle Holding Company, LLC BETTY J. LONG President, Retired First Federal Savings of Cynthiana TED MCCLAIN President, Hopewell Insurance Company WES OMOHUNDRO Controller, The Allen Company, Inc. EDWIN S. SAUNTER President, Saunier North American, Inc. ROBERT G. THOMPSON Farmer, Thoroughbred Breeder Snowhill Farm WOODFORD S. VAN METER, MD Professor of Ophthalmology University of Kentucky BOURBON PROCTOR W. BLAIR Partner, Ludwig, Blair & Bush, PLLC LONNIE CONLEY Co-Owner, Paris Machining ALLYSON EADS Co-Owner, Eads Hardware THEODORE KUSTER Chief Executive Officer Hillside Farm/Shawhan Place, LLC BODES SHACKELFORD PARRISH President, The Clay Ward Agency, LLC BOBBY L. SHIPLEY Owner, Frames on Main Gallery CENTRAL KENTUCKY WILLIAM MILES ARVIN, JR. Attorney, Law Offices of William Miles Arvin Fayette County MICHAEL R. BISHOP, DMD Michael R. Bishop, DMD &Associates, PSC Jessamine County LOREN CARL U.S. Marshal, Retired Woodford County GEORGE HOSKINS Managing Director, Wimbledon Farm Fayette County JAMES KAY Businessman, Farmer Woodford County JOHN G. ROCHE John G. Roche Opticians, Inc. Clark County KEVIN E. WELSH Alltech, Winchester Operations Manager Clark County MICHAEL I. WILLIAMS President, CEO, Blue Grass Energy Jessamine County EAST KENTUCKY (ROWAN / ELLIOTT) ROCKY ADKINS Minority Floor Leatler, House of Representatives TRENT HAMILTON Owner, Hamilton, Inc, G. R. (SONNY)10NES 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, Stutlent Life Morehead State University HARRIS( K,BRUCEF Branch Camp Maysville Com Licking Valley BRAD MAR Farmer, Forme JOEL TECH Chief Executive GERRY WH Appraiser, BroE 1/ ' t ~~►1 KEITH DANIEL Owner, KDA Office Furniture MARK GENTRY President &CEO, Precision Tube, Inc. CHRIS HORNSBY Owner &Agency Manager Madison County Farm Bureau AMANDA MARCUM Realtor, Berkshire Hathaway HomeServices Foster, Realtors DEBRA NEAL Interim President, C00 &CFO Former Madison Bank MAR( BOBBINS Madison County Attorney SCOTT ANDREW BROWN Lead Pastor, Grace Christian Church GUS BYNUM, MD Family Physician, Retired MIKE HOCKENSMITH Owner and President The Hockensmith Agency, Inc. KATY PRATHER Realtor, Keller Williams Bluegrass Realty WILLIAM (CHIP) RICHARDSON, MD Ophthalmologist, Georgetown Eye Care •~ t~ ,` ,~,~,r. ~__.. ' ~ ~'~. ~~ w1 ,~ 78 f~i n \I i ~:. ... _ z.:~. ~.._~.~ - --_: SENIOR MANAGEMENT LOUIS PRICHARD President and Chief Executive Officer NORMAN 1. FRYMAN Executive Vice President, Chief Credit Officer JAMES BRADEN Senior Vice President, Chief Administrative Officer BRENDA BRAGONIER Senior Vice President Director of Marketing, Customer Service Center CAROLCASKEY 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 CHRIS GORLEY Senior Vice President, Director of Operations WILLIAM H. HOUGH Senior Vice President, Director of Sales and Service ACCOUNTING GREGORY I.DAWSON Senior Vice President, Chief Financial Officer BRENDA BERRY Assistant Vice President, Senior Accountant BRANDON GILLIAM Vice President, Controller 1ANICE HASH Assistant Vice President Senior Accountant/Purchasing Agent COMMERCIAL LENDING DARKEN 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 BEN FRYMAN Vice President, Commercial Lender CHRIS JACKSON Vice President, Small Business Adminstrator Guarantor Officer MARA MAYBRY Vice President, Commercial Lender SHAWNA MCWILLIAMS Vice President, Commercial Lender CREDIT ADMINISTRATION NORMAN J. FRYMAN Executive Vice President, Chief Credit Officer CONNIE FOLEY Administrative Assistant/Consumer Lender LISA HIGHLEY Vice President, Director of Mortgage Lending ANDREW BIDDLE Senior Software Administrator 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 BECKY LYONS Mortgage Servicing Manager JOSH TUCKER Senior Software Administrator 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 OPERATIONS CHRIS GORLEY Senior Vice President, Director of Operations KAREN ANDERSON Assistant Vice President Exception Item and Data Management Officer MELINDA BIDDLE Assistant Vice President, Bank Support Specialist DIXIE FITE Assistant Vice President, Quality Control Officer IRA Specialist ERIC HASH Assistant Vice President Electronic Banking Manager CATE MILBURN Fraud and Dispute Specialist CAROL NORTON Assistant Vice President Treasury Management Officer RISK MANAGEMENT JAMES BRADEN Senior Vice President, Chief Administrative Officer CYNTHIA CRISWELL Assistant Vice President Communit Reinvestment Act Officer Y Assistant Bank Secrecy Act Officer, Vendor Management SHERRY GRIFFITH Assistant Vice President Bank Secrecy Act/Security Officer LYDIA SOSBY Vice President, Compliance Officer JENNIFER STIVERS Vice President, Risk Manager WEALTH MANAGEMENT JAMES L. ELLIOTT SeniorvicePresident Director of Wealth Management ROD BROTH ERTON Vice President, Wealth Advisor MIKE ESTES Financial Consultant ,' _ ~_ ' ~uY r Y ~' ~I" ~ f~ =awl t~. .,~ ~~/'~ ~+~ j ~~ w "a ...T yrt1i~ - ~ ~yt - ' a .4 ~Y ~, ~~ ~ - ~~i,.~ r 'k ~I JAMES GRAY Financial Advisor JASON GRESHAM, CFP Vice President, Wealth Advisor CHRISTOPHER MENSER Financial Advisor CLARK NYBERG Director of Portfolio Management MELISSA RITCHIE Trust Operations Officer JEFF ROWLAND Vice President, Private Banker SELINA SHEPHERD, CTFA Assistant Vice President, Trust Officer ~ , ~ ~ WILLIAM H, HOUGH Senior Vice President Director of Sales and Service JEREMY BROWN Vice President, Branch Administration DARRYL M. TERRY Central Kentucky Regional President Clark, Fayette, Jessamine, and Woodford Counties BRANDON EASON Bourbon County Market President JOHN HAMILTON Madison County Market President ALLEN JOHNSON Harrison County Market President ALEX LYTTLE Jessamine County Market President SHERRY MATHIS East Kentucky Market President Elliott and Rowan Counties MARK SULSKI Scott County Market President -~ BOURBON REGION MADISON REGION BRANDON EASON Market President WALLIS BROOKS Assistant Vice President, Branch Manager KARIN BUCHANAN Assistant Vice President, Mortgage Lender CLARK REGION DARRYL M. TERRY Central Kentucky Regional President CHRISTOPHER J. LEMASTER Business Development Officer TERESA SHIMFESSEL Assistant Vice President Branch Manager/Consumer Lender FAYETTE REGION DARRYL M. TERRY Central Kentucky Regional President LINDA G. HELM Vice President, Mortgage Loan Originator HARRISON REGION ALLEN JOHNSON Market President FRED CAUDILL Assistant Vice President, Mortgage Lender JESSAMINE REGION DARRYL M. TERRY Central Kentucky Regional President ALEX LYTTLE Market President TEAGUE SIMS Assistant Vice President, Mortgage Lender 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 EAST KENTUCKY REGION (ROWAN / ELLIOTT) SHERRY MATHIS Market President GABE BROWN Branch Manager/Consumer Lender CONNIE INGRAM Assistant Vice President, Mortgage Lender SCOTT REGION MARK SULSKI Market President JOHN (JR) SCHORNICK Assistant Vice President, Mort a e Lender g g WOODFORD REGION DARRYL M. TERRY Central Kentucky Regional President JUSTIN CARROLL Market Manager, Business Development Officer ~' 0 DOING THINGS THE RIGHT WAY Call It Home has been our slogan for 23 years. It still holds true today! We provide a high level of customer service to establish and maintain long term relationships. Our consistent focus on the needs of our clients and the communities we call home, allows us to compete effectively, We build value for shareholders by providing relationship-based financial services to the people in the communities we serve, as well as the businesses in those same ten markets. WEALTH MANAGEMENT The strength of our Wealth Management team continues to grow, as does our client base. Whether our clients need an Investment Advisor, assistance in putting together an estate plan, or evaluating the value of a business, we will be there to offer advice and strategies. As it relates to those abilities, we will soon be offering a new "app" that will allow our clients the ability to aggregate and track their entire net worth electronically. We offer our clients a wide variety of products and services, along with methods for using our services. Our banking, technology, lending, and wealth management products and services are designed to meet the financial needs of our customers, establish new relationships, and expand our business opportunities. We strive for opportunities to expand our relationships with our customers. TECHNOLOGY We are in a dynamic and intensely competitive industry, and information security in a digital age continues to be a major focus and priority for us. More and more consumers are embracing electronic payments and mobile banking. The continued adoption of digital and mobile solutions creates opportunities and aligns very well with Kentucky Bank's vision to provide the type of banking access that customers desire, while providing personal banking options for our clients, LENDING Commercial lending is an extremely competitive business. Our lenders assist our clients in structuring their loans in the most advantageous way. We offer commercial loans for virtually any type of business including SBA, Agricultural, Commercial, and Real Estate loans. Our commercial team of 9 lenders has over 130 collective years of experience, which offers us a unique ability to understand the business needs of our clients. MORTGAGE Kentucky Bank is a leading provider of mortgage loans in our communities. Providing home loans to the families in our communities is an important service to our markets. In 2016, we originated a record 568 mortgages, which is a 16%increase over 2015, resulting in more than $89 million in mortgage loans. We hope to continue a strong mortgage business, as the housing market and interests rates may be influencing factors in future mortgage growth. Kentuckians Call It Home with a home loan from Kentucky Bank. NEW DESIGN OF BRANCH BANKING We are changing with the times. When the new Colby Roatl office in Winchester opens, we think customers will enjoy the new, exciting, friendly, bright look, Rather than having the more traditional teller windows, the branch will have four concierge style stations. While utilizing this structure, customers will have greater access to our representatives. As important as the physical layout will be, our people will be going through a very thorough and rigorous educational process to ensure that we will be able not only to meet but exceed customer expectations. Of course, customers can still conduct all the usual transactions they are accustomed to at the branch, but with new innovative touches. To a greater extent, customers are utilizing online banking, mobile devices, and ATMs to complete their everyday transactions. However, we know that branches will continue to remain essential to serving our customers. We encourage you to visit our new branch when it is completed this summer. _e~ ~_r ~~ r~ ~~ ~~~~~ ~~ ~~~ ~~~ ~ ~' ~r~...... 5-Star Rating Bauer Financial i i O.. We celebrate our employees with our recognition as a "Best Place to Work in Kentucky" our 6th year inarow, ~ y• •,' ~ ~ yti•~ t - ~ '. ~ ~ ~ ,!~' ~ ~, 1 ,, PHOTOS 0 BOBBY SHIPLEY- FRAMES ON MAIN GALLERY(front cover, inside back cover, 6, 7), LEE THOMAS (pp. 2,4), HOLLI GIBBON (p. 4), AMY SWORD (pp.1, 5) Kentucky ~1"Bancshares, Inc. 001CSN288E PO Box 157 ~ Paris, KY 40362-0157 ~ (800) 467-1939 ~ www.kybank.com