Pikeville National Corp. of Kentucky is looking forward to 1995, in part so it can forget about 1994.
The Pikeville-based company, located in the eastern corner of the state, had a rough year, punctuated by a 45% decline in net income from the previous year.
"This was a year of extraordinarily bad events for us," said Terry N. Coleman, Pikeville's chief executive. "I was very happy to see Jan. 1. It was nightmarish."
The poor showing resulted primarily from three events: a $2.7 million loss on derivatives, $1.6 million in loan losses, and $945,000 in restructuring costs.
Despite the bad year, the first in recent memory for the $1.3 billion- asset bank, analysts are upbeat about its prospects for 1995.
"A lot of these things were anticipated," said Christopher L. Hargrove, vice president at Professional Bank Services in Louisville. "I think the only surprise was the derivative problem. But I would say they've gotten their system in order and are on the hunt again. I'm bullish on them for '95."
Alan F. Morel, vice president of Hilliard & Lyons in Louisville, expressed similar confidence in the bank. He pointed to the bank's market dominance in eastern Kentucky, its new automation system, and its management as reasons for his optimism.
"They just have a really strong group of managers," Mr. Morel said. "They're aggressive in their requirements but conservative in their execution. They look for opportunities but don't risk everything for the big buck."
The bank's trust company apparently lapsed in this last area when it bought $5 million of derivatives shortly after the subsidiary was created two years ago. Rising interest rates gutted the value of these investments by about 50%.
In order to protect its customers, Pikeville National bought the securities from the trust company at full value, thereby absorbing the loss.
Excluding the losses from securities and loans, fourth quarter earnings increased by 7% to $3 million and noninterest income jumped by 19% from the equivalent quarter in 1993, Mr. Coleman said.
Pikeville National is in the process of completing three acquisitions and is poised for further growth, he said.
