The Bank of Kentucky Financial Corporation Announces Fourth Quarter Earnings

The Bank of Kentucky Financial Corporation Announces Fourth Quarter Earnings

Net Income Available to Common Shareholders of $5,010,000 Up 6% for the Fourth
Quarter

CRESTVIEW HILLS, Ky., Jan. 17, 2013 (GLOBE NEWSWIRE) -- The Bank of Kentucky
Financial Corporation (the "Company") (Nasdaq:BKYF), the holding company of
The Bank of Kentucky, Inc. (the "Bank"), today reported its earnings for the
fourth quarter and year ended December 31, 2012. For the fourth quarter and
the twelve months of 2012, the Company reported an increase in diluted
earnings per common share of 5% and 16% respectively as compared to the same
periods in 2011.

A summary of the Company's results follows:

Fourth Quarter ended December 31,           2012        2011        Change
Net income                                  $5,010,000  $4,909,000  2%
Net income available to common shareholders $5,010,000  $4,714,000  6%
Earnings per common share, basic            $0.67       $0.63       6%
Earnings per common share, diluted          $0.66       $0.63       5%
                                                                 
Twelve Months ended December 31,            2012        2011        Change
Net income                                  $18,145,000 $16,489,000 10%
Net income available to common shareholders $18,145,000 $15,517,000 17%
Net income per common share, basic          $2.43       $2.09       16%
Net income per common share, diluted        $2.41       $2.07       16%

Robert Zapp, President & CEO stated, "We continued to build on a strong year,
highlighted by a fourth quarter in which earnings topped $5 million.Total
loans increased by $65 million for the year, which was the highest organic
loan growth experienced since the financial crisis began in 2008.Mortgage
loan volume remained robust in the fourth quarter, capping off the best year
since 2003. Adding new customer relationships, both on the business and
consumer side, fueled core account growth, which added more than $70 million
in net deposits for the year.Investment revenue from our Wealth Advisory
Group continues to experience double-digit growth, and we are pleased with the
success of our newest branch in Cincinnati, which celebrates its one year
anniversary this month. Overall, I am pleased to report our financial
performance for the fourth quarter and the full year.We continue to review
opportunities to expand through acquisition, while striving to grow
organically, investing in our core lines of business."

The increase in earnings available to common shareholders in the fourth
quarter of 2012 was primarily attributable to a $900,000 (41%) decrease in the
provision for loan losses and a $195,000 (100%) decrease in preferred stock
dividends and amortization as compared to the fourth quarter of 2011.Also
contributing to increased earnings was a 2% increase in total revenue (net
interest income and non interest income), which was offset with a 12% increase
in noninterest expense. The decrease in the provision for loan losses
reflected lower levels of charge-offs, lower levels of impaired loan reserves
and lower levels of adversely classified loans as compared to December 2011.
The reduction of preferred stock dividends and amortization reflects the
November 2011 repurchase of the final $17 million of the Company's Fixed Rate
Cumulative Perpetual Preferred Stock, Series A, previously issued to the U.S.
Department of the Treasury as part of the TARP CPP program.

Net interest income increased $245,000 in the fourth quarter of 2012, as
compared to the same period in 2011. The net interest margin, on a tax
equivalent basis was 3.63% in the fourth quarter of 2012 which equaled the net
interest margin in the fourth quarter of 2011.Contributing to the increase
in net interest income was a $247,000 prepayment fee received in the
quarter.This prepayment fee also contributed 6 basis points to the net
interest margin for the quarter.

The provision for loan losses decreased by $900,000 (41%) in the fourth
quarter of 2012, as compared to the same period in 2011.Contributing to this
decrease were lower levels of charge-offs and lower levels of impaired loan
reserves as compared to December 2011.The Company's annualized net
charge-offs to average loans decreased from .65% in the fourth quarter of 2011
to .45% in the fourth quarter of 2012.The Company recorded $1,317,000 in net
charge-offs in the fourth quarter of 2012 as compared to $1,853,000 in the
fourth quarter of 2011.Net charge-offs in the fourth quarter of 2012 were
reduced by a $961,000 recovery on a loan charged-off in the third quarter of
2012.The majority of the loans charged off in the fourth quarter of 2012 were
reserved for in prior quarters.The reserve for impaired loans was $6,265,000
at December 31, 2012, which was $1,178,000 lower than the $7,443,000 reserve
at December 31, 2011.As a result of the lower impaired loan reserves, lower
charge-offs and lower levels of adversely classified loans, the Allowance for
Loan Losses (ALL) has decreased from 1.62% of loans at the end of the fourth
quarter of 2011 to 1.39% of loans at the end of the fourth quarter of 2012.
The adequacy of the ALL is analyzed quarterly and adjusted as necessary to
maintain appropriate reserves for probable incurred losses in the Bank's loan
portfolio.On a sequential basis, the provision for loan losses of $1,300,000
in the fourth quarter of 2012 was $900,000 lower than the provision in the
third quarter of 2012. Net charge-offs on a sequential basis decreased from
$3,961,000 (1.39% of loans) in the third quarter of 2012 to $1,371,000 (.45%
of loans) in the fourth quarter of 2012.Contributing to the decrease in the
provision and charge-offs on a sequential basis was the $961,000 recovery
discussed previously.

The Company's non-performing assets as a percentage of total assets were 1.34%
as of December 31, 2012, as compared to 1.25% as of December 31, 2011.The
Company's non-performing loans as a percentage of total loans were 1.61% as of
December 31, 2012, as compared to 1.40% as of December 31,
2011.Non-performing loans increased $3,413,000 from December 2011 to December
2012 and other real estate owned decreased $448,000 in the same time
period.On a sequential quarterly basis, non-performing loans increased
$4,365,000 while other real estate owned decreased $796,000 from September
2012.Contributing to the increase in non-performing loans from December of
2011 and September of 2012 was one commercial relationship which added
approximately $7,000,000 to non-accruing loans in the fourth quarter of
2012.This relationship was reported as an accruing restructured loan in
September of 2012 and the preceding four quarters.

Non-interest income increased 1% ($71,000) in the fourth quarter of 2012, as
compared to the same period in 2011, while non-interest expense increased 12%
($1,267,000) from the same period last year.Contributing to the increase in
non-interest income was an $114,000 or a 20% increase in the gains on sale of
real estate loans and a $124,000 or 20% increase in trust fee income, which
were offset by an increase of $141,000 or 166% increase in losses on other
real estate owned. Contributing to the increase in non-interest expense was an
$825,000 (16%) increase in salaries and benefits expense.The increase in
salaries and benefits included $285,000 in higher accruals for bonuses and
$182,000 in higher accruals for pension plan expense.The added bonus accrual
reflects the end of the TARP restriction on bonus pay for executives, while
the increased pension plan expense was the result of a lower discount rate
applied to future benefits.

Total assets were $1.844 billion at the end of the fourth quarter of 2012,
which was $99 million or 6% higher than the same date a year ago. Total loans
increased $65 million (6%), investments in securities increased $10 million
(3%) and cash and cash equivalents increased $16 million (12%) from December
of 2011. The balance sheet increases were funded by an increase in deposits
of $71 million, or 5% and an increase in short-term borrowings of $12 million
or 41%. Total equity increased $14 million or 9% from the same date in
2011.


The Bank of Kentucky Financial Corporation
Selected Consolidated Financial Data
(Dollars in thousands, except per share data)
                                                                 
                          Fourth Quarter           Year ended December 31,
                           Comparison               Comparison
Income Statement Data      12/31/12 12/31/11 % Chg   12/31/12 12/31/11 % Chg
Interest income            $15,742  $16,096  (2)%    $62,524  $64,798  (4)%
Interest expense           1,410    2,009    (30)%   6,339    9,260    (32)%
Net interest income        14,332   14,087   2%      56,185   55,538   1%
                                                                 
Provision for loan losses  1,300    2,200    (41)%   7,000    10,750   (35)%
Net interest income after  13,032   11,887   10%     49,185   44,788   10%
provision for loan losses
Non interest income        5,601    5,530    1%      22,421   20,724   8%
Noninterest expense       11,670   10,403   12%     46,338   42,114   10%
Net income before income   6,963    7,014    (1)%    25,268   23,398   8%
taxes
Provision for income taxes 1,953    2,105    (7)%    7,123    6,909    3%
Net income                 5,010    4,909    2%      18,145   16,489   10%
Preferred stock dividends  --      195      (100)%  --      972      (100)%
& amortization
Net income available to    $5,010   $4,714   6%      $18,145  $15,517  17%
common shareholders
Per Common Share Data                                             
Diluted earnings per       0.66     0.63     5%      2.41     2.07     16%
common share
Cash dividends declared    0.17     0.00     100%    0.79     0.56     41%
Earnings Performance Data                                         
Return on common equity    11.79%   12.21%   (42)bps 11.08%   10.41%   47bps
Return on assets           1.12%    1.13%    (1)bps  1.05%    1.00%    5bps
Net interest margin        3.52%    3.55%    (3)bps  3.53%    3.65%    (12)bps


The Bank of Kentucky Financial Corporation
Selected Consolidated Financial Data
(Dollars in thousands, except per share data)
                                                           
Balance Sheet Data                                          
                                          December 31, 2012 December 31, 2011
Assets:                                                     
Cash and cash equivalents                  $151,832          $135,964
Investments                                381,537           371,737
Loans held for sale                        16,324            8,920
Total loans, gross                         1,195,409         1,129,954
Allowance for loan losses                  (16,568)          (18,288)
Premises and equipment, net                22,494            22,827
Goodwill and acquisition intangibles, net  24,485            25,251
Other assets and accrued interest          68,591            68,359
receivable
Total assets                               $1,844,104        $1,744,724
                                                           
Liabilities & Shareholders' Equity                          
Total deposits                             $1,570,007        $1,498,821
Short-term borrowings                      41,408            29,300
Notes payable                              48,715            48,739
Accrued interest payable and other         13,534            11,294
liabilities
Total liabilities                          1,673,664         1,588,154
Common stockholders' equity                170,440           156,570
Total liabilities and shareholders' equity $1,844,104        $1,744,724


The Bank of Kentucky Financial Corporation
Selected Consolidated Financial Data
(Dollars in thousands, except per share data)
                                                                
                    Average Balance Sheet Rates (presented on a tax
                     equivalent basis)
                    Quarter ended December 31,  Quarter ended December 31,
                     2012                       2011
                     Average     Interest Yield/ Average     Interest Yield/
                    outstanding earned/  rate   outstanding earned/  rate
                     balance     paid            balance     paid
                                                                
Interest-earning                                                 
assets:
Loans receivable     $1,175,879  $14,365  4.86%  $1,139,767  $14,493  5.04%
(1)(2)
Securities (2)       373,008     1,728    1.84   360,265     1,848    2.02
Other
interest-earning     71,139      92       0.51   76,258      81       0.42
assets
Total
interest-earning     1,620,026   16,185   3.97   1,576,290   16,422   4.13
assets
Non-interest-earning 152,740                   141,526             
assets
Total assets         $1,772,766                $1,717,816          
Interest-bearing                                                 
liabilities:
Transaction accounts 848,302     432      0.20   783,753     528      0.27
Time deposits        358,936     720      0.80   406,963     1,217    1.19
Borrowings           72,193      258      1.42   77,832      264      1.35
Total
interest-bearing     1,279,431   1,410    0.44   1,268,548   2,009    0.63
liabilities
Non-interest-bearing 324,304                   286,340             
liabilities
Total liabilities    1,603,735                 1,554,888           
Shareholders' equity 169,031                   162,928             
Total liabilities
and shareholders'    $1,772,766                $1,717,816          
equity
Net interest income             $14,775                   $14,413  
Interest rate spread                    3.53%                     3.50%
Net interest margin
(net interest income
as a percent of                         3.63%                     3.63%
average
interest-earning
assets)
                                                                
(1) Includes                                                    
non-accrual loans.
(2) Income presented on a tax equivalent basis using a 35.00% tax rate in
2012 and 2011. The tax equivalent adjustment was $443,000 and $326,000 in          
2012 and 2011, respectively.


The Bank of Kentucky Financial Corporation
Selected Consolidated Financial Data
(Dollars in thousands, except per share data)
                                                                       
                           Average Balance Sheet Rates (presented on a tax
                            equivalent basis)
                           Year ended December 31,     Year ended December 31,
                            2012                        2011
                            Average     Interest Yield/ Average     Interest Yield/
                           outstanding earned/  rate   outstanding earned/  rate
                            balance     paid            balance     paid
                                                                       
Interest-earning assets:                                                
Loans receivable (1)(2)     $1,151,139  $56,196  4.88%  $1,123,625  $58,379  5.20%
Securities (2)              373,029     7,412    1.99   326,681     7,302    2.24
Other interest-earning      65,716      334      0.51   71,085      372      0.52
assets
Total interest-earning     1,589,884   63,942   4.02   1,521,391   66,053   4.34
assets
Non-interest-earning assets 143,694                   134,667             
Total assets                $1,733,578                $1,656,058          
Interest-bearing                                                        
liabilities:
Transaction accounts        819,915     1,552    0.21   736,323     2,403    0.33
Time deposits               378,111     3,728    0.93   420,026     5,835    1.39
Borrowings                  74,786      1,059    1.42   74,147      1,022    1.38
Total interest-bearing      1,272,812   6,339    0.50   1,230,496   9,260    0.75
liabilities
Non-interest-bearing        297,003                   262,245             
liabilities
Total liabilities           1,569,815                 1,492,741           
Shareholders' equity        163,763                   163,317             
Total liabilities and       $1,733,578                $1,656,058          
shareholders' equity
Net interest income                    $57,603                   $56,793  
Interest rate spread                           3.52%                     3.59%
Net interest margin (net interest
income as a percent of average                  3.62%                     3.73%
interest-earning assets)
___________________________                                             
(1) Includes non-accrual    
loans.
(2) Income presented on a tax equivalent basis using a 35.00% tax rate in 2012 and
2011. The tax equivalent adjustment was $1,418,000 and $1,255,000 in 2012 and 2011,  .
respectively.


The Bank of Kentucky Financial Corporation
Selected Consolidated Financial Data
(Dollars in thousands, except per share data)
                            Five-Quarter Comparison                
Income Statement Data        12/31/12  9/30/12   6/30/12   3/31/12   12/31/11
Net interest income          $14,332   $13,962   $14,047   $13,844   $14,087
Provision for loan losses    1,300     2,200     1,700     1,800     2,200
                                                                
Net interest income after    13,032    11,762    12,347    12,044    11,887
provision for loan losses
Service charges and fees     2,322     2,325     2,241     2,201     2,390
Gain on sale of real estate  694       917       589       586       580
loans
Gain/(loss) on sale of       --        --        (4)       207       --
securities
Trust fee income             749       710       694       689       625
Bankcard transaction revenue 971       940       952       902       885
Gains/(losses) on other real (226)     (67)      (40)      (94)      (85)
estate owned
Other non-interest income    1,091     1,036     921       1,115     1,135
Total non-interest income    5,601     5,861     5,353     5,606     5,530
Salaries and employee        5,869     5,909     5,724     5,451     5,044
benefits expense
Occupancy and equipment      1,341     1,316     1,315     1,277     1,192
expense
Data processing expense      618       505       533       535       522
State bank taxes             554       579       579       559       415
Amortization of intangible   183       187       196       200       220
assets
FDIC Insurance               296       267       295       305       305
Other non-interest expenses  2,809     3,036     2,885     3,015     2,705
Total non-interest expense   11,670    11,799    11,527    11,342    10,403
Net income before income tax 6,963     5,824     6,173     6,308     7,014
expense
Income tax expense           1,953     1,628     1,749     1,793     2,105
Net income                   5,010     4,196     4,424     4,515     4,909
Preferred stock dividends &  --       --       --       --       195
amortization
Net income available to      $5,010    $4,196    $4,424    $4,515    $4,714
common shareholders
Per Common Share Data                                            
Diluted earnings per common  0.66      0.56      0.59      0.60      0.63
share
Cash dividends declared      0.17      0.32      0.00      0.30      0.00
Weighted average common                                          
shares outstanding
Basic                       7,470,146 7,465,926 7,465,434 7,448,604 7,432,995
Diluted                     7,557,777 7,554,271 7,542,372 7,520,062 7,465,606
Earnings Performance Data                                        
Return on common equity      11.79%    10.05%    10.99%    11.49%    12.21%
Return on assets             1.12%     0.98%     1.03%     1.04%     1.13%
Net interest margin          3.52%     3.56%     3.57%     3.49%     3.55%
Net interest margin (tax     3.63%     3.64%     3.65%     3.57%     3.63%
equivalent)


The Bank of Kentucky Financial Corporation
Selected Consolidated Financial Data
(Dollars in thousands, except per share data)
                       Five-Quarter Comparison
                                                               
Balance Sheet Data      12/31/12   9/30/12    6/30/12    3/31/12    12/31/11
Assets:                                                         
Cash and cash           $151,832   $81,950    $66,719    $133,153   $135,964
equivalents
Investments             381,537    361,108    376,454    374,336    371,737
Loans held for sale     16,324     19,314     13,983     10,863     8,920
Total loans             1,195,409  1,159,074  1,143,733  1,130,200  1,129,954
Allowance for loan      (16,568)   (16,585)   (18,346)   (18,362)   (18,288)
losses
Premises and equipment, 22,494     22,714     22,923     23,159     22,827
net
Goodwill and
acquisition             24,485     24,668     24,856     25,051     25,251
intangibles, net
Other assets & accrued  68,591     69,711     73,543     74,381     68,359
interest receivable
Total assets            $1,844,104 $1,721,954 $1,703,865 $1,752,781 $1,744,724
Liabilities &                                                   
Shareholders' Equity
Total deposits          $1,570,007 $1,471,246 $1,455,328 $1,505,709 $1,498,821
Short-term borrowings   41,408     22,142     24,373     29,334     29,300
Notes payable           48,715     48,721     48,727     48,733     48,739
Accrued interest
payable & other         13,534     12,224     10,987     9,531      11,294
liabilities
Total liabilities       1,673,664  1,554,333  1,539,415  1,593,307  1,588,154
Common stockholders'    170,440    167,621    164,450    159,474    156,570
equity
Preferred stock         --        --        --        --        --
Shareholders' equity    170,440    167,621    164,450    159,474    156,570
Total liabilities and   $1,844,104 $1,721,954 $1,703,865 $1,752,781 $1,744,724
shareholders' equity
Common shares           7,470,146  7,467,396  7,465,841  7,464,811  7,432,995
outstanding
Average Balance Sheet                                           
Data
Average investments     $373,008   $369,707   $375,245   $374,027   $360,265
Average other earning   71,139     32,781     70,648     88,597     76,258
assets
Average loans           1,175,879  1,158,072  1,136,894  1,133,367  1,139,767
Average earning assets  1,620,026  1,560,560  1,582,787  1,595,991  1,576,290
Average assets          1,772,766  1,707,843  1,730,575  1,745,169  1,717,816
Average deposits        1,518,557  1,459,593  1,482,222  1,494,332  1,464,550
Average interest        1,207,238  1,165,673  1,194,699  1,224,743  1,190,716
bearing deposits
Average interest
bearing transaction     848,302    796,346    813,312    821,643    783,753
deposits
Average interest        358,936    369,327    381,387    403,100    406,963
bearing time deposits
Average borrowings      72,193     70,445     75,789     80,798     77,832
Average interest        1,279,431  1,236,118  1,270,488  1,305,541  1,268,548
bearing liabilities
Average common          169,031    166,036    161,962    158,022    153,175
stockholders equity
Average preferred stock --         --         --         --         9,753


The Bank of Kentucky Financial Corporation
Selected Consolidated Financial Data
(Dollars in thousands, except per share data)
                                                                 
                                 Five-Quarter Comparison
                                                                 
Asset Quality Data                12/31/12 9/30/12  6/30/12  3/31/12  12/31/11
Allowance for loan losses to      1.39%    1.43%    1.60%    1.62%    1.62%
total loans
Allowance for loan losses to      86%      112%     111%     105%     115%
non-performing loans
Nonaccrual loans                  $19,244 $14,813 $16,265 $16,779 $15,651
Loans – 90 days past due & still  39       105      195      680      219
accruing
Total non-performing loans        19,283   14,918   16,460   17,459   15,870
OREO and repossessed assets       5,396    6,192    5,950    6,328    5,844
Total non-performing assets       24,679   21,110   22,410   23,787   21,714
Restructured loans-accruing       6,046    12,270   15,388   15,492   13,306
Non-performing loans to total     1.61%    1.29%    1.44%    1.54%    1.40%
loans
Non-performing assets to total    1.34%    1.23%    1.32%    1.36%    1.25%
assets
Annualized charge-offs to average 0.45%    1.39%    0.61%    0.62%    0.65%
loans
Net charge-offs                   $1,317   $3,961   $1,716   $1,726   $1,853
                                                                 
Other Information                                                 
Total assets under management (in 714      715      701      702      667
millions)
Full-time equivalent employees    365      370      376      359      356

About BKFC

BKFC, a bank holding company with assets of approximately $1.844 billion,
offers banking and related financial services to both individuals and business
customers.BKFC operates thirty-three branch locations and fifty-six ATMs in
the Northern Kentucky/Cincinnati market.

CONTACT: Martin Gerrety
         Executive Vice President and CFO
         (859) 372-5169
         mgerrety@bankofky.com
 
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