The Bank of Kentucky Financial Corporation Announces Second Quarter Earnings

The Bank of Kentucky Financial Corporation Announces Second Quarter Earnings

CRESTVIEW HILLS, Ky., July 18, 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
second quarter ended June 30, 2013. For the second quarter, the Company
reported an increase in net income of 1% as compared to the same period in
2012.

A summary of the Company's results follows:

Second Quarter ended June 30,        2013       2012       Change
Net income                           $4,485,000 $4,424,000 1%
Earnings per common share, basic     $0.60      $0.59      2%
Earnings per common share, diluted   $0.59      $0.59      0%
                                                        
Six Months ended June 30,            2013       2012       Change
Net income                           $8,575,000 $8,939,000 (4)%
Net income per common share, basic   $1.15      $1. 20    (4)%
Net income per common share, diluted $1.13      $1 .19    (5)%

Robert W. Zapp, President & CEO, commented on the financial results: "Our
second quarter finished strong as we maintained forward progress in our core
businesses, even as we continue to experience margin compression and a
sluggish economic recovery that has kept loan growth to a minimum. However, I
am encouraged to see increased activity with respect to small business and
corporate borrowing and I anticipate this trend to remain positive along with
improved credit metrics." Zapp added, "We continue to deepen client
relationships by cross-selling investments, mortgage loans, treasury
management and card products. Revenue in these areas experienced double-digit
growth in the second quarter compared to 2012, contributing to our increase in
earnings. In addition, we continue to improve and modify our approach to
retail banking, internet banking, mobile banking and how we serve our
customers. As a result, we experienced an increase in overall service charge
revenue, have become more efficient, and continue to invest in new
technologies, maintaining our high level of customer service, and addressing
the growing regulatory demands all banks are facing today. I am pleased with
our second quarter performance as we look to build on this momentum for the
second half of the year." 

Driving the increase in net income in the second quarter of 2013 was a
$487,000 (9%) increase in non-interest income, which offset a $339,000 (2%)
decrease in net interest income as compared to the second quarter of 2012.
Contributing to the increase in non-interest income were service charges on
deposits, gains on the sale of real estate loans, trust fee income and
bankcard revenue.The decrease in net interest income was the result of the
compression on the net interest margin. The compression of the net interest
margin is the result of the historically low interest rate environment, where
the cost of funds are close to a floor and the yield on earning assets still
has room to decline.

Non-interest income increased 9% ($487,000) in the second quarter of 2013, as
compared to the same period in 2012, while non-interest expense increased 1%
($138,000) from the same period last year.Contributing to the increase in
non-interest income was a $340,000 or 15% increase in service charges on
deposits, a $156,000 or 22% increase in trust fee income, a $92,000 or 10%
increase in bankcard transaction revenue and a $83,000 or 14% increase in
gains on the sale of real estate loans which were offset by $268,000 higher
losses on other real estate owned. Contributing to the increase in
non-interest expense was $264,000 or 5% increase in the salaries and benefits
expense.

Net interest income decreased $339,000, or 2% in the second quarter of 2013,
as compared to the same period in 2012. The net interest margin, on a tax
equivalent basis, decreased 19 basis points from 3.65% in the second quarter
of 2012 to 3.46% in the second quarter of 2013.As discussed above, the
decrease in the net interest income and the compression of the net interest
margin was the result of the yield on earning assets falling faster than the
cost of interest bearing liabilities.The yield on earning assets decreased 31
basis points from 4.06% in the second quarter of 2012 to 3.75% in the second
quarter of 2013, while the cost of interest bearing liabilities only decreased
15 basis points from .51% to .36% in the same period.The decrease in the
interest margin was partially offset with an increase in earning assets of $42
million, or 3% on average from the second quarter of 2012.On a tax equivalent
basis, the effect of the reduction in the net interest income as a result of
rate was a negative $1,101,000, which was partially offset by an $748,000
positive effect on net interest income as a result of the growth in earning
assets.

The provision for loan losses decreased by $100,000 (6%) in the second quarter
of 2013, as compared to the same period in 2012.Contributing to this decrease
were lower levels of charge-offs as compared to the second quarter of
2012.The Company's annualized net charge-offs to average loans decreased
from .61% in the second quarter of 2012 to .54% in the second quarter of 2013
while non-performing loans as a percentage of total loans were 1.60% as of
June 30, 2013, as compared to 1.44% as of June 30, 2012.The Company recorded
$1,591,000 in net charge-offs in the second quarter of 2013 as compared to
$1,716,000 in the second quarter of 2012.On a sequential basis, the provision
for loan losses of $1,600,000 in the second quarter of 2013 was $400,000 lower
than theprovision in the first quarter of 2013, while non-performing loans
decreased from $21.8 million (1.84% of total loans) at March 31, 2013 to $18.9
million (1.60% of total loans) at June 30, 2013.Net charge-offs on a
sequential basis decreased from $1,927,000 (.66% of loans) in the first
quarter of 2013 to $1,591,000 (.54% of loans) in the second quarter of
2013.The majority of the loans charged off in the first quarter of 2013 were
reserved for in prior quarters.The reserve for impaired loans was $4,361,000
at June 30, 2013, which was $3,155,000 lower than the $7,516,000 reserve at
June 30, 2012.As a result of the lower impaired loan reserves and lower
levels of adversely classified loans, the Allowance for Loan Losses (ALL) has
decreased from 1.60% of loans at the end of the second quarter of 2012 to
1.40% of loans at the end of the second quarter of 2013.On a sequential basis
the ALL was 1.40% at the end of both the first and second quarter of 2013.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.

The Company's non-performing assets as a percentage of total assets were 1.38%
as of June 30, 2013, as compared to 1.32% as of June 30, 2012.While
non-performing loans increased $2,485,000 from June 2012 to June 2013, other
real estate owned decreased $743,000 in the same time period.These
properties are recorded at their estimated net realizable value with the
difference between this value and the loan balance being recorded as a
charge-off at the time of foreclosure.

Total assets were $1.766 billion at the end of the second quarter of 2013,
which was $62 million or 4% higher than the same date a year ago. Total loans
increased $42 million (4%) and were funded by an increase in deposits of $50
million, or 3%.Total equity increased $5.8 million from the same date in
2012.In September 2012, the Company's Board of Directors voted to change from
a semi-annual cash dividend to a quarterly cash dividend, commencing with the
fourth quarter of 2012. This resulted in cash dividends declared increasing
from $.00 in the second quarter of 2012 to $.17 in the same period of 2013. On
a year to date basis, cash dividends increased from $.30 in 2012 to $.34 in
2013.

The Bank of Kentucky Financial Corporation
Selected Consolidated Financial Data
(Dollars in thousands, except per share data)
                                                                
                     Second Quarter             Six months ended June 30,
                      Comparison                  Comparison
Income Statement Data 6/30/13   6/30/12   % Chg   6/30/13   6/30/12   % Chg
Interest income       $ 14,880 $ 15,661 (5)%    $ 29,746 $ 31,349 (5)%
Interest expense      1,172    1,614    (27)%   2,455    3,458     (29)%
Net interest income   13,708    14,047    (2)%    27,291    27,891    (2)%
                                                                
Provision for loan    1,600   1,700    (6)%    3,600    3,500    3%
losses
Net interest income
after provision for   12,108    12,347    (2)%    23,691    24,391    (3)%
loan losses
Non interest income   5,840     5,353     9%      11,702    10,959    7%
Noninterest expense  11,665   11,527   1%      23,434   22,869   2%
Net income before     6,283     6,173     2%      11,959    12,481    (4)%
income taxes
Provision for income  1,798    1,749    3%      3,384    3,542    (4)%
taxes
Net income            $ 4,485  $ 4,424  1%      $ 8,575  $ 8,939  (4)%
Per Common Share Data                                            
Diluted earnings per  0.59      0.59      0%      1.13      1.19      (5)%
common share
Cash dividends        0.17      0.00      0%     0.34      0.30      13%
declared
Earnings Performance                                             
Data
Return on common      10.48%    10.99%    (51)bps 10.07%    11.24%    (117)bps
equity
Return on assets      1.00%     1.03%     (3)bps  .96%      1.03%     (7)bps
Net interest margin   3.38%     3.57%     (19)bps 3.35%     3.53%     (18)bps
                                                                


The Bank of Kentucky Financial Corporation
Selected Consolidated Financial Data
(Dollars in thousands, except per share data)
                                                           
                                                           
Balance Sheet Data                                          
                                              June 30, 2013 December 31, 2012
Assets:                                                     
Cash and cash equivalents                      $80,941      $151,832
Investments                                    384,653       381,537
Loans held for sale                            9,909         16,324
Total loans, gross                             1,185,449     1,195,409
Allowance for loan losses                      (16,650)      (16,568)
Premises and equipment, net                    22,560        22,494
Goodwill and acquisition intangibles, net      24,169        24,485
Other assets and accrued interest receivable   74,859       68,591
Total assets                                   $ 1,765,890   $ 1,844,104
                                                           
Liabilities & Shareholders' Equity                          
Total deposits                                 $1,504,829   $ 1,570,007
Short-term borrowings                          26,934        41,408
Notes payable                                  50,702        48,715
Accrued interest payable and other liabilities 13,196       13,534
Total liabilities                              1,595,661     1,673,664
Common stockholders' equity                    170,229      170,440
Total liabilities and shareholders' equity     $ 1,765,890  $ 1,844,104
                                                           

                                      


                      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 )
                      Three Months ended June 30, Three Months ended June 30,
                       2013                        2012
                       Average     Interest       Average     Interest 
                      outstanding earned/  Yield/ outstanding earned/  Yield/
                       balance     paid     rate   balance     paid     rate
                                               
Interest-earning                                                   
assets:
Loans receivable       $1,190,590  $13,390  4.51%  $1,136,894  $13,948  4.93%
(1)(2)
Securities (2)         387,526     1,725    1.79   375,245     1,961    2.10
Other interest-earning 46,886  78    0.67   70,648   79    0.45
assets
                                                                  
Total interest-earning 1,625,002   15,193  3.75  1,582,787   15,988  4.06
assets
                                                                  
Non-interest-earning   165,041                  147,788            
assets
Total assets           $1,790,043                $1,730,575          
                                                                  
Interest-bearing                                                   
liabilities:
Transaction accounts   882,084     355      0.16   813,312     425      0.21
Time deposits          333,774     579      0.70   381,387     923      0.97
Borrowings             74,927    238    1.27   75,789    266    1.41
Total interest-bearing 1,290,785   1,172    0.36  1,270,488  1,614    0.51
liabilities
                                                                  
Non-interest-bearing   327,665                  298,125            
liabilities
                                                                  
Total liabilities      1,618,450                 1,568,613           
                                                                  
Shareholders' equity   171,593                  161,962            
                                                                  
Total liabilities and  $1,790,043                $1,730,575          
shareholders' equity
                                                                  
Net interest income               $14,021                   $14,374  
Interest rate spread                      3.39%                     3.55%
Net interest margin
(net interest income
as a percent of                           3.46%                     3.65%
average
interest-earning
assets)
                                                                  
(1)Includes non-accrual loans.
(2)Income presented on a tax equivalent basis using a 35.00%tax rate in 2013
and 2012. The tax equivalent adjustment was $313,000 and $327,000 in 2013 and
2012, 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 )
                      Six Months ended June       Six Months ended June 30,
                       30,2013                     2012
                       Average     Interest       Average     Interest 
                      outstanding earned/  Yield/ outstanding earned/  Yield/
                       balance     paid     rate   balance     paid     rate
                                               
Interest-earning                                                   
assets:
Loans receivable       $1,192,612  $26,785  4.53%  $1,135,131  $27,906  4.94%
(1)(2)
Securities (2)         381,979     3,404    1.80   374,636     3,921    2.10
Other interest-earning 66,390   174   0.53   79,622   171   0.43
assets
                                                                  
Total interest-earning 1,640,981  30,363  3.73  1,589,389  31,998  4.05
assets
                                                                  
Non-interest-earning   159,819                  148,483            
assets
Total assets           $1,800,800                $1,737,872          
                                                                  
Interest-bearing                                                   
liabilities:
Transaction accounts   887,317     754      0.17   817,477     895      0.22
Time deposits          342,714     1,224    0.72   392,243     2,019    1.04
Borrowings             75,149    477     1.28   78,293    544     1.40
Total interest-bearing 1,305,180   2,455   0.38  1,288,013  3,458    0.54
liabilities
                                                                  
Non-interest-bearing   323,975                  289,867            
liabilities
                                                                  
Total liabilities      1,629,155                 1,577,880           
                                                                  
Shareholders' equity   171,645                  159,992            
                                                                  
Total liabilities and  $1,800,800                $1,737,872          
shareholders' equity
                                                                  
Net interest income               $27,908                   $28,540  
Interest rate spread                      3.35%                     3.51%
Net interest margin
(net interest income                                                   
as a percent of                                                    
average                                     3.43%                       3.61%
interest-earning
assets)
________________________
(1)Includes non-accrual loans.
(2)Income presented on a tax equivalent basis using a 35.00% tax rate in 2013
and 2012. The tax equivalent adjustment was $617,000 and $649,000 in 2013 and
2012, respectively.


                                                                
The Bank of Kentucky Financial Corporation
Selected Consolidated Financial Data
(Dollars in thousands, except per share data)
                                                                
                            Five-Quarter Comparison
                                                                
Income Statement Data        6/30/13   3/31/13   12/31/12  9/30/12   6/30/12
Net interest income          $ 13,708 $ 13,583 $ 14,332 $ 13,962 $ 14,047
Provision for loan losses    1,600    2,000    1,300    2,200    1,700
                                                                
Net interest income after    12,108    11,583   13,032    11,762    12,347
provision for loan losses
Service charges and fees     2,581     2,131     2,322     2,325     2,241
Gain on sale of real estate  672       539       694       917       589
loans
Gain on sale of securities   --        274       --        --        (4)
Trust fee income             850       852       749       710       694
Bankcard transaction revenue 1,044     957       971       940       952
Gains/(losses) on other real (308)     (4)       (226)     (67)      (40)
estate owned
Other non-interest income    1,001 1,113   1,091 1,036 921
Total non-interest income    5,840    5,862    5,601    5,861    5,353
Salaries and employee        5,988     5,913     5,869     5,909     5,724
benefits expense
Occupancy and equipment      1,315     1,306     1,341     1,316     1,315
expense
Data processing expense      537       550       618       505       533
State bank taxes             615       575       554       579       579
Amortization of intangible   157       159       183       187       196
assets
FDIC Insurance               335       295       296       267       295
Other non-interest expenses  2,718    2,971    2,809    3,036    2,885
Total non-interest expense   11,665   11,769   11,670   11,799   11,527
Net income before income tax 6,283     5,676     6,963     5,824     6,173
expense
Income tax expense           1,798    1,586    1,953    1,628    1,749
Net income                   $4,485   $4,090   $5,010   $4,196   $4,424
Per Common Share Data                                            
Diluted earnings per common  0.59      0.54      0.66      0.56      0.59
share
Cash dividends declared      0.17      0.17      0.17      0.32      0.00
Weighted average common                                          
shares outstanding
Basic                        7,491,619 7,478,901 7,470,146 7,465,926 7,465,434
Diluted                      7,564,179 7,583,544 7,557,777 7,554,271 7,542,372
Earnings Performance Data                                        
Return on common equity      10.48%    9.66%     11.79%    10.05%    10.99%
Return on assets             1.00%     0.92%     1.12%     0.98%     1.03%
Net interest margin          3.38%     3.32%     3.52%     3.56%     3.57%
Net interest margin (tax     3.46%     3.40%     3.63%     3.64%     3.65%
equivalent)
                                                                
                                                                
                             

The Bank of Kentucky Financial Corporation                                   
Selected Consolidated Financial Data
(Dollars in thousands, except per share data)

                   Five-Quarter Comparison
Balance Sheet Data  6/30/13     3/31/13      12/31/12    9/30/12   6/30/12
Assets:                                                        
Cash and cash       $80,941    $138,561   $151,832   $81,950  $66,719
equivalents
Investments         384,653     376,704      381,537     361,108   376,454
Loans held for sale 9,909       14,038       16,324      19,314    13,983
Total loans         1,185,449   1,187,742    1,195,409   1,159,074 1,143,733
Allowance for loan  (16,650)    (16,641)     (16,568)    (16,585)  (18,346)
losses
Premises and        22,560      22,559       22,494      22,714    22,923
equipment, net
Goodwill and
acquisition         24,169      24,325       24,485      24,668    24,856
intangibles, net
Other assets &
accrued interest    74,859     73,223      68,591     69,711   73,543
receivable
Total assets        $ 1,765,890 $ 1,820,511  $ 1,844,104 $         $
                                                         1,721,954 1,703,865
Liabilities &
Shareholders'                                                  
Equity:
Total deposits      $          $ 1,558,933 $          $        $
                    1,504,829                1,570,007   1,471,246 1,455,328
Short-term          26,934      28,309       41,408      22,142    24,373
borrowings
Notes payable       50,702      48,709       48,715      48,721    48,727
Accrued interest
payable & other     13,196     11,604      13,534     12,224   10,987
liabilities
Total liabilities   1,595,661   1,647,555    1,673,664   1,554,333 1,539,415
Shareholders'       170,229    172,956     170,440    167,621  164,450
equity
Total liabilities   $                       $          $        $
and shareholders'   1,765,890   $ 1,820,511 1,844,104   1,721,954 1,703,865
equity
Common shares       7,498,014   7,482,776    7,470,236   7,467,396 7,465,841
outstanding
Average Balance                                                
Sheet Data
Average investments $387,526    $376,370     $373,008    $369,707  $375,245
Average other       46,886      86,110       71,139      32,781    70,648
earning assets
Average loans       1,190,590   1,194,657    1,175,879   1,158,072 1,136,894
Average earning     1,625,002   1,657,137    1,620,026   1,560,560 1,582,787
assets
Average assets      1,790,043   1,811,675    1,772,766   1,707,843 1,730,575
Average deposits    1,529,159   1,551,953    1,518,557   1,459,593 1,482,222
Average interest    1,215,858   1,244,360    1,207,238   1,165,673 1,194,699
bearing deposits
Average interest
bearing transaction 882,084     892,609      848,302     796,346   813,312
deposits
Average interest
bearing time        333,774     351,751      358,936     369,327   381,387
deposits
Average borrowings  74,927      75,375       72,193      70,445    75,789
Average interest    1,290,785   1,319,735    1,279,431   1,236,118 1,270,488
bearing liabilities
Average common      171,593     171,698      169,031     166,036   161,962
stockholders equity
                                                              
                                                              

The Bank of Kentucky Financial Corporation
Selected Consolidated Financial Data
(Dollars in thousands, except per share data)
                                                                  
                                     Five-Quarter Comparison
                                     
Asset Quality Data                    6/30/13 3/31/13 12/31/12 9/30/12 6/30/12
Allowance for loan losses to total    1.40%   1.40%   1.39%    1.43%   1.60%
loans
Allowance for loan losses to          88%    76%    86%     112%   111%
non-performing loans
Nonaccrual loans                      $18,934 $21,771 $19,244  $14,813 $16,265
Loans – 90 days past due & still      11     36     39     105    195
accruing
Total non-performing loans            18,945 21,807 19,283  14,918 16,460
OREO and repossessed assets           5,207  5,454  5,396   6,192  5,950
Total non-performing assets           24,152 27,261 24,679  21,110 22,410
Restructured loans-accruing           7,204   7,499   6,046    12,270  15,388
Non-performing loans to total loans   1.60%   1.84%   1.61%    1.29%   1.44%
Non-performing assets to total assets 1.38%   1.50%   1.34%    1.23%   1.32%
Annualized charge-offs to average     0.54%   0.66%   0.45%    1.39%   0.61%
loans
Net charge-offs                       $1,591  $1,927  $1,317   $3,961  $1,716
                                                                  
Other Information
Total assets under management (in     747     744    714      715     701
millions)
Full-time equivalent employees        361     364   365     370     376

About BKFC

BKFC, a bank holding company with assets of approximately $1.766 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 market.

CONTACT: For more information contact:
         Martin Gerrety
         Executive Vice President and CFO
         (859) 372-5169
         mgerrety@bankofky.com
 
Press spacebar to pause and continue. Press esc to stop.