The Bank of Kentucky Financial Corporation Announces Record Earnings for the Third Quarter

The Bank of Kentucky Financial Corporation Announces Record Earnings for the
Third Quarter

Record Net Income of $5,415,000 for the Third Quarter, Up 29% From 2012

CRESTVIEW HILLS, Ky., Oct. 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
third quarter ended September 30, 2013. For the quarter, the Company reported
an increase in net income of 29% compared with the same period in 2012.

A summary of the Company's results follows:

Third Quarter ended September 30,    2013        2012        Change
Net income                           $5,415,000  $4,196,000  29%
Earnings per common share, basic     $0.72       $0.56       29%
Earnings per common share, diluted   $0.72       $0.56       29%
                                                          
Nine Months ended September 30,      2013        2012        Change
Net income                           $13,990,000 $13,135,000 7%
Net income per common share, basic   $1.87       $1. 76     6%
Net income per common share, diluted $1.85       $1 .74     6%

Robert W. Zapp, President & CEO, commented, "I am particularly pleased to
report on the company's third quarter results as The Bank achieved more than
one milestone. First and foremost, earnings for the quarter set a record by
surpassing $5.4 million, which was 29% higher compared with the same period
last year. Even in the midst of a significant slowdown in mortgage loan
originations due to the rate environment, we have been successful in other
lines of business and continue to focus on expense control and credit quality.
For example, the Wealth Advisory Group continued to contribute double-digit
revenue growth, credit metrics across the board maintained their positive
trends, and I applaud the efforts of employees throughout the company who have
kept expenses in check and have found ways to improve efficiency." Zapp added,
"the second milestone is also significant as we operate in the shadow of the
financial crisis and navigate through a slow moving economy. The Bank's total
loans outstanding finished the quarter strong and exceeded $1.2 billion for
the first time. Our team of lenders, business bankers, and branch managers are
working together every day to meet the borrowing and banking needs of the
community and we look forward to continued growth in the fourth quarter and
into 2014."

The increase in net income in the third quarter of 2013 was primarily due to a
$1,600,000 (73%) decrease in the provision for loan losses and a $195,000 (3%)
increase in non-interest income compared with the third quarter of 2012.
Contributing to the decrease in the provision for loan losses were lower
levels of charge-offs and lower levels of adversely classified loans compared
with September of 2012. Contributing to the increase in non-interest income
were service charges on deposits, trust fee income and bankcard revenue.

Non-interest income increased 3% ($195,000) in the third quarter of 2013,
compared with the same period in 2012, while non-interest expense decreased 1%
($80,000) from the same period last year. Contributing to the increase in
non-interest income was a $504,000 or 22% increase in service charges on
deposits, a $136,000 or 19% increase in trust fee income and a $72,000 or 8%
increase in bankcard transaction revenue, which was offset by a $635,000 or
69% decrease in gains on the sale of real estate loans. 

Net interest income remained relatively unchanged compared with the same
period in 2012, decreasing $40,000 in the third quarter of 2013. The net
interest margin, on a tax equivalent basis, decreased 14 basis points from
3.64% in the third quarter of 2012 to 3.50% in the third quarter of 2013.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 25
basis points from 4.02% in the third quarter of 2012 to 3.77% in the third
quarter of 2013, while the cost of interest bearing liabilities only decreased
12 basis points from .47% to .35% in the same period. The decrease in the
net interest margin was partially offset with an increase in earning assets of
$55 million, or 4% on average from the third quarter of 2012.On a tax
equivalent basis, the effect of the reduction in net interest income as a
result of rate was a negative $653,000, which was partially offset by a
$601,000 positive effect on net interest income as a result of the growth in
earning assets.

The provision for loan losses decreased by $1,600,000 (73%) in the third
quarter of 2013, compared with the same period in 2012.Contributing to this
decrease were lower levels of charge-offs compared with the third quarter of
2012. The Company's annualized net charge-offs to average loans decreased
from 1.39% in the third quarter of 2012 to .21% in the third quarter of 2013
while non-performing loans as a percentage of total loans were 1.37% as of
September 30, 2013, compared with 1.29% as of September 30, 2012. The
Company recorded $618,000 in net charge-offs in the third quarter of 2013
compared with $3,961,000 in the third quarter of 2012.On a sequential basis,
the provision for loan losses of $600,000 in the third quarter of 2013 was
$1,000,000 lower than theprovision in the second quarter of 2013, while
non-performing loans decreased from $18.9 million (1.60% of total loans) at
June 30, 2013 to $16.4 million (1.37% of total loans) at September 30,
2013.Net charge-offs on a sequential basis decreased from $1,591,000 (.54% of
loans) in the second quarter of 2013 to $618,000 (.21% of loans) in the third
quarter of 2013.As a result of improving credit metrics, the Allowance for
Loan Losses (ALL) has decreased from 1.43% of loans at the end of the third
quarter of 2012 to 1.38% of loans at the end of the third quarter of 2013.On
a sequential basis the ALL decreased from 1.40% at the end of the second
quarter of 2013 to 1.38% at the end of the third 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.

Total assets were $1.802 billion at the end of the third quarter of 2013,
which was $80 million or 5% higher than the same date a year ago. Total loans
increased $42 million (4%) and were funded by an increase in deposits of $58
million, or 4%.Total equity increased $7.6 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 decreasing
from $.32 per share in the third quarter of 2012 to $.17 per share in the same
period of 2013. The change in the dividend frequency also resulted in cash
dividends decreasing from $.62 per share in 2012 to $.51 per sharein 2013 on
a year to date basis.

The Bank of Kentucky Financial Corporation
Selected Consolidated Financial Data
(Dollars in thousands, except per share data)
                          Third Quarter          Nine months ended September
                           Comparison              30, Comparison
Income Statement Data      9/30/13 9/30/12 % Chg   9/30/13   9/30/12  % Chg
Interest income            $15,034 $15,433 (3)%    $44,780   $46,782  (4)%
Interest expense           1,112   1,471   (24)%   3,567     4,929    (28)%
Net interest income        13,922  13,962  (--)%   41,213    41,853   (2)%
Provision for loan losses 600     2,200   (73)%   4,200     5,700    (26)%
Net interest income after  13,322  11,762  13%     37,013    36,153   2%
provision for loan losses
                                                                
Non interest income        6,056   5,861   3%      17,758    16,820   6%
Noninterest expense       11,719  11,799  (1)%    35,153    34,668   1%
Net income before income   7,659   5,824   32%     19,618    18,305   7%
taxes
Provision for income taxes 2,244   1,628   38%     5,628     5,170    9%
Net income                 $5,415  $4,196  29%     $13,990   $13,135  7%
Per Common Share Data                                            
Diluted earnings per       0.72    0.56    29%     1.85      1.74     6%
common share
Cash dividends declared    0.17    0.32    (47)%   0.51      0.62     (18)%
Earnings Performance Data                                        
Return on common equity    12.44%  10.05%  239bps  10.87%    10.83%   4bps
Return on assets           1.21%   .98%    23bps   1.04%     1.02%    2bps
Net interest margin        3.42%   3.56%   (14)bps 3.38%     3.54%    (16)bps


The Bank of Kentucky Financial Corporation
Selected Consolidated Financial Data
(Dollars in thousands, except per share data)
Balance Sheet Data                                          
                                         September 30, 2013 December 31, 2012
Assets:                                                     
Cash and cash equivalents                 $102,448           $151,832
Investments                               389,179            381,537
Loans held for sale                       2,435              16,324
Total loans, gross                        1,201,193          1,195,409
Allowance for loan losses                 (16,632)           (16,568)
Premises and equipment, net               22,517             22,494
Goodwill and acquisition intangibles, net 24,018             24,485
Other assets and accrued interest         77,066             68,591
receivable
Total assets                              $1,802,224         $1,844,104
                                                           
Liabilities & Shareholders' Equity                          
Total deposits                            $1,529,505         $1,570,007
Short-term borrowings                     32,167             41,408
Notes payable                             50,695             48,715
Accrued interest payable and other        14,606             13,534
liabilities
Total liabilities                         1,626,973          1,673,664
Common stockholders' equity               175,251            170,440
Total liabilities and shareholders'       $1,802,224         $1,844,104
equity

                     
                     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 September Three Months ended
                     30,                          September 30,
                      2013                        2012
                      Average      Interest Yield/ Average     Interest Yield/
                     outstanding  earned/  rate   outstanding earned/  rate
                      balance      paid            balance     paid
                                                                  
Interest-earning                                                   
assets:
Loans receivable      $1,199,824   $13,442  4.44%  $1,158,072  $13,926  4.78%
(1)(2)
Securities (2)        386,644      1,835    1.88   369,707     1,763    1.90
Other
interest-earning      29,039       73       1.00   32,781      71       0.86
assets
                     1,615,507    15,350   3.77   1,560,560   15,760   4.02
Total
interest-earning                                                   
assets
                                                                  
Non-interest-earning  155,984                    147,283             
assets
Total assets          $1,771,491                 $1,707,843          
                                                                  
Interest-bearing                                                   
liabilities:
Transaction accounts  848,512      327      0.15   796,346     280      0.14
Time deposits         316,435      519      0.65   369,327     934      1.01
Borrowings            80,733       266      1.31   70,445      257      1.45
Total
interest-bearing      1,245,680    1,112    0.35   1,236,118   1,471    0.47
liabilities
Non-interest-bearing  353,071                    305,689             
liabilities
Total liabilities    1,598,751                  1,541,807           
                                                                  
Shareholders' equity  172,740                    166,036             
                                                                  
Total liabilities
and shareholders'     $1,771,491                 $1,707,843          
equity
Net interest income               $14,238                   $14,289  
Interest rate spread                      3.42%                     3.55%
Net interest margin
(net interest income
as a percent of                           3.50%                    3.64%
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 $316,000 and $327,000 in 2013 and
2012, respectively.

                     Selected Consolidated Financial Data
                     (Dollars in thousands, except per share data)
                     Average Balance Sheet Rates (presented on a tax
                      equivalent basis )
                      Nine Months ended September  Nine Months ended September
                     30,2013                      30,
                                                   2012
                      Average      Interest Yield/ Average     Interest Yield/
                     outstanding  earned/  rate   outstanding earned/  rate
                      balance      paid            balance     paid
                                               
Interest-earning                                                   
assets:
Loans receivable      $1,195,042   $40,226  4.48%  $1,142,833  $41,832  4.89%
(1)(2)
Securities (2)        383,551      5,240    1.82   373,036     5,684    2.04
Other
interest-earning      53,803       247      0.61   63,895      242      0.51
assets
 Total
interest-earning      1,632,396    45,713   3.74   1,579,764   47,758   4.04
assets


Non-interest-earning  158,527                    148,025             
assets
Total assets          $1,790,923                 $1,727,789          
Interest-bearing                                                   
liabilities:
Transaction accounts  874,240      1,081    0.17   810,382     1,175    0.19
Time deposits         333,857      1,743    0.70   384,549     2,953    1.03
Borrowings            77,024       743      1.29   75,657      801      1.41
Total
interest-bearing      1,285,121    3,567    0.37   1,270,588   4,929    0.52
liabilities
Non-interest-bearing  333,792                    295,194             
liabilities
Total liabilities    1,618,913                  1,565,782           


Shareholders' equity  172,010                    162,007             
Total liabilities and $1,790,923                 $1,727,789          
shareholders' equity
Net interest income               $42,146                   $42,829  
Interest rate spread                      3.37%                     3.52%
Net interest margin
(net interest income
as a percent of                           3.45%                     3.62%
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 $933,000 and $976,000 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     9/30/13   6/30/13   3/31/13   12/31/12  9/30/12
Data
Net interest income  $13,922   $13,708   $13,583   $14,332   $13,962
Provision for loan   600       1,600     2,000     1,300     2,200
losses
Net interest income
after provision for  13,322    12,108    11,583    13,032    11,762
loan losses
Service charges and  2,829     2,581     2,131     2,322     2,325
fees
Gain on sale of real 282       672       539       694       917
estate loans
Gain on sale of      --        --        274       --        --
securities
Trust fee income     846       850       852       749       710
Bankcard transaction 1,012     1,044     957       971       940
revenue
Gains/(losses) on
other real estate    (201)     (308)     (4)       (226)     (67)
owned
Other non-interest   1,288     1,001     1,113     1,091     1,036
income
Total non-interest   6,056     5,840     5,862     5,601     5,861
income
Salaries and
employee benefits    5,969     5,988     5,913     5,869     5,909
expense
Occupancy and        1,366     1,315     1,306     1,341     1,316
equipment expense
Data processing      533       537       550       618       505
expense
State bank taxes     615       615       575       554       579
Amortization of      151       157       159       183       187
intangible assets
FDIC Insurance       317       335       295       296       267
Other non-interest   2,768     2,718     2,971     2,809     3,036
expenses
Total non-interest   11,719    11,665    11,769    11,670    11,799
expense
Net income before    7,659     6,283     5,676     6,963     5,824
income tax expense
Income tax expense   2,244     1,798     1,586     1,953     1,628
Net income           $5,415    $4,485    $4,090    $5,010    $4,196
Per Common Share                                         
Data
Diluted earnings per 0.72      0.59      0.54      0.66      0.56
common share
Cash dividends       0.17      0.17      0.17      0.17      0.32
declared
Weighted average
common shares                                            
outstanding
Basic               7,516,770 7,491,619 7,478,901 7,470,146 7,465,926
Diluted             7,549,530 7,564,179 7,583,544 7,557,777 7,554,271
Earnings Performance                                     
Data
Return on common     12.44%    10.48%    9.66%     11.79%    10.05%
equity
Return on assets     1.21%     1.00%     0.92%     1.12%     0.98%
Net interest margin  3.42%     3.38%     3.32%     3.52%     3.56%
Net interest margin  3.50%     3.46%     3.40%     3.63%     3.64%
(tax equivalent)

The Bank of Kentucky Financial Corporation
Selected Consolidated Financial Data
(Dollars in thousands, except per share data)
                       Five-Quarter Comparison
Balance Sheet Data      9/30/13    6/30/13    3/31/13    12/31/12   9/30/12
Assets:                                                         
Cash and cash           $102,448   $80,941    $138,561   $151,832   $81,950
equivalents
Investments             389,179    384,653    376,704    381,537    361,108
Loans held for sale     2,435      9,909      14,038     16,324     19,314
Total loans             1,201,193  1,185,449  1,187,742  1,195,409  1,159,074
Allowance for loan      (16,632)   (16,650)   (16,641)   (16,568)   (16,585)
losses
Premises and equipment, 22,517     22,560     22,559     22,494     22,714
net
Goodwill and
acquisition             24,018     24,169     24,325     24,485     24,668
intangibles, net
Other assets & accrued  77,066     74,859     73,223     68,591     69,711
interest receivable
Total assets            $1,802,224 $1,765,890 $1,820,511 $1,844,104 $1,721,954
Liabilities &                                                   
Shareholders' Equity:
Total deposits          $1,529,505 $1,504,829 $1,558,933 $1,570,007 $1,471,246
Short-term borrowings   32,167     26,934     28,309     41,408     22,142
Notes payable           50,695     50,702     48,709     48,715     48,721
Accrued interest
payable & other         14,606     13,196     11,604     13,534     12,224
liabilities
Total liabilities       1,626,973  1,595,661  1,647,555  1,673,664  1,554,333
Shareholders' equity    175,251    170,229    172,956    170,440    167,621
Total liabilities and   $1,802,224 $1,765,890 $1,820,511 $1,844,104 $1,721,954
shareholders' equity
Common shares           7,528,618  7,498,014  7,482,776  7,470,236  7,467,396
outstanding
Average Balance Sheet                                           
Data
Average investments     $386,644   $387,526   $376,370   $373,008   $369,707
Average other earning   29,039     46,886     86,110     71,139     32,781
assets
Average loans           1,199,824  1,190,590  1,194,657  1,175,879  1,158,072
Average earning assets  1,615,507  1,625,002  1,657,137  1,620,026  1,560,560
Average assets          1,771,491  1,790,043  1,811,675  1,772,766  1,707,843
Average deposits        1,506,101  1,529,159  1,551,953  1,518,557  1,459,593
Average interest        1,164,947  1,215,858  1,244,360  1,207,238  1,165,673
bearing deposits
Average interest
bearing transaction     848,512    882,084    892,609    848,302    796,346
deposits
Average interest        316,435    333,774    351,751    358,936    369,327
bearing time deposits
Average borrowings      80,733     74,927     75,375     72,193     70,445
Average interest        1,248,680  1,290,785  1,319,735  1,279,431  1,236,118
bearing liabilities
Average common          172,740    171,593    171,698    169,031    166,036
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                    9/30/13 6/30/13 3/31/13 12/31/12 9/30/12
Allowance for loan losses to total    1.38%   1.40%   1.40%   1.39%    1.43%
loans
Allowance for loan losses to          101%    88%     76%     86%      112%
non-performing loans
                                                                  
Nonaccrual loans                      $16,197 $18,934 $21,771 $19,244  $14,813
Loans – 90 days past due & still      207     11      36      39       105
accruing
Total non-performing loans            16,404  18,945  21,807  19,283   14,918
OREO and repossessed assets           6,141   5,207   5,454   5,396    6,192
Total non-performing assets           22,545  24,152  27,261  24,679   21,110
Restructured loans-accruing           7,109   7,204   7,499   6,046    12,270
Non-performing loans to total loans   1.37%   1.60%   1.84%   1.61%    1.29%
Non-performing assets to total assets 1.26%   1.38%   1.50%   1.34%    1.23%
Annualized charge-offs to average     0.21%   0.54%   0.66%   0.45%    1.39%
loans
Net charge-offs                       $618    $1,591  $1,927  $1,317   $3,961
                                                                  
Other Information                                                  
Total assets under management (in     766     747     744     714      715
millions)
Full-time equivalent employees        351     361     364     365      370

About BKFC

BKFC, a bank holding company with assets of approximately $1.802 billion,
offers banking and related financial services to both individuals and business
customers.BKFC operates thirty-two 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