The Bank of Kentucky Financial Corporation Announces First Quarter Earnings

The Bank of Kentucky Financial Corporation Announces First Quarter Earnings

Net Income of $4,618,000 for the First Quarter, Up 13% From 2013

CRESTVIEW HILLS, Ky., April 17, 2014 (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
first quarter ended March 31, 2014. For the first quarter, the Company
reported an increase in net income of 13% compared with the same period in
2013.

A summary of the Company's results follows:

First Quarter ended March 31,      2014       2013       Change
Net income                         $4,618,000 $4,090,000 13%
Earnings per common share, basic   $0.60      $0.55      9%
Earnings per common share, diluted $0.60      $0.54      11%

Robert W. Zapp, President & CEO, commented, "The positive first quarter
results for the Company were underscored by solid loan growth, specifically in
our commercial lending divisions. In addition, improving credit metrics and
revenue growth from our Wealth Advisory Group helped offset the significant
decline in mortgage loan volume compared to last year. We continued to invest
in technology and people in the first quarter. We are in the process of
improving how we process loans with an upgraded system; we continue to roll
out new mobile and online banking services; and we added talent and resources
to help us grow quality loans while addressing the increased regulatory
demands on our business. Going forward, we will maintain this path, maximizing
opportunities to expand, grow, and improve the Bank."

The increase in net income in the first quarter of 2014 was primarily due to a
$1,100,000 (55%) decrease in the provision for loan losses and a $286,000 (2%)
increase in net interest income compared with the first quarter of 2013.
Contributing to the decrease in the provision for loan losses were lower
levels of charge-offs and lower levels of non-performing loans compared with
March of 2013. Contributing to the increase in net interest income was the
$74,121,000 (6%) growth in loans from March 31, 2013.

Non-interest income decreased 5% ($280,000) in the first quarter of 2014,
compared with the same period in 2013, while non-interest expense increased 3%
($349,000) from the same period last year. Contributing to the decrease in
non-interest income was a $274,000 or 100% decrease in gain on the sale of
securities and a $374,000 or 69% decrease in gains on the sale of real estate
loans, which was partially offset with $303,000 or 14% increase in service
charges on deposits and an $89,000 or 10% increase in trust fee income. The
decrease in gains on the sale of real estate was the result of lower
refinancing volume due to slightly higher long term rates compared with 2013.

Net interest income increased $286,000, or 2% in the first quarter of 2014,
compared with the same period in 2013. The net interest margin, on a tax
equivalent basis, decreased 1 basis point from 3.40% in the first quarter of
2013 to 3.39% in the first quarter of 2014. The increase in the net interest
income was the result of a $40.3 million or 2% growth in earning assets
compared with the first quarter of 2013. The yield on earning assets decreased
6 basis points from 3.71% in the first quarter of 2013 to 3.65% in the first
quarter of 2014, while the cost of interest bearing liabilities also decreased
6 basis points from .39% to .33% in the same period.

The provision for loan losses decreased by $1,100,000 (55%) in the first
quarter of 2014, compared with the same period in 2013. Contributing to this
decrease were lower levels of charge-offs compared with the first quarter of
2013.The Company's annualized net charge-offs to average loans decreased from
.66% in the first quarter of 2013 to .27% in the first quarter of 2014 while
non-performing loans as a percentage of total loans were 1.23% as of March 31,
2014, compared with 1.84% as of March 31, 2013.The Company recorded $857,000
in net charge-offs in the first quarter of 2014 compared with $1,927,000 in
the first quarter of 2013.On a quarterly sequential basis, the provision for
loan losses of $900,000 in the first quarter of 2014 was $400,000 higher than
theprovision in the fourth quarter of 2013, while non-performing loans
increased from $15.4 million (1.24% of total loans) at December 31, 2013 to
$15.5 million (1.23% of total loans) at March 31, 2014.Net charge-offs on a
quarterly sequential basis increased slightly from $826,000 (.27% of loans) in
the fourth quarter of 2014 to $857,000 (.27% of loans) in the first quarter of
2014.As a result of improving credit metrics, the Allowance for Loan Losses
(ALL) has decreased from 1.40% of loans at the end of the first quarter of
2013 to 1.30% of loans at the end of the first quarter of 2014.On a quarterly
sequential basis the ALL remained stable at 1.30% at the end of the fourth
quarter of 2013 and the end of the first quarter of 2014. 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 $1.859 billion at the end of the first quarter of 2014,
which was $39 million or 2% higher than on the same date a year ago. The
increase of $74 million (6%) in total loans and $20 million (5%) in
investments were offset by a $49 million (38%) decrease in cash and cash
equivalents.The decrease in cash and cash equivalents included a $53 million
(67%) decrease in fed funds sold.The increase in assets was funded by an
increase in deposits of $25 million, or 2%, and an increase in equity of $13.7
million or 8% from the same date in 2013.

                                The Bank of Kentucky Financial Corporation
                                Selected Consolidated Financial Data
                                (Dollars in thousands, except per share data)
                                First Quarter Comparison
Income Statement Data            3/31/14         3/31/13         % Chg
Interest income                  $14,929         $14,866         0%
Interest expense                 1,060           1,283           (17)%
Net interest income              13,869          13,583          2%
                                                              
Provision for loan losses       900             2,000           (55)%
Net interest income after        12,969          11,583          12%
provision for loan losses
Non interest income              5,582           5,862           (5)%
Noninterest expense             12,118          11,769          3%
Net income before income taxes   6,433           5,676           13%
Provision for income taxes       1,815           1,586           14%
Net income                       $4,618          $4,090          13%
Per Common Share Data                                          
Diluted earnings per common      0.60            0.54            11%
share
Cash dividends declared          0.18            0.17            6%
Earnings Performance Data                                      
Return on common equity          10.18%          9.66%           52bps
Return on assets                 1.01%           0.92%           9bps
Net interest margin              3.31%           3.32%           (1)bps


The Bank of Kentucky Financial Corporation
Selected Consolidated Financial Data
(Dollars in thousands, except per share data)
                                                           
Balance Sheet Data                                          
                                             March 31, 2014 December 31, 2013
Assets:                                                     
Cash and cash equivalents                     $89,102        $78,621
Investments                                   396,733        418,385
Loans held for sale                           6,248          3,214
Total loans, gross                            1,261,863      1,249,645
Allowance for loan losses                     (16,349)       (16,306)
Premises and equipment, net                   22,845         22,444
Goodwill and acquisition intangibles, net     23,737         23,871
Other assets and accrued interest receivable  75,244         77,618
Total assets                                  $1,859,423     $1,857,492
                                                           
Liabilities & Shareholders' Equity                          
Total deposits                                $1,584,076     $1,587,585
Short-term borrowings                         29,220         27,643
Notes payable                                 45,515         45,577
Accrued interest payable and other            13,981         15,548
liabilities
Total liabilities                             1,672,792      1,676,353
Common stockholders' equity                   186,631        181,139
Total liabilities and shareholders' equity    $1,859,423     $1,857,492

                    
                    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 March 31,     Quarter ended March 31,
                     2014                        2013
                     Average     Interest        Average     Interest Yield/
                    outstanding earned/  Yield/ outstanding earned/  rate
                     balance     paid     rate   balance     paid
                                                                
Interest-earning                                                 
assets:
Loans receivable     $1,255,552  $13,123  4.24%  $1,194,657  $13,396  4.55%
(1)(2)
Securities (2)       412,047     2,074    2.04   376,370     1,679    1.81
Other
interest-earning     29,854      67       0.91   86,110      96       0.45
assets
                                                                
Total
interest-earning     1,697,453   15,264   3.65   1,657,137   15,171   3.71
assets
                                                                
Non-interest-earning 158,850                   154,538             
assets
Total assets         $1,856,303                $1,811,675          
                                                                
Interest-bearing                                                 
liabilities:
Transaction accounts 947,221     386      0.17   892,609     399      0.18
Time deposits        298,020     438      0.60   351,751     645      0.74
Borrowings           73,529      236      1.30   75,375      239      1.29
Total
interest-bearing     1,318,770  1,060   0.33  1,319,735  1,283   0.39
liabilities
                                                                
Non-interest-bearing 353,648                   320,242             
liabilities
                                                                
Total liabilities    1,672,418                1,639,977          
                                                                
Shareholders' equity 183,885                   171,698             
                                                                
Total liabilities
and shareholders'    $1,856,303               $1,811,675         
equity
                                                                
Net interest income             $14,204                   $13,888  
Interest rate spread                    3.32%                     3.32%
Net interest margin
(net interest income
as a percent of                         3.39%                     3.40%
average
interest-earning
assets)
                                                                                 
(1) Includes non-accrual loans.                                                   
(2) Income presented on a tax equivalent basis using a 35.00% tax rate in
2014 and 2013, respectively. The tax equivalent adjustment was $335,000 and       
$305,000 in 2014 and 2013, respectively.


The Bank of Kentucky Financial Corporation
Selected Consolidated Financial Data
(Dollars in thousands, except per share data)
                        Five-Quarter Comparison                          
Income Statement Data    3/31/14   12/31/13  9/30/13   6/30/13   3/31/13
Net interest income      $13,869   $14,041   $13,922   $13,708   $13,583
Provision for loan       900       500       600       1,600     2,000
losses
                                                            
Net interest income
after provision for loan 12,969   13,541   13,322   12,108   11,583
losses
Service charges and fees 2,434     2,782     2,829     2,581     2,131
Gain on sale of real     165       165       282       672       539
estate loans
Gain on sale of          -         -         -         -         274
securities
Trust fee income         941       854       846       850       852
Bankcard transaction     999       1,008     1,012     1,044     957
revenue
Gains/(losses) on other  (81)      (22)      (201)     (308)     (4)
real estate owned
Other non-interest       1,124     1,466     1,288     1,001     1,113
income
Total non-interest       5,582     6,253     6,056     5,840     5,862
income
Salaries and employee    5,873     5,691     5,969     5,988     5,913
benefits expense
Occupancy and equipment  1,435     1,330     1,366     1,315     1,306
expense
Data processing expense  535       551       533       537       550
State bank taxes         642       584       615       615       575
Other real estate owned  342       384       457       350       334
and loan collection
Amortization of          133       148       151       157       159
intangible assets
FDIC Insurance           554       376       317       335       295
Other non-interest       2,604     2,528     2,311     2,368     2,637
expenses
Total non-interest       12,118    11,592    11,719    11,665    11,769
expense
Net income before income 6,433     8,202     7,659     6,283     5,676
tax expense
Income tax expense       1,815     2,427     2,244     1,798     1,586
Net income               $4,618    $5,775    $5,415    $4,485    $4,090
Per Common Share Data                                        
Diluted earnings per     0.60      0.76      0.72      0.59      0.54
common share
Cash dividends declared  0.18      0.18      0.17      0.17      0.17
Weighted average common                                      
shares outstanding
Basic                    7,640,872 7,565,121 7,516,770 7,491,619 7,478,901
Diluted                  7,687,106 7,611,879 7,549,530 7,564,121 7,583,544
Earnings Performance                                         
Data
Return on common equity  10.18%    12.86%    12.44%    10.48%    9.66%
Return on assets         1.01%     1.25%     1.21%     1.00%     0.92%
Net interest margin      3.31%     3.32%     3.42%     3.38%     3.32%
Net interest margin (tax 3.39%     3.39%     3.50%     3.46%     3.40%
equivalent)


The Bank of Kentucky Financial Corporation
Selected Consolidated Financial Data
(Dollars in thousands, except per share data)
                       Five-Quarter Comparison                    
Balance Sheet Data      3/31/14    12/31/13   9/30/13    6/30/13    3/31/13
Assets:                                                         
Cash and cash           $89,102    $78,621    $102,448   $80,941    $138,561
equivalents
Investments             396,733    418,385    389,179    384,653    376,704
Loans held for sale     6,248      3,214      2,435      9,909      14,038
Total loans             1,261,863  1,249,645  1,201,193  1,185,449  1,187,742
Allowance for loan      (16,349)   (16,306)   (16,632)   (16,650)   (16,641)
losses
Premises and equipment, 22,845     22,444     22,517     22,560     22,559
net
Goodwill and
acquisition             23,737     23,871     24,018     24,169     24,325
intangibles, net
Other assets & accrued  75,244     77,618     77,066     74,859     73,223
interest receivable
Total assets            $1,859,423 $1,857,492 $1,802,224 $1,765,890 $1,820,511
Liabilities &                                                   
Shareholders' Equity:
Total deposits          $1,584,076 $1,587,585 $1,529,505 $1,504,829 $1,558,933
Short-term borrowings   29,220     27,643     32,167     26,934     28,309
Notes payable           45,515     45,577     50,695     50,702     48,709
Accrued interest
payable & other         13,981     15,548     14,606     13,196     11,604
liabilities
Total liabilities       1,672,792  1,676,353  1,626,973  1,595,661  1,647,555
Shareholders' equity    186,631    181,139    175,251    170,229    172,956
Total liabilities and   $1,859,423 $1,857,492 $1,802,224 $1,765,890 $1,820,511
shareholders' equity
Common shares           7,649,493  7,619,999  7,528,618  7,498,014  7,482,776
outstanding
Average Balance Sheet                                           
Data
Average investments     $412,047   $404,687   $386,644   $387,526   $376,370
Average other earning   29,854     55,521     29,039     46,886     86,110
assets
Average loans           1,255,552  1,218,140  1,199,824  1,190,590  1,194,657
Average earning assets  1,697,453  1,678,348  1,615,507  1,625,002  1,657,137
Average assets          1,856,303  1,839,242  1,771,491  1,790,043  1,811,675
Average deposits        1,576,944  1,568,764  1,506,101  1,529,159  1,551,953
Average interest        1,245,241  1,215,455  1,164,947  1,215,858  1,244,360
bearing deposits
Average interest
bearing transaction     947,221    911,075    848,512    882,084    892,609
deposits
Average interest        298,020    304,380    316,435    333,774    351,751
bearing time deposits
Average borrowings      73,529     78,197     80,733     74,927     75,375
Average interest        1,318,770  1,293,652  1,248,680  1,290,785  1,319,735
bearing liabilities
Average common          183,885    178,135    172,740    171,593    171,698
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                    3/31/14 12/31/13 9/30/13 6/30/13 3/31/13
Allowance for loan losses to total    1.30%   1.30%    1.38%   1.40%   1.40%
loans
Allowance for loan losses to          105%    106%     101%    88%     76%
non-performing loans
Nonaccrual loans                      $15,531 $15,417  $16,197 $18,934 $21,771
Loans – 90 days past due & still      12      21       207     11      36
accruing
Total non-performing loans            15,543  15,438   16,404  18,945  21,807
OREO and repossessed assets           5,557   5,305    6,141   5,207   5,454
Total non-performing assets           21,100  20,743   22,545  24,152  27,261
Restructured loans-accruing           11,825  8,816    7,109   7,204   7,499
Non-performing loans to total loans   1.23%   1.24%    1.37%   1.60%   1.84%
Non-performing assets to total assets 1.14%   1.12%    1.26%   1.38%   1.50%
Annualized charge-offs to average     0.27%   0.27%    0.21%   0.54%   0.66%
loans
Net charge-offs                       $857    $826     $618    $1,591  $1,927
                                                                  
Other Information                                                  
Total assets under management (in     858     836      766     747     744
millions)
Full-time equivalent employees        345     346      351     361     364

About BKFC

BKFC, a bank holding company with assets of approximately $1.859 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
 
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