The Bank Of Kentucky Financial Corporation Announces Second Quarter Earnings

The Bank Of Kentucky Financial Corporation Announces Second Quarter Earnings  Net Income of $5,065,000 for the Second Quarter, Up 13% From 2013  CRESTVIEW HILLS, Ky., July 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 second quarter ended June 30, 2014. For the second 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 are as follows:  Second Quarter ended June 30,        2014       2013       Change Net income                           $5,065,000 $4,485,000 13% Earnings per common share, basic     $0.66      $0.60      10% Earnings per common share, diluted   $0.66      $0.59      12%                                                          Six Months ended June 30,            2014       2013       Change Net income                           $9,683,000 $8,575,000 13% Net income per common share, basic   $1.27      $1.15      10% Net income per common share, diluted $1.26      $1.13      12%  "Our strong second quarter performance mirrored the first quarter as The Bank increased earnings by 13% from the previous year," commented Robert W. Zapp, President & CEO. "Not only is solid commercial loan growth contributing to the Bank's success, but new relationships have led to opportunities in other areas such as treasury management. Our Wealth Advisory Group and their team of investment specialists continue to partner closely with our retail branch personnel, expanding relationships and reaching new clients, which resulted in another record quarter for this business unit. Zapp added, "As we begin the second half of the year, I feel we are well positioned in the markets we serve to grow organically and leverage our talent, technologies and relationships to meet our goals".  The increase in net income in the second quarter of 2014 was primarily due to a $600,000 (38%) decrease in the provision for loan losses and a $454,000 (8%) increase in non-interest income compared with the second 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 June of 2013.Contributing to the increase in non-interest income was a $305,000 gain on the sale of securities.   Non-interest income increased $454,000 or 8% in the second quarter of 2014 compared with the same period in 2013, while non-interest expense increased $483,000 or 4% from the same period last year.Contributing to the increase in non-interest income was a $305,000 or 100% increase in gain on the sale of securities and a $134,000 or 16% increase in trust fee income, which was partially offset by a $424,000 or 63% decrease in gains on the sale of real estate loans. The decrease in gains on the sale of real estate loans was the result of lower refinancing volume due to slightly higher long term rates compared to 2013.  Net interest income increased $273,000, or 2% in the second quarter of 2014, compared with the same period in 2013. The net interest margin, on a tax equivalent basis, decreased eight basis points from 3.46% in the second quarter of 2013 to 3.38% in the second quarter of 2014. The increase in net interest income was the result of a $72.6 million or 4% growth in earning assets compared with the second quarter of 2013. The yield on earning assets decreased 10 basis points from 3.75% in the second quarter of 2013 to 3.65% in the second quarter of 2014, while the cost of interest bearing liabilities decreased two basis points from 0.36% to 0.34% in the same period.  The provision for loan losses decreased by $600,000 (38%) in the second quarter of 2014, compared with the same period in 2013.Contributing to this decrease were lower levels of charge-offs compared with the second quarter of 2013. The Company's annualized net charge-offs to average loans decreased from 0.54% in the second quarter of 2013 to 0.32% in the second quarter of 2014 while non-performing loans as a percentage of total loans were 1.37% as of June 30, 2014, compared with 1.60% as of June 30, 2013. The Company recorded $1,015,000 in net charge-offs in the second quarter of 2014 compared with $1,591,000 in the second quarter of 2013.On a quarterly sequential basis, the provision for loan losses of $1,000,000 in the second quarter of 2014 was $100,000 higher than theprovision in the first quarter of 2014, while non-performing loans increased from $15.5 million (1.23% of total loans) at March 31, 2014 to $17.4 million (1.37% of total loans) at June 30, 2014.Net charge-offs on a quarterly sequential basis increased from $857,000 (.27% of loans) in the first quarter of 2014 to $1,015,000 (.32% of loans) in the second quarter of 2014.As a result of improving credit metrics, the Allowance for Loan Losses (ALL) decreased from 1.40% of loans at the end of the second quarter of 2013 to 1.28% of loans at the end of the second quarter of 2014.On a quarterly sequential basis the ALL decreased two basis points from 1.30% at the end of the first quarter of 2014 to 1.28% at the end of the second 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 $1.858 billion at the end of the second quarter of 2014, which was $92 million or 5% higher than the end of the second quarter of 2013. The increase of $87 million (7%) in total loans and $16 million (4%) in investments were offset by a $6 million (8%) decrease in cash and cash equivalents.The increase in assets was funded by an increase in deposits of $68 million, or 5%, and an increase in equity of $22 million or 13% from the same date in 2013.  The Bank of Kentucky Financial Corporation Selected Consolidated Financial Data (Dollars in thousands, except per share data)                           Second Quarter Comparison Six months ended June 30,                                                      Comparison Income Statement Data     6/30/14   6/30/13  % Chg   6/30/14  6/30/13  % Chg Interest income           $15,100   $14,880  1%      $30,029  $29,746  1% Interest expense          1,119     1,172    (5)%    2,179    2,455    (11)% Net interest income       13,981    13,708   2%      27,850   27,291   2%                                                                   Provision for loan        1,000     1,600    (38)%   1,900    3,600    (47)% losses Net interest income after 12,981    12,108   7%      25,950   23,691   10% provision for loan losses Non interest income       6,294     5,840    8%      11,876   11,702   1% Noninterest expense      12,148    11,665   4%      24,266   23,434   4% Net income before income  7,127     6,283    13%     13,560   11,959   13% taxes Provision for income      2,062     1,798    15%     3,877    3,384    15% taxes Net income                $5,065    $4,485   13%     $9,683   $8,575   13% Per Common Share Data                                              Diluted earnings per      0.66      0.59     12%     1.26     1.13     12% common share Cash dividends declared   0.18      0.17     6%      0.36     0.34     6% Earnings Performance Data                                          Return on common equity   10.70%    10.48%   22bps   10.45%   10.07%   38bps Return on assets          1.10%     1.00%    10bps   1.06%    .96%     10bps Net interest margin       3.30%     3.38%    (8)bps  3.31%    3.35%    (4)bps                                                                                                                                      The Bank of Kentucky Financial Corporation Selected Consolidated Financial Data (Dollars in thousands, except per share data)                                                             Balance Sheet Data                                                                                         June 30, 2014 December 31, 2013 Assets:                                                      Cash and cash equivalents                      $74,447       $78,621 Investments                                    400,444       418,385 Loans held for sale                            4,437         3,214 Total loans, gross                             1,272,152     1,249,645 Allowance for loan losses                      (16,334)      (16,306) Premises and equipment, net                    22,704        22,444 Goodwill and acquisition intangibles, net      23,620        23,871 Other assets and accrued interest receivable   76,317        77,618 Total assets                                   $1,857,787    $1,857,492                                                             Liabilities & Shareholders' Equity                           Total deposits                                 $1,572,819    $1,587,585 Short-term borrowings                          21,012        27,643 Notes payable                                  55,451        45,577 Accrued interest payable and other liabilities 16,242        15,548 Total liabilities                              1,665,524     1,676,353 Common stockholders' equity                    192,263       181,139 Total liabilities and shareholders' equity     $1,857,787    $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 )                     Three Months ended June 30,  Three Months ended June 30,                      2014                        2013                     Average     Interest       Average     Interest                      outstanding earned/   Yield/ outstanding earned/   Yield/                     balance    paid      rate   balance     paid      rate                                                                    Interest-earning                                                    assets: Loans receivable     $1,268,370  $13,356   4.22%  $1,190,590  $13,390   4.51% (1)(2) Securities (2)       403,047     2,020     2.01   387,526     1,725     1.79 Other interest-earning     26,175      62        0.95   46,886      78        0.67 assets                                                                    Total interest-earning     1,697,592   15,438    3.65   1,625,002   15,193    3.75 assets                                                                    Non-interest-earning 149,684                    165,041               assets Total assets         $1,847,276                 $1,790,043                                                                               Interest-bearing                                                    liabilities: Transaction accounts 934,082     387       0.17   882,084     355       0.16 Time deposits        300,759     482       0.64   333,774     579       0.70 Borrowings           79,455      250       1.26   74,927      238       1.27 Total interest-bearing     1,314,296   1,119     0.34   1,290,785   1,172     0.36 liabilities                                                                    Non-interest-bearing 343,033                    327,665               liabilities                                                                    Total liabilities    1,657,329                  1,618,450                                                                                Shareholders' equity 189,947                    171,593                                                                                  Total liabilities and shareholders'    $1,847,276                 $1,790,043            equity                                                                    Net interest income             $14,319                    $14,021    Interest rate spread                     3.31%                      3.39% Net interest margin (net interest income as a percent of                          3.38%                      3.46% 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. The tax equivalent adjustment was $337,000 and $313,000 in 2014 and 2013, 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 30,2014 Six Months ended June 30,                                                    2013                     Average      Interest       Average      Interest                      outstanding earned/   Yield/ outstanding earned/   Yield/                     balance      paid      rate   balance      paid      rate                                                                      Interest-earning                                                      assets: Loans receivable     $1,261,997   $26,478   4.23%  $1,192,612   $26,785   4.53% (1)(2) Securities (2)       407,522      4,094     2.03   381,979      3,404     1.80 Other interest-earning     28,005       129       0.93   66,390       174       0.53 assets                                                                      Total interest-earning     1,697,524    30,701    3.65   1,640,981    30,363    3.73 assets                                                                      Non-interest-earning 150,559                     159,819                assets Total assets         $1,848,083                  $1,800,800                                                                                  Interest-bearing                                                      liabilities: Transaction accounts 940,614      773       0.17   887,317      754       0.17 Time deposits        299,398      920       0.62   342,714      1,224     0.72 Borrowings           76,481       486       1.28   75,149       477       1.28 Total interest-bearing     1,316,493    2,179     0.33   1,305,180    2,455     0.38 liabilities                                                                      Non-interest-bearing 344,674                     323,975                liabilities                                                                      Total liabilities    1,661,167                   1,629,155                                                                                   Shareholders' equity 186,916                     171,645                                                                                     Total liabilities and shareholders'    $1,848,083                  $1,800,800             equity                                                                      Net interest income              $28,522                     $27,908    Interest rate spread                      3.32%                       3.35% Net interest margin (net interest income as a percent of                           3.39%                       3.43% 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. The tax equivalent adjustment was $672,000 and $617,000 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        6/30/14   3/31/14   12/31/13  9/30/13   6/30/13 Net interest income          $13,981   $13,869   $14,041   $13,922   $13,708 Provision for loan losses    1,000     900       500       600       1,600                                                                  Net interest income after    12,981    12,969    13,541    13,322    12,108 provision for loan losses Service charges and fees     2,496     2,434     2,782     2,829     2,581 Gain on sale of real estate  248       165       165       282       672 loans Gain on sale of securities   305       --        --        --        -- Trust fee income             984       941       854       846       850 Bankcard transaction revenue 1,105     999       1,008     1,012     1,044 Gains/(losses) on other real (106)     (81)      (22)      (201)     (308) estate owned Other non-interest income    1,262     1,124     1,466     1,288     1,001 Total non-interest income    6,294     5,582     6,253     6,056     5,840 Salaries and employee        6,026     5,873     5,691     5,969     5,988 benefits expense Occupancy and equipment      1,404     1,435     1,330     1,366     1,315 expense Data processing expense      520       535       551       533       537 State bank taxes             642       642       584       615       615 Other real estate owned and  346       342       384       457       350 loan collection Amortization of intangible   117       133       148       151       157 assets FDIC Insurance               595       554       376       317       335 Other non-interest expenses  2,498     2,604     2,528     2,311     2,368 Total non-interest expense   12,148    12,118    11,592    11,719    11,665 Net income before income tax 7,127     6,433     8,202     7,659     6,283 expense Income tax expense           2,062     1,815     2,427     2,244     1,798 Net income                   $5,065    $4,618    $5,775    $5,415    $4,485 Per Common Share Data                                             Diluted earnings per common  0.66      0.60      0.76      0.72      0.59 share Cash dividends declared      0.18      0.18      0.18      0.17      0.17 Weighted average common                                           shares outstanding Basic                       7,662,927 7,640,872 7,565,121 7,516,770 7,491,619 Diluted                     7,702,231 7,687,106 7,611,879 7,549,530 7,564,121 Earnings Performance Data                                         Return on common equity      10.70%    10.18%    12.86%    12.44%    10.48% Return on assets             1.10%     1.01%     1.25%     1.21%     1.00% Net interest margin          3.30%     3.31%     3.32%     3.42%     3.38% Net interest margin (tax     3.38%     3.39%     3.39%     3.50%     3.46% equivalent)                                                                                                                                    The Bank of Kentucky Financial Corporation Selected Consolidated Financial Data (Dollars in thousands, except per share data)                                                                 Balance Sheet Data      6/30/14    3/31/14    12/31/13   9/30/13    6/30/13 Assets:                                                          Cash and cash           $74,447    $89,102    $78,621    $102,448   $80,941 equivalents Investments             400,444    396,733    418,385    389,179    384,653 Loans held for sale     4,437      6,248      3,214      2,435      9,909 Total loans             1,272,152  1,261,863  1,249,645  1,201,193  1,185,449 Allowance for loan      (16,334)   (16,349)   (16,306)   (16,632)   (16,650) losses Premises and equipment, 22,704     22,845     22,444     22,517     22,560 net Goodwill and acquisition             23,620     23,737     23,871     24,018     24,169 intangibles, net Other assets & accrued  76,317     75,244     77,618     77,066     74,859 interest receivable Total assets            $1,857,787 $1,859,423 $1,857,492 $1,802,224 $1,765,890 Liabilities &                                                    Shareholders' Equity: Total deposits          $1,572,819 $1,584,076 $1,587,585 $1,529,505 $1,504,829 Short-term borrowings   21,012     29,220     27,643     32,167     26,934 Notes payable           55,451     45,515     45,577     50,695     50,702 Accrued interest payable & other         16,242     13,981     15,548     14,606     13,196 liabilities Total liabilities       1,665,524  1,672,792  1,676,353  1,626,973  1,595,661 Shareholders' equity    192,263    186,631    181,139    175,251    170,229 Total liabilities and   $1,857,787 $1,859,423 $1,857,492 $1,802,224 $1,765,890 shareholders' equity Common shares           7,671,045  7,649,493  7,619,999  7,528,618  7,498,014 outstanding Average Balance Sheet                                            Data Average investments     $403,047   $412,047   $404,687   $386,644   $387,526 Average other earning   26,175     29,854     55,521     29,039     46,886 assets Average loans           1,268,370  1,255,552  1,218,140  1,199,824  1,190,590 Average earning assets  1,697,592  1,697,453  1,678,348  1,615,507  1,625,002 Average assets          1,847,276  1,856,303  1,839,242  1,771,491  1,790,043 Average deposits        1,564,626  1,576,944  1,568,764  1,506,101  1,529,159 Average interest        1,234,841  1,245,241  1,215,455  1,164,947  1,215,858 bearing deposits Average interest bearing transaction     934,082    947,221    911,075    848,512    882,084 deposits Average interest        300,759    298,020    304,380    316,435    333,774 bearing time deposits Average borrowings      79,455     73,529     78,197     80,733     74,927 Average interest        1,314,296  1,318,770  1,293,652  1,248,680  1,290,785 bearing liabilities Average common          189,947    183,885    178,135    172,740    171,593 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          6/30/2014 3/31/2014 12/31/2013 9/30/2013 6/30/2013 Allowance for loan losses   1.28%     1.30%     1.30%      1.38%     1.40% to total loans Allowance for loan losses   94%       105%      106%       101%      88% to non-performing loans Nonaccrual loans            $17,384   $15,531   $15,417    $16,197   $18,934 Loans – 90 days past due &  24        12        21         207       11 still accruing Total non-performing loans  17,408    15,543    15,438     16,404    18,945 OREO and repossessed assets 4,931     5,557     5,305      6,141     5,207 Total non-performing assets 22,339    21,100    20,743     22,545    24,152 Restructured loans-accruing 8,154     11,825    8,816      7,109     7,204 Non-performing loans to     1.37%     1.23%     1.24%      1.37%     1.60% total loans Non-performing assets to    1.21%     1.14%     1.12%      1.26%     1.38% total assets Annualized charge-offs to   0.32%     0.27%     0.27%      0.21%     0.54% average loans Net charge-offs             $1,015    $857      $826       $618      $1,591                                                                  Other Information                                                 Total assets under          $876      $858      $836       $766      $747 management (in millions) Full-time equivalent        346       345       346        351       361 employees                                                                   About BKFC  BKFC, a bank holding company with assets of approximately $1.858 billion, offers banking and related financial services to both individuals and business customers.BKFC operates thirty-two branch locations and fifty-two 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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