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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