CRESTVIEW HILLS, Ky., Jan. 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 fourth quarter and year ended December 31, 2012. For the fourth quarter and the twelve months of 2012, the Company reported an increase in diluted earnings per common share of 5% and 16% respectively as compared to the same periods in 2011.
A summary of the Company's results follows:
| Fourth Quarter ended December 31, | 2012 | 2011 | Change |
| Net income | $5,010,000 | $4,909,000 | 2% |
| Net income available to common shareholders | $5,010,000 | $4,714,000 | 6% |
| Earnings per common share, basic | $0.67 | $0.63 | 6% |
| Earnings per common share, diluted | $0.66 | $0.63 | 5% |
| Twelve Months ended December 31, | 2012 | 2011 | Change |
| Net income | $18,145,000 | $16,489,000 | 10% |
| Net income available to common shareholders | $18,145,000 | $15,517,000 | 17% |
| Net income per common share, basic | $2.43 | $2.09 | 16% |
| Net income per common share, diluted | $2.41 | $2.07 | 16% |
Robert Zapp, President & CEO stated, "We continued to build on a strong year, highlighted by a fourth quarter in which earnings topped $5 million. Total loans increased by $65 million for the year, which was the highest organic loan growth experienced since the financial crisis began in 2008. Mortgage loan volume remained robust in the fourth quarter, capping off the best year since 2003. Adding new customer relationships, both on the business and consumer side, fueled core account growth, which added more than $70 million in net deposits for the year. Investment revenue from our Wealth Advisory Group continues to experience double-digit growth, and we are pleased with the success of our newest branch in Cincinnati, which celebrates its one year anniversary this month. Overall, I am pleased to report our financial performance for the fourth quarter and the full year. We continue to review opportunities to expand through acquisition, while striving to grow organically, investing in our core lines of business."
The increase in earnings available to common shareholders in the fourth quarter of 2012 was primarily attributable to a $900,000 (41%) decrease in the provision for loan losses and a $195,000 (100%) decrease in preferred stock dividends and amortization as compared to the fourth quarter of 2011. Also contributing to increased earnings was a 2% increase in total revenue (net interest income and non interest income), which was offset with a 12% increase in noninterest expense. The decrease in the provision for loan losses reflected lower levels of charge-offs, lower levels of impaired loan reserves and lower levels of adversely classified loans as compared to December 2011. The reduction of preferred stock dividends and amortization reflects the November 2011 repurchase of the final $17 million of the Company's Fixed Rate Cumulative Perpetual Preferred Stock, Series A, previously issued to the U.S. Department of the Treasury as part of the TARP CPP program.
Net interest income increased $245,000 in the fourth quarter of 2012, as compared to the same period in 2011. The net interest margin, on a tax equivalent basis was 3.63% in the fourth quarter of 2012 which equaled the net interest margin in the fourth quarter of 2011. Contributing to the increase in net interest income was a $247,000 prepayment fee received in the quarter. This prepayment fee also contributed 6 basis points to the net interest margin for the quarter.
The provision for loan losses decreased by $900,000 (41%) in the fourth quarter of 2012, as compared to the same period in 2011. Contributing to this decrease were lower levels of charge-offs and lower levels of impaired loan reserves as compared to December 2011. The Company's annualized net charge-offs to average loans decreased from .65% in the fourth quarter of 2011 to .45% in the fourth quarter of 2012. The Company recorded $1,317,000 in net charge-offs in the fourth quarter of 2012 as compared to $1,853,000 in the fourth quarter of 2011. Net charge-offs in the fourth quarter of 2012 were reduced by a $961,000 recovery on a loan charged-off in the third quarter of 2012. The majority of the loans charged off in the fourth quarter of 2012 were reserved for in prior quarters. The reserve for impaired loans was $6,265,000 at December 31, 2012, which was $1,178,000 lower than the $7,443,000 reserve at December 31, 2011. As a result of the lower impaired loan reserves, lower charge-offs and lower levels of adversely classified loans, the Allowance for Loan Losses (ALL) has decreased from 1.62% of loans at the end of the fourth quarter of 2011 to 1.39% of loans at the end of the fourth quarter of 2012. 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. On a sequential basis, the provision for loan losses of $1,300,000 in the fourth quarter of 2012 was $900,000 lower than the provision in the third quarter of 2012. Net charge-offs on a sequential basis decreased from $3,961,000 (1.39% of loans) in the third quarter of 2012 to $1,371,000 (.45% of loans) in the fourth quarter of 2012. Contributing to the decrease in the provision and charge-offs on a sequential basis was the $961,000 recovery discussed previously.
The Company's non-performing assets as a percentage of total assets were 1.34% as of December 31, 2012, as compared to 1.25% as of December 31, 2011. The Company's non-performing loans as a percentage of total loans were 1.61% as of December 31, 2012, as compared to 1.40% as of December 31, 2011. Non-performing loans increased $3,413,000 from December 2011 to December 2012 and other real estate owned decreased $448,000 in the same time period. On a sequential quarterly basis, non-performing loans increased $4,365,000 while other real estate owned decreased $796,000 from September 2012. Contributing to the increase in non-performing loans from December of 2011 and September of 2012 was one commercial relationship which added approximately $7,000,000 to non-accruing loans in the fourth quarter of 2012. This relationship was reported as an accruing restructured loan in September of 2012 and the preceding four quarters.
Non-interest income increased 1% ($71,000) in the fourth quarter of 2012, as compared to the same period in 2011, while non-interest expense increased 12% ($1,267,000) from the same period last year. Contributing to the increase in non-interest income was an $114,000 or a 20% increase in the gains on sale of real estate loans and a $124,000 or 20% increase in trust fee income, which were offset by an increase of $141,000 or 166% increase in losses on other real estate owned. Contributing to the increase in non-interest expense was an $825,000 (16%) increase in salaries and benefits expense. The increase in salaries and benefits included $285,000 in higher accruals for bonuses and $182,000 in higher accruals for pension plan expense. The added bonus accrual reflects the end of the TARP restriction on bonus pay for executives, while the increased pension plan expense was the result of a lower discount rate applied to future benefits.
Total assets were $1.844 billion at the end of the fourth quarter of 2012, which was $99 million or 6% higher than the same date a year ago. Total loans increased $65 million (6%), investments in securities increased $10 million (3%) and cash and cash equivalents increased $16 million (12%) from December of 2011. The balance sheet increases were funded by an increase in deposits of $71 million, or 5% and an increase in short-term borrowings of $12 million or 41%. Total equity increased $14 million or 9% from the same date in 2011.
| The Bank of Kentucky Financial Corporation | ||||||
| Selected Consolidated Financial Data | ||||||
| (Dollars in thousands, except per share data) | ||||||
| Fourth Quarter Comparison | Year ended December 31, Comparison | |||||
| Income Statement Data | 12/31/12 | 12/31/11 | % Chg | 12/31/12 | 12/31/11 | % Chg |
| Interest income | $15,742 | $16,096 | (2)% | $62,524 | $64,798 | (4)% |
| Interest expense | 1,410 | 2,009 | (30)% | 6,339 | 9,260 | (32)% |
| Net interest income | 14,332 | 14,087 | 2% | 56,185 | 55,538 | 1% |
| Provision for loan losses | 1,300 | 2,200 | (41)% | 7,000 | 10,750 | (35)% |
| Net interest income after provision for loan losses | 13,032 | 11,887 | 10% | 49,185 | 44,788 | 10% |
| Non interest income | 5,601 | 5,530 | 1% | 22,421 | 20,724 | 8% |
| Non interest expense | 11,670 | 10,403 | 12% | 46,338 | 42,114 | 10% |
| Net income before income taxes | 6,963 | 7,014 | (1)% | 25,268 | 23,398 | 8% |
| Provision for income taxes | 1,953 | 2,105 | (7)% | 7,123 | 6,909 | 3% |
| Net income | 5,010 | 4,909 | 2% | 18,145 | 16,489 | 10% |
| Preferred stock dividends & amortization | -- | 195 | (100)% | -- | 972 | (100)% |
| Net income available to common shareholders | $5,010 | $4,714 | 6% | $18,145 | $15,517 | 17% |
| Per Common Share Data | ||||||
| Diluted earnings per common share | 0.66 | 0.63 | 5% | 2.41 | 2.07 | 16% |
| Cash dividends declared | 0.17 | 0.00 | 100% | 0.79 | 0.56 | 41% |
| Earnings Performance Data | ||||||
| Return on common equity | 11.79% | 12.21% | (42)bps | 11.08% | 10.41% | 47bps |
| Return on assets | 1.12% | 1.13% | (1)bps | 1.05% | 1.00% | 5bps |
| Net interest margin | 3.52% | 3.55% | (3)bps | 3.53% | 3.65% | (12)bps |
| The Bank of Kentucky Financial Corporation | ||
| Selected Consolidated Financial Data | ||
| (Dollars in thousands, except per share data) | ||
| Balance Sheet Data | ||
| December 31, 2012 | December 31, 2011 | |
| Assets: | ||
| Cash and cash equivalents | $151,832 | $135,964 |
| Investments | 381,537 | 371,737 |
| Loans held for sale | 16,324 | 8,920 |
| Total loans, gross | 1,195,409 | 1,129,954 |
| Allowance for loan losses | (16,568) | (18,288) |
| Premises and equipment, net | 22,494 | 22,827 |
| Goodwill and acquisition intangibles, net | 24,485 | 25,251 |
| Other assets and accrued interest receivable | 68,591 | 68,359 |
| Total assets | $1,844,104 | $1,744,724 |
| Liabilities & Shareholders' Equity | ||
| Total deposits | $1,570,007 | $1,498,821 |
| Short-term borrowings | 41,408 | 29,300 |
| Notes payable | 48,715 | 48,739 |
| Accrued interest payable and other liabilities | 13,534 | 11,294 |
| Total liabilities | 1,673,664 | 1,588,154 |
| Common stockholders' equity | 170,440 | 156,570 |
| Total liabilities and shareholders' equity | $1,844,104 | $1,744,724 |
| 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 December 31, 2012 | Quarter ended December 31, 2011 | ||||||||||||
| Average outstanding balance | Interest earned/ paid | Yield/ rate | Average outstanding balance | Interest earned/ paid | Yield/ rate | ||||||||
| Interest-earning assets: | |||||||||||||
| Loans receivable (1)(2) | $1,175,879 | $14,365 | 4.86% | $1,139,767 | $14,493 | 5.04% | |||||||
| Securities (2) | 373,008 | 1,728 | 1.84 | 360,265 | 1,848 | 2.02 | |||||||
| Other interest-earning assets | 71,139 | 92 | 0.51 | 76,258 | 81 | 0.42 | |||||||
| Total interest-earning assets | 1,620,026 | 16,185 | 3.97 | 1,576,290 | 16,422 | 4.13 | |||||||
| Non-interest-earning assets | 152,740 | 141,526 | |||||||||||
| Total assets | $1,772,766 | $1,717,816 | |||||||||||
| Interest-bearing liabilities: | |||||||||||||
| Transaction accounts | 848,302 | 432 | 0.20 | 783,753 | 528 | 0.27 | |||||||
| Time deposits | 358,936 | 720 | 0.80 | 406,963 | 1,217 | 1.19 | |||||||
| Borrowings | 72,193 | 258 | 1.42 | 77,832 | 264 | 1.35 | |||||||
| Total interest-bearing liabilities | 1,279,431 | 1,410 | 0.44 | 1,268,548 | 2,009 | 0.63 | |||||||
| Non-interest-bearing liabilities | 324,304 | 286,340 | |||||||||||
| Total liabilities | 1,603,735 | 1,554,888 | |||||||||||
| Shareholders' equity | 169,031 | 162,928 | |||||||||||
| Total liabilities and shareholders' equity | $1,772,766 | $1,717,816 | |||||||||||
| Net interest income | $14,775 | $14,413 | |||||||||||
| Interest rate spread | 3.53% | 3.50% | |||||||||||
| Net interest margin (net interest income as a percent of average interest-earning assets) | 3.63% | 3.63% | |||||||||||
| (1) Includes non-accrual loans. | |||||||||||||
| (2) Income presented on a tax equivalent basis using a 35.00% tax rate in 2012 and 2011. The tax equivalent adjustment was $443,000 and $326,000 in 2012 and 2011, 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) | |||||||||||||
| Year ended December 31, 2012 | Year ended December 31, 2011 | ||||||||||||
|
Average outstanding balance |
Interest earned/ paid |
Yield/ rate |
Average outstanding balance |
Interest earned/ paid |
Yield/ rate |
||||||||
| Interest-earning assets: | |||||||||||||
| Loans receivable (1)(2) | $1,151,139 | $56,196 | 4.88% | $1,123,625 | $58,379 | 5.20% | |||||||
| Securities (2) | 373,029 | 7,412 | 1.99 | 326,681 | 7,302 | 2.24 | |||||||
| Other interest-earning assets | 65,716 | 334 | 0.51 | 71,085 | 372 | 0.52 | |||||||
| Total interest-earning assets | 1,589,884 | 63,942 | 4.02 | 1,521,391 | 66,053 | 4.34 | |||||||
| Non-interest-earning assets | 143,694 | 134,667 | |||||||||||
| Total assets | $1,733,578 | $1,656,058 | |||||||||||
| Interest-bearing liabilities: | |||||||||||||
| Transaction accounts | 819,915 | 1,552 | 0.21 | 736,323 | 2,403 | 0.33 | |||||||
| Time deposits | 378,111 | 3,728 | 0.93 | 420,026 | 5,835 | 1.39 | |||||||
| Borrowings | 74,786 | 1,059 | 1.42 | 74,147 | 1,022 | 1.38 | |||||||
| Total interest-bearing liabilities | 1,272,812 | 6,339 | 0.50 | 1,230,496 | 9,260 | 0.75 | |||||||
| Non-interest-bearing liabilities | 297,003 | 262,245 | |||||||||||
| Total liabilities | 1,569,815 | 1,492,741 | |||||||||||
| Shareholders' equity | 163,763 | 163,317 | |||||||||||
| Total liabilities and shareholders' equity | $1,733,578 | $1,656,058 | |||||||||||
| Net interest income | $57,603 | $56,793 | |||||||||||
| Interest rate spread | 3.52% | 3.59% | |||||||||||
| Net interest margin (net interest income as a percent of average interest-earning assets) | 3.62% | 3.73% | |||||||||||
| ___________________________ | |||||||||||||
| (1) Includes non-accrual loans. | |||||||||||||
| (2) Income presented on a tax equivalent basis using a 35.00% tax rate in 2012 and 2011. The tax equivalent adjustment was $1,418,000 and $1,255,000 in 2012 and 2011, respectively. | . | ||||||||||||
| The Bank of Kentucky Financial Corporation | |||||
| Selected Consolidated Financial Data | |||||
| (Dollars in thousands, except per share data) | |||||
| Five-Quarter Comparison | |||||
| Income Statement Data | 12/31/12 | 9/30/12 | 6/30/12 | 3/31/12 | 12/31/11 |
| Net interest income | $14,332 | $13,962 | $14,047 | $13,844 | $14,087 |
| Provision for loan losses | 1,300 | 2,200 | 1,700 | 1,800 | 2,200 |
| Net interest income after provision for loan losses | 13,032 | 11,762 | 12,347 | 12,044 | 11,887 |
| Service charges and fees | 2,322 | 2,325 | 2,241 | 2,201 | 2,390 |
| Gain on sale of real estate loans | 694 | 917 | 589 | 586 | 580 |
| Gain/(loss) on sale of securities | -- | -- | (4) | 207 | -- |
| Trust fee income | 749 | 710 | 694 | 689 | 625 |
| Bankcard transaction revenue | 971 | 940 | 952 | 902 | 885 |
| Gains/(losses) on other real estate owned | (226) | (67) | (40) | (94) | (85) |
| Other non-interest income | 1,091 | 1,036 | 921 | 1,115 | 1,135 |
| Total non-interest income | 5,601 | 5,861 | 5,353 | 5,606 | 5,530 |
| Salaries and employee benefits expense | 5,869 | 5,909 | 5,724 | 5,451 | 5,044 |
| Occupancy and equipment expense | 1,341 | 1,316 | 1,315 | 1,277 | 1,192 |
| Data processing expense | 618 | 505 | 533 | 535 | 522 |
| State bank taxes | 554 | 579 | 579 | 559 | 415 |
| Amortization of intangible assets | 183 | 187 | 196 | 200 | 220 |
| FDIC Insurance | 296 | 267 | 295 | 305 | 305 |
| Other non-interest expenses | 2,809 | 3,036 | 2,885 | 3,015 | 2,705 |
| Total non-interest expense | 11,670 | 11,799 | 11,527 | 11,342 | 10,403 |
| Net income before income tax expense | 6,963 | 5,824 | 6,173 | 6,308 | 7,014 |
| Income tax expense | 1,953 | 1,628 | 1,749 | 1,793 | 2,105 |
| Net income | 5,010 | 4,196 | 4,424 | 4,515 | 4,909 |
| Preferred stock dividends & amortization | -- | -- | -- | -- | 195 |
| Net income available to common shareholders | $5,010 | $4,196 | $4,424 | $4,515 | $4,714 |
| Per Common Share Data | |||||
| Diluted earnings per common share | 0.66 | 0.56 | 0.59 | 0.60 | 0.63 |
| Cash dividends declared | 0.17 | 0.32 | 0.00 | 0.30 | 0.00 |
| Weighted average common shares outstanding | |||||
| Basic | 7,470,146 | 7,465,926 | 7,465,434 | 7,448,604 | 7,432,995 |
| Diluted | 7,557,777 | 7,554,271 | 7,542,372 | 7,520,062 | 7,465,606 |
| Earnings Performance Data | |||||
| Return on common equity | 11.79% | 10.05% | 10.99% | 11.49% | 12.21% |
| Return on assets | 1.12% | 0.98% | 1.03% | 1.04% | 1.13% |
| Net interest margin | 3.52% | 3.56% | 3.57% | 3.49% | 3.55% |
| Net interest margin (tax equivalent) | 3.63% | 3.64% | 3.65% | 3.57% | 3.63% |
| The Bank of Kentucky Financial Corporation | |||||
| Selected Consolidated Financial Data | |||||
| (Dollars in thousands, except per share data) | |||||
| Five-Quarter Comparison | |||||
| Balance Sheet Data | 12/31/12 | 9/30/12 | 6/30/12 | 3/31/12 | 12/31/11 |
| Assets: | |||||
| Cash and cash equivalents | $151,832 | $81,950 | $66,719 | $133,153 | $135,964 |
| Investments | 381,537 | 361,108 | 376,454 | 374,336 | 371,737 |
| Loans held for sale | 16,324 | 19,314 | 13,983 | 10,863 | 8,920 |
| Total loans | 1,195,409 | 1,159,074 | 1,143,733 | 1,130,200 | 1,129,954 |
| Allowance for loan losses | (16,568) | (16,585) | (18,346) | (18,362) | (18,288) |
| Premises and equipment, net | 22,494 | 22,714 | 22,923 | 23,159 | 22,827 |
| Goodwill and acquisition intangibles, net | 24,485 | 24,668 | 24,856 | 25,051 | 25,251 |
| Other assets & accrued interest receivable | 68,591 | 69,711 | 73,543 | 74,381 | 68,359 |
| Total assets | $1,844,104 | $1,721,954 | $1,703,865 | $1,752,781 | $1,744,724 |
| Liabilities & Shareholders' Equity | |||||
| Total deposits | $1,570,007 | $1,471,246 | $1,455,328 | $1,505,709 | $1,498,821 |
| Short-term borrowings | 41,408 | 22,142 | 24,373 | 29,334 | 29,300 |
| Notes payable | 48,715 | 48,721 | 48,727 | 48,733 | 48,739 |
| Accrued interest payable & other liabilities | 13,534 | 12,224 | 10,987 | 9,531 | 11,294 |
| Total liabilities | 1,673,664 | 1,554,333 | 1,539,415 | 1,593,307 | 1,588,154 |
| Common stockholders' equity | 170,440 | 167,621 | 164,450 | 159,474 | 156,570 |
| Preferred stock | -- | -- | -- | -- | -- |
| Shareholders' equity | 170,440 | 167,621 | 164,450 | 159,474 | 156,570 |
| Total liabilities and shareholders' equity | $1,844,104 | $1,721,954 | $1,703,865 | $1,752,781 | $1,744,724 |
| Common shares outstanding | 7,470,146 | 7,467,396 | 7,465,841 | 7,464,811 | 7,432,995 |
| Average Balance Sheet Data | |||||
| Average investments | $373,008 | $369,707 | $375,245 | $374,027 | $360,265 |
| Average other earning assets | 71,139 | 32,781 | 70,648 | 88,597 | 76,258 |
| Average loans | 1,175,879 | 1,158,072 | 1,136,894 | 1,133,367 | 1,139,767 |
| Average earning assets | 1,620,026 | 1,560,560 | 1,582,787 | 1,595,991 | 1,576,290 |
| Average assets | 1,772,766 | 1,707,843 | 1,730,575 | 1,745,169 | 1,717,816 |
| Average deposits | 1,518,557 | 1,459,593 | 1,482,222 | 1,494,332 | 1,464,550 |
| Average interest bearing deposits | 1,207,238 | 1,165,673 | 1,194,699 | 1,224,743 | 1,190,716 |
| Average interest bearing transaction deposits | 848,302 | 796,346 | 813,312 | 821,643 | 783,753 |
| Average interest bearing time deposits | 358,936 | 369,327 | 381,387 | 403,100 | 406,963 |
| Average borrowings | 72,193 | 70,445 | 75,789 | 80,798 | 77,832 |
| Average interest bearing liabilities | 1,279,431 | 1,236,118 | 1,270,488 | 1,305,541 | 1,268,548 |
| Average common stockholders equity | 169,031 | 166,036 | 161,962 | 158,022 | 153,175 |
| Average preferred stock | -- | -- | -- | -- | 9,753 |
| The Bank of Kentucky Financial Corporation | |||||
| Selected Consolidated Financial Data | |||||
| (Dollars in thousands, except per share data) | |||||
| Five-Quarter Comparison | |||||
| Asset Quality Data | 12/31/12 | 9/30/12 | 6/30/12 | 3/31/12 | 12/31/11 |
| Allowance for loan losses to total loans | 1.39% | 1.43% | 1.60% | 1.62% | 1.62% |
| Allowance for loan losses to non-performing loans | 86% | 112% | 111% | 105% | 115% |
| Nonaccrual loans | $19,244 | $14,813 | $16,265 | $16,779 | $15,651 |
| Loans – 90 days past due & still accruing | 39 | 105 | 195 | 680 | 219 |
| Total non-performing loans | 19,283 | 14,918 | 16,460 | 17,459 | 15,870 |
| OREO and repossessed assets | 5,396 | 6,192 | 5,950 | 6,328 | 5,844 |
| Total non-performing assets | 24,679 | 21,110 | 22,410 | 23,787 | 21,714 |
| Restructured loans-accruing | 6,046 | 12,270 | 15,388 | 15,492 | 13,306 |
| Non-performing loans to total loans | 1.61% | 1.29% | 1.44% | 1.54% | 1.40% |
| Non-performing assets to total assets | 1.34% | 1.23% | 1.32% | 1.36% | 1.25% |
| Annualized charge-offs to average loans | 0.45% | 1.39% | 0.61% | 0.62% | 0.65% |
| Net charge-offs | $1,317 | $3,961 | $1,716 | $1,726 | $1,853 |
| Other Information | |||||
| Total assets under management (in millions) | 714 | 715 | 701 | 702 | 667 |
| Full-time equivalent employees | 365 | 370 | 376 | 359 | 356 |
About BKFC
BKFC, a bank holding company with assets of approximately $1.844 billion, offers banking and related financial services to both individuals and business customers. BKFC operates thirty-three branch locations and fifty-six ATMs in the Northern Kentucky/Cincinnati market.