CRESTVIEW HILLS, Ky., July 20, 2011 (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 and six months ended June 30, 2011. For the second quarter and the first six months of 2011, the Company reported an increase in diluted earnings per common share of 27% and 49% respectively as compared to the same periods in 2010.
A summary of the Company's results follows:
| Second Quarter ended June 30, | 2011 | 2010 | Change |
| Net income | $3,794,000 | $2,610,000 | 45% |
| Net income available to common shareholders | $3,535,000 | $2,096,000 | 69% |
| Earnings per common share, basic | $0.48 | $0.37 | 30% |
| Earnings per common share, diluted | $0.47 | $0.37 | 27% |
| Six Months ended June 30, | 2011 | 2010 | Change |
| Net income | $7,306,000 | $4,470,000 | 63% |
| Net income available to common shareholders | $6,790,000 | $3,446,000 | 97% |
| Net income per common share, basic | $0.91 | $ 0 .61 | 49% |
| Net income per common share, diluted | $0.91 | $ 0 .61 | 49% |
Robert Zapp, President & CEO stated, "We followed an exceptional opening quarter of 2011 with a second quarter of improved earnings. We announced plans to open our first branch in downtown Cincinnati later this year and we executed a purchase and assumption agreement with United Kentucky Bank of Pendleton County, Inc. We are excited to open our first branch in Ohio and to welcome the staff and customers of UKB in Falmouth, Kentucky. These positive and strategic moves are coupled with the continued improvement we witnessed in the second quarter with respect to our credit metrics and overall loan demand. I have confidence in our team and the resources we have put in place as we work to maintain our path, strategically and financially, in the coming quarters."
Driving the increase in earnings in the second quarter of 2011 was a $1,500,000 (33%) decrease in the provision for loan losses as compared to the second quarter of 2010. Also contributing to increased earnings was a 3% increase in total revenue. The increase in net income available to common shareholders was also attributable to a 50% reduction in preferred stock dividends and amortization. The decrease in the provision for loan losses reflected improving credit metrics as compared to June of 2010, while the reduction of preferred stock dividends and amortization reflects the December 2010 repurchase of $17 million of the outstanding $34 million of the Company's Fixed Rate Cumulative Perpetual Preferred Stock, Series A (the "Series A Preferred Stock"), previously issued to the U.S. Department of the Treasury as part of the TARP CPP program.
Net interest income increased $573,000, or 4% in the second quarter of 2011, as compared to the same period in 2010. The net interest margin, on a tax equivalent basis, increased 3 basis points from 3.81% in the second quarter of 2010 to 3.84% in the second quarter of 2011. Contributing to the increase in net interest income was the growth in average earning assets, which increased $53 million, or 4% on average from the second quarter of 2010.
The provision for loan losses decreased by $1,500,000 (33%) in the second quarter of 2011, as compared to the same period in 2010. Contributing to this decrease were lower levels of non-performing loans and charge-offs as compared to June 2010. The Company's non-performing loans as a percentage of total loans were 1.46% as of June 30, 2011, as compared to 1.99% as of June 30, 2010, while annualized net charge-offs to average loans decreased from 1.26% in the second quarter of 2010 to 1.03% in the second quarter of 2011. The Company recorded $2,871,000 in net charge-offs in the second quarter of 2011 as compared to $3,577,000 in the second quarter of 2010. On a sequential basis, the provision for loan losses of $3,000,000 in the second quarter of 2011 was equal to the provision in the first quarter of 2011, while non-performing loans decreased from $20.4 million (1.82% of total loans) at March 31, 2011 to $16.4 million (1.46% of total loans) at June 30, 2011. Net charge-offs on a sequential basis increased slightly from $2,680,000 (.98% of loans) in the first quarter of 2011 to $2,871,000 (1.03% of loans) in the second quarter of 2011. The allowance for loan losses (ALL) increased $1,285,000 or 8% from June 2010, and $448,000 from December 31, 2010. As a result of the added allowance, the ALL has increased from 1.47% of loans at the end of the second quarter of 2010 to 1.58% of loans at the end of the second quarter of 2011. 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.
Non-interest income increased 1% ($34,000) in the second quarter of 2011, as compared to the same period in 2010, while non-interest expense increased 3% ($319,000) from the same period last year. Contributing to the increase in non-interest expense was a $281,000 (6%) increase in salaries and employee benefits.
Total assets were $1.602 billion at the end of the second quarter of 2011, which was $82 million or 5% higher than the same date a year ago. Total loans increased $6 million (0%) while investments in securities increased $86 million (37%) from June of 2010. The increased investments in securities were funded by an increase in deposits of $54 million, or 4%, and an increase in shareholders' equity of $21 million or 15%. The growth in equity was a result of increased earnings as described above and the net increase in capital from the Company's December 2010 common stock offering, less the Series A Preferred Stock repurchase.
| 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 | 6/30/11 | 6/30/10 | % Chg | 6/30/11 | 6/30/10 | % Chg | ||||
| Interest income | $16,423 | $16,813 | (2)% | $32,422 | $33,586 | (3)% | ||||
| Interest expense | 2,396 | 3,359 | (29)% | 5,047 | 7,198 | (30)% | ||||
| Net interest income | 14,027 | 13,454 | 4% | 27,375 | 26,388 | 4% | ||||
| Provision for loan losses | 3,000 | 4,500 | (33)% | 6,000 | 9,000 | (33)% | ||||
| Net interest income after provision for loan losses | 11,027 | 8,954 | 23% | 21,375 | 17,388 | 23% | ||||
| Non-interest income | 4,974 | 4,940 | 1% | 9,897 | 9,545 | 4% | ||||
| Non-interest expense | 10,635 | 10,316 | 3% | 20,984 | 20,929 | --% | ||||
| Net income before income taxes | 5,366 | 3,578 | 50% | 10,288 | 6,004 | 71% | ||||
| Provision for income taxes | 1,572 | 968 | 62% | 2,982 | 1,534 | 94% | ||||
| Net income | 3,794 | 2,610 | 45% | 7,306 | 4,470 | 63% | ||||
| Preferred stock dividends & amortization | 259 | 514 | (50)% | 516 | 1,024 | (50)% | ||||
| Net income available to common shareholders | $3,535 | $2,096 | 69% | $6,790 | $3,446 | 97% | ||||
| Per Common Share Data | ||||||||||
| Diluted earnings per common share | 0.47 | 0.37 | 27% | 0.91 | 0.61 | 49% | ||||
| Cash dividends declared | 0.00 | 0.00 | 0% | 0.28 | 0.28 | 0% | ||||
| Earnings Performance Data | ||||||||||
| Return on common equity | 9.59% | 7.59% | 200bps | 9.40% | 6.33% | 307bps | ||||
| Return on assets | .93% | .67% | 26bps | .90% | .57% | 33bps | ||||
| Net interest margin | 3.76% | 3.74% | 2bps | 3.66% | 3.68% | (2)bps | ||||
| The Bank of Kentucky Financial Corporation | ||||||
| Selected Consolidated Financial Data | ||||||
| (Dollars in thousands, except per share data) | ||||||
| Balance Sheet Data | ||||||
| June 30, 2011 | December 31, 2010 | June 30, 2010 | ||||
| Assets: | ||||||
| Cash and cash equivalents | $61,098 | $172,664 | $69,094 | |||
| Investments | 320,202 | 285,326 | 233,817 | |||
| Loans held for sale | 1,107 | 15,279 | 6,795 | |||
| Total loans, gross | 1,128,511 | 1,106,009 | 1,122,964 | |||
| Allowance for loan losses | (17,816) | (17,368) | (16,531) | |||
| Premises and equipment, net | 22,576 | 23,170 | 23,690 | |||
| Goodwill and acquisition intangibles, net | 25,028 | 25,464 | 26,178 | |||
| Other assets and accrued interest receivable | 61,013 | 54,340 | 53,613 | |||
| Total assets | $1,601,719 | $1,664,884 | $1,519,620 | |||
| Liabilities & Shareholders' Equity | ||||||
| Total deposits | $1,355,284 | $1,422,312 | $1,300,949 | |||
| Short-term borrowings | 20,610 | 23,419 | 18,097 | |||
| Notes payable | 48,750 | 48,761 | 44,770 | |||
| Accrued interest payable and other liabilities | 10,682 | 11,022 | 10,894 | |||
| Total liabilities | 1,435,325 | 1,505,514 | 1,374,710 | |||
| Common stockholders' equity | 149,511 | 142,580 | 111,510 | |||
| Preferred stock | 16,882 | 16,790 | 33,400 | |||
| Shareholders' equity | 166,393 | 159,370 | 144,910 | |||
| Total liabilities and shareholders' equity | $1,601,719 | $1,664,884 | $1,519,620 | |||
| 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, 2011 | Three Months ended June 30, 2010 | |||||
|
Average outstanding balance |
Interest earned/ paid |
Yield/ rate |
Average outstanding balance |
Interest earned/ paid |
Yield/ rate |
|
| Interest-earning assets: | ||||||
| Loans receivable (1)(2) | $1,119,767 | $14,770 | 5.29% | $1,139,730 | $15,426 | 5.43% |
| Securities (2) | 319,377 | 1,881 | 2.36 | 243,572 | 1,536 | 2.53 |
| Other interest-earning assets | 57,607 | 84 | 0.58 | 60,416 | 97 | 0.64 |
| Total interest-earning assets | 1,496,751 | 16,735 | 4.48 | 1,443,718 | 17,059 | 4.74 |
| Non-interest-earning assets | 137,239 | 124,119 | ||||
| Total assets | $1,633,990 | $1,567,837 | ||||
| Interest-bearing liabilities: | ||||||
| Transaction accounts | 721,948 | 513 | 0.29 | 695,866 | 646 | 0.37 |
| Time deposits | 423,038 | 1,629 | 1.54 | 450,254 | 2,415 | 2.15 |
| Borrowings | 72,580 | 254 | 1.4 | 66,333 | 298 | 1.8 |
| Total interest-bearing liabilities | 1,217,566 | 2,396 | 0.79 | 1,212,453 | 3,359 | 1.11 |
| Non-interest-bearing liabilities | 252,718 | 212,297 | ||||
| Total liabilities | 1,470,284 | 1,424,750 | ||||
| Shareholders' equity | 163,706 | 143,087 | ||||
| Total liabilities and shareholders' equity | $1,633,990 | $1,567,837 | ||||
| Net interest income | $14,339 | $13,700 | ||||
| Interest rate spread | 3.69% | 3.63% | ||||
| Net interest margin (net interest income as a percent of average interest-earning assets) | 3.84% | 3.81% | ||||
| (1) Includes non-accrual loans. | ||||||
| (2) Income presented on a tax equivalent basis using a 35.00% and 34.23% tax rate in 2011 and 2010, respectively. The tax equivalent adjustment was $312,000 and $246,000 in 2011 and 2010, 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, 2011 | Six Months ended June 30, 2010 | |||||
|
Average outstanding balance |
Interest earned/ paid |
Yield/ rate |
Average outstanding balance |
Interest earned/ paid |
Yield/ rate |
|
| Interest-earning assets: | ||||||
| Loans receivable (1)(2) | $1,114,153 | $29,234 | 5.29% | $1,146,378 | $30,803 | 5.42% |
| Securities (2) | 310,901 | 3,573 | 2.32 | 230,001 | 3,067 | 2.69 |
| Other interest-earning assets | 84,397 | 222 | 0.53 | 68,735 | 206 | 0.60 |
| Total interest-earning assets | 1,509,451 | 33,029 | 4.41 | 1,445,114 | 34,076 | 4.76 |
| Non-interest-earning assets | 133,063 | 124,880 | ||||
| Total assets | $1,642,514 | $1,569,994 | ||||
| Interest-bearing liabilities: | ||||||
| Transaction accounts | 725,063 | 1,184 | 0.33 | 699,182 | 1,596 | 0.46 |
| Time deposits | 431,155 | 3,355 | 1.57 | 454,405 | 5,010 | 2.22 |
| Borrowings | 73,065 | 508 | 1.4 | 66,736 | 592 | 1.79 |
| Total interest-bearing liabilities | 1,229,283 | 5,047 | 0.83 | 1,220,323 | 7,198 | 1.19 |
| Non-interest-bearing liabilities | 251,281 | 207,529 | ||||
| Total liabilities | 1,480,564 | 1,427,852 | ||||
| Shareholders' equity | 161,950 | 142,142 | ||||
| Total liabilities and shareholders' equity | $1,642,514 | $1,569,994 | ||||
| Net interest income | $27,982 | $26,878 | ||||
| Interest rate spread | 3.58% | 3.57% | ||||
| Net interest margin (net interest income as a percent of average interest-earning assets) | 3.74% | 3.75% | ||||
| (1) Includes non-accrual loans. | ||||||
| (2) Income presented on a tax equivalent basis using a 35.00% and 34.23% tax rate in 2011 and 2010, respectively. The tax equivalent adjustment was $607,000 and $490,000 in 2011 and 2010, respectively. | ||||||
| The Bank of Kentucky Financial Corporation | |||||||
| Selected Consolidated Financial Data | |||||||
| (Dollars in thousands, except per share data) | |||||||
| Five-Quarter Comparison | |||||||
| Income Statement Data | 6/30/11 | 3/31/11 | 12/31/10 | 9/30/10 | 6/30/10 | ||
| Net interest income | $14,027 | $13,348 | $13,429 | $13,592 | $13,454 | ||
| Provision for loan losses | 3,000 | 3,000 | 3,000 | 3,500 | 4,500 | ||
| Net interest income after provision for loan losses | 11,027 | 10,348 | 10,429 | 10,092 | 8,954 | ||
| Service charges and fees | 2,424 | 2,157 | 2,411 | 2,589 | 2,622 | ||
| Gain on sale of real estate loans | 228 | 278 | 946 | 1,041 | 337 | ||
| Gain on sale of securities | -- | 231 | -- | -- | -- | ||
| Trust fee income | 723 | 663 | 601 | 620 | 602 | ||
| Bankcard transaction revenue | 859 | 789 | 774 | 727 | 749 | ||
| Gains/(losses) on Other Real Estate Owned | (94) | 16 | (125) | (110) | 30 | ||
| Other non-interest income | 834 | 789 | 935 | 760 | 600 | ||
| Total non-interest income | 4,974 | 4,923 | 5,542 | 5,627 | 4,940 | ||
| Salaries and employee benefits expense | 5,045 | 4,754 | 4,959 | 5,110 | 4,764 | ||
| Occupancy and equipment expense | 1,241 | 1,248 | 1,185 | 1,195 | 1,187 | ||
| Data processing expense | 467 | 494 | 484 | 442 | 443 | ||
| State bank taxes | 550 | 536 | 477 | 492 | 507 | ||
| Amortization of intangible assets | 215 | 221 | 357 | 357 | 375 | ||
| FDIC Insurance | 384 | 583 | 566 | 504 | 587 | ||
| Other non-interest expenses | 2,733 | 2,513 | 2,742 | 2,625 | 2,453 | ||
| Total non-interest expense | 10,635 | 10,349 | 10,770 | 10,725 | 10,316 | ||
| Net income before income tax expense | 5,366 | 4,922 | 5,201 | 4,994 | 3,578 | ||
| Income tax expense | 1,572 | 1,410 | 1,528 | 1,466 | 968 | ||
| Net income | 3,794 | 3,512 | 3,673 | 3,528 | 2,610 | ||
| Preferred stock dividends & amortization | 259 | 257 | 707 | 515 | 514 | ||
| Net income available to common shareholders | $3,535 | $3,255 | $2,966 | $3,013 | $2,096 | ||
| Per Common Share Data | |||||||
| Diluted earnings per common share | 0.47 | 0.44 | 0.46 | 0.53 | 0.37 | ||
| Cash dividends declared | 0.00 | 0.28 | 0.00 | 0.28 | 0.00 | ||
| Weighted average common shares outstanding | |||||||
| Basic | 7,432,487 | 7,432,295 | 6,434,354 | 5,666,707 | 5,666,707 | ||
| Diluted | 7,501,731 | 7,459,220 | 6,434,354 | 5,666,707 | 5,666,707 | ||
| Earnings Performance Data | |||||||
| Return on common equity | 9.59% | 9.21% | 9.33% | 10.68% | 7.59% | ||
| Return on assets | .93% | .86% | .91% | .93% | .67% | ||
| Net interest margin | 3.76% | 3.56% | 3.62% | 3.90% | 3.74% | ||
| Net interest margin (tax equivalent) | 3.84% | 3.63% | 3.70% | 3.97% | 3.81% | ||
| The Bank of Kentucky Financial Corporation | |||||
| Selected Consolidated Financial Data | |||||
| (Dollars in thousands, except per share data) | |||||
| Five-Quarter Comparison | |||||
| Balance Sheet Data | 6/30/11 | 3/31/11 | 12/31/10 | 9/30/10 | 6/30/10 |
| Assets: | |||||
| Cash and cash equivalents | $61,098 | $97,712 | $172,664 | $41,280 | $69,094 |
| Investments | 320,202 | 328,271 | 285,326 | 240,657 | 233,817 |
| Loans held for sale | 1,107 | 1,223 | 15,279 | 21,903 | 6,795 |
| Total loans | 1,128,511 | 1,118,136 | 1,106,009 | 1,120,168 | 1,122,964 |
| Allowance for loan losses | (17,816) | (17,688) | (17,368) | (17,163) | (16,531) |
| Premises and equipment, net | 22,576 | 22,856 | 23,170 | 23,373 | 23,690 |
| Goodwill and acquisition intangibles, net | 25,028 | 25,242 | 25,464 | 25,820 | 26,178 |
| Other assets & accrued interest receivable | 61,013 | 61,684 | 54,340 | 54,028 | 53,613 |
| Total assets | $1,601,719 | $1,637,436 | $1,664,884 | $1,510,066 | $ 1,519,620 |
| Liabilities & Shareholders' Equity | |||||
| Total deposits | $1,355,284 | $1,390,706 | $1,422,312 | $1,271,455 | $1,300,949 |
| Short-term borrowings | 20,610 | 24,667 | 23,419 | 36,175 | 18,097 |
| Notes payable | 48,750 | 48,756 | 48,761 | 44,766 | 44,770 |
| Accrued interest payable & other liabilities | 10,682 | 12,289 | 11,022 | 11,307 | 10,894 |
| Total liabilities | 1,435,325 | 1,476,418 | 1,505,514 | 1,363,703 | 1,374,710 |
| Common stockholders' equity | 149,511 | 144,183 | 142,580 | 112,873 | 111,510 |
| Preferred stock | 16,882 | 16,835 | 16,790 | 33,490 | 33,400 |
| Shareholders' equity | 166,393 | 161,018 | 159,370 | 146,363 | 144,910 |
| Total liabilities and shareholders' equity | $1,601,719 | $1,637,436 | $1,664,884 | $1,510,066 | $ 1,519,620 |
| Common shares outstanding | 7,432,995 | 7,432,295 | 7,432,295 | 5,666,707 | 5,666,707 |
| Average Balance Sheet Data | |||||
| Average investments | $319,377 | $302,331 | $252,793 | $234,335 | $243,572 |
| Average other earning assets | 57,607 | 111,484 | 85,384 | 28,232 | 60,416 |
| Average loans | 1,119,767 | 1,108,477 | 1,133,524 | 1,123,503 | 1,139,730 |
| Average earning assets | 1,496,751 | 1,522,292 | 1,471,701 | 1,386,070 | 1,443,718 |
| Average assets | 1,633,990 | 1,649,947 | 1,595,835 | 1,509,821 | 1,567,837 |
| Average deposits | 1,385,624 | 1,406,861 | 1,366,256 | 1,285,557 | 1,347,906 |
| Average interest bearing deposits | 1,144,986 | 1,168,383 | 1,130,890 | 1,083,935 | 1,146,120 |
| Average interest bearing transaction deposits | 721,948 | 729,022 | 682,826 | 637,835 | 695,866 |
| Average interest bearing time deposits | 423,038 | 439,361 | 448,064 | 446,100 | 450,254 |
| Average borrowings | 72,580 | 73,555 | 69,784 | 67,153 | 66,333 |
| Average interest bearing liabilities | 1,217,566 | 1,241,938 | 1,200,674 | 1,151,088 | 1,212,453 |
| Average common stockholders equity | 146,848 | 143,382 | 126,068 | 112,192 | 109,732 |
| Average preferred stock | 16,858 | 16,813 | 31,710 | 33,445 | 33,355 |
| The Bank of Kentucky Financial Corporation | |||||
| Selected Consolidated Financial Data | |||||
| (Dollars in thousands, except per share data) | |||||
| Five-Quarter Comparison | |||||
| Asset Quality Data | 6/30/11 | 3/31/11 | 12/31/10 | 9/30/10 | 6/30/10 |
| Allowance for loan losses to total loans | 1.58% | 1.58% | 1.57% | 1.53% | 1.47% |
| Allowance for loan losses to non-performing loans | 1.07% | 87% | 82% | 90% | 74% |
| Nonaccrual loans | $16,322 | $19,735 | $20,648 | $18,768 | $22,184 |
| Loans – 90 days past due & still accruing | 100 | 637 | 414 | 207 | 213 |
| Total non-performing loans | 16,422 | 20,372 | 21,062 | 18,975 | 22,397 |
| OREO and repossessed assets | 1,902 | 1,083 | 795 | 1,392 | 1,397 |
| Total non-performing assets | 18,324 | 21,455 | 21,857 | 20,367 | 23,794 |
| Restructured loans-accruing | 7,022 | 3,294 | 6,135 | 3,901 | 3,441 |
| Non-performing loans to total loans | 1.46% | 1.82% | 1.90% | 1.69% | 1.99% |
| Non-performing assets to total assets | 1.15% | 1.32% | 1.32% | 1.35% | 1.57% |
| Annualized charge-offs to average loans | 1.03% | 0.98% | 1.00% | 1.02% | 1.26% |
| Net charge-offs | $2,871 | $2,680 | $2,795 | $2,867 | $3,577 |
About BKFC
BKFC, a bank holding company with assets of approximately $1.601 billion, offers banking and related financial services to both individuals and business customers. BKFC operates thirty-one branch locations and fifty-two ATMs in the Northern Kentucky market.