CRESTVIEW HILLS, Ky., April 23, 2010 (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, 2010. For the first quarter, the Company reported a decrease in diluted earnings per common share of 48% as compared to the first quarter of 2009. The first quarter results included an additional $2,975,000 provision for loan losses as compared to the first quarter of 2009, which contributed to the decrease in earnings per share as well as net income. Contributing to this increase in the provision for loan losses were higher levels of charge-offs and non-performing loans in the first quarter of 2010 as compared to the same period in 2009, and management's concerns over the effects that the recent recession, including the deteriorating housing market, falling real estate values and high unemployment rates, will have on the Company's loan portfolio. The results for first quarter of 2010 also included an increase in revenue of $3,201,000, which was partially offset by an increase in noninterest expense of $1,765,000 as compared to the first quarter of 2009. Two acquisitions that were completed in the fourth quarter of 2009 had a significant impact on the Company's balance sheet and income statement as compared to the first quarter of 2009. In the fourth quarter of 2009, the Bank completed the purchase of three banking offices of Integra Bank Corporation's wholly-owned bank subsidiary, Integra Bank N.A., located in Crittenden, Dry Ridge and Warsaw, Kentucky and a portfolio of selected commercial loans originated by Integra Bank's Covington, Kentucky loan production office. This transaction added $76 million in deposits and $107 million in loans. The Bank also announced in the fourth quarter that investment professionals from Tapke Asset Management, LLC ("TAM") joined the Bank.
A summary of the Company's results follows:
| First Quarter ended March 31, | 2010 | 2009 | Change |
| Net income | $1,860,000 | $2,816,000 | (34)% |
| Net income available for common shareholders | $1,350,000 | $2,558,000 | (47)% |
| Earnings per common share, basic | $0.24 | $0.46 | (48)% |
| Earnings per common share, diluted | $0.24 | $0.46 | (48)% |
Net interest income increased $2,698,000, or 26% in the first quarter of 2010, as compared to the same period in 2009, while the net interest margin, on a tax equivalent basis, increased 11 basis points from 3.58% in the first quarter of 2009 to 3.69% in the first quarter of 2010. The increase in net interest income was the result of the growth in earning assets, which increased $261 million, or 22% on average from the first quarter of 2009.
The provision for loan losses increased by $2,975,000 (195%) in the first quarter of 2010, as compared to the same period in 2009. Contributing to this increase were higher levels of charge-offs in the first quarter of 2010, as compared to the same period in 2009, and management's concerns over the declining housing market, falling real estate values and overall deteriorating economic conditions. The Company recorded $4,046,000 in net charge-offs in the first quarter of 2010 as compared to $682,000 in the first quarter of 2009. The Company's non-performing loans as a percentage of total loans were 1.91% as of March 31, 2010, as compared to .84% as of March 31, 2009, and the annualized net charge-offs to average loans increased from .27% in the first quarter of 2009 to 1.41% in the first quarter of 2010. On a sequential basis, the provision for loan losses of $4,500,000 in the first quarter of 2010 equaled the provision in the fourth quarter of 2009, while non-performing loans decreased 17% from $25.6 million (2.21% of total loans) at December 31, 2009 to $21.8 million (1.91% of total loans) at March 31, 2010. Also, net charge-offs on a sequential basis increased from $3,125,000 (1.12% of loans) in the fourth quarter of 2009 to $4,046,000 (1.40% of loans) in the first quarter of 2010. As a result of the impact that current economic conditions have had on the Company's loan portfolio, the allowance for loan losses (ALL) increased $4,854,000 (45%) from March 31, 2009. As a result of the added allowance, the ALL has increased from 1.05% of loans at the end of the first quarter of 2009 to 1.37% of loans at the end of the first quarter of 2010. Removing the loans purchased from Integra, the ALL would be 1.51% of loans. The loans from Integra were purchased at a discount of .98%, and current accounting does not allow this discount to be added to the ALL. The adequacy of the ALL is analyzed quarterly and adjusted as necessary to maintain appropriate reserves for probable incurred losses in the loan portfolio.
Non-interest income increased 12% ($503,000) in the first quarter of 2010, as compared to the same period in 2009, while non-interest expense increased 20% ($1,765,000) from the same period last year. Contributing to the increase in non-interest income was in trust income, service charges and bankcard revenue, which was offset with a decrease in gains on the sales of securities and gains on the sale of real estate loans. Contributing to the increase in trust fees was the TAM acquisition. The first quarter of 2010 included $141,000 in gains on the sale of Other Real Estate Owned ("OREO") properties, which was the result of a payment received in litigation on a OREO property sold for a loss in the third quarter of 2009. Non-interest expense in the first quarter of 2010 included the full quarter effect of both the Integra branch acquisition and the TAM acquisition. Added personnel from the TAM and Integra acquisitions contributed to the 14% ($566,000) increase in salaries and benefits. Occupancy and equipment expense for the first quarter of 2010 included a $100,000 write down of a banking office that is currently available for sale. Contributing to the increase in other expenses was increased FDIC insurance and loan collection & OREO expense which increased $186,000 (47%) and $189,000 (104%) respectively from the first quarter of 2009.
Total assets were $1.596 billion at the end of the first quarter of 2010, which was $280 million or 21% higher than the same date a year ago. Total loans, investments and fed funds sold grew $116 million (11%), $81 million (51%) and $71 million (428%) respectively, from March of 2009 and were funded by an increase in deposits of $279 million or 25%. Total deposits included approximately $50 million in short term deposits from one corporate customer.
| The Bank of Kentucky Financial Corporation | |||
| Selected Consolidated Financial Data | |||
| (Dollars in thousands, except per share data) | |||
| First Quarter Comparison | |||
| Income Statement Data | 3/31/10 | 3/31/09 | % Chg |
| Interest income | $ 16,773 | $ 15,113 | 11% |
| Interest expense | 3,839 | 4,877 | (21)% |
| Net interest income | 12,934 | 10,236 | 26% |
| Provision for loan losses | 4,500 | 1,525 | 195% |
| Net interest income after provision for loan losses | 8,434 | 8,711 | (3)% |
| Non – interest income | 4,605 | 4,102 | 12% |
| Non – interest expense | 10,613 | 8,848 | 20% |
| Net income before income taxes | 2,426 | 3,965 | (39)% |
| Provision for income taxes | 566 | 1,149 | (51)% |
| Net income | 1,860 | 2,816 | (34)% |
| Preferred Stock Dividends & Amortization | 510 | 258 | 98% |
| Net Income Available to Common Shareholders | $ 1,350 | $ 2,558 | (47)% |
| Per Common Share Data | |||
| Diluted earnings per common share | 0.24 | 0.46 | 48% |
| Cash dividends declared | 0.28 | 0.28 | 0% |
| Earnings Performance Data | |||
| Return on common equity | 5.03% | 10.11% | (508)bps |
| Return on assets | .48% | .89% | (41)bps |
| Net interest margin | 3.63% | 3.50% | 13bps |
| Balance Sheet Data | |||
| Investments | $240,550 | $159,192 | 51% |
| Total loans | 1,142,609 | 1,026,845 | 11% |
| Allowance for loan losses | 15,607 | 10,753 | 45% |
| Total assets | 1,595,554 | 1,315,329 | 21% |
| Total deposits | 1,376,468 | 1,097,811 | 25% |
| Total borrowings | 67,609 | 71,050 | (5)% |
| Common Stockholders' equity | 107,952 | 103,711 | 4% |
| Preferred Stock | 33,311 | 33,007 | 1% |
| Common Shares Outstanding | 5,666,707 | 5,612,607 | 1% |
| Five-Quarter Comparison | |||||
| Income Statement Data | 3/31/10 | 12/31/09 | 9/30/09 | 6/30/09 | 3/31/09 |
| Net interest income | 12,934 | 12,162 | 11,417 | $ 10,978 | $ 10,236 |
| Provision for loan losses | 4,500 | 4,500 | 4,000 | 2,800 | 1,525 |
| Net interest income after provision for loan losses |
8,434 |
7,662 |
7,417 |
8,178 |
8,711 |
| Service charges and fees | 2,267 | 2,408 | 2,444 | 2,289 | 2,015 |
| Gain on sale of real estate loans | 322 | 276 | 223 | 478 | 526 |
| Gain on sale of securities | -- | 465 | -- | -- | 263 |
| Trust fee income | 550 | 322 | 288 | 271 | 230 |
| Bankcard transaction revenue | 673 | 615 | 579 | 551 | 491 |
| Gains/(Losses) on Other Real Estate Owned | 141 | 14 | (594) | 39 | 13 |
| Other non-interest income | 652 | 616 | 636 | 594 | 564 |
| Total non-interest income | 4,605 | 4,716 | 3,576 | 4,222 | 4,102 |
| Salaries and employee benefits expense | 4,565 | 4,086 | 4,006 | 4,048 | 3,999 |
| Occupancy and equipment expense | 1,450 | 1,139 | 1,158 | 1,169 | 1,237 |
| Data processing expense | 461 | 426 | 392 | 385 | 394 |
| State bank taxes | 490 | 433 | 456 | 456 | 452 |
| Amortization of intangible assets | 384 | 258 | 258 | 283 | 296 |
| FDIC Insurance | 585 | 553 | 429 | 1,027 | 399 |
| Other non-interest expenses | 2,678 | 2,351 | 2,299 | 2,217 | 2,071 |
| Total non-interest expense | 10,613 | 9,246 | 8,998 | 9,585 | 8,848 |
| Net income before income tax expense | 2,426 | 3,132 | 1,995 | 2,815 | 3,965 |
| Income tax expense | 566 | 804 | 450 | 744 | 1,149 |
| Net income | 1,860 | 2,328 | 1,545 | 2,071 | 2,816 |
| Preferred Stock Dividends & Amortization | 510 | 509 | 506 | 519 | 258 |
| Net Income Available to Common Shareholders | $ 1,350 | $ 1,819 | $ 1,039 | $ 1,552 | $ 2,558 |
| Per Common Share Data | |||||
| Diluted earnings per common share | 0.24 | 0.32 | 0.18 | 0.27 | 0.46 |
| Cash dividends declared | 0.28 | 0.00 | 0.28 | 0.00 | 0.28 |
| Weighted average common shares outstanding | |||||
| Basic | 5,666,707 | 5,622,142 | 5,615,475 | 5,612,607 | 5,611,607 |
| Diluted | 5,681,515 | 5,652,722 | 5,695,096 | 5,658,818 | 5,611,607 |
| Earnings Performance Data | |||||
| Return on common equity | 5.03% | 6.76% | 3.95% | 5.96% | 10.11% |
| Return on assets | .48% | .63% | .46% | .62% | .89% |
| Net interest margin | 3.63% | 3.57% | 3.64% | 3.53% | 3.50% |
| Net interest margin (tax equivalent) | 3.69% | 3.65% | 3.72% | 3.61% | 3.58% |
| Balance Sheet Data | 3/31/10 | 12/31/09 | 9/30/09 | 6/30/09 | 3/31/09 |
| Investments | $240,550 | $214,567 | $153,732 | $163,260 | $159,192 |
| Total loans | 1,142,609 | 1,156,640 | 1,110,202 | 1,052,033 | 1,026,845 |
| Allowance for loan losses | 15,607 | 15,153 | 13,778 | 11,816 | 10,753 |
| Total assets | 1,595,554 | 1,563,659 | 1,391,669 | 1,334,114 | 1,315,329 |
| Total deposits | 1,376,468 | 1,343,003 | 1,150,764 | 1,119,335 | 1,097,811 |
| Total borrowings | 67,609 | 66,450 | 91,005 | 65,356 | 71,050 |
| Common Stockholders' equity | 107,952 | 107,907 | 105,728 | 105,325 | 103,711 |
| Preferred Stock | 33,311 | 33,226 | 33,142 | 33,057 | 33,007 |
| Common Shares Outstanding | 5,666,707 | 5,666,707 | 5,616,707 | 5,612,607 | 5,612,607 |
| Average Balance Sheet Data | |||||
| Average investments | $216,280 | $182,769 | $161,026 | $159,767 | $123,123 |
| Average other earning assets | 77,147 | 44,822 | 20,516 | 36,244 | 35,120 |
| Average loans | 1,153,099 | 1,123,355 | 1,065,031 | 1,050,749 | 1,027,391 |
| Average earning assets | 1,446,526 | 1,350,946 | 1,246,573 | 1,246,760 | 1,185,634 |
| Average assets | 1,572,174 | 1,455,496 | 1,346,674 | 1,344,100 | 1,282,008 |
| Average deposits | 1,354,035 | 1,236,465 | 1,128,342 | 1,127,982 | 1,080,699 |
| Average interest bearing deposits | 1,161,137 | 1,064,344 | 967,968 | 967,030 | 936,503 |
| Average interest bearing transaction deposits | 702,534 | 629,018 | 546,114 | 556,248 | 536,141 |
| Average interest bearing time deposits | 458,603 | 435,326 | 421,854 | 410,782 | 400,362 |
| Average borrowings | 67,144 | 67,517 | 67,553 | 67,383 | 73,397 |
| Average interest bearing liabilities | 1,288,281 | 1,131,861 | 1,035,521 | 1,034,413 | 1,009,900 |
| Average Common stockholders equity | 107,929 | 106,818 | 105,506 | 104,518 | 102,579 |
| Average Preferred stock | 33,269 | 33,184 | 33,100 | 33,032 | 16,504 |
| Asset Quality Data | |||||
| Allowance for loan losses to total loans | 1.37% | 1.31% | 1.24% | 1.12% | 1.05% |
| Allowance for loan losses to non-performing loans | 72% | 59% | 54% | 80% | 89% |
| Nonaccrual loans | $21,692 | $23,826 | $24,046 | $12,105 | $7,636 |
| Loans – 90 days past due & still accruing | 114 | 1,736 | 1,351 | 1,943 | 1,022 |
| Total non-performing loans | 21,806 | 25,562 | 25,397 | 14,048 | 8,658 |
| OREO and repossessed assets | 1,535 | 1,381 | 1,015 | 1,209 | 1,259 |
| Total non-performing assets | 23,341 | 26,943 | 26,412 | 15,257 | 9,917 |
| Restructured loans-accruing | 6,332 | 3,568 | -- | 632 | 3,492 |
| Non-performing loans to total loans | 1.91% | 2.21% | 2.29% | 1.34% | .84% |
| Non-performing assets to total assets | 1.47% | 1.73% | 1.91% | 1.15% | .76% |
| Annualized charge-offs to average loans | 1.41% | 1.12% | .76% | .68% | .27% |
| Net charge-offs | $4,046 | $3,125 | $2,038 | $1,737 | $682 |
About BKFC
BKFC, a bank holding company with assets of approximately $1.596 billion, offers banking and related financial services to both individuals and business customers. BKFC operates thirty-one branch locations and forty-seven ATMs in the Northern Kentucky market.