updated 4/21/2011 1:46:53 PM ET 2011-04-21T17:46:53

CRESTVIEW HILLS, Ky., April 21, 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 first quarter ended March 31, 2011. For the first quarter, the Company reported an increase in diluted earnings per common share of 83% from the same period in 2010.

A summary of the Company's results follows:

First Quarter ended March 31, 2011 2010 Change
Net income $3,512,000 $1,860,000 89%
Net income available to common shareholders $3,255,000 $1,350,000 141%
Earnings per common share, basic $0.44 $0.24 83%
Earnings per common share, diluted $0.44 $0.24 83%

Robert Zapp, President & CEO stated, "We continue to experience a steady improvement in several key areas of our company, which helped drive earnings higher during the first quarter of 2011. Non-performing loans and charge-offs declined, allowing the Bank to lower its provision for loan losses substantially as compared to last year. We increased our interest income, kept expenses in check, and benefited from increased revenue from bankcard usage, and our wealth advisory group continues to contribute new revenue to the Bank. Overall lending is showing signs of life and we hope to expand our business further as the year progresses."

Driving the increase in earnings in the first quarter of 2011 was a $1,500,000 (33%) decrease in the provision for loan losses as compared to the first quarter of 2010. Also contributing to increased earnings was a 4% increase in total revenue, a 2% decrease in noninterest expense and a 50% reduction in preferred stock dividends and amortization. The decrease in the provision for loan losses reflected improving credit metrics as compared to March 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 $414,000, or 3% in the first quarter of 2011, as compared to the same period in 2010. The net interest margin, on a tax equivalent basis, decreased 6 basis points from 3.69% in the first quarter of 2010 to 3.63% in the first quarter of 2011. Contributing to the increase in net interest income was the growth in average earning assets which increased $76 million, or 5% on average from the first quarter of 2010. 

The provision for loan losses decreased by $1,500,000 (33%) in the first 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 March 2010. The Company's non-performing loans as a percentage of total loans were 1.82% as of March 31, 2011, as compared to 1.91% as of March 31, 2010, while annualized net charge-offs to average loans decreased from 1.41% in the first quarter of 2010 to .98% in the first quarter of 2011. The Company recorded $2,680,000 in net charge-offs in the first quarter of 2011 as compared to $4,046,000 in the first quarter of 2010. On a sequential basis, the provision for loan losses of $3,000,000 in the first quarter of 2011 was equal to the provision in the fourth quarter of 2010, while non-performing loans decreased from $21.1 million (1.90% of total loans) at December 31, 2010 to $20.4 million (1.82% of total loans) at March 31, 2011. Net charge-offs on a sequential basis decreased from $2,795,000 (1.00% of loans) in the fourth quarter of 2010 to $2,680,000 (.98% of loans) in the first quarter of 2011. The allowance for loan losses (ALL) increased $2,081,000 or 13% from March 2010, and $320,000 from December 31, 2010. As a result of the added allowance, the ALL has increased from 1.37% of loans at the end of the first quarter of 2010 to 1.58% of loans at the end of the first 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 7% ($318,000) in the first quarter of 2011, as compared to the same period in 2010, while non-interest expense decreased 2% ($264,000) from the same period last year. Contributing to the increase in non-interest income was gains on the sale of securities which increase $231,000 (100%) from the first quarter of 2010. Contributing to the decrease in non-interest expense was $163,000 (42%) reduction in the amortization of intangible assets and $117,000 (32%) decrease in loan collection expense.

Total assets were $1.637 billion at the end of the first quarter of 2011, which was $42 million or 3% higher than the same date a year ago. Total loans decreased $24 million (2%) while investments in securities increased $88 million (36%) from March of 2010. The increased investments in securities were funded by an increase in deposits of $14 million, or 1%, and an increase in Shareholders' equity of $20 million or 14%. The growth in equity was a result of earnings 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)
       
  First Quarter Comparison  
Income Statement Data 03/31/11 03/31/10 % Chg
Interest income $ 15,999  $ 16,773   (5)%
Interest expense  2,651  3,839 (31)%
Net interest income 13,348 12,934 3%
Provision for loan losses  3,000  4,500 (33)%
Net interest income after provision for loan losses 10,348 8,434 23%
Non interest income 4,923 4,605 7%
Non interest expense  10,349  10,613 (2)%
Net income before income taxes 4,922 2,426 103%
Provision for income taxes  1,410  566 149%
Net income  3,512  1,860 89%
Preferred stock dividends & amortization  257  510 (50)%
Net income available to common shareholders $ 3,255 $ 1,350 141%
Per Common Share Data      
Diluted earnings per common share 0.44 0.24 83%
Cash dividends declared 0.28 0.28  0%
Earnings Performance Data      
Return on common equity 9.21% 5.03% 418bps
Return on assets .86% .48% 38bps
Net interest margin 3.56% 3.63% (7)bps
       
       
The Bank of Kentucky Financial Corporation
Selected Consolidated Financial Data
(Dollars in thousands, except per share data)
     
Balance Sheet Data    
  March 31, 2011 December 31, 2010
Assets:    
Cash and cash equivalents  $ 97,712  $ 172,664
Investments 328,271 285,326
Loans held for sale 1,223 15,279
Total loans, gross 1,118,136 1,106,009
Allowance for loan losses (17,688) (17,368)
Premises and equipment, net 22,856 23,170
Goodwill and acquisition intangibles, net 25,242 25,464
Other assets and accrued interest receivable  61,684  54,340
Total assets $ 1,637,436 $ 1,664,884
     
Liabilities & Shareholders' Equity    
Total deposits  $ 1,390,706  $ 1,422,312
Short-term borrowings 24,667 23,419
Notes payable 48,756 48,761
Accrued interest payable and other liabilities  12,289  11,022
Total liabilities 1,476,418 1,505,514
Common stockholders' equity 144,183 142,580
Preferred stock  16,835  16,790
Shareholders' equity  161,018  159,370
Total liabilities and shareholders' equity  $ 1,637,436  $ 1,664,884

 

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 March 31, 2011 Quarter ended March 31, 2010
  Average

outstanding

balance
Interest

earned/

paid
 

Yield/

rate
Average

outstanding

balance
Interest

earned/

paid
 

Yield/

rate
         
Interest-earning assets:            
Loans receivable (1)(2) $1,108,477 $14,462 5.29% $1,153,099 $15,397 5.42%
Securities (2) 302,331 1,692 2.27 216,280 1,510 2.83
Other interest-earning assets    111,484    138 0.50    77,147    109 0.57
 

Total interest-earning assets

 
1,522,292  16,292  4.34  1,446,526  17,016  4.77
Non-interest-earning assets  127,655       125,648    
Total assets

 
$1,649,947     $1,572,174    
Interest-bearing liabilities:            
Transaction accounts 729,022 671 0.37  702,534 950 0.55
Time deposits 439,361 1,726 1.59 458,603 2,595 2.29
Borrowings   73,555   254 1.41  67,144   294 1.78
Total interest-bearing liabilities

 
 

  1,241,938
 

 2,651
 

 .87
  1,228,281  3,839  1.27
Non-interest-bearing liabilities  247,815      202,695    
 

Total liabilities

 
1,489,753     1,430,976    
Shareholders' equity

 
 160,194      141,198    
Total liabilities and shareholders' equity

 
 

$1,649,947
     

$1,572,174
   
Net interest income   $13,641     $13,177  
Interest rate spread     3.47%     3.50%
Net interest margin (net interest

income as a percent of average

interest-earning assets)
     

 

3.63%
     

 

3.69%
             
(1) Includes non-accrual loans.
(2) Income presented on a tax equivalent basis using a 34.83% and 34.00% tax rate in 2011 and 2010,

respectively. The  tax equivalent adjustment was $293,000 and $243,000 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 03/31/11 12/31/10 9/30/10 6/30/10 3/31/10
Net interest income $ 13,348  $ 13,429  $ 13,592  $ 13,454  $ 12,934 
Provision for loan losses  3,000  3,000  3,500  4,500  4,500
Net interest income after provision for loan losses  

 10,348
 

 10,429
 

 10,092
 

 8,954
 

 8,434
Service charges and fees 2,157 2,411 2,589 2,622 2,267
Gain on sale of real estate loans 278 946 1,041 337 322
Gain on sale of securities 231 -- -- -- --
Trust fee income 663 601 620 602 550
Bankcard transaction revenue 789 774 727 749 673
Gains/(losses) on Other Real Estate Owned 16 (125) (110) 30 141
Other non-interest income     789  935  760  600  652
Total non-interest income  4,923  5,542  5,627  4,940  4,605
Salaries and employee benefits expense 4,754 4,959 5,110 4,764 4,565
Occupancy and equipment expense 1,248 1,185 1,195 1,187 1,450
Data processing expense 494 484 442 443 461
State bank taxes 536 477 492 507 490
Amortization of intangible assets 221 357 357 375 384
FDIC Insurance 583 566 504 587 585
Other non-interest expenses  2,513  2,742  2,625  2,453  2,678
Total non-interest expense  10,349  10,770  10,725  10,316  10,613
Net income before income tax expense 4,922 5,201 4,994 3,578 2,426
Income tax expense  1,410  1,528  1,466  968  566
Net income  3,512  3,673  3,528  2,610  1,860
Preferred stock dividends & amortization  257  707  515  514  510
Net income available to common shareholders $ 3,255 $ 2,966 $ 3,013 $ 2,096 $ 1,350
Per Common Share Data          
Diluted earnings per common share 0.44 0.46 0.53 0.37 0.24
Cash dividends declared 0.28 0.00 0.28 0.00 0.28
Weighted average common shares outstanding          
Basic 7,432,295 6,434,354 5,666,707 5,666,707 5,666,707
Diluted 7,459,220 6,434,354 5,666,707 5,666,707 5,681,515
Earnings Performance Data          
Return on common equity 9.21% 9.33% 10.68% 7.59% 5.03%
Return on assets .86% .91% .93% .67% .48%
Net interest margin 3.56% 3.62% 3.90% 3.74% 3.63%
Net interest margin (tax equivalent) 3.63% 3.70% 3.97% 3.81% 3.69%
           
           
The Bank of Kentucky Financial Corporation
Selected Consolidated Financial Data
(Dollars in thousands, except per share data)
           
  Five-Quarter Comparison
Balance Sheet Data 03/31/11 12/31/10 9/30/10 6/30/10 3/31/10
Assets:          
Cash and cash equivalents  $ 97,712  $ 172,664  $ 41,280  $69,094 $121,299
Investments 328,271 285,326 240,657 233,817 240,650
Loans held for sale 1,223 15,279 21,903 6,795 2,072
Total loans 1,118,136 1,106,009 1,120,168 1,122,964 1,142,609
Allowance for loan losses (17,688) (17,368) (17,163) (16,531) (15,607)
Premises and equipment, net 22,856 23,170 23,373 23,690 23,883
Goodwill and acquisition intangibles, net 25,242 25,464 25,820 26,178 26,552
Other assets & accrued interest receivable  61,684  54,340  54,028  53,613  54,096
Total assets $ 1,637,436 $ 1,664,884 $ 1,510,066  1,519,620 1,595,554
Liabilities & Shareholders' Equity          
Total deposits  $ 1,390,706  $ 1,422,312 $1,271,455 $1,300,949 $1,376,468
Short-term borrowings 24,667 23,419 36,175 18,097 22,833
Notes payable 48,756 48,761 44,766 44,770 44,776
Accrued interest payable & other liabilities  12,289  11,022  11,307  10,894  10,214
Total liabilities 1,476,418 1,505,514 1,363,703 1,374,710 1,454,291
Common stockholders' equity 144,183 142,580 112,873 111,510 107,952
Preferred stock  16,835   16,790  33,490  33,400  33,311
Shareholders' equity  161,018  159,370  146,363  144,910 141,263
Total liabilities and shareholders' equity  $ 1,637,436  $ 1,664,884 $1,510,066  1,519,620 1,595,554
Common shares outstanding 7,432,295 7,432,295 5,666,707 5,666,707 5,666,707
Average Balance Sheet Data          
Average investments $302,331 $252,793 $234,335 $243,572 $216,280
Average other earning assets 111,484 85,384 28,232 60,416 77,147
Average loans 1,108,477 1,133,524 1,123,503 1,139,730 1,153,099
Average earning assets 1,522,292 1,471,701 1,386,070 1,443,718 1,446,526
Average assets 1,649,947 1,595,835 1,509,821 1,567,837 1,572,174
Average deposits 1,406,861 1,366,256 1,285,557 1,347,906 1,354,035
Average interest bearing deposits 1,168,383 1,130,890 1,083,935 1,146,120 1,161,137
Average interest bearing transaction deposits 729,022 682,826 637,835 695,866 702,534
Average interest bearing time deposits 439,361 448,064 446,100 450,254 458,603
Average borrowings 73,555 69,784 67,153 66,333 67,144
Average interest bearing liabilities 1,241,938 1,200,674 1,151,088 1,212,453 1,288,281
Average common stockholders equity 143,382 126,068 112,192 109,732 107,929
Average preferred stock 16,813 31,710 33,445 33,355 33,269
           
           
The Bank of Kentucky Financial Corporation
Selected Consolidated Financial Data
(Dollars in thousands, except per share data)
           
  Five-Quarter Comparison
Asset Quality Data 03/31/11 12/31/10 9/30/10 6/30/10 3/31/10
Allowance for loan losses to total loans 1.58% 1.57% 1.53% 1.47% 1.37%
Allowance for loan losses to non-performing loans 87%  82%  90%  74% 72%
Nonaccrual loans $19,735 $20,648 $18,768 $22,184 $21,692
Loans – 90 days past due & still accruing  637  414  207  213  114
Total non-performing loans  20,372  21,062  18,975  22,397  21,806
OREO and repossessed assets  1,083  795  1,392  1,397  1,535
Total non-performing assets  21,455  21,857  20,367  23,794  23,341
Restructured loans-accruing 3,294 6,135 3,901 3,441 6,332
Non-performing loans to total loans 1.82% 1.90% 1.69% 1.99% 1.91%
Non-performing assets to total assets 1.32% 1.32% 1.35% 1.57% 1.47%
Annualized charge-offs to average loans 0.98% 1.00% 1.02% 1.26% 1.41%
Net charge-offs $2,680 $2,795 $2,867 $3,577 $4,046

About BKFC

BKFC, a bank holding company with assets of approximately $1.637 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.

CONTACT: Martin Gerrety
         Executive Vice President and CFO
         (859) 372-5169
         mgerrety@bankofky.com

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