CRESTVIEW HILLS, Ky., Oct. 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 third quarter and nine months ended September 30, 2011. For the third quarter and the first nine months of 2011, the Company reported an increase in diluted earnings per common share of 2% and 27% respectively as compared to the same periods in 2010.
A summary of the Company's results follows:
| Third Quarter ended September 30, | 2011 | 2010 | Change | ||
| Net income | $4,274,000 | $3,528,000 | 21% | ||
| Net income available to common shareholders | $4,013,000 | $3,013,000 | 33% | ||
| Earnings per common share, basic | $0.54 | $0.53 | 2% | ||
| Earnings per common share, diluted | $0.54 | $0.53 | 2% | ||
| Nine Months ended September 30, | 2011 | 2010 | Change | ||
| Net income | $11,580,000 | $7,998,000 | 45% | ||
| Net income available to common shareholders | $10,803,000 | $6,459,000 | 67% | ||
| Net income per common share, basic | $1.45 | $1.14 | 27% | ||
| Net income per common share, diluted | $1.45 | $1.14 | 27% | ||
Robert Zapp, President & CEO, stated, "We continue to build upon a solid year of financial performance and we are pleased with our latest results. We are closely monitoring the current economic environment, which remains unstable, but are confident in the work we have done and strategies we have in place to navigate through a prolonged recovery. Decreasing our provision expense as we experience lower levels of non-performing loans and losses helped push earnings higher, as well as a reduction in costs associated with deposit insurance and the Bank's partial repayment of TARP. We believe our continued gain in market share through core deposit growth and our expansion plans to open two new branch locations in the coming months, strengthens our prospects going forward."
Driving the increase in earnings in the third quarter of 2011 was a $950,000 (27%) decrease in the provision for loan losses as compared to the third quarter of 2010. The increase in net income available to common shareholders was also attributable to a 49% reduction in preferred stock dividends and amortization expense. The decrease in the provision for loan losses reflected improving credit metrics as compared to September of 2010, while the reduction of preferred stock dividends and amortization expense 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 $484,000, or 4% in the third quarter of 2011, as compared to the same period in 2010. Contributing to the increase in net interest income was the growth in average earning assets, which increased $101 million, or 7% on average from the third quarter of 2010. The net interest margin, on a tax equivalent basis, decreased 14 basis points from 3.97% in the third quarter of 2010 to 3.83% in the third quarter of 2011. Contributing to the decrease in the net interest margin was the mix of the growth in earning assets. Of the $101 million in growth, $90 million or 89% of the growth was attributed to the Bank's securities portfolio, which generally have lower yields than loans.
The provision for loan losses decreased by $950,000 (27%) in the third 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 September 2010. The Company's non-performing loans as a percentage of total loans were 1.43% as of September 30, 2011, as compared to 1.69% as of September 30, 2010, while annualized net charge-offs to average loans decreased from 1.02% in the third quarter of 2010 to .86% in the third quarter of 2011. The Company recorded $2,425,000 in net charge-offs in the third quarter of 2011 as compared to $2,867,000 in the third quarter of 2010. On a sequential basis, the provision for loan losses of $2,550,000 in the third quarter of 2011 was $450,000 lower than the provision in the second quarter of 2011, while non-performing loans decreased from $16.4 million (1.46% of total loans) at June 30, 2011 to $16.0 million (1.43% of total loans) at September 30, 2011. Net charge-offs on a sequential basis decreased from $2,871,000 (1.03% of loans) in the second quarter of 2011 to $2,425,000 (.86% of loans) in the third quarter of 2011. The allowance for loan losses (ALL) increased $778,000 or 5% from September 2010, and $573,000 from December 31, 2010. As a result of the added allowance, the ALL has increased from 1.53% of loans at the end of the third quarter of 2010 to 1.60% of loans at the end of the third 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 decreased 6% ($330,000) in the third quarter of 2011, as compared to the same period in 2010, while non-interest expense remained unchanged ($2,000) from the same period last year. Contributing to the decrease in non-interest income was a $338,000 or 32% decrease in the gains on sale of real estate loans. These gains were driven by a sharp drop in interest rates in the third quarter of 2010, which prompted increased demand for home mortgage loan refinancing. On a sequential basis, the gains on the sale of real estate loans increased $475,000 or 208% from the second quarter of 2011; this increase was also driven by a drop in interest rates. Non-interest expense included a $241,000 (5%) increase in salaries and employee benefits expense, offset by $235,000 (47%) lower cost for FDIC insurance expense. The decrease in FDIC insurance was the result of recent changes in the methodology used by the FDIC to determine federal deposit insurance assessments.
Total assets were $1.624 billion at the end of the third quarter of 2011, which was $114 million or 8% higher than the same date a year ago. Total loans decreased $2 million while investments in securities increased $99 million (41%) from September of 2010. The increased investments in securities were funded by an increase in deposits of $98 million, or 8%, and an increase in shareholders' equity of $23 million, or 16%. 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) | ||||||
| Third Quarter Comparison | Nine months ended June 30, Comparison | |||||
| Income Statement Data | 9/30/2011 | 9/30/2010 | % Chg | 9/30/2011 | 9/30/2010 | % Chg |
| Interest income | $16,280 | $16,694 | (2)% | $48,702 | $50,280 | (3)% |
| Interest expense | 2,204 | 3,102 | (29)% | 7,251 | 10,300 | (30)% |
| Net interest income | 14,076 | 13,592 | 4% | 41,451 | 39,980 | 4% |
| Provision for loan losses | 2,550 | 3,500 | (27)% | 8,550 | 12,500 | (31)% |
| Net interest income after provision for loan losses | 11,526 | 10,092 | 14% | 32,901 | 27,480 | 20% |
| Non interest income | 5,297 | 5,627 | (6)% | 15,194 | 15,172 | --% |
| Non interest expense | 10,727 | 10,725 | --% | 31,711 | 31,654 | --% |
| Net income before income taxes | 6,096 | 4,994 | 22% | 16,384 | 10,998 | 49% |
| Provision for income taxes | 1,822 | 1,466 | 24% | 4,804 | 3,000 | 60% |
| Net income | 4,274 | 3,528 | 21% | 11,580 | 7,998 | 45% |
| Preferred stock dividends & amortization | 261 | 515 | (49)% | 777 | 1,539 | (50)% |
| Net income available to common shareholders | $4,013 | $3,013 | 33% | $10,803 | $6,459 | 67% |
| Per Common Share Data | ||||||
| Diluted earnings per common share | 0.54 | 0.53 | 2% | 1.45 | 1.14 | 27% |
| Cash dividends declared | 0.28 | 0.28 | 0% | 0.56 | 0.56 | 0% |
| Earnings Performance Data | ||||||
| Return on common equity | 10.51% | 10.68% | (17)bps | 9.78% | 7.81% | 197bps |
| Return on assets | 1.05% | .93% | 12bps | .95% | .69% | 26bps |
| Net interest margin | 3.76% | 3.90% | (14)bps | 3.69% | 3.75% | (6)bps |
| The Bank of Kentucky Financial Corporation | |||
| Selected Consolidated Financial Data | |||
| (Dollars in thousands, except per share data) | |||
| Balance Sheet Data | |||
| September 30, 2011 | December 31, 2010 | September 30, 2010 | |
| Assets: | |||
| Cash and cash equivalents | $67,657 | $172,664 | $41,280 |
| Investments | 339,780 | 285,326 | 240,657 |
| Loans held for sale | 6,612 | 15,279 | 21,903 |
| Total loans, gross | 1,118,630 | 1,106,009 | 1,120,168 |
| Allowance for loan losses | (17,941) | (17,368) | (17,163) |
| Premises and equipment, net | 22,653 | 23,170 | 23,373 |
| Goodwill and acquisition intangibles, net | 24,826 | 25,464 | 25,820 |
| Other assets and accrued interest receivable | 62,182 | 54,340 | 54,028 |
| Total assets | $1,624,399 | $1,664,884 | $1,510,066 |
| Liabilities & Shareholders' Equity | |||
| Total deposits | $1,369,215 | $1,422,312 | $1,271,455 |
| Short-term borrowings | 26,248 | 23,419 | 36,175 |
| Notes payable | 48,745 | 48,761 | 44,766 |
| Accrued interest payable and other liabilities | 10,905 | 11,022 | 11,307 |
| Total liabilities | 1,455,113 | 1,505,514 | 1,363,703 |
| Common stockholders' equity | 152,356 | 142,580 | 112,873 |
| Preferred stock | 16,930 | 16,790 | 33,490 |
| Shareholders' equity | 169,286 | 159,370 | 146,363 |
| Total liabilities and shareholders' equity | $1,624,399 | $1,664,884 | $1,510,066 |
| 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 September 30, 2011 | Three Months ended September 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) | $1,126,118 | $14,652 | 5.16% | $1,123,503 | $15,497 | 5.47% |
| Securities (2) | 324,144 | 1,881 | 2.3 | 234,335 | 1,384 | 2.34 |
| Other interest-earning assets | 39,721 | 69 | 0.69 | 28,232 | 76 | 1.07 |
| Total interest-earning assets | 1,489,983 | 16,602 | 4.42 | 1,386,070 | 16,957 | 4.85 |
| Non-interest-earning assets | 133,736 | 123,751 | ||||
| Total assets | $1,623,719 | $1,509,821 | ||||
| Interest-bearing liabilities: | ||||||
| Transaction accounts | 711,046 | 524 | 0.29 | 637,835 | 732 | 0.46 |
| Time deposits | 411,193 | 1,430 | 1.38 | 446,100 | 2,049 | 1.82 |
| Borrowings | 72,421 | 250 | 1.37 | 67,153 | 321 | 1.90 |
|
Total interest-bearing liabilities |
1,194,660 | 2,204 | 0.73 | 1,151,088 | 3,102 | 1.07 |
| Non-interest-bearing liabilities | 261,219 | 213,096 | ||||
| Total liabilities | 1,455,879 | 1,364,184 | ||||
| Shareholders' equity | 167,840 | 145,637 | ||||
|
Total liabilities and shareholders' equity |
$1,623,719 | $1,509,821 | ||||
| Net interest income | $14,398 | $13,855 | ||||
| Interest rate spread | 3.69% | 3.78% | ||||
|
Net interest margin (net interest income as a percent of average interest-earning assets) |
3.83% | 3.97% | ||||
| (1) Includes non-accrual loans. | ||||||
|
(2) Income presented on a tax equivalent basis using a 35.00% and 34.37% tax rate in 2011 and 2010, respectively. The tax equivalent adjustment was $322,000 and $263,000 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 ) | ||||||
| Nine Months ended September 30, 2011 | Nine Months ended September 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) | $1,118,185 | $43,886 | 5.25% | $1,138,669 | $46,303 | 5.44% |
| Securities (2) | 315,364 | 5,454 | 2.31 | 231,462 | 4,456 | 2.57 |
| Other interest-earning assets | 69,341 | 291 | .56 | 55,086 | 282 | .68 |
| Total interest-earning assets | 1,502,890 | 49,631 | 4.40 | 1,425,217 | 51,041 | 4.77 |
| Non-interest-earning assets | 132,355 | 124,499 | ||||
| Total assets | $1,635,245 | $1,549,716 | ||||
| Interest-bearing liabilities: | ||||||
| Transaction accounts | 720,339 | 1,708 | 0.32 | 678,509 | 2,328 | 0.46 |
| Time deposits | 424,428 | 4,785 | 1.51 | 451,607 | 7,059 | 2.09 |
| Borrowings | 72,879 | 758 | 1.39 | 66,877 | 913 | 1.83 |
|
Total interest-bearing liabilities |
1,217,646 | 7,251 | 0.80 | 1,196,993 | 10,300 | 1.15 |
| Non-interest-bearing liabilities | 252,033 | 210,045 | ||||
| Total liabilities | 1,469,679 | 1,407,038 | ||||
| Shareholders' equity | 165,566 | 142,678 | ||||
|
Total liabilities and shareholders' equity |
||||||
| $1,635,245 | $1,549,716 | |||||
| Net interest income | $42,380 | $40,741 | ||||
| Interest rate spread | 3.60% | 3.62% | ||||
|
Net interest margin (net interest income as a percent of average interest-earning assets) |
3.77% | 3.82% | ||||
| (1) Includes non-accrual loans. | ||||||
|
(2) Income presented on a tax equivalent basis using a 35.00% and 34.37% tax rate in 2011 and 2010, respectively. The tax equivalent adjustment was $929,000 and $761,000 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 | 9/30/11 | 6/30/11 | 3/31/11 | 12/31/10 | 9/30/10 |
| Net interest income | $14,076 | $14,027 | $13,348 | $13,429 | $13,592 |
| Provision for loan losses | 2,550 | 3,000 | 3,000 | 3,000 | 3,500 |
| Net interest income after provision for loan losses | 11,526 | 11,027 | 10,348 | 10,429 | 10,092 |
| Service charges and fees | 2,470 | 2,424 | 2,157 | 2,411 | 2,589 |
| Gain on sale of real estate loans | 703 | 228 | 278 | 946 | 1,041 |
| Gain on sale of securities | -- | -- | 231 | -- | -- |
| Trust fee income | 630 | 723 | 663 | 601 | 620 |
| Bankcard transaction revenue | 849 | 859 | 789 | 774 | 727 |
| Gains/(losses) on Other Real Estate Owned | (98) | (94) | 16 | (125) | (110) |
| Other non-interest income | 743 | 834 | 789 | 935 | 760 |
| Total non-interest income | 5,297 | 4,974 | 4,923 | 5,542 | 5,627 |
| Salaries and employee benefits expense | 5,351 | 5,045 | 4,754 | 4,959 | 5,110 |
| Occupancy and equipment expense | 1,216 | 1,241 | 1,248 | 1,185 | 1,195 |
| Data processing expense | 500 | 467 | 494 | 484 | 442 |
| State bank taxes | 550 | 550 | 536 | 477 | 492 |
| Amortization of intangible assets | 202 | 215 | 221 | 357 | 357 |
| FDIC Insurance | 269 | 384 | 583 | 566 | 504 |
| Other non-interest expenses | 2,639 | 2,733 | 2,513 | 2,742 | 2,625 |
| Total non-interest expense | 10,727 | 10,635 | 10,349 | 10,770 | 10,725 |
| Net income before income tax expense | 6,096 | 5,366 | 4,922 | 5,201 | 4,994 |
| Income tax expense | 1,822 | 1,572 | 1,410 | 1,528 | 1,466 |
| Net income | 4,274 | 3,794 | 3,512 | 3,673 | 3,528 |
| Preferred stock dividends & amortization | 261 | 259 | 257 | 707 | 515 |
| Net income available to common shareholders | $4,013 | $3,535 | $3,255 | $2,966 | $3,013 |
| Per Common Share Data | |||||
| Diluted earnings per common share | 0.54 | 0.47 | 0.44 | 0.46 | 0.53 |
| Cash dividends declared | 0.28 | 0.00 | 0.28 | 0.00 | 0.28 |
| Weighted average common shares outstanding | |||||
| Basic | 7,432,995 | 7,432,487 | 7,432,295 | 6,434,354 | 5,666,707 |
| Diluted | 7,488,743 | 7,501,731 | 7,459,220 | 6,434,354 | 5,666,707 |
| Earnings Performance Data | |||||
| Return on common equity | 10.51% | 9.59% | 9.21% | 9.33% | 10.68% |
| Return on assets | 1.05% | .93% | .86% | .91% | .93% |
| Net interest margin | 3.76% | 3.76% | 3.56% | 3.62% | 3.90% |
| Net interest margin (tax equivalent) | 3.83% | 3.84% | 3.63% | 3.70% | 3.97% |
| The Bank of Kentucky Financial Corporation | |||||
| Selected Consolidated Financial Data | |||||
| (Dollars in thousands, except per share data) | |||||
| Five-Quarter Comparison | |||||
| Balance Sheet Data | 9/30/11 | 6/30/11 | 3/31/11 | 12/31/10 | 9/30/10 |
| Assets: | |||||
| Cash and cash equivalents | $67,657 | $61,098 | $97,712 | $172,664 | $41,280 |
| Investments | 339,780 | 320,202 | 328,271 | 285,326 | 240,657 |
| Loans held for sale | 6,612 | 1,107 | 1,223 | 15,279 | 21,903 |
| Total loans | 1,118,630 | 1,128,511 | 1,118,136 | 1,106,009 | 1,120,168 |
| Allowance for loan losses | (17,941) | (17,816) | (17,688) | (17,368) | (17,163) |
| Premises and equipment, net | 22,653 | 22,576 | 22,856 | 23,170 | 23,373 |
| Goodwill and acquisition intangibles, net | 24,826 | 25,028 | 25,242 | 25,464 | 25,820 |
| Other assets & accrued interest receivable | 62,182 | 61,013 | 61,684 | 54,340 | 54,028 |
| Total assets | $1,624,399 | $1,601,719 | $1,637,436 | $1,664,884 | $1,510,066 |
| Liabilities & Shareholders' Equity | |||||
| Total deposits | $1,369,215 | $1,355,284 | $1,390,706 | $1,422,312 | $1,271,455 |
| Short-term borrowings | 26,248 | 20,610 | 24,667 | 23,419 | 36,175 |
| Notes payable | 48,745 | 48,750 | 48,756 | 48,761 | 44,766 |
| Accrued interest payable & other liabilities | 10,905 | 10,682 | 12,289 | 11,022 | 11,307 |
| Total liabilities | 1,455,113 | 1,435,326 | 1,476,418 | 1,505,514 | 1,363,703 |
| Common stockholders' equity | 152,356 | 149,511 | 144,183 | 142,580 | 112,873 |
| Preferred stock | 16,930 | 16,882 | 16,835 | 16,790 | 33,490 |
| Shareholders' equity | 169,286 | 166,393 | 161,018 | 159,370 | 146,363 |
| Total liabilities and shareholders' equity | $1,624,399 | $1,601,719 | $1,637,436 | $1,664,884 | $1,510,066 |
| Common shares outstanding | 7,432,995 | 7,432,995 | 7,432,295 | 7,432,295 | 5,666,707 |
| Average Balance Sheet Data | |||||
| Average investments | $324,144 | $319,377 | $302,331 | $252,793 | $234,335 |
| Average other earning assets | 39,721 | 57,607 | 111,484 | 85,384 | 28,232 |
| Average loans | 1,126,118 | 1,119,767 | 1,108,477 | 1,133,524 | 1,123,503 |
| Average earning assets | 1,489,983 | 1,496,751 | 1,522,292 | 1,471,701 | 1,386,070 |
| Average assets | 1,623,719 | 1,633,990 | 1,649,947 | 1,595,835 | 1,509,821 |
| Average deposits | 1,372,244 | 1,385,624 | 1,406,861 | 1,366,256 | 1,285,557 |
| Average interest bearing deposits | 1,122,239 | 1,144,986 | 1,168,383 | 1,130,890 | 1,083,935 |
| Average interest bearing transaction deposits | 711,046 | 721,948 | 729,022 | 682,826 | 637,835 |
| Average interest bearing time deposits | 411,193 | 423,038 | 439,361 | 448,064 | 446,100 |
| Average borrowings | 72,421 | 72,580 | 73,555 | 69,784 | 67,153 |
| Average interest bearing liabilities | 1,194,660 | 1,217,566 | 1,241,938 | 1,200,674 | 1,151,088 |
| Average common stockholders equity | 150,934 | 146,848 | 143,382 | 126,068 | 112,192 |
| Average preferred stock | 16,906 | 16,858 | 16,813 | 31,710 | 33,445 |
| The Bank of Kentucky Financial Corporation | |||||
| Selected Consolidated Financial Data | |||||
| (Dollars in thousands, except per share data) | |||||
| Five-Quarter Comparison | |||||
| Asset Quality Data | 9/30/11 | 6/30/11 | 3/31/11 | 12/31/10 | 9/30/10 |
| Allowance for loan losses to total loans | 1.60% | 1.58% | 1.58% | 1.57% | 1.53% |
|
Allowance for loan losses to non- performing loans |
1.12% |
1.07% | 87% | 82% | 90% |
| Nonaccrual loans | $15,964 | $16,322 | $19,735 | $20,648 | $18,768 |
| Loans – 90 days past due & still accruing | 45 | 100 | 637 | 414 | 207 |
| Total non-performing loans | 16,009 | 16,422 | 20,372 | 21,062 | 18,975 |
| OREO and repossessed assets | 1,894 | 1,902 | 1,083 | 795 | 1,392 |
| Total non-performing assets | 17,903 | 18,324 | 21,455 | 21,857 | 20,367 |
| Restructured loans-accruing | 13,108 | 7,022 | 3,294 | 6,135 | 3,901 |
| Non-performing loans to total loans | 1.43% | 1.46% | 1.82% | 1.90% | 1.69% |
| Non-performing assets to total assets | 1.11% | 1.15% | 1.32% | 1.32% | 1.35% |
| Annualized charge-offs to average loans | .86% | 1.03% | 0.98% | 1.00% | 1.02% |
| Net charge-offs | $2,425 | $2,871 | $2,680 | $2,795 | $2,867 |
About BKFC
BKFC, a bank holding company with assets of approximately $1.624 billion, offers banking and related financial services to both individuals and business customers. BKFC operates thirty-one branch locations and fifty-four ATMs in the Northern Kentucky market.