CRESTVIEW HILLS, Ky., April 19, 2012 (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, 2012. For the first quarter, the Company reported an increase in diluted earnings per common share of 36% from the same period in 2011.
A summary of the Company's results follows:
| First Quarter ended March 31, | 2012 | 2011 | Change |
| Net income | $4,515,000 | $3,512,000 | 29% |
| Net income available to common shareholders | $4,515,000 | $3,255,000 | 39% |
| Earnings per common share, basic | $0.61 | $0.44 | 39% |
| Earnings per common share, diluted | $0.60 | $0.44 | 36% |
Robert Zapp, President & CEO stated, "I am pleased with our solid performance in the first quarter. We continue to benefit from positive credit trends and no longer have the obligation associated with TARP. Increased revenue from our investment business and strong growth in our mortgage division helped fuel our overall revenue increase. Growth in the Bank's deposit accounts, both personal and business, supported increases in fee income across the board." Mr. Zapp added, "As we observe the steady, albeit slow, economic recovery, we anticipate increased demand for credit as businesses expand and invest, which will support asset growth in our commercial lending operations. We are pleased with the success of our first location in downtown Cincinnati that opened in late January and we will continue our strategy of organic growth in conjunction with potential acquisitions and new branches in Cincinnati and Northern Kentucky."
Driving the increase in earnings available to common shareholders in the first quarter of 2012 was a $1,200,000 (40%) decrease in the provision for loan losses and a $257,000 (100%) decrease in preferred stock dividends and amortization as compared to the first quarter of 2011. Also contributing to increased earnings was a 6% increase in total revenue, which was partially offset with a 10% increase in noninterest expense. The decrease in the provision for loan losses reflected improving credit metrics as compared to March of 2011, while 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 (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 $496,000, or 4% in the first quarter of 2012, as compared to the same period in 2011. The net interest margin, on a tax equivalent basis, decreased 6 basis points from 3.63% in the first quarter of 2011 to 3.57% in the first quarter of 2012. Contributing to the increase in net interest income was the growth in average earning assets which increased $74 million, or 5% on average from the first quarter of 2011. Contributing to the decrease in the net interest margin was the mix of the growth in earning assets. Of the $74 million in growth, $49 million or 66% of the growth was attributed to the Bank's securities portfolio and fed funds sold, which generally have lower yields than loans.
The provision for loan losses decreased by $1,200,000 (40%) in the first quarter of 2012, as compared to the same period in 2011. Contributing to this decrease were lower levels of non-performing loans and charge-offs as compared to March 2011. The Company's non-performing loans as a percentage of total loans were 1.54% as of March 31, 2012, as compared to 1.82% as of March 31, 2011, while annualized net charge-offs to average loans decreased from .98% in the first quarter of 2011 to .62% in the first quarter of 2012. The Company recorded $1,726,000 in net charge-offs in the first quarter of 2012 as compared to $2,680,000 in the first quarter of 2011. On a sequential basis, the provision for loan losses of $1,800,000 in the first quarter of 2012 was $400,000 lower than the provision in the fourth quarter of 2011, while non-performing loans increased from $15.9 million (1.40% of total loans) at December 31, 2011 to $17.5 million (1.54% of total loans) at March 31, 2012. Net charge-offs on a sequential basis decreased from $1,853,000 (.65% of loans) in the fourth quarter of 2011 to $1,726,000 (.62% of loans) in the first quarter of 2012. The allowance for loan losses (ALL) as of March 31, 2012 increased $674,000 or 4% from March 2011, and $74,000 from December 31, 2011. As a result of the first quarter provision for loan losses, the ALL has increased from 1.58% of loans at the end of the first quarter of 2011 to 1.62% of loans at the end of the first 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.
The Company's non-performing assets as a percentage of total assets were 1.36% as of March 31, 2012, as compared to 1.32% as of March 31, 2011. While non-performing loans decreased $2,913,000 from March 2011 to March 2012, other real estate owned increased $5,245,000 in the same time period. On a sequential quarterly basis, other real estate owned increased $484,000 from December 2011. The increase in other real estate owned from March of 2011 was primarily the result of one commercial real estate relationship which added $3,475,000 in other real estate owned in the fourth quarter of 2011. These properties are recorded at their estimated net realizable value with the difference between this value and the loan balance being recorded as a charge-off.
Non-interest income increased 14% ($683,000) in the first quarter of 2012, as compared to the same period in 2011, while non-interest expense increased 10% ($993,000) from the same period last year. Contributing to the increase in non-interest income was a $308,000 or 111% increase in the gains on sale of real estate loans. These gains were driven by a drop in interest rates from the first quarter of 2011, which has prompted increased demand for home mortgage loan refinancing. Contributing to the increase in non-interest expense was $697,000 (15%) increase in the salaries and benefits expense. The increase in salaries and benefits included approximately $125,000 in higher bonus accruals and $125,000 in higher commission expense. The added bonus accrual reflects the end of the TARP restriction on bonus pay for executives, while the increased commission expense included higher commissions paid for the higher gains on the sale of real estate loans.
Total assets were $1.753 billion at the end of the first quarter of 2012, which was $115 million or 7% higher than the same date a year ago. Total loans increased $12 million (1%), investments in securities increased $46 million (14%) and cash and cash equivalents increased $35 million (36%) from March of 2011. The balance sheet increases were funded by an increase in deposits of $115 million, or 8%. Total equity decreased $1.5 million from the same date in 2011 as a result of the repurchase of the Series A Preferred Stock.
| The Bank of Kentucky Financial Corporation | |||||
| Selected Consolidated Financial Data | |||||
| (Dollars in thousands, except per share data) | |||||
| First Quarter Comparison | |||||
| Income Statement Data | 3/31/12 | 3/31/11 | % Chg | ||
| Interest income | $15,688 | $15,999 | (2)% | ||
| Interest expense | 1,844 | 2,651 | (30)% | ||
| Net interest income | 13,844 | 13,348 | 4% | ||
| Provision for loan losses | 1,800 | 3,000 | (40)% | ||
| Net interest income after provision for loan losses | 12,044 | 10,348 | 16% | ||
| Non interest income | 5,606 | 4,923 | 14% | ||
| Non interest expense | 11,342 | 10,349 | 10% | ||
| Net income before income taxes | 6,308 | 4,922 | 28% | ||
| Provision for income taxes | 1,793 | 1,410 | 27% | ||
| Net income | 4,515 | 3,512 | 29% | ||
| Preferred stock dividends & amortization | -- | 257 | (100)% | ||
| Net income available to common shareholders | $4,515 | $3,255 | 39% | ||
| Per Common Share Data | |||||
| Diluted earnings per common share | 0.60 | 0.44 | 36% | ||
| Cash dividends declared | 0.30 | 0.28 | 7% | ||
| Earnings Performance Data | |||||
| Return on common equity | 11.49% | 9.21% | 228bps | ||
| Return on assets | 1.04% | 0.86% | 18bps | ||
| Net interest margin | 3.49% | 3.56% | (7)bps | ||
| The Bank of Kentucky Financial Corporation | ||
| Selected Consolidated Financial Data | ||
| (Dollars in thousands, except per share data) | ||
| Balance Sheet Data | ||
| March 31, 2012 | December 31, 2011 | |
| Assets: | ||
| Cash and cash equivalents | $133,153 | $135,964 |
| Investments | 374,336 | 371,737 |
| Loans held for sale | 10,863 | 8,920 |
| Total loans, gross | 1,130,200 | 1,129,954 |
| Allowance for loan losses | (18,362) | (18,288) |
| Premises and equipment, net | 23,159 | 22,827 |
| Goodwill and acquisition intangibles, net | 25,051 | 25,251 |
| Other assets and accrued interest receivable | 74,381 | 68,359 |
| Total assets | $1,752,781 | $1,744,724 |
| Liabilities & Shareholders' Equity | ||
| Total deposits | $1,505,709 | $1,498,821 |
| Short-term borrowings | 29,334 | 29,300 |
| Notes payable | 48,733 | 48,739 |
| Accrued interest payable and other liabilities | 9,531 | 11,294 |
| Total liabilities | 1,593,307 | 1,588,154 |
| Common stockholders' equity | 159,474 | 156,570 |
| Total liabilities and shareholders' equity | $1,752,781 | $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 March 31, 2012 | Quarter ended March 31, 2011 | |||||
| Average | Interest | Average | Interest | |||
| outstanding | earned/ | Yield/ | outstanding | earned/ | Yield/ | |
| balance | paid | rate | balance | paid | rate | |
| Interest-earning assets: | ||||||
| Loans receivable (1)(2) | $1,133,367 | $13,958 | 4.95% | $1,108,477 | $14,462 | 5.29% |
| Securities (2) | 374,027 | 1,960 | 2.11 | 302,331 | 1,692 | 2.27 |
| Other interest-earning assets | 88,597 | 92 | 0.42 | 111,484 | 138 | 0.50 |
| Total interest-earning assets | 1,595,991 | 16,010 | 4.03 | 1,522,292 | 16,292 | 4.34 |
| Non-interest-earning assets | 149,178 | 127,655 | ||||
| Total assets | $1,745,169 | $1,649,947 | ||||
| Interest-bearing liabilities: | ||||||
| Transaction accounts | 821,643 | 470 | 0.23 | 729,022 | 671 | 0.37 |
| Time deposits | 403,100 | 1,096 | 1.09 | 439,361 | 1,726 | 1.59 |
| Borrowings | 80,798 | 278 | 1.38 | 73,555 | 254 | 1.41 |
| Total interest-bearing liabilities | 1,305,541 | 1,844 | 0.57 | 1,241,938 | 2,651 | 0.87 |
| Non-interest-bearing liabilities | 281,606 | 247,815 | ||||
| Total liabilities | 1,587,147 | 1,489,753 | ||||
| Shareholders' equity | 158,022 | 160,194 | ||||
| Total liabilities and shareholders' equity | $1,745,169 | $1,649,947 | ||||
| Net interest income | $14,166 | $13,641 | ||||
| Interest rate spread | 3.46% | 3.47% | ||||
| Net interest margin (net interest income as a percent of average interest-earning assets) | 3.57% | 3.63% | ||||
| (1) Includes non-accrual loans. | ||||||
| (2) Income presented on a tax equivalent basis using a 35.00% and 34.83% tax rate in 2012 and 2011, respectively. The tax equivalent adjustment was $322,000 and $293,000 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 | 3/31/12 | 12/31/11 | 9/30/11 | 6/30/11 | 3/31/11 |
| Net interest income | $13,844 | $14,087 | $14,076 | $14,027 | $13,348 |
| Provision for loan losses | 1,800 | 2,200 | 2,550 | 3,000 | 3,000 |
| Net interest income after provision for loan losses | 12,044 | 11,887 | 11,526 | 11,027 | 10,348 |
| Service charges and fees | 2,201 | 2,390 | 2,470 | 2,424 | 2,157 |
| Gain on sale of real estate loans | 586 | 580 | 703 | 228 | 278 |
| Gain on sale of securities | 207 | -- | -- | -- | 231 |
| Trust fee income | 689 | 625 | 630 | 723 | 663 |
| Bankcard transaction revenue | 902 | 885 | 849 | 859 | 789 |
| Gains/(losses) on other real estate owned | (94) | (85) | (98) | (94) | 16 |
| Other non-interest income | 1,115 | 1,135 | 743 | 834 | 789 |
| Total non-interest income | 5,606 | 5,530 | 5,297 | 4,974 | 4,923 |
| Salaries and employee benefits expense | 5,451 | 5,044 | 5,351 | 5,045 | 4,754 |
| Occupancy and equipment expense | 1,277 | 1,192 | 1,216 | 1,241 | 1,248 |
| Data processing expense | 535 | 522 | 500 | 467 | 494 |
| State bank taxes | 559 | 415 | 550 | 550 | 536 |
| Amortization of intangible assets | 200 | 220 | 202 | 215 | 221 |
| FDIC Insurance | 305 | 305 | 269 | 384 | 583 |
| Other non-interest expenses | 3,015 | 2,705 | 2,639 | 2,733 | 2,513 |
| Total non-interest expense | 11,342 | 10,403 | 10,727 | 10,635 | 10,349 |
| Net income before income tax expense | 6,308 | 7,014 | 6,096 | 5,366 | 4,922 |
| Income tax expense | 1,793 | 2,105 | 1,822 | 1,572 | 1,410 |
| Net income | 4,515 | 4,909 | 4,274 | 3,794 | 3,512 |
| Preferred stock dividends & amortization | -- | 195 | 261 | 259 | 257 |
| Net income available to common shareholders | $4,515 | $4,714 | $4,013 | $3,535 | $3,255 |
| Per Common Share Data | |||||
| Diluted earnings per common share | 0.60 | 0.63 | 0.54 | 0.47 | 0.44 |
| Cash dividends declared | 0.30 | 0.00 | 0.28 | 0.00 | 0.28 |
| Weighted average common shares outstanding | |||||
| Basic | 7,448,604 | 7,432,995 | 7,432,995 | 7,432,487 | 7,432,295 |
| Diluted | 7,520,062 | 7,465,606 | 7,488,743 | 7,501,731 | 7,459,220 |
| Earnings Performance Data | |||||
| Return on common equity | 11.49% | 12.21% | 10.51% | 9.59% | 9.21% |
| Return on assets | 1.04% | 1.13% | 1.05% | 0.93% | 0.86% |
| Net interest margin | 3.49% | 3.55% | 3.76% | 3.76% | 3.56% |
| Net interest margin (tax equivalent) | 3.57% | 3.63% | 3.83% | 3.84% | 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 | 3/31/12 | 12/31/11 | 9/30/11 | 6/30/11 | 3/31/11 |
| Assets: | |||||
| Cash and cash equivalents | $133,153 | $135,964 | $67,657 | $61,098 | $97,712 |
| Investments | 374,336 | 371,737 | 339,780 | 320,202 | 328,271 |
| Loans held for sale | 10,863 | 8,920 | 6,612 | 1,107 | 1,223 |
| Total loans | 1,130,200 | 1,129,954 | 1,118,630 | 1,128,511 | 1,118,136 |
| Allowance for loan losses | (18,362) | (18,288) | (17,941) | (17,816) | (17,688) |
| Premises and equipment, net | 23,159 | 22,827 | 22,653 | 22,576 | 22,856 |
| Goodwill and acquisition intangibles, net | 25,051 | 25,251 | 24,826 | 25,028 | 25,242 |
| Other assets & accrued interest receivable | 74,381 | 68,359 | 62,182 | 61,013 | 61,684 |
| Total assets | $1,752,781 | $1,744,724 | $1,624,399 | $1,601,719 | $1,637,436 |
| Liabilities & Shareholders' Equity | |||||
| Total deposits | $1,505,709 | $1,498,821 | $1,369,215 | $1,355,284 | $1,390,706 |
| Short-term borrowings | 29,334 | 29,300 | 26,248 | 20,610 | 24,667 |
| Notes payable | 48,733 | 48,739 | 48,745 | 48,750 | 48,756 |
| Accrued interest payable & other liabilities | 9,531 | 11,294 | 10,905 | 10,682 | 12,289 |
| Total liabilities | 1,593,307 | 1,588,154 | 1,455,113 | 1,435,326 | 1,476,418 |
| Common stockholders' equity | 159,474 | 156,570 | 152,356 | 149,511 | 144,183 |
| Preferred stock | -- | -- | 16,930 | 16,882 | 16,835 |
| Shareholders' equity | 159,474 | 156,570 | 169,286 | 166,393 | 161,018 |
| Total liabilities and shareholders' equity | $1,752,781 | $1,744,724 | $1,624,399 | $1,601,719 | $1,637,436 |
| Common shares outstanding | 7,464,811 | 7,432,995 | 7,432,995 | 7,432,995 | 7,432,295 |
| Average Balance Sheet Data | |||||
| Average investments | $374,027 | $360,265 | $324,144 | $319,377 | $302,331 |
| Average other earning assets | 88,597 | 76,258 | 39,721 | 57,607 | 111,484 |
| Average loans | 1,133,367 | 1,139,767 | 1,126,118 | 1,119,767 | 1,108,477 |
| Average earning assets | 1,595,991 | 1,576,290 | 1,489,983 | 1,496,751 | 1,522,292 |
| Average assets | 1,745,169 | 1,717,816 | 1,623,719 | 1,633,990 | 1,649,947 |
| Average deposits | 1,494,332 | 1,464,550 | 1,372,244 | 1,385,624 | 1,406,861 |
| Average interest bearing deposits | 1,224,743 | 1,190,716 | 1,122,239 | 1,144,986 | 1,168,383 |
| Average interest bearing transaction deposits | 821,643 | 783,753 | 711,046 | 721,948 | 729,022 |
| Average interest bearing time deposits | 403,100 | 406,963 | 411,193 | 423,038 | 439,361 |
| Average borrowings | 80,798 | 77,832 | 72,421 | 72,580 | 73,555 |
| Average interest bearing liabilities | 1,305,541 | 1,268,548 | 1,194,660 | 1,217,566 | 1,241,938 |
| Average common stockholders equity | 158,022 | 153,175 | 150,934 | 146,848 | 143,382 |
| Average preferred stock | -- | 9,753 | 16,906 | 16,858 | 16,813 |
| The Bank of Kentucky Financial Corporation | |||||
| Selected Consolidated Financial Data | |||||
| (Dollars in thousands, except per share data) | |||||
| Five-Quarter Comparison | |||||
| Asset Quality Data | 3/31/12 | 12/31/11 | 9/30/11 | 6/30/11 | 3/31/11 |
| Allowance for loan losses to total loans | 1.62% | 1.62% | 1.60% | 1.58% | 1.58% |
| Allowance for loan losses to non-performing loans | 105% | 1.15% | 1.12% | 1.07% | 87% |
| Nonaccrual loans | $16,779 | $15,651 | $15,964 | $16,322 | $19,735 |
| Loans – 90 days past due & still accruing | 680 | 219 | 45 | 100 | 637 |
| Total non-performing loans | 17,459 | 15,870 | 16,009 | 16,422 | 20,372 |
| OREO and repossessed assets | 6,328 | 5,844 | 1,894 | 1,902 | 1,083 |
| Total non-performing assets | 23,787 | 21,714 | 17,903 | 18,324 | 21,455 |
| Restructured loans-accruing | 15,492 | 13,306 | 13,108 | 7,022 | 3,294 |
| Non-performing loans to total loans | 1.54% | 1.40% | 1.43% | 1.46% | 1.82% |
| Non-performing assets to total assets | 1.36% | 1.25% | 1.11% | 1.15% | 1.32% |
| Annualized charge-offs to average loans | 0.62% | 0.65% | 0.86% | 1.03% | 0.98% |
| Net charge-offs | $1,726 | $1,853 | $2,425 | $2,871 | $2,680 |
About BKFC
BKFC, a bank holding company with assets of approximately $1.753 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 market.