CRESTVIEW HILLS, Ky., July 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 second quarter and six months ended June 30, 2012. For the second quarter, the Company reported an increase in diluted earnings per common share of 26% from the same period in 2011.
A summary of the Company's results follows:
| Second Quarter ended June 30, | 2012 | 2011 | Change |
| Net income | $4,424,000 | $3,794,000 | 17% |
| Net income available to common shareholders | $4,424,000 | $3,535,000 | 25% |
| Earnings per common share, basic | $0.59 | $0.48 | 23% |
| Earnings per common share, diluted | $0.59 | $0.47 | 26% |
| Six Months ended June 30, | 2012 | 2011 | Change |
| Net income | $8,939,000 | $7,306,000 | 22% |
| Net income available to common shareholders | $8,939,000 | $6,790,000 | 32% |
| Net income per common share, basic | $1.20 | $ 0 .91 | 32% |
| Net income per common share, diluted | $1.19 | $ 0 .91 | 31% |
Robert Zapp, President & CEO stated, "We continue to execute our strategy as evidenced by the Company's financial results for the quarter. Positive momentum within our lending lines of business contributed to the Bank's organic loan growth of $14 million in the second quarter, which was the highest quarterly loan growth experienced over the last three years. Mortgage revenue remained strong and problem assets declined, which were key drivers of our success in the second quarter. We have invested in the resources and technology for continued growth, and I believe that the Bank is well positioned going forward."
Driving the increase in earnings available to common shareholders in the second quarter of 2012 was a $1,300,000 (43%) decrease in the provision for loan losses and a $259,000 (100%) decrease in preferred stock dividends and amortization as compared to the second quarter of 2011. Also contributing to increased earnings was a 2% increase in total revenue (net interest income and non interest income), which was offset with an 8% increase in noninterest expense. The decrease in the provision for loan losses reflected improving credit metrics as compared to June 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 $20,000 in the second quarter of 2012, as compared to the same period in 2011. The net interest margin, on a tax equivalent basis, decreased 19 basis points from 3.84% in the second quarter of 2011 to 3.65% in the second quarter of 2012. Contributing to the decrease in the net interest margin was the mix of the growth in earning assets. Of the $86 million growth in average earning assets from the second quarter of 2011 to second quarter of 2012, $69 million or 80% 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 $1,300,000 (43%) in the second quarter of 2012, as compared to the same period in 2011. Contributing to this decrease were lower non-performing loans and charge-offs ratios as compared to June 2011. The Company's non-performing loans as a percentage of total loans were 1.44% as of June 30, 2012, as compared to 1.46% as of June 30, 2011, while annualized net charge-offs to average loans decreased from 1.03% in the second quarter of 2011 to 0.61% in the second quarter of 2012. The Company recorded $1,716,000 in net charge-offs in the second quarter of 2012 as compared to $2,871,000 in the second quarter of 2011. On a sequential basis, the provision for loan losses of $1,700,000 in the second quarter of 2012 was $100,000 lower than the provision in the first quarter of 2012, while non-performing loans decreased from $17.5 million (1.54% of total loans) at March 31, 2012 to $16.5 million (1.44% of total loans) at June 30, 2012. Net charge-offs on a sequential basis decreased from $1,726,000 (0.62% of loans) in the first quarter of 2012 to $1,716,000 (0.61% of loans) in the second quarter of 2012. The allowance for loan losses (ALL) as of June 30, 2012 decreased $16,000 from March 2012. The ALL has decreased from 1.62% of loans at the end of the first quarter of 2012 to 1.60% of loans at the end of the second 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 1.32% as of June 30, 2012, as compared to 1.15% as of June 30, 2011. Non-performing loans increased $38,000 from June 2011 to June 2012 and other real estate owned increased $4,048,000 in the same time period. On a sequential quarterly basis, other real estate owned decreased $378,000 from March 2012. The increase in other real estate owned from June 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 fair value less estimated costs to sell with the difference between this value and the loan balance being recorded as a charge-off.
Non-interest income increased 8% ($379,000) in the second quarter of 2012, as compared to the same period in 2011, while non-interest expense increased 8% ($892,000) from the same period last year. Contributing to the increase in non-interest income was a $361,000 or a 158% increase in the gains on sale of real estate loans. These gains were driven by a drop in interest rates from the second quarter of 2011, which has prompted increased demand for home mortgage loan refinancing. Contributing to the increase in non-interest expense was a $679,000 (13%) increase in salaries and benefits expense. The increase in salaries and benefits included $134,000 in higher bonus accruals and $122,000 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 based on higher real estate loan originations.
Total assets were $1.704 billion at the end of the second quarter of 2012, which was $102 million or 6% higher than the same date a year ago. Total loans increased $15 million (1%), investments in securities increased $56 million (18%) and cash and cash equivalents increased $6 million (9%) from June of 2011. The balance sheet increases were funded by an increase in deposits of $100 million, or 7%. Total equity decreased $1.9 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) |
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| Second Quarter Comparison | Six months ended June 30, Comparison | |||||
| Income Statement Data | 6/30/12 | 6/30/11 | % Chg | 6/30/12 | 6/30/11 | % Chg |
| Interest income | $ 15,661 | $ 16,423 | (5)% | $ 31,349 | $ 32,422 | (3)% |
| Interest expense | 1,614 | 2,396 | (33)% | 3,458 | 5,047 | (31)% |
| Net interest income | 14,047 | 14,027 | --% | 27,891 | 27,375 | 2% |
| Provision for loan losses |
1,700 |
3,000 |
(43)% |
3,500 |
6,000 |
(42)% |
| Net interest income after provision for loan losses | 12,347 | 11,027 | 12% | 24,391 | 21,375 | 14% |
| Non interest income | 5,353 | 4,974 | 8% | 10,959 | 9,897 | 11% |
| Non interest expense | 11,527 | 10,635 | 8% | 22,869 | 20,984 | 9% |
| Net income before income taxes | 6,173 | 5,366 | 15% | 12,481 | 10,288 | 21% |
| Provision for income taxes | 1,749 | 1,572 | 11% | 3,542 | 2,982 | 19% |
| Net income | 4,424 | 3,794 | 17% | 8,939 | 7,306 | 22% |
| Preferred stock dividends & amortization | -- | 259 | (100)% | -- | 516 | (100)% |
| Net income available to common shareholders | $ 4,424 | $ 3,535 | 25% | $ 8,939 | $ 6,790 | 32% |
| Per Common Share Data | ||||||
| Diluted earnings per common share | 0.59 | 0.47 | 26% | 1.19 | 0.91 | 31% |
| Cash dividends declared | 0.00 | 0.00 | 0% | 0.30 | 0.28 | 7% |
| Earnings Performance Data | ||||||
| Return on common equity | 10.99% | 9.59% | 140bps | 11.24% | 9.40% | 184bps |
| Return on assets | 1.03% | 0.93% | 10bps | 1.03% | 0.90% | 13bps |
| Net interest margin | 3.57% | 3.76% | (19)bps | 3.53% | 3.66% | (13)bps |
| The Bank of Kentucky Financial Corporation | ||
| Selected Consolidated Financial Data | ||
|
(Dollars in thousands, except per share data) |
||
| Balance Sheet Data | ||
| June 30, 2012 | December 31, 2011 | |
| Assets: | ||
| Cash and cash equivalents | $ 66,719 | $ 135,964 |
| Investments | 376,454 | 371,737 |
| Loans held for sale | 13,983 | 8,920 |
| Total loans, gross | 1,143,733 | 1,129,954 |
| Allowance for loan losses | (18,346) | (18,288) |
| Premises and equipment, net | 22,923 | 22,827 |
| Goodwill and acquisition intangibles, net | 24,856 | 25,251 |
| Other assets and accrued interest receivable | 73,543 | 68,359 |
| Total assets | $ 1,703,865 | $ 1,744,724 |
| Liabilities & Shareholders' Equity | ||
| Total deposits | $ 1,455,328 | $ 1,498,821 |
| Short-term borrowings | 24,373 | 29,300 |
| Notes payable | 48,727 | 48,739 |
| Accrued interest payable and other liabilities | 10,987 | 11,294 |
| Total liabilities | 1,539,415 | 1,588,154 |
| Common stockholders' equity | 164,450 | 156,570 |
| Total liabilities and shareholders' equity | $ 1,703,865 | $ 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 ) | ||||||
| Three Months ended June 30, 2012 | Three Months ended June 30, 2011 | |||||
|
Average outstanding balance |
Interest earned/paid |
Yield/ rate |
Average outstanding balance |
Interest earned/ paid |
Yield/ rate |
|
| Interest-earning assets: | ||||||
| Loans receivable (1)(2) | $1,136,894 | $13,948 | 4.93% | $1,119,767 | $14,770 | 5.29% |
| Securities (2) | 375,245 | 1,961 | 2.10 | 319,377 | 1,881 | 2.36 |
| Other interest-earning assets | 70,648 | 79 | 0.45 | 57,607 | 84 | 0.58 |
|
Total interest-earning assets |
1,582,787 | 15,988 | 4.06 | 1,496,751 | 16,735 | 4.48 |
| Non-interest-earning assets | 147,788 | 137,239 | ||||
|
Total assets |
$1,730,575 | $1,633,990 | ||||
| Interest-bearing liabilities: | ||||||
| Transaction accounts | 813,312 | 425 | 0.21 | 721,948 | 513 | 0.29 |
| Time deposits | 381,387 | 923 | 0.97 | 423,038 | 1,629 | 1.54 |
| Borrowings | 75,789 | 266 | 1.41 | 72,580 | 254 | 1.40 |
|
Total interest-bearing liabilities |
1,270,488 |
1,614 |
0.51 |
1,217,566 |
2,396 |
0.79 |
| Non-interest-bearing liabilities | 298,125 | 252,718 | ||||
|
Total liabilities |
1,568,613 | 1,470,284 | ||||
|
Shareholders' equity |
161,962 | 163,706 | ||||
|
Total liabilities and shareholders' equity |
$1,730,575 |
$1,633,990 |
||||
| Net interest income | $14,374 | $14,339 | ||||
| Interest rate spread | 3.55% | 3.69% | ||||
| Net interest margin (net interest income as a percent of average interest-earning assets) |
3.65% |
3.84% |
||||
|
(1) Includes non-accrual loans. |
||||||
| (2) Income presented on a tax equivalent basis using a 35.00% tax rate in 2012 and 2011. The tax equivalent adjustment was $327,000 and $312,000 in 2012 and 2011, 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 30,2012 | Six Months ended June 30, 2011 | |||||
|
Average outstanding balance |
Interest earned/paid |
Yield/ rate |
Average outstanding balance |
Interest earned/ paid |
Yield/ rate |
|
| Interest-earning assets: | ||||||
| Loans receivable (1)(2) | $1,135,131 | $27,906 | 4.94% | $1,114,153 | $29,234 | 5.29% |
| Securities (2) | 374,636 | 3,921 | 2.10 | 310,901 | 3,573 | 2.32 |
| Other interest-earning assets | 79,622 | 171 | 0.43 | 84,397 | 222 | 0.53 |
|
Total interest-earning assets |
1,589,389 | 31,998 | 4.05 | 1,509,451 | 33,029 | 4.41 |
| Non-interest-earning assets | 148,483 | 133,063 | ||||
|
Total assets |
$1,737,872 | $1,642,514 | ||||
| Interest-bearing liabilities: | ||||||
| Transaction accounts | 817,477 | 895 | 0.22 | 725,063 | 1,184 | 0.33 |
| Time deposits | 392,243 | 2,019 | 1.04 | 431,155 | 3,355 | 1.57 |
| Borrowings | 78,293 | 544 | 1.40 | 73,065 | 508 | 1.40 |
|
Total interest-bearing liabilities |
1,288,013 |
3,458 |
0.54 |
1,229,283 |
5,047 |
0.83 |
| Non-interest-bearing liabilities | 289,867 | 251,281 | ||||
|
Total liabilities |
1,577,880 | 1,480,564 | ||||
|
Shareholders' equity |
159,992 | 161,950 | ||||
|
Total liabilities and shareholders' equity |
$1,737,872 |
$1,642,514 |
||||
| Net interest income | $28,540 | $27,982 | ||||
| Interest rate spread | 3.51% | 3.58% | ||||
| Net interest margin (net interest income as a percent of average interest-earning assets) |
3.61% |
3.74% |
||||
|
(1) Includes non-accrual loans. |
||||||
|
(2) Income presented on a tax equivalent basis using a 35.00% tax rate in 2012 and 2011. The tax equivalent adjustment was $649,000 and $607,000 in 2012 and 2011, respectively. |
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| The Bank of Kentucky Financial Corporation | |||||
| Selected Consolidated Financial Data | |||||
|
(Dollars in thousands, except per share data) |
|||||
| Five-Quarter Comparison | |||||
| Income Statement Data | 6/30/12 | 3/31/12 | 12/31/11 | 9/30/11 | 6/30/11 |
| Net interest income | $ 14,047 | $ 13,844 | $ 14,087 | $ 14,076 | $ 14,027 |
| Provision for loan losses | 1,700 | 1,800 | 2,200 | 2,550 | 3,000 |
| Net interest income after provision for loan losses |
12,347 |
12,044 |
11,887 |
11,526 |
11,027 |
| Service charges and fees | 2,241 | 2,201 | 2,390 | 2,470 | 2,424 |
| Gain on sale of real estate loans | 589 | 586 | 580 | 703 | 228 |
| Gain/(loss) on sale of securities | (4) | 207 | -- | -- | -- |
| Trust fee income | 694 | 689 | 625 | 630 | 723 |
| Bankcard transaction revenue | 952 | 902 | 885 | 849 | 859 |
| Gains/(losses) on other real estate owned | (40) | (94) | (85) | (98) | (94) |
| Other non-interest income | 921 | 1,115 | 1,135 | 743 | 834 |
| Total non-interest income | 5,353 | 5,606 | 5,530 | 5,297 | 4,974 |
| Salaries and employee benefits expense | 5,724 | 5,451 | 5,044 | 5,351 | 5,045 |
| Occupancy and equipment expense | 1,315 | 1,277 | 1,192 | 1,216 | 1,241 |
| Data processing expense | 533 | 535 | 522 | 500 | 467 |
| State bank taxes | 579 | 559 | 415 | 550 | 550 |
| Amortization of intangible assets | 196 | 200 | 220 | 202 | 215 |
| FDIC Insurance | 295 | 305 | 305 | 269 | 384 |
| Other non-interest expenses | 2,885 | 3,015 | 2,705 | 2,639 | 2,733 |
| Total non-interest expense | 11,527 | 11,342 | 10,403 | 10,727 | 10,635 |
| Net income before income tax expense | 6,173 | 6,308 | 7,014 | 6,096 | 5,366 |
| Income tax expense | 1,749 | 1,793 | 2,105 | 1,822 | 1,572 |
| Net income | 4,424 | 4,515 | 4,909 | 4,274 | 3,794 |
| Preferred stock dividends & amortization | -- | -- | 195 | 261 | 259 |
| Net income available to common shareholders | $ 4,424 | $ 4,515 | $ 4,714 | $ 4,013 | $ 3,535 |
| Per Common Share Data | |||||
| Diluted earnings per common share | 0.59 | 0.60 | 0.63 | 0.54 | 0.47 |
| Cash dividends declared | 0.00 | 0.30 | 0.00 | 0.28 | 0.00 |
| Weighted average common shares outstanding | |||||
| Basic | 7,465,434 | 7,448,604 | 7,432,995 | 7,432,995 | 7,432,487 |
| Diluted | 7,542,372 | 7,520,062 | 7,465,606 | 7,488,743 | 7,501,731 |
| Earnings Performance Data | |||||
| Return on common equity | 10.99% | 11.49% | 12.21% | 10.51% | 9.59% |
| Return on assets | 1.03% | 1.04% | 1.13% | 1.05% | 0.93% |
| Net interest margin | 3.57% | 3.49% | 3.55% | 3.76% | 3.76% |
| Net interest margin (tax equivalent) | 3.65% | 3.57% | 3.63% | 3.83% | 3.84% |
| The Bank of Kentucky Financial Corporation | |||||
| Selected Consolidated Financial Data | |||||
| (Dollars in thousands, except per share data) | |||||
| Five-Quarter Comparison | |||||
| Balance Sheet Data | 6/30/12 | 3/31/12 | 12/31/11 | 9/30/11 | 6/30/11 |
| Assets: | |||||
| Cash and cash equivalents | $ 66,719 | $ 133,153 | $ 135,964 | $ 67,657 | $ 61,098 |
| Investments | 376,454 | 374,336 | 371,737 | 339,780 | 320,202 |
| Loans held for sale | 13,983 | 10,863 | 8,920 | 6,612 | 1,107 |
| Total loans | 1,143,733 | 1,130,200 | 1,129,954 | 1,118,630 | 1,128,511 |
| Allowance for loan losses | (18,346) | (18,362) | (18,288) | (17,941) | (17,816) |
| Premises and equipment, net | 22,923 | 23,159 | 22,827 | 22,653 | 22,576 |
| Goodwill and acquisition intangibles, net | 24,856 | 25,051 | 25,251 | 24,826 | 25,028 |
| Other assets & accrued interest receivable | 73,543 | 74,381 | 68,359 | 62,182 | 61,013 |
| Total assets | $ 1,703,865 | $ 1,752,781 | $ 1,744,724 | $ 1,624,399 | $ 1,601,719 |
| Liabilities & Shareholders' Equity | |||||
| Total deposits | $ 1,455,328 | $ 1,505,709 | $ 1,498,821 | $ 1,369,215 | $1,355,284 |
| Short-term borrowings | 24,373 | 29,334 | 29,300 | 26,248 | 20,610 |
| Notes payable | 48,727 | 48,733 | 48,739 | 48,745 | 48,750 |
| Accrued interest payable & other liabilities | 10,987 | 9,531 | 11,294 | 10,905 | 10,682 |
| Total liabilities | 1,539,415 | 1,593,307 | 1,588,154 | 1,455,113 | 1,435,326 |
| Common stockholders' equity | 164,450 | 159,474 | 156,570 | 152,356 | 149,511 |
| Preferred stock | -- | -- | -- | 16,930 | 16,882 |
| Shareholders' equity | 164,450 | 159,474 | 156,570 | 169,286 | 166,393 |
| Total liabilities and shareholders' equity | $ 1,703,865 | $ 1,752,781 | $ 1,744,724 | $ 1,624,399 | $ 1,601,719 |
| Common shares outstanding | 7,465,841 | 7,464,811 | 7,432,995 | 7,432,995 | 7,432,995 |
| Average Balance Sheet Data | |||||
| Average investments | $375,245 | $374,027 | $360,265 | $324,144 | $319,377 |
| Average other earning assets | 70,648 | 88,597 | 76,258 | 39,721 | 57,607 |
| Average loans | 1,136,894 | 1,133,367 | 1,139,767 | 1,126,118 | 1,119,767 |
| Average earning assets | 1,582,787 | 1,595,991 | 1,576,290 | 1,489,983 | 1,496,751 |
| Average assets | 1,730,575 | 1,745,169 | 1,717,816 | 1,623,719 | 1,633,990 |
| Average deposits | 1,482,222 | 1,494,332 | 1,464,550 | 1,372,244 | 1,385,624 |
| Average interest bearing deposits | 1,194,699 | 1,224,743 | 1,190,716 | 1,122,239 | 1,144,986 |
| Average interest bearing transaction deposits | 813,312 | 821,643 | 783,753 | 711,046 | 721,948 |
| Average interest bearing time deposits | 381,387 | 403,100 | 406,963 | 411,193 | 423,038 |
| Average borrowings | 75,789 | 80,798 | 77,832 | 72,421 | 72,580 |
| Average interest bearing liabilities | 1,270,488 | 1,305,541 | 1,268,548 | 1,194,660 | 1,217,566 |
| Average common stockholders equity | 161,962 | 158,022 | 153,175 | 150,934 | 146,848 |
| Average preferred stock | -- | -- | 9,753 | 16,906 | 16,858 |
| The Bank of Kentucky Financial Corporation | |||||
| Selected Consolidated Financial Data | |||||
|
(Dollars in thousands, except per share data) |
|||||
| Five-Quarter Comparison | |||||
| Asset Quality Data | 6/30/12 | 3/31/12 | 12/31/11 | 9/30/11 | 6/30/11 |
| Allowance for loan losses to total loans | 1.60% | 1.62% | 1.62% | 1.60% | 1.58% |
| Allowance for loan losses to non-performing loans |
111% |
105% |
115% |
112% |
107% |
| Nonaccrual loans | $16,265 | $16,779 | $15,651 | $15,964 | $16,322 |
| Loans – 90 days past due & still accruing | 195 | 680 | 219 | 45 | 100 |
| Total non-performing loans | 16,460 | 17,459 | 15,870 | 16,009 | 16,422 |
| OREO and repossessed assets | 5,950 | 6,328 | 5,844 | 1,894 | 1,902 |
| Total non-performing assets | 22,410 | 23,787 | 21,714 | 17,903 | 18,324 |
| Restructured loans-accruing | 15,388 | 15,492 | 13,306 | 13,108 | 7,022 |
| Non-performing loans to total loans | 1.44% | 1.54% | 1.40% | 1.43% | 1.46% |
| Non-performing assets to total assets | 1.32% | 1.36% | 1.25% | 1.11% | 1.15% |
| Annualized charge-offs to average loans | 0.61% | 0.62% | 0.65% | 0.86% | 1.03% |
| Net charge-offs | $1,716 | $1,726 | $1,853 | $2,425 | $2,871 |
| Other Information | |||||
| Total assets under management (in millions) | 701 | 702 | 667 | 639 | 681 |
| Full-time equivalent employees | 376 | 359 | 356 | 349 | 354 |
About BKFC
BKFC, a bank holding company with assets of approximately $1.704 billion, offers banking and related financial services to both individuals and business customers. BKFC operates thirty-three branch locations and fifty-four ATMs in the Northern Kentucky/Cincinnati market.