CRESTVIEW HILLS, Ky., Jan. 22, 2009 (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 fourth quarter and the twelve months ended December 31, 2008. The Company reported an increase in diluted net income per share of 5% for the year and a decrease of 7% for the fourth quarter of 2008, as compared to the same periods in 2007. The fourth quarter results included the impact of an additional $1,150,000 provision for loan losses as compared to the fourth quarter of 2007. Contributing to this increase in the provision for loan losses were higher levels of charge-offs in the fourth quarter of 2008, as compared to the same period in 2007, and management's continuing concerns over the deteriorating economic conditions. The increased provision for loan losses was partially offset by a $700,000 (7%) increase in net interest income. Contributing to the increase in net interest income was an 18 basis point improvement in the net interest margin.
A summary of the Company's results follows: Fourth Quarter ended December 31, 2008 2007 Change --------------------------------- ---- ---- ------ Net income $ 2,791,000 $ 3,085,000 (10)% Net income per share, basic $ 0.50 $ 0.54 (7)% Net income per share, diluted $ 0.50 $ 0.54 (7)% Twelve Months ended December 31, 2008 2007 Change -------------------------------- ---- ---- ------ Net income $11,341,000 $11,131,000 2% Net income per share, basic $ 2.02 $ 1.93 5% Net income per share, diluted $ 2.02 $ 1.93 5%
Net interest income increased $700,000, or 7% in the fourth quarter of 2008, as compared to the same period in 2007, while the net interest margin increased from 3.46% in the fourth quarter of 2007 to 3.64% in the fourth quarter of 2008. These increases resulted primarily from the cost of interest bearing liabilities decreasing more than the yield on earning assets. The cost of interest bearing liabilities decreased 186 basis points, from 4.25% for the fourth quarter of 2007 to 2.39% for the fourth quarter of 2008, while the yield on interest earning assets decreased only 141 basis points, from 7.16% for the fourth quarter of 2007 to 5.75% for the fourth quarter of 2008.
The provision for loan losses increased by $1,150,000 (219%) in the fourth quarter of 2008 as compared to the same period in 2007. Contributing to this increase was higher levels of charge-offs in the fourth quarter of 2008, as compared to the same period in 2007, and management's concerns over the declining housing market and overall deteriorating economic conditions. The Company recorded $1,229,000 in net charge-offs in the fourth quarter of 2008 as compared to $774,000 in the fourth quarter of 2007. The Company's non-performing loans as a percentage of total loans were .99% at December 31, 2008, compared to .95% as of December 31, 2007, and the annualized net charge-offs to average loans increased from .33% in the fourth quarter of 2007 to .47% in the fourth quarter of 2008.
Non-interest income increased 3% ($106,000) in the fourth quarter of 2008, as compared to the same period in 2007, while non-interest expense decreased 2% ($134,000) from the same period last year. Contributing to the increase in non-interest income was an $112,000 (5%) increase in service charges on deposits. Non-interest expense in the fourth quarter of 2008 included a $280,000 (7%) decrease in salaries and employee benefits expense as compared to the fourth quarter of 2007. The reduction in salaries and benefits was the result of $417,000 decrease in accruals for the bonus and profit sharing plans in the fourth quarter of 2008 as compared to the fourth quarter of 2007. For the year, the bonus and profit sharing expense decreased $809,000 (63%) from 2007. The decreases in these incentive plans cost was the result of the Company not meeting certain financial goals. Non-interest expense also included a $100,000 entry fee to NASDAQ, which the Company became listed on November 24, 2008.
Total assets were $1.255 billion at the end of the fourth quarter of 2008, which was $23 million or 2% higher than the same date a year ago. Total loans grew $77 million or 8% from December of 2007 and were funded by an increase in deposits of $9 million and a decrease in investments of $49 million or 29%. The decrease in investments included $40 million in short term investments that matured in January of 2008.
The Bank of Kentucky Financial Corporation Selected Consolidated Financial Data (Dollars in thousands, except per share data) Fourth Quarter Full Year Income Comparison Comparison Statement -------------- ---------- Data 12/31/08 12/31/07 % Chg 2008 2007 % Chg -------- -------- ----- ---- ---- ----- Interest income $16,268 $19,963 (19)% $68,682 $75,713 (9)% Interest expense 5,874 10,269 (43)% 28,020 38,477 (27)% ------- ------- --------- --------- Net interest income 10,394 9,694 7% 40,662 37,236 9% Provision for loan losses 1,675 525 219% 4,850 1,575 208% ------- ------- --------- --------- Net interest income after provision for loan losses 8,719 9,169 (5)% 35,812 35,661 0% Non - interest income 3,650 3,544 3% 14,768 14,043 5% Non - interest expense 8,357 8,491 (2)% 34,223 33,719 1% ------- ------- --------- --------- Net income before income taxes 4,012 4,222 (5)% 16,357 15,985 2% Provision for income taxes 1,221 1,137 7% 5,016 4,854 3% ------- ------- --------- --------- Net income $2,791 $3,085 (10)% $11,341 $11,131 2% ======= ======= ========= ========= Per Share Data Basic earnings per share $0.50 $0.54 (7)% $2.02 $1.93 5% Diluted earnings per share 0.50 0.54 (7)% 2.02 1.93 5% Cash dividends declared 0.00 0.00 -- 0.54 0.46 17% Earnings Performance Data Return on equity 11.15% 13.26% (211)bps 11.80% 12.39% (59)bps Return on assets .90% 1.01% (11)bps .93% .99% (6)bps Net interest margin 3.64% 3.46% 18bps 3.63% 3.62% 1 bps Balance Sheet Data Investments $119,212 $168,299 (29)% Total loans 1,026,557 949,714 8% Allowance for loan losses 9,910 8,505 17% Total assets 1,255,382 1,232,724 2% Total deposits 1,071,153 1,062,079 1% Total borrowings 72,951 65,129 12% Stockholders' equity 101,448 93,485 9% Shares Outstanding 5,606,607 5,684,207 (1)% Five-Quarter Comparison Income ----------------------- Statement 12/31/08 9/30/08 6/30/08 3/31/08 12/31/07 Data -------- ------- ------- ------- -------- Net interest income $10,394 $10,544 $10,117 $9,607 $9,694 Provision for loan losses 1,675 775 1,600 800 525 --------- --------- --------- --------- --------- Net interest income after provision for loan losses 8,719 9,769 8,517 8,807 9,169 --------- --------- --------- --------- --------- Service charges and fees 2,269 2,452 2,327 1,870 2,157 Gain on sale of real estate loans 220 116 165 436 227 Trust fee income 252 284 283 292 292 Bankcard transaction revenue 489 502 500 433 437 Other non-interest income 420 553 382 523 431 --------- --------- --------- --------- --------- Total non-interest income 3,650 3,907 3,657 3,554 3,544 --------- --------- --------- --------- --------- Salaries and employee benefits expense 3,886 4,224 3,979 4,296 4,166 Occupancy and equipment expense 1,132 1,191 1,183 1,212 1,178 Data processing expense 330 336 339 360 378 State bank taxes 336 420 420 400 300 Amortization of intangible assets 296 296 333 352 352 Other non-interest expenses 2,377 2,267 2,138 2,120 2,117 --------- --------- --------- --------- --------- Total non-interest expense 8,357 8,734 8,392 8,740 8,491 --------- --------- --------- --------- --------- Net income before income tax expense 4,012 4,942 3,782 3,621 4,222 Income tax expense 1,221 1,523 1,155 1,117 1,137 --------- --------- --------- --------- --------- Net income 2,791 3,419 2,627 2,504 3,085 ========= ========= ========= ========= ========= Per Share Data Basic earnings per share $0.50 $0.61 $0.47 $0.44 $0.54 Diluted earnings per share 0.50 0.61 0.47 0.44 0.54 Cash dividends declared 0.00 0.28 0.00 0.26 0.00 Weighted average shares outstanding Basic 5,606,607 5,606,607 5,613,530 5,658,002 5,704,610 Diluted 5,606,749 5,606,980 5,615,496 5,670,435 5,721,841 Earnings Performance Data Return on equity 11.15% 14.08% 11.17% 10.77% 13.26% Return on assets .90% 1.14% .87% .83% 1.01% Net interest margin 3.64% 3.82% 3.63% 3.44% 3.46% Net interest margin (tax equivalent) 3.70% 3.86% 3.68% 3.48% 3.50% Balance Sheet 12/31/08 9/30/08 6/30/08 3/31/08 12/31/07 Data -------- ------- ------- ------- -------- Investments $119,212 $97,819 $101,142 $111,204 $168,299 Total loans 1,026,557 999,393 982,916 960,737 949,714 Allowance for loan losses 9,910 9,464 9,099 8,820 8,505 Total assets 1,255,382 1,214,339 1,208,176 1,238,643 1,232,724 Total deposits 1,071,153 992,493 1,031,990 1,041,852 1,062,079 Total borrowings 72,951 113,256 70,555 92,415 65,129 Stockholders' equity 101,448 97,720 95,514 93,596 93,485 Shares Outstanding 5,606,607 5,606,607 5,606,607 5,624,607 5,684,207 Average Balance Sheet Data Average investments $106,903 $99,185 $110,174 $123,958 $121,373 Average other earning assets 17,872 7,865 38,578 46,825 56,158 Average loans 1,011,395 991,206 971,573 953,592 934,089 Average earning assets 1,136,170 1,098,256 1,120,325 1,124,375 1,111,620 Average assets 1,236,114 1,195,289 1,214,158 1,218,466 1,208,352 Average deposits 1,046,289 1,003,548 1,030,671 1,044,996 1,040,376 Average interest bearing deposits 899,434 852,399 887,201 910,592 897,253 Average interest bearing transaction deposits 516,082 492,501 523,734 537,275 524,679 Average interest bearing time deposits 383,352 359,898 363,467 373,317 372,574 Average borrowings 78,631 79,227 72,707 63,791 61,330 Average interest bearing liabilities 978,065 931,626 959,908 974,383 958,583 Average stockholders equity 99,584 96,618 94,556 93,541 92,273 Asset Quality Data Allowance for loan losses to total loans .97% .95% .93% .92% .90% Allowance for loan losses to non-performing loans 98% 85% 74% 75% 94% Nonaccrual loans $8,211 $8,226 $9,745 $8,744 $6,389 Restructured loans 575 575 -- -- -- Loans - 90 days past due & still accruing 1,350 2,844 2,490 3,066 2,658 --------- --------- --------- --------- --------- Total non-performing loans 10,136 11,645 12,235 11,810 9,047 OREO and repossessed assets 712 3,673 3,474 4,373 4,117 Total non-performing assets 10,848 15,318 15,709 16,183 13,164 ========= ========= ========= ========= ========= Non-performing loans to total loans .99% 1.17% 1.24% 1.23% .95% Non-performing assets to total assets .87% 1.26% 1.30% 1.31% 1.07% Annualized charge-offs to average loans .48% .16% .54% .20% .33% Net charge-offs $1,229 $410 $1,321 $485 $774
About BKFC
BKFC, a bank holding company with assets of approximately $1.255 billion, offers banking and related financial services to both individuals and business customers. BKFC operates twenty-eight branch locations and forty-four ATMs in the Northern Kentucky market.