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.