CRESTVIEW HILLS, Ky., July 23, 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 second quarter and the six months ended June 30, 2009. For the second quarter and the first six months of 2009, the Company reported a decrease in diluted earnings per common share of 20% for the year, and 43% for the second quarter, as compared to the same periods in 2008. The second quarter results reflect the sale of $34 million in preferred stock and the issuance of a warrant for shares of common stock to the U.S. Department of Treasury ("Treasury") on February 13, 2009 in connection with the Company's participation in the Treasury's TARP Capital Purchase Program. The effect of Treasury's investment on the earnings per common share includes the accrual for the payment of dividends on the preferred stock and the related preferred stock amortization expense of $519,000 for the second quarter and $777,000 for the six month period. No comparable dividends were paid in the 2008 periods. With continued earnings and the Treasury investment, the Company continues to maintain a significantly higher level of capital than required by regulatory authorities to be designated as well-capitalized. The second quarter results included the FDIC special assessment and higher regular FDIC premiums that increased expense by $832,000 as compared to the second quarter of 2008, and an additional $1,200,000 provision for loan losses as compared to the second quarter of 2008. Contributing to this increase in the provision for loan losses were higher levels of charge-offs and non-performing loans in the second quarter of 2009 as compared to the same period in 2008, and management's continuing concerns over the effect of the declining housing market and overall deteriorating economic conditions will have on the Company's loan portfolio.
A summary of the Company's results follows: Second Quarter ended June 30, 2009 2008 Change ----------------------------- ---------- ---------- ---------- Net income $2,071,000 $2,627,000 (21)% Net income available for common shareholders $1,552,000 $2,627,000 (41)% Earnings per common share, basic $ 0.28 $ 0.47 (40)% Earnings per common share, diluted $ 0.27 $ 0.47 (43)% Six Months ended June 30, 2009 2008 Change ------------------------- ---------- ---------- ---------- Net income $4,887,000 $5,131,000 (5)% Net income available for common shareholders $4,110,000 $5,131,000 (20)% Net income per common share, basic $ .73 $ .91 (20)% Net income per common share, diluted $ .73 $ .91 (20)%
Net interest income increased $861,000, or 9% in the second quarter of 2009, as compared to the same period in 2008, while the net interest margin, on a tax equivalent basis, decreased 7 basis points from 3.68% in the second quarter of 2008 to 3.61% in the second quarter of 2009. The increase in net interest income was the result of the growth in earning assets, which increased $126 million or 11% on average from the second quarter of 2008. While the net interest margin decreased, the net interest spread, the difference between the Bank's yield on earning assets and the cost of interest bearing liabilities, increased by 4 basis points from the second quarter of 2008. The difference between the net interest margin and net interest spread is accounted for by the diminishing impact that net non interest bearing funding, net free funds, has on the margin as over all funding cost decrease.
The provision for loan losses increased by $1,200,000 (75%) in the second quarter of 2009, as compared to the same period in 2008. Contributing to this increase was higher levels of charge-offs in the second quarter of 2009, as compared to the same period in 2008, and management's concerns over the declining housing market and overall deteriorating economic conditions. The Company recorded $1,737,000 in net charge-offs in the second quarter of 2009 as compared to $1,321,000 in the second quarter of 2008. The Company's non-performing loans as a percentage of total loans were 1.40% as of June 30, 2009, as compared to 1.24% as of June 30, 2008, and the annualized net charge-offs to average loans increased from .54% in the second quarter of 2008 to .68% in the second quarter of 2009. As a result of the stress current economic conditions have had on the Company's loan portfolio, the allowance for loan losses (ALL) increased $1,063,000 (10%) from the end of the first quarter of 2009 and $1,906,000 (19%) from the end of 2008. As a result of the added allowance the ALL has increased from .97% of loans at the end of 2008 to 1.12% of loans at the end of the second quarter. The adequacy of the ALL is analyzed quarterly and adjusted as necessary to maintain appropriate reserves for probable incurred losses in the loan portfolio.
Non-interest income increased 15% ($565,000) in the second quarter of 2009, as compared to the same period in 2008, while non-interest expense increased 14% ($1,193,000) from the same period last year. Contributing to the increase in non-interest income was a $313,000 (190%) increase in gains on the sale of real estate loans. Non-interest expense in the second quarter of 2009 included an $832,000 (426%) increase in FDIC insurance expense. The increase in the FDIC insurance expense included a $600,000 accrual for the special assessment that will be paid in the third quarter of 2009. This special assessment was assessed to all FDIC insured institutions to replenish the depleted reserves due to the many bank failures.
Total assets were $1.334 billion at the end of the second quarter of 2009, which was $126 million or 10% higher than the same date a year ago. Total loans and investments grew $69 million or 7% and $62 million or 61% respectively, from June of 2008 and were funded by an increase in deposits of $87 million or 8% and an increase in preferred stock and warrants of $34 million.
The Bank of Kentucky Financial Corporation
Selected Consolidated Financial Data
(Dollars in thousands, except per share data)
Second Quarter Six months ended
Comparison June 30, Comparison
------------------------- --------------------------
6/30/09 6/30/08 % Chg 6/30/09 6/30/08 % Chg
------- ------- ----- ------- ------- -----
Income Statement
Data
Interest income $15,528 $17,041 (9)% $30,641 $35,551 (14)%
Interest expense 4,550 6,924 (34)% 9,427 15,827 (40)%
------- ------- ------- -------
Net interest
income 10,978 10,117 9% 21,214 19,724 8%
Provision for
loan losses 2,800 1,600 75% 4,325 2,400 80%
------- ------- ------- -------
Net interest
income after
provision for
loan losses 8,178 8,517 (4)% 16,889 17,324 (3)%
Non-interest
income 4,222 3,657 15% 8,324 7,211 15%
Non-interest
expense 9,585 8,392 14% 18,433 17,132 8%
------- ------- ------- -------
Net income
before income
taxes 2,815 3,782 (26)% 6,780 7,403 (8)%
Provision for
income taxes 744 1,155 (36)% 1,893 2,272 (17)%
------- ------- ------- -------
Net income 2,071 2,627 (21)% 4,887 5,131 (5)%
Preferred Stock
Dividends &
Amortization 519 -- 100% 777 -- 100%
------- ------- ------- -------
Net Income
Available to
Common
Shareholders $ 1,552 $ 2,627 (41)% $ 4,110 $ 5,131 (20)%
======= ======= ======= =======
Per Common
Share Data
Diluted earnings
per common
share 0.27 0.47 (43)% 0.73 0.91 (20)%
Cash dividends
declared 0.00 0.00 0% 0.28 0.26 8%
Earnings
Performance
Data
Return on
common equity 5.96% 11.17% (521)bps 8.00% 11.03% (303)bps
Return on
assets .62% .87% 25bps .75% .85% (10)bps
Net interest
margin 3.53% 3.63% (10)bps 3.52% 3.55% (3)bps
Balance Sheet Data
Investments $ 163,260 $ 101,142 61%
Total loans 1,052,033 982,916 7%
Allowance for
loan losses 11,816 9,099 30%
Total assets 1,334,114 1,208,176 10%
Total deposits 1,119,335 1,031,990 8%
Total borrowings 65,356 70,555 (7)%
Common Stockholders'
equity 105,325 95,514 10%
Preferred Stock 33,057 -- 100%
Common Shares
Outstanding 5,612,607 5,606,607 -%
Five-Quarter Comparison
------------------------------------------------------
6/30/09 3/31/09 12/31/08 9/30/08 6/30/08
Income ---------- ---------- ---------- ---------- ----------
Statement Data
Net interest
income $ 10,978 $ 10,236 $ 10,394 $ 10,544 $ 10,117
Provision for
loan losses 2,800 1,525 1,675 775 1,600
---------- ---------- ---------- ---------- ----------
Net interest
income after
provision for
loan losses 8,178 8,711 8,719 9,769 8,517
---------- ---------- ---------- ---------- ----------
Service charges
and fees 2,289 2,015 2,269 2,452 2,327
Gain on sale of
real estate
loans 478 526 220 116 165
Gain on sale of
securities -- 263 -- -- --
Trust fee
income 271 230 252 284 283
Bankcard
transaction
revenue 551 491 489 502 500
Other non-
interest
income 633 577 420 553 382
---------- ---------- ---------- ---------- ----------
Total non-
interest
income 4,222 4,102 3,650 3,907 3,657
---------- ---------- ---------- ---------- ----------
Salaries and
employee
benefits
expense 4,048 3,999 3,886 4,224 3,979
Occupancy and
equipment
expense 1,169 1,237 1,132 1,191 1,183
Data processing
expense 385 394 330 336 339
State bank
taxes 456 452 336 420 420
Amortization of
intangible
assets 283 296 296 296 333
FDIC Insurance 1,027 399 194 194 195
Other non-
interest
expenses 2,217 2,071 2,183 2,073 1,943
---------- ---------- ---------- ---------- ----------
Total non-
interest
expense 9,585 8,848 8,357 8,734 8,392
---------- ---------- ---------- ---------- ----------
Net income
before income
tax expense 2,815 3,965 4,012 4,942 3,782
Income tax
expense 744 1,149 1,221 1,523 1,155
---------- ---------- ---------- ---------- ----------
Net income 2,071 2,816 2,791 3,419 2,627
Preferred Stock
Dividends &
Amortization 519 258 -- -- --
---------- ---------- ---------- ---------- ----------
Net Income
Available to
Common
Shareholders $ 1,552 $ 2,558 2,791 3,419 2,627
========== ========== ========== ========== ==========
Per Common
Share Data
Diluted
earnings per
common share 0.27 0.46 0.50 0.61 0.47
Cash dividends
declared 0.00 0.28 0.00 0.28 0.00
Weighted
average common
shares
outstanding
Basic 5,612,607 5,611,607 5,606,607 5,606,607 5,613,530
Diluted 5,658,818 5,611,607 5,606,749 5,606,980 5,615,496
Earnings
Performance
Data
Return on
common equity 5.96% 10.11% 11.15% 14.08% 11.17%
Return on
assets .62% .89% .90% 1.14% .87%
Net interest
margin 3.53% 3.50% 3.64% 3.82% 3.63%
Net interest
margin (tax
equivalent) 3.61% 3.58% 3.70% 3.86% 3.68%
------------------------------------------------------
6/30/09 3/31/09 12/31/08 9/30/08 6/30/08
Balance Sheet ---------- ---------- ---------- ---------- ----------
Data
Investments $ 163,260 $ 159,192 $ 119,212 $ 97,819 $ 101,142
Total loans 1,052,033 1,026,845 1,026,557 999,393 982,916
Allowance for
loan losses 11,816 10,753 9,910 9,464 9,099
Total assets 1,334,114 1,315,329 1,255,382 1,214,339 1,208,176
Total deposits 1,119,335 1,097,811 1,071,153 992,493 1,031,990
Total
borrowings 65,356 71,050 72,951 113,256 70,555
Common
Stockholders'
equity 105,325 103,711 101,448 97,720 95,514
Preferred Stock 33,057 33,007 -- -- --
Common Shares
Outstanding 5,612,607 5,612,607 5,606,607 5,606,607 5,606,607
Average Balance
Sheet Data
Average
investments $ 159,767 $ 123,123 $ 106,903 $ 99,185 $ 110,174
Average other
earning assets 36,244 35,120 17,872 7,865 38,578
Average loans 1,050,749 1,027,391 1,011,395 991,206 971,573
Average earning
assets 1,246,760 1,185,634 1,136,170 1,098,256 1,120,325
Average assets 1,344,100 1,282,008 1,236,114 1,195,289 1,214,158
Average
deposits 1,127,982 1,080,699 1,046,289 1,003,548 1,030,671
Average
interest
bearing
deposits 967,030 936,503 899,434 852,399 887,201
Average
interest
bearing
transaction
deposits 556,248 536,141 516,082 492,501 523,734
Average
interest
bearing time
deposits 410,782 400,362 383,352 359,898 363,467
Average
borrowings 67,383 73,397 78,631 79,227 72,707
Average
interest
bearing
liabilities 1,034,413 1,009,900 978,065 931,626 959,908
Average Common
stockholders
equity 104,518 102,579 99,584 96,618 94,556
Average
Preferred
stock 33,032 16,504 -- -- --
Asset Quality
Data
Allowance for
loan losses
to total loans 1.12% 1.05% .97% .95% .93%
Allowance for
loan losses to
non-performing
loans 80% 89% 98% 85% 74%
Nonaccrual
loans $ 12,105 $ 7,636 $ 8,211 $ 8,226 $ 9,745
Restructured
loans 632 3,492 575 575 --
Loans - 90 days
past due &
still accruing 1,943 1,022 1,350 2,844 2,490
---------- ---------- ---------- ---------- ----------
Total non-
performing
loans 14,680 12,150 10,136 11,645 12,235
OREO and
repossessed
assets 1,209 1,259 712 3,673 3,474
---------- ---------- ---------- ---------- ----------
Total non-
performing
assets 15,889 13,409 10,848 15,318 15,709
========== ========== ========== ========== ==========
Non-performing
loans to
total loans 1.40% 1.18% .99% 1.17% 1.24%
Non-performing
assets to
total assets 1.20% 1.02% .87% 1.26% 1.30%
Annualized
charge-offs
to average
loans .68% .27% .48% .16% .54%
Net charge-offs$ 1,737 $ 682 $ 1,229 $ 410 $ 1,321
About BKFC
BKFC, a bank holding company with assets of approximately $1.334 billion, offers banking and related financial services to both individuals and business customers. BKFC operates twenty-eight branch locations and forty-five ATMs in the Northern Kentucky market.