CRESTVIEW HILLS, Ky., Oct. 18, 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 third quarter and nine months ended September 30, 2012. For the third quarter, the Company reported an increase in diluted earnings per common share of 4% from the same period in 2011.
A summary of the Company's results follows:
| Third Quarter ended September 30, | 2012 | 2011 | Change |
| Net income | $4,196,000 | $4,274,000 | (2)% |
| Net income available to common shareholders | $4,196,000 | $4,013,000 | 5% |
| Earnings per common share, basic | $0.56 | $0.54 | 4% |
| Earnings per common share, diluted | $0.56 | $0.54 | 4% |
| Nine Months ended September 30, | 2012 | 2011 | Change |
| Net income | $13,135,000 | $11,580,000 | 13% |
| Net income available to common shareholders | $13,135,000 | $10,803,000 | 22% |
| Net income per common share, basic | $1.76 | $1.45 | 21% |
| Net income per common share, diluted | $1.74 | $1.45 | 20% |
Robert Zapp, President & CEO, stated, "The positive trends we have seen in lending over the past several months continued into the third quarter of 2012, with most of the growth coming in the past few months. In addition, increased mortgage volume at a time when interest rates were at historic lows helped to increase fee revenue for the quarter. Although slow moving, we are experiencing a steady climb in borrowing among businesses and consumers and are active in helping local businesses obtain credit of any size. We continue to grow organically and have focused on expanding existing customer relationships by selling investment services and additional bank products and services. The Bank has further established itself in the region by capturing additional market share and maintaining our position as the largest bank in Northern Kentucky with 23% of total deposits. Overall, The Bank continues to execute its strategy and looks forward to future success."
The increase in earnings available to common shareholders in the third quarter of 2012 was primarily attributable to a $350,000 (14%) decrease in the provision for loan losses and a $261,000 (100%) decrease in preferred stock dividends and amortization as compared to the third 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 a 10% increase in noninterest expense. The decrease in the provision for loan losses reflected lower levels of impaired loan reserves, lower levels of nonperforming loans and lower levels of adversely classified loans as compared to September 2011. 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 decreased $114,000 in the third 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 3.83% in the third quarter of 2011 to 3.64% in the third quarter of 2012. Contributing to the decrease in the net interest margin was the mix of the growth in earning assets. Of the $71 million growth in average earning assets from the third quarter of 2011 to third quarter of 2012, $46 million or 65% of the growth was attributed to the Bank's securities portfolio, which generally has lower yields than loans.
The provision for loan losses decreased by $350,000 (14%) in the third quarter of 2012, as compared to the same period in 2011. Contributing to this decrease were lower levels of impaired loan reserves, non-performing and adversely classified loans as compared to September 2011. The Company's non-performing loans as a percentage of total loans were 1.29% as of September 30, 2012, as compared to 1.43% as of September 30, 2011, while annualized net charge-offs to average loans increased from .86% in the third quarter of 2011 to 1.39% in the third quarter of 2012. The Company recorded $3,961,000 in net charge-offs in the third quarter of 2012 as compared to $2,425,000 in the third quarter of 2011. The majority of the loans charged off in the third quarter of 2012 were reserved for in prior quarters. On a sequential basis, the provision for loan losses of $2,200,000 in the third quarter of 2012 was $500,000 higher than the provision in the second quarter of 2012, while non-performing loans decreased from $16.5 million (1.44% of total loans) at June 30, 2012 to $14.9 million (1.29% of total loans) at September 30, 2012. Net charge-offs on a sequential basis increased from $1,716,000 (0.61% of loans) in the second quarter of 2012 to $3,961,000 (1.39% of loans) in the third quarter of 2012. The allowance for loan losses (ALL) as of September 30, 2012 decreased $1,761,000 from June 2012. The decrease in the ALL is primarily the result of the loans that were charged off in the third quarter of 2012 that were reserved for in previous quarters. The reserve for impaired loans was $6,254,000 at September 30, 2012, which was $1,261,000 lower than the $7,515,000 at June 30, 2012 and $1,508,000 lower than the $7,762,000 at September 30, 2011. As a result, the ALL has decreased from 1.60% of loans at the end of the second quarter of 2012 to 1.43% of loans at the end of the third 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 1.23% as of September 30, 2012, as compared to 1.11% as of September 30, 2011. Non-performing loans decreased $1,091,000 from September 2011 to September 2012 and other real estate owned increased $4,298,000 in the same time period. On a sequential quarterly basis, other real estate owned increased $242,000 from June 2012. The increase in other real estate owned from September 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 11% ($564,000) in the third quarter of 2012, as compared to the same period in 2011, while non-interest expense increased 10% ($1,072,000) from the same period last year. Contributing to the increase in non-interest income was a $214,000 or a 30% increase in the gains on sale of real estate loans. These gains were driven by the low current interest rates, which has prompted increased demand for home mortgage loan refinancing. Contributing to the increase in non-interest expense was a $558,000 (10%) increase in salaries and benefits expense. The increase in salaries and benefits included $181,000 in higher commission expense. The increase in commission expense included higher commissions paid based on higher real estate loan originations.
Total assets were $1.722 billion at the end of the third quarter of 2012, which was $98 million or 6% higher than the same date a year ago. Total loans increased $40 million (4%), investments in securities increased $21 million (6%) and cash and cash equivalents increased $14 million (21%) from September of 2011. The balance sheet increases were funded by an increase in deposits of $102 million, or 7%. Total equity decreased $1.7 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) | ||||||
| Third Quarter Comparison | Nine months ended September 30, Comparison | |||||
| Income Statement Data | 9/30/12 | 9/30/11 | % Chg | 9/30/12 | 9/30/11 | % Chg |
| Interest income | $15,433 | $16,280 | (5)% | $46,782 | $48,702 | (4)% |
| Interest expense | 1,471 | 2,204 | (33)% | 4,929 | 7,251 | (32)% |
| Net interest income | 13,962 | 14,076 | (1)% | 41,853 | 41,451 | 1% |
| Provision for loan losses | 2,200 | 2,550 | (14)% | 5,700 | 8,550 | (33)% |
| Net interest income after provision for loan losses | 11,762 | 11,526 | 2% | 36,153 | 32,901 | 10% |
| Non interest income | 5,861 | 5,297 | 11% | 16,820 | 15,194 | 11% |
| Non interest expense | 11,799 | 10,727 | 10% | 34,668 | 31,711 | 9% |
| Net income before income taxes | 5,824 | 6,096 | (4)% | 18,305 | 16,384 | 12% |
| Provision for income taxes | 1,628 | 1,822 | (11)% | 5,170 | 4,804 | 8% |
| Net income | 4,196 | 4,274 | (2)% | 13,135 | 11,580 | 13% |
| Preferred stock dividends & amortization | -- | 261 | (100)% | -- | 777 | (100)% |
| Net income available to common shareholders | $4,196 | $4,013 | 5% | $13,135 | $10,803 | 22% |
| Per Common Share Data | ||||||
| Diluted earnings per common share | 0.56 | 0.54 | 4% | 1.74 | 1.45 | 20% |
| Cash dividends declared | 0.32 | 0.28 | 14% | 0.62 | 0.56 | 11% |
| Earnings Performance Data | ||||||
| Return on common equity | 10.05% | 10.51% | (46)bps | 10.83% | 9.78% | 105bps |
| Return on assets | 0.98% | 1.05% | (7)bps | 1.02% | 0.95% | 7bps |
| Net interest margin | 3.56% | 3.76% | (20)bps | 3.54% | 3.69% | (15)bps |
| The Bank of Kentucky Financial Corporation | ||
| Selected Consolidated Financial Data | ||
| (Dollars in thousands, except per share data) | ||
| Balance Sheet Data | ||
| September 30, 2012 | December 31, 2011 | |
| Assets: | ||
| Cash and cash equivalents | $81,950 | $135,964 |
| Investments | 361,108 | 371,737 |
| Loans held for sale | 19,314 | 8,920 |
| Total loans, gross | 1,159,074 | 1,129,954 |
| Allowance for loan losses | (16,585) | (18,288) |
| Premises and equipment, net | 22,714 | 22,827 |
| Goodwill and acquisition intangibles, net | 24,668 | 25,251 |
| Other assets and accrued interest receivable | 69,711 | 68,359 |
| Total assets | $1,721,954 | $1,744,724 |
| Liabilities & Shareholders' Equity | ||
| Total deposits | $1,471,246 | $1,498,821 |
| Short-term borrowings | 22,142 | 29,300 |
| Notes payable | 48,721 | 48,739 |
| Accrued interest payable and other liabilities | 12,224 | 11,294 |
| Total liabilities | 1,554,333 | 1,588,154 |
| Common stockholders' equity | 167,621 | 156,570 |
| Total liabilities and shareholders' equity | $1,721,954 | $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 September 30, 2012 | Three Months ended September 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) | $1,158,072 | $13,926 | 4.78% | $1,126,118 | $14,652 | 5.16% |
| Securities (2) | 369,707 | 1,763 | 1.90 | 324,144 | 1,881 | 2.30 |
| Other interest-earning assets | 32,781 | 71 | 0.86 | 39,721 | 69 | 0.69 |
| Total interest-earning assets | 1,560,560 | 15,760 | 4.02 | 1,489,983 | 16,602 | 4.42 |
| Non-interest-earning assets | 147,283 | 133,736 | ||||
| Total assets | $1,707,843 | $1,623,719 | ||||
| Interest-bearing liabilities: | ||||||
| Transaction accounts | 796,346 | 280 | 0.14 | 711,046 | 524 | 0.29 |
| Time deposits | 369,327 | 934 | 1.01 | 411,193 | 1,430 | 1.38 |
| Borrowings | 70,445 | 257 | 1.45 | 72,421 | 250 | 1.37 |
| Total interest-bearing liabilities | 1,236,118 | 1,471 | 0.47 | 1,194,660 | 2,204 | 0.73 |
| Non-interest-bearing liabilities | 305,689 | 261,219 | ||||
| Total liabilities | 1,541,807 | 1,455,879 | ||||
| Shareholders' equity | 166,036 | 167,840 | ||||
| Total liabilities and shareholders' equity | $1,707,843 | $1,623,719 | ||||
| Net interest income | $14,289 | $14,398 | ||||
| Interest rate spread | 3.55% | 3.69% | ||||
| Net interest margin (net interest income as a percent of average interest-earning assets) | 3.64% | 3.83% | ||||
| (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 $322,000 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 ) | ||||||
| Nine Months ended September 30, 2012 | Nine Months ended September 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) | $1,142,833 | $41,832 | 4.89% | $1,118,185 | $43,886 | 5.25% |
| Securities (2) | 373,036 | 5,684 | 2.04 | 315,364 | 5,454 | 2.31 |
| Other interest-earning assets | 63,895 | 242 | 0.51 | 69,341 | 291 | 0.56 |
| Total interest-earning assets | 1,579,764 | 47,758 | 4.04 | 1,502,890 | 49,631 | 4.40 |
| Non-interest-earning assets | 148,025 | 132,355 | ||||
| Total assets | $1,727,789 | $1,635,245 | ||||
| Interest-bearing liabilities: | ||||||
| Transaction accounts | 810,382 | 1,175 | 0.19 | 720,339 | 1,708 | 0.32 |
| Time deposits | 384,549 | 2,953 | 1.03 | 424,428 | 4,785 | 1.51 |
| Borrowings | 75,657 | 801 | 1.41 | 72,879 | 758 | 1.39 |
| Total interest-bearing liabilities | 1,270,588 | 4,929 | 0.52 | 1,217,646 | 7,251 | 0.80 |
| Non-interest-bearing liabilities | 295,194 | 252,033 | ||||
| Total liabilities | 1,565,782 | 1,469,679 | ||||
| Shareholders' equity | 162,007 | 165,566 | ||||
| Total liabilities and shareholders' equity | $1,727,789 | $1,635,245 | ||||
| Net interest income | $42,829 | $42,380 | ||||
| Interest rate spread | 3.52% | 3.60% | ||||
| Net interest margin (net interest income as a percent of average interest-earning assets) | 3.62% | 3.77% | ||||
| (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 $976,000 and $929,000 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 | 9/30/12 | 6/30/12 | 3/31/12 | 12/31/11 | 9/30/11 |
| Net interest income | $13,962 | $14,047 | $13,844 | $14,087 | $14,076 |
| Provision for loan losses | 2,200 | 1,700 | 1,800 | 2,200 | 2,550 |
| Net interest income after provision for loan losses | 11,762 | 12,347 | 12,044 | 11,887 | 11,526 |
| Service charges and fees | 2,325 | 2,241 | 2,201 | 2,390 | 2,470 |
| Gain on sale of real estate loans | 917 | 589 | 586 | 580 | 703 |
| Gain/(loss) on sale of securities | -- | (4) | 207 | -- | -- |
| Trust fee income | 710 | 694 | 689 | 625 | 630 |
| Bankcard transaction revenue | 940 | 952 | 902 | 885 | 849 |
| Gains/(losses) on other real estate owned | (67) | (40) | (94) | (85) | (98) |
| Other non-interest income | 1,036 | 921 | 1,115 | 1,135 | 743 |
| Total non-interest income | 5,861 | 5,353 | 5,606 | 5,530 | 5,297 |
| Salaries and employee benefits expense | 5,909 | 5,724 | 5,451 | 5,044 | 5,351 |
| Occupancy and equipment expense | 1,316 | 1,315 | 1,277 | 1,192 | 1,216 |
| Data processing expense | 505 | 533 | 535 | 522 | 500 |
| State bank taxes | 579 | 579 | 559 | 415 | 550 |
| Amortization of intangible assets | 187 | 196 | 200 | 220 | 202 |
| FDIC Insurance | 267 | 295 | 305 | 305 | 269 |
| Other non-interest expenses | 3,036 | 2,885 | 3,015 | 2,705 | 2,639 |
| Total non-interest expense | 11,799 | 11,527 | 11,342 | 10,403 | 10,727 |
| Net income before income tax expense | 5,824 | 6,173 | 6,308 | 7,014 | 6,096 |
| Income tax expense | 1,628 | 1,749 | 1,793 | 2,105 | 1,822 |
| Net income | 4,196 | 4,424 | 4,515 | 4,909 | 4,274 |
| Preferred stock dividends & amortization | -- | -- | -- | 195 | 261 |
| Net income available to common shareholders | $4,196 | $4,424 | $4,515 | $4,714 | $4,013 |
| Per Common Share Data | |||||
| Diluted earnings per common share | 0.56 | 0.59 | 0.60 | 0.63 | 0.54 |
| Cash dividends declared | 0.32 | 0.00 | 0.30 | 0.00 | 0.28 |
| Weighted average common shares outstanding | |||||
| Basic | 7,465,926 | 7,465,434 | 7,448,604 | 7,432,995 | 7,432,995 |
| Diluted | 7,554,271 | 7,542,372 | 7,520,062 | 7,465,606 | 7,488,743 |
| Earnings Performance Data | |||||
| Return on common equity | 10.05% | 10.99% | 11.49% | 12.21% | 10.51% |
| Return on assets | 0.98% | 1.03% | 1.04% | 1.13% | 1.05% |
| Net interest margin | 3.56% | 3.57% | 3.49% | 3.55% | 3.76% |
| Net interest margin (tax equivalent) | 3.64% | 3.65% | 3.57% | 3.63% | 3.83% |
| The Bank of Kentucky Financial Corporation | |||||
| Selected Consolidated Financial Data | |||||
| (Dollars in thousands, except per share data) | |||||
| Five-Quarter Comparison | |||||
| Balance Sheet Data | 9/30/12 | 6/30/12 | 3/31/12 | 12/31/11 | 9/30/11 |
| Assets: | |||||
| Cash and cash equivalents | $81,950 | $66,719 | $133,153 | $135,964 | $67,657 |
| Investments | 361,108 | 376,454 | 374,336 | 371,737 | 339,780 |
| Loans held for sale | 19,314 | 13,983 | 10,863 | 8,920 | 6,612 |
| Total loans | 1,159,074 | 1,143,733 | 1,130,200 | 1,129,954 | 1,118,630 |
| Allowance for loan losses | (16,585) | (18,346) | (18,362) | (18,288) | (17,941) |
| Premises and equipment, net | 22,714 | 22,923 | 23,159 | 22,827 | 22,653 |
| Goodwill and acquisition intangibles, net | 24,668 | 24,856 | 25,051 | 25,251 | 24,826 |
| Other assets & accrued interest receivable | 69,711 | 73,543 | 74,381 | 68,359 | 62,182 |
| Total assets | $1,721,954 | $1,703,865 | $1,752,781 | $1,744,724 | $1,624,399 |
| Liabilities & Shareholders' Equity | |||||
| Total deposits | $1,471,246 | $1,455,328 | $1,505,709 | $1,498,821 | $1,369,215 |
| Short-term borrowings | 22,142 | 24,373 | 29,334 | 29,300 | 26,248 |
| Notes payable | 48,721 | 48,727 | 48,733 | 48,739 | 48,745 |
| Accrued interest payable & other liabilities | 12,224 | 10,987 | 9,531 | 11,294 | 10,905 |
| Total liabilities | 1,554,333 | 1,539,415 | 1,593,307 | 1,588,154 | 1,455,113 |
| Common stockholders' equity | 167,621 | 164,450 | 159,474 | 156,570 | 152,356 |
| Preferred stock | -- | -- | -- | -- | 16,930 |
| Shareholders' equity | 167,621 | 164,450 | 159,474 | 156,570 | 169,286 |
| Total liabilities and shareholders' equity | $1,721,954 | $1,703,865 | $1,752,781 | $1,744,724 | $1,624,399 |
| Common shares outstanding | 7,467,396 | 7,465,841 | 7,464,811 | 7,432,995 | 7,432,995 |
| Average Balance Sheet Data | |||||
| Average investments | $369,707 | $375,245 | $374,027 | $360,265 | $324,144 |
| Average other earning assets | 32,781 | 70,648 | 88,597 | 76,258 | 39,721 |
| Average loans | 1,158,072 | 1,136,894 | 1,133,367 | 1,139,767 | 1,126,118 |
| Average earning assets | 1,560,560 | 1,582,787 | 1,595,991 | 1,576,290 | 1,489,983 |
| Average assets | 1,707,843 | 1,730,575 | 1,745,169 | 1,717,816 | 1,623,719 |
| Average deposits | 1,459,593 | 1,482,222 | 1,494,332 | 1,464,550 | 1,372,244 |
| Average interest bearing deposits | 1,165,673 | 1,194,699 | 1,224,743 | 1,190,716 | 1,122,239 |
| Average interest bearing transaction deposits | 796,346 | 813,312 | 821,643 | 783,753 | 711,046 |
| Average interest bearing time deposits | 369,327 | 381,387 | 403,100 | 406,963 | 411,193 |
| Average borrowings | 70,445 | 75,789 | 80,798 | 77,832 | 72,421 |
| Average interest bearing liabilities | 1,236,118 | 1,270,488 | 1,305,541 | 1,268,548 | 1,194,660 |
| Average common stockholders equity | 166,036 | 161,962 | 158,022 | 153,175 | 150,934 |
| Average preferred stock | -- | -- | -- | 9,753 | 16,906 |
| The Bank of Kentucky Financial Corporation | |||||
| Selected Consolidated Financial Data | |||||
| (Dollars in thousands, except per share data) | |||||
| Five-Quarter Comparison | |||||
| Asset Quality Data | 9/30/12 | 6/30/12 | 3/31/12 | 12/31/11 | 9/30/11 |
| Allowance for loan losses to total loans | 1.43% | 1.60% | 1.62% | 1.62% | 1.60% |
| Allowance for loan losses to non-performing loans | 112% | 111% | 105% | 115% | 112% |
| Nonaccrual loans | $14,813 | $16,265 | $16,779 | $15,651 | $15,964 |
| Loans – 90 days past due & still accruing | 105 | 195 | 680 | 219 | 45 |
| Total non-performing loans | 14,918 | 16,460 | 17,459 | 15,870 | 16,009 |
| OREO and repossessed assets | 6,192 | 5,950 | 6,328 | 5,844 | 1,894 |
| Total non-performing assets | 21,110 | 22,410 | 23,787 | 21,714 | 17,903 |
| Restructured loans-accruing | 12,270 | 15,388 | 15,492 | 13,306 | 13,108 |
| Non-performing loans to total loans | 1.29% | 1.44% | 1.54% | 1.40% | 1.43% |
| Non-performing assets to total assets | 1.23% | 1.32% | 1.36% | 1.25% | 1.11% |
| Annualized charge-offs to average loans | 1.39% | 0.61% | 0.62% | 0.65% | 0.86% |
| Net charge-offs | $3,961 | $1,716 | $1,726 | $1,853 | $2,425 |
| Other Information | |||||
| Total assets under management (in millions) | 715 | 701 | 702 | 667 | 639 |
| Full-time equivalent employees | 370 | 376 | 359 | 356 | 349 |
About BKFC
BKFC, a bank holding company with assets of approximately $1.722 billion, offers banking and related financial services to both individuals and business customers. BKFC operates thirty-three branch locations and fifty-five ATMs in the Northern Kentucky/Cincinnati market.