CRESTVIEW HILLS, Ky., Jan. 16, 2014 (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 ended December 31, 2013. For the fourth quarter and the year ending December 31, 2013, the Company reported an increase in net income of 15% and 9% respectively compared with the same periods in 2012.
A summary of the Company's results follows:
| Fourth Quarter ended December 31, | 2013 | 2012 | Change |
| Net income | $5,775,000 | $5,010,000 | 15% |
| Earnings per common share, basic | $0.76 | $0.67 | 13% |
| Earnings per common share, diluted | $0.76 | $0.66 | 15% |
| Year ended December 31, | 2013 | 2012 | Change |
| Net income | $19,765,000 | $18,145,000 | 9% |
| Net income per common share, basic | $2.63 | $2.43 | 8% |
| Net income per common share, diluted | $2.61 | $2.41 | 8% |
Robert W. Zapp, President & CEO, commented, "In the wake of achieving record earnings in the third quarter, we finished the year even better, setting another record by exceeding $5.7 million in net income for the fourth quarter and $19.7 million for the year. Several areas contributed to this achievement including record revenue from The Bank's Wealth Advisory Group and revenue from retail banking. In addition, it was encouraging to see momentum on the commercial lending side, particularly since mortgage originations have decreased in recent months. We experienced our greatest loan growth in the fourth quarter and we believe the pipeline will remain robust with opportunities going into 2014. Net loan growth in the fourth quarter, for example, exceeded $48 million, helping push total loans outstanding to a record $1.250 billion." Zapp added, "Charge-offs and non-performing loans continue to decline, resulting in lower allowances and decreased provisioning. The trend of improving credit metrics in 2013 not only helped the company's financial performance, it is also a positive sign going forward for sound growth and economic development in the markets we serve, which benefits everyone."
The increase in net income in the fourth quarter of 2013 was primarily due to an $800,000 (62%) decrease in the provision for loan losses and a $652,000 (12%) increase in non-interest income compared with the fourth quarter of 2012. Contributing to the decrease in the provision for loan losses were lower levels of charge-offs and lower levels of non-performing loans compared with December of 2012. Contributing to the increase in non-interest income were higher service charges on deposits and trust fee income.
Non-interest income increased 12% ($652,000) in the fourth quarter of 2013, compared with the same period in 2012, while non-interest expense decreased 1% ($78,000) from the same period last year. Contributing to the increase in non-interest income was a $460,000 or 20% increase in service charges on deposits, a $105,000 or 14% increase in trust fee income and a $204,000 or 90% decrease in losses on other real estate owned, which was offset by a $529,000 or 76% decrease in gains on the sale of real estate loans. Other non-interest income and other non-interest expense both included $180,000 in revenue and expense related to benefits plans. The revenue reflected an increase in investments related to benefits plans and the expense reflected an offsetting increase in liabilities for the same benefits plans. The $180,000 was $213,000 higher than the figures from the fourth quarter of 2012. Contributing to the 3% ($178,000) decrease in salaries and benefits was lower bonus accruals and fewer employees as compared to the fourth quarter of 2012.
Net interest income decreased $291,000, or 2% in the fourth quarter of 2013, compared with the same period in 2012. The net interest margin, on a tax equivalent basis, decreased 24 basis points from 3.63% in the fourth quarter of 2012 to 3.39% in the fourth quarter of 2013. Contributing to the net interest income in 2012 was a $247,000 loan prepayment fee received in the quarter. This prepayment fee contributed 6 basis points to the net interest margin for the fourth quarter of 2012. Adjusting out the 2012 prepayment fee the net interest income remained relatively unchanged compared with the same period in 2012, decreasing $44,000 from the fourth quarter of 2012. The decrease in the net interest income and the compression of the net interest margin was the result of the yield on earning assets falling faster than the cost of interest bearing liabilities. The yield on earning assets decreased 32 basis points from 3.97% in the fourth quarter of 2012 to 3.65% in the fourth quarter of 2013, while the cost of interest bearing liabilities only decreased 11 basis points from .44% to .33% in the same period. The decrease in the net interest margin was partially offset with an increase in earning assets of $58 million, or 4% on average from the fourth quarter of 2012.
The provision for loan losses decreased by $800,000 (62%) in the fourth quarter of 2013, compared with the same period in 2012. Contributing to this decrease were lower levels of charge-offs compared with the fourth quarter of 2012. The Company's annualized net charge-offs to average loans decreased from .45% in the fourth quarter of 2012 to .27% in the fourth quarter of 2013 while non-performing loans as a percentage of total loans were 1.24% as of December 31, 2013, compared with 1.61% as of December 31, 2012. The Company recorded $826,000 in net charge-offs in the fourth quarter of 2013 compared with $1,317,000 in the fourth quarter of 2012. On a sequential basis, the provision for loan losses of $500,000 in the fourth quarter of 2013 was $100,000 lower than the provision in the third quarter of 2013, while non-performing loans decreased from $16.4 million (1.37% of total loans) at September 30, 2013 to $15.4 million (1.24% of total loans) at December 31, 2013. Net charge-offs on a sequential basis increased from $618,000 (.21% of loans) in the third quarter of 2013 to $826,000 (.27% of loans) in the fourth quarter of 2013. The majority of the charge-offs in the fourth quarter of 2013 were reserved for in previous periods. As a result of improving credit metrics, the Allowance for Loan Losses (ALL) has decreased from 1.39% of loans at the end of the fourth quarter of 2012 to 1.30% of loans at the end of the fourth quarter of 2013. On a sequential basis the ALL decreased from 1.38% at the end of the third quarter of 2013 to 1.30% at the end of the fourth quarter of 2013, as a result of $326,000 decrease in the ALL balance and a $48 million increase in loans outstanding. 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.
Total assets were $1.857 billion at the end of the fourth quarter of 2013, which was $13 million or 1% higher than the same date a year ago. The increase of $54 million (5%) in total loan and $37 million (10%) in investments were offset by a $73 million (48%) decrease in cash and cash equivalents. The decrease in cash and cash equivalents included a $53 million (70%) decrease in fed funds sold. The increase in assets was funded by an increase in deposits of $18 million, or 1%. Total equity increased $10.6 million from the same date in 2012. In September 2012, the Company's Board of Directors voted to change from a semi-annual cash dividend to a quarterly cash dividend, commencing with the fourth quarter of 2012. The change in the dividend frequency resulted in cash dividends decreasing from $.79 per share in 2012 to $.69 per share in 2013 on a year to date basis. Cash dividends declared in the fourth quarter increased $.01 (6%) to $.18 per share as compared to $.17 per share in the fourth quarter of 2012.
| The Bank of Kentucky Financial Corporation | ||||||
| Selected Consolidated Financial Data | ||||||
| (Dollars in thousands, except per share data) | ||||||
| Fourth Quarter Comparison | Year ended December 31, Comparison | |||||
| Income Statement Data | 12/31/13 | 12/31/12 | % Chg | 12/31/13 | 12/31/12 | % Chg |
| Interest income | $15,132 | $15,742 | (4)% | $59,912 | $62,524 | (4)% |
| Interest expense | 1,091 | 1,410 | (23)% | 4,658 | 6,339 | (27)% |
| Net interest income | 14,041 | 14,332 | (2)% | 55,254 | 56,185 | (2)% |
| Provision for loan losses | 500 | 1,300 | (62)% | 4,700 | 7,000 | (33)% |
| Net interest income after provision for loan losses | 13,541 | 13,032 | 4% | 50,554 | 49,185 | 3% |
| Non interest income | 6,253 | 5,601 | 12% | 24,011 | 22,421 | 7% |
| Non interest expense | 11,592 | 11,670 | (1)% | 46,745 | 46,338 | 1% |
| Net income before income taxes | 8,202 | 6,963 | 18% | 27,820 | 25,268 | 10% |
| Provision for income taxes | 2,427 | 1,953 | 24% | 8,055 | 7,123 | 13% |
| Net income | $5,775 | $5,010 | 15% | $19,765 | $18,145 | 9% |
| Per Common Share Data | ||||||
| Diluted earnings per common share | 0.76 | 0.66 | 15% | 2.61 | 2.41 | 8% |
| Cash dividends declared | 0.18 | 0.17 | 6% | 0.69 | 0.79 | (13)% |
| Earnings Performance Data | ||||||
| Return on common equity | 12.86% | 11.79% | 107bps | 11.39% | 11.08% | 31bps |
| Return on assets | 1.25% | 1.12% | 13bps | 1.10% | 1.05% | 5bps |
| Net interest margin | 3.32% | 3.52% | (20)bps | 3.36% | 3.53% | (17)bps |
| The Bank of Kentucky Financial Corporation | ||
| Selected Consolidated Financial Data | ||
| (Dollars in thousands, except per share data) | ||
| Balance Sheet Data | ||
| December 31, 2013 | December 31, 2012 | |
| Assets: | ||
| Cash and cash equivalents | $78,621 | $151,832 |
| Investments | 418,385 | 381,537 |
| Loans held for sale | 3,214 | 16,324 |
| Total loans, gross | 1,249,645 | 1,195,409 |
| Allowance for loan losses | (16,306) | (16,568) |
| Premises and equipment, net | 22,444 | 22,494 |
| Goodwill and acquisition intangibles, net | 23,871 | 24,485 |
| Other assets and accrued interest receivable | 77,618 | 68,591 |
| Total assets | $1,857,492 | $1,844,104 |
| Liabilities & Shareholders' Equity | ||
| Total deposits | $1,587,585 | $1,570,007 |
| Short-term borrowings | 27,643 | 41,408 |
| Notes payable | 45,577 | 48,715 |
| Accrued interest payable and other liabilities | 15,548 | 13,534 |
| Total liabilities | 1,676,353 | 1,673,664 |
| Common stockholders' equity | 181,139 | 170,440 |
| Total liabilities and shareholders' equity | $1,857,492 | $1,844,104 |
| 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 ) | ||||||
| Quarter ended December 31, 2013 | Quarter ended December 31, 2012 | |||||
| Average | Interest | Average | Interest | |||
| outstanding | earned/ | Yield/ | outstanding | earned/ | Yield/ | |
| balance | paid | rate | balance | paid | rate | |
| Interest-earning assets: | ||||||
| Loans receivable (1)(2) | $1,218,140 | $13,344 | 4.35% | $1,175,879 | $14,365 | 4.86% |
| Securities (2) | 404,687 | 2,013 | 1.97 | 373,008 | 1,728 | 1.84 |
| Other interest-earning assets | 55,521 | 88 | 0.63 | 71,139 | 92 | 0.51 |
| Total interest-earning assets | 1,678,348 | 15,445 | 3.65 | 1,620,026 | 16,185 | 3.97 |
| Non-interest-earning assets | 161,014 | 152,740 | ||||
| Total assets | $1,839,362 | $1,772,766 | ||||
| Interest-bearing liabilities: | ||||||
| Transaction accounts | 911,075 | 368 | 0.16 | 848,302 | 432 | 0.20 |
| Time deposits | 304,380 | 472 | 0.62 | 358,936 | 720 | 0.80 |
| Borrowings | 78,197 | 251 | 1.27 | 72,193 | 258 | 1.42 |
| Total interest-bearing liabilities | 1,293,652 | 1,091 | 0.33 | 1,279,431 | 1,410 | 0.44 |
| Non-interest-bearing liabilities | 367,515 | 324,304 | ||||
| Total liabilities | 1,661,106 | 1,603,735 | ||||
| Shareholders' equity | 178,195 | 169,031 | ||||
| Total liabilities and shareholders' equity | $1,839,362 | $1,772,766 | ||||
| Net interest income | $14,354 | $14,775 | ||||
| Interest rate spread | 3.32% | 3.53% | ||||
| Net interest margin (net interest income as a percent of average interest-earning assets) | 3.39% | 3.63% | ||||
| (1) | Includes non-accrual loans. |
| (2) | Income presented on a tax equivalent basis using a 35.00% tax rate in 2013 and 2012. The tax equivalent adjustment was $314,000 and $443,000 in 2013 and 2012, 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 ) | ||||||
| Year ended December 31,2013 | Year ended December 31, 2012 | |||||
| Average | Interest | Average | Interest | |||
| outstanding | earned/ | Yield/ | outstanding | earned/ | Yield/ | |
| balance | paid | rate | balance | paid | rate | |
| Interest-earning assets: | ||||||
| Loans receivable (1)(2) | $1,200,866 | $53,570 | 4.46% | $1,151,139 | $56,196 | 4.88% |
| Securities (2) | 388,878 | 7,253 | 1.87 | 373,029 | 7,412 | 1.99 |
| Other interest-earning assets | 54,235 | 335 | 0.62 | 65,716 | 334 | 0.51 |
| Total interest-earning assets | 1,643,979 | 61,158 | 3.72 | 1,589,884 | 63,942 | 4.02 |
| Non-interest-earning assets | 159,153 | 149,211 | ||||
| Total assets | $1,803,132 | $1,739,095 | ||||
| Interest-bearing liabilities: | ||||||
| Transaction accounts | 883,525 | 1,449 | 0.16 | 819,915 | 1,552 | 0.21 |
| Time deposits | 326,427 | 2,215 | 0.68 | 378,111 | 3,728 | 0.93 |
| Borrowings | 77,352 | 994 | 1.29 | 74,786 | 1,059 | 1.42 |
| Total interest-bearing liabilities | 1,287,304 | 4,658 | 0.36 | 1,272,812 | 6,339 | 0.50 |
| Non-interest-bearing liabilities | 342,272 | 302,520 | ||||
| Total liabilities | 1,629,576 | 1,575,332 | ||||
| Shareholders' equity | 173,556 | 163,763 | ||||
| Total liabilities and shareholders' equity | $1,803,132 | $1,739,095 | ||||
| Net interest income | $56,500 | $57,603 | ||||
| Interest rate spread | 3.36% | 3.52% | ||||
| Net interest margin (net interest income as a percent of average interest-earning assets) | 3.44% | 3.62% | ||||
| (1) | Includes non-accrual loans. |
| (2) | Income presented on a tax equivalent basis using a 35.00% tax rate in 2013 and 2012. The tax equivalent adjustment was $1,246,000 and $1,418,000 in 2013 and 2012, respectively. |
| The Bank of Kentucky Financial Corporation | |||||
| Selected Consolidated Financial Data | |||||
| (Dollars in thousands, except per share data) | |||||
| Five-Quarter Comparison | |||||
| Income Statement Data | 12/31/13 | 9/30/13 | 6/30/13 | 3/31/13 | 12/31/12 |
| Net interest income | $14,041 | $13,922 | $13,708 | $13,583 | $14,332 |
| Provision for loan losses | 500 | 600 | 1,600 | 2,000 | 1,300 |
| Net interest income after provision for loan losses | 13,541 | 13,322 | 12,108 | 11,583 | 13,032 |
| Service charges and fees | 2,782 | 2,829 | 2,581 | 2,131 | 2,322 |
| Gain on sale of real estate loans | 165 | 282 | 672 | 539 | 694 |
| Gain on sale of securities | -- | -- | -- | 274 | -- |
| Trust fee income | 854 | 846 | 850 | 852 | 749 |
| Bankcard transaction revenue | 1,008 | 1,012 | 1,044 | 957 | 971 |
| Gains/(losses) on other real estate owned | (22) | (201) | (308) | (4) | (226) |
| Other non-interest income | 1,466 | 1,288 | 1,001 | 1,113 | 1,091 |
| Total non-interest income | 6,253 | 6,056 | 5,840 | 5,862 | 5,601 |
| Salaries and employee benefits expense | 5,691 | 5,969 | 5,988 | 5,913 | 5,869 |
| Occupancy and equipment expense | 1,330 | 1,366 | 1,315 | 1,306 | 1,341 |
| Data processing expense | 551 | 533 | 537 | 550 | 618 |
| State bank taxes | 584 | 615 | 615 | 575 | 554 |
| Other real estate owned and loan collection | 389 | 455 | 444 | 244 | 324 |
| Amortization of intangible assets | 148 | 151 | 157 | 159 | 183 |
| FDIC Insurance | 376 | 317 | 335 | 295 | 296 |
| Other non-interest expenses | 2,523 | 2,313 | 2,274 | 2,727 | 2,485 |
| Total non-interest expense | 11,592 | 11,719 | 11,665 | 11,769 | 11,670 |
| Net income before income tax expense | 8,202 | 7,659 | 6,283 | 5,676 | 6,963 |
| Income tax expense | 2,427 | 2,244 | 1,798 | 1,586 | 1,953 |
| Net income | $5,775 | $5,415 | $4,485 | $4,090 | $5,010 |
| Per Common Share Data | |||||
| Diluted earnings per common share | 0.76 | 0.72 | 0.59 | 0.54 | 0.66 |
| Cash dividends declared | 0.18 | 0.17 | 0.17 | 0.17 | 0.17 |
| Weighted average common shares outstanding | |||||
| Basic | 7,565,121 | 7,516,770 | 7,491,619 | 7,478,901 | 7,470,146 |
| Diluted | 7,611,879 | 7,549,530 | 7,564,121 | 7,583,544 | 7,557,777 |
| Earnings Performance Data | |||||
| Return on common equity | 12.86% | 12.44% | 10.48% | 9.66% | 11.79% |
| Return on assets | 1.25% | 1.21% | 1.00% | 0.92% | 1.12% |
| Net interest margin | 3.32% | 3.42% | 3.38% | 3.32% | 3.52% |
| Net interest margin (tax equivalent) | 3.39% | 3.50% | 3.46% | 3.40% | 3.63% |
| The Bank of Kentucky Financial Corporation | |||||
| Selected Consolidated Financial Data | |||||
| (Dollars in thousands, except per share data) | |||||
| Five-Quarter Comparison | |||||
| Balance Sheet Data | 12/31/13 | 9/30/13 | 6/30/13 | 3/31/13 | 12/31/12 |
| Assets: | |||||
| Cash and cash equivalents | $78,621 | $102,448 | $80,941 | $138,561 | $151,832 |
| Investments | 418,385 | 389,179 | 384,653 | 376,704 | 381,537 |
| Loans held for sale | 3,214 | 2,435 | 9,909 | 14,038 | 16,324 |
| Total loans | 1,249,645 | 1,201,193 | 1,185,449 | 1,187,742 | 1,195,409 |
| Allowance for loan losses | (16,306) | (16,632) | (16,650) | (16,641) | (16,568) |
| Premises and equipment, net | 22,444 | 22,517 | 22,560 | 22,559 | 22,494 |
| Goodwill and acquisition intangibles, net | 23,871 | 24,018 | 24,169 | 24,325 | 24,485 |
| Other assets & accrued interest receivable | 77,618 | 77,066 | 74,859 | 73,223 | 68,591 |
| Total assets | $1,857,492 | $1,802,224 | $1,765,890 | $1,820,511 | $1,844,104 |
| Liabilities & Shareholders' Equity: | |||||
| Total deposits | $1,587,585 | $1,529,505 | $1,504,829 | $1,558,933 | $1,570,007 |
| Short-term borrowings | 27,643 | 32,167 | 26,934 | 28,309 | 41,408 |
| Notes payable | 45,577 | 50,695 | 50,702 | 48,709 | 48,715 |
| Accrued interest payable & other liabilities | 15,548 | 14,606 | 13,196 | 11,604 | 13,534 |
| Total liabilities | 1,676,353 | 1,626,973 | 1,595,661 | 1,647,555 | 1,673,664 |
| Shareholders' equity | 181,139 | 175,251 | 170,229 | 172,956 | 170,440 |
| Total liabilities and shareholders' equity | $1,857,492 | $1,802,224 | $1,765,890 | $1,820,511 | $1,844,104 |
| Common shares outstanding | 7,619,999 | 7,528,618 | 7,498,014 | 7,482,776 | 7,470,236 |
| Average Balance Sheet Data | |||||
| Average investments | $404,687 | $386,644 | $387,526 | $376,370 | $373,008 |
| Average other earning assets | 55,521 | 29,039 | 46,886 | 86,110 | 71,139 |
| Average loans | 1,218,140 | 1,199,824 | 1,190,590 | 1,194,657 | 1,175,879 |
| Average earning assets | 1,678,348 | 1,615,507 | 1,625,002 | 1,657,137 | 1,620,026 |
| Average assets | 1,839,242 | 1,771,491 | 1,790,043 | 1,811,675 | 1,772,766 |
| Average deposits | 1,568,764 | 1,506,101 | 1,529,159 | 1,551,953 | 1,518,557 |
| Average interest bearing deposits | 1,215,455 | 1,164,947 | 1,215,858 | 1,244,360 | 1,207,238 |
| Average interest bearing transaction deposits | 911,075 | 848,512 | 882,084 | 892,609 | 848,302 |
| Average interest bearing time deposits | 304,380 | 316,435 | 333,774 | 351,751 | 358,936 |
| Average borrowings | 78,197 | 80,733 | 74,927 | 75,375 | 72,193 |
| Average interest bearing liabilities | 1,293,652 | 1,248,680 | 1,290,785 | 1,319,735 | 1,279,431 |
| Average common stockholders equity | 178,135 | 172,740 | 171,593 | 171,698 | 169,031 |
| The Bank of Kentucky Financial Corporation | |||||
| Selected Consolidated Financial Data | |||||
| (Dollars in thousands, except per share data) | |||||
| Five-Quarter Comparison | |||||
| Asset Quality Data | 12/31/13 | 9/30/13 | 6/30/13 | 3/31/13 | 12/31/12 |
| Allowance for loan losses to total loans | 1.30% | 1.38% | 1.40% | 1.40% | 1.39% |
| Allowance for loan losses to non-performing loans | 106% | 101% | 88% | 76% | 86% |
| Nonaccrual loans | $15,417 | $16,197 | $18,934 | $21,771 | $19,244 |
| Loans – 90 days past due & still accruing | 21 | 207 | 11 | 36 | 39 |
| Total non-performing loans | 15,438 | 16,404 | 18,945 | 21,807 | 19,283 |
| OREO and repossessed assets | 5,305 | 6,141 | 5,207 | 5,454 | 5,396 |
| Total non-performing assets | 20,743 | 22,545 | 24,152 | 27,261 | 24,679 |
| Restructured loans-accruing | 8,816 | 7,109 | 7,204 | 7,499 | 6,046 |
| Non-performing loans to total loans | 1.24% | 1.37% | 1.60% | 1.84% | 1.61% |
| Non-performing assets to total assets | 1.12% | 1.26% | 1.38% | 1.50% | 1.34% |
| Annualized charge-offs to average loans | 0.27% | 0.21% | 0.54% | 0.66% | 0.45% |
| Net charge-offs | $826 | $618 | $1,591 | $1,927 | $1,317 |
| Other Information | |||||
| Total assets under management (in millions) | 836 | 766 | 747 | 744 | 714 |
| Full-time equivalent employees | 346 | 351 | 361 | 364 | 365 |
About BKFC
BKFC, a bank holding company with assets of approximately $1.857 billion, offers banking and related financial services to both individuals and business customers. BKFC operates thirty-two branch locations and fifty-six ATMs in the Northern Kentucky market.