CRESTVIEW HILLS, Ky., July 17, 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 second quarter ended June 30, 2014. For the second quarter, the Company reported an increase in net income of 13% compared with the same period in 2013.
A summary of the Company's results are as follows:
| Second Quarter ended June 30, | 2014 | 2013 | Change |
| Net income | $5,065,000 | $4,485,000 | 13% |
| Earnings per common share, basic | $0.66 | $0.60 | 10% |
| Earnings per common share, diluted | $0.66 | $0.59 | 12% |
| Six Months ended June 30, | 2014 | 2013 | Change |
| Net income | $9,683,000 | $8,575,000 | 13% |
| Net income per common share, basic | $1.27 | $1.15 | 10% |
| Net income per common share, diluted | $1.26 | $1.13 | 12% |
"Our strong second quarter performance mirrored the first quarter as The Bank increased earnings by 13% from the previous year," commented Robert W. Zapp, President & CEO. "Not only is solid commercial loan growth contributing to the Bank's success, but new relationships have led to opportunities in other areas such as treasury management. Our Wealth Advisory Group and their team of investment specialists continue to partner closely with our retail branch personnel, expanding relationships and reaching new clients, which resulted in another record quarter for this business unit. Zapp added, "As we begin the second half of the year, I feel we are well positioned in the markets we serve to grow organically and leverage our talent, technologies and relationships to meet our goals".
The increase in net income in the second quarter of 2014 was primarily due to a $600,000 (38%) decrease in the provision for loan losses and a $454,000 (8%) increase in non-interest income compared with the second quarter of 2013. 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 June of 2013. Contributing to the increase in non-interest income was a $305,000 gain on the sale of securities.
Non-interest income increased $454,000 or 8% in the second quarter of 2014 compared with the same period in 2013, while non-interest expense increased $483,000 or 4% from the same period last year. Contributing to the increase in non-interest income was a $305,000 or 100% increase in gain on the sale of securities and a $134,000 or 16% increase in trust fee income, which was partially offset by a $424,000 or 63% decrease in gains on the sale of real estate loans. The decrease in gains on the sale of real estate loans was the result of lower refinancing volume due to slightly higher long term rates compared to 2013.
Net interest income increased $273,000, or 2% in the second quarter of 2014, compared with the same period in 2013. The net interest margin, on a tax equivalent basis, decreased eight basis points from 3.46% in the second quarter of 2013 to 3.38% in the second quarter of 2014. The increase in net interest income was the result of a $72.6 million or 4% growth in earning assets compared with the second quarter of 2013. The yield on earning assets decreased 10 basis points from 3.75% in the second quarter of 2013 to 3.65% in the second quarter of 2014, while the cost of interest bearing liabilities decreased two basis points from 0.36% to 0.34% in the same period.
The provision for loan losses decreased by $600,000 (38%) in the second quarter of 2014, compared with the same period in 2013. Contributing to this decrease were lower levels of charge-offs compared with the second quarter of 2013. The Company's annualized net charge-offs to average loans decreased from 0.54% in the second quarter of 2013 to 0.32% in the second quarter of 2014 while non-performing loans as a percentage of total loans were 1.37% as of June 30, 2014, compared with 1.60% as of June 30, 2013. The Company recorded $1,015,000 in net charge-offs in the second quarter of 2014 compared with $1,591,000 in the second quarter of 2013. On a quarterly sequential basis, the provision for loan losses of $1,000,000 in the second quarter of 2014 was $100,000 higher than the provision in the first quarter of 2014, while non-performing loans increased from $15.5 million (1.23% of total loans) at March 31, 2014 to $17.4 million (1.37% of total loans) at June 30, 2014. Net charge-offs on a quarterly sequential basis increased from $857,000 (.27% of loans) in the first quarter of 2014 to $1,015,000 (.32% of loans) in the second quarter of 2014. As a result of improving credit metrics, the Allowance for Loan Losses (ALL) decreased from 1.40% of loans at the end of the second quarter of 2013 to 1.28% of loans at the end of the second quarter of 2014. On a quarterly sequential basis the ALL decreased two basis points from 1.30% at the end of the first quarter of 2014 to 1.28% at the end of the second quarter of 2014. 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 $1.858 billion at the end of the second quarter of 2014, which was $92 million or 5% higher than the end of the second quarter of 2013. The increase of $87 million (7%) in total loans and $16 million (4%) in investments were offset by a $6 million (8%) decrease in cash and cash equivalents. The increase in assets was funded by an increase in deposits of $68 million, or 5%, and an increase in equity of $22 million or 13% from the same date in 2013.
| The Bank of Kentucky Financial Corporation | ||||||
| Selected Consolidated Financial Data | ||||||
| (Dollars in thousands, except per share data) | ||||||
| Second Quarter Comparison | Six months ended June 30, Comparison | |||||
| Income Statement Data | 6/30/14 | 6/30/13 | % Chg | 6/30/14 | 6/30/13 | % Chg |
| Interest income | $15,100 | $14,880 | 1% | $30,029 | $29,746 | 1% |
| Interest expense | 1,119 | 1,172 | (5)% | 2,179 | 2,455 | (11)% |
| Net interest income | 13,981 | 13,708 | 2% | 27,850 | 27,291 | 2% |
| Provision for loan losses | 1,000 | 1,600 | (38)% | 1,900 | 3,600 | (47)% |
| Net interest income after provision for loan losses | 12,981 | 12,108 | 7% | 25,950 | 23,691 | 10% |
| Non interest income | 6,294 | 5,840 | 8% | 11,876 | 11,702 | 1% |
| Non interest expense | 12,148 | 11,665 | 4% | 24,266 | 23,434 | 4% |
| Net income before income taxes | 7,127 | 6,283 | 13% | 13,560 | 11,959 | 13% |
| Provision for income taxes | 2,062 | 1,798 | 15% | 3,877 | 3,384 | 15% |
| Net income | $5,065 | $4,485 | 13% | $9,683 | $8,575 | 13% |
| Per Common Share Data | ||||||
| Diluted earnings per common share | 0.66 | 0.59 | 12% | 1.26 | 1.13 | 12% |
| Cash dividends declared | 0.18 | 0.17 | 6% | 0.36 | 0.34 | 6% |
| Earnings Performance Data | ||||||
| Return on common equity | 10.70% | 10.48% | 22bps | 10.45% | 10.07% | 38bps |
| Return on assets | 1.10% | 1.00% | 10bps | 1.06% | .96% | 10bps |
| Net interest margin | 3.30% | 3.38% | (8)bps | 3.31% | 3.35% | (4)bps |
| The Bank of Kentucky Financial Corporation | ||
| Selected Consolidated Financial Data | ||
| (Dollars in thousands, except per share data) | ||
| Balance Sheet Data | ||
| June 30, 2014 | December 31, 2013 | |
| Assets: | ||
| Cash and cash equivalents | $74,447 | $78,621 |
| Investments | 400,444 | 418,385 |
| Loans held for sale | 4,437 | 3,214 |
| Total loans, gross | 1,272,152 | 1,249,645 |
| Allowance for loan losses | (16,334) | (16,306) |
| Premises and equipment, net | 22,704 | 22,444 |
| Goodwill and acquisition intangibles, net | 23,620 | 23,871 |
| Other assets and accrued interest receivable | 76,317 | 77,618 |
| Total assets | $1,857,787 | $1,857,492 |
| Liabilities & Shareholders' Equity | ||
| Total deposits | $1,572,819 | $1,587,585 |
| Short-term borrowings | 21,012 | 27,643 |
| Notes payable | 55,451 | 45,577 |
| Accrued interest payable and other liabilities | 16,242 | 15,548 |
| Total liabilities | 1,665,524 | 1,676,353 |
| Common stockholders' equity | 192,263 | 181,139 |
| Total liabilities and shareholders' equity | $1,857,787 | $1,857,492 |
| 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 June 30, 2014 | Three Months ended June 30, 2013 | |||||
| Average | Interest | Average | Interest | |||
| outstanding | earned/ | Yield/ | outstanding | earned/ | Yield/ | |
| balance | paid | rate | balance | paid | rate | |
| Interest-earning assets: | ||||||
| Loans receivable (1)(2) | $1,268,370 | $13,356 | 4.22% | $1,190,590 | $13,390 | 4.51% |
| Securities (2) | 403,047 | 2,020 | 2.01 | 387,526 | 1,725 | 1.79 |
| Other interest-earning assets | 26,175 | 62 | 0.95 | 46,886 | 78 | 0.67 |
| Total interest-earning assets | 1,697,592 | 15,438 | 3.65 | 1,625,002 | 15,193 | 3.75 |
| Non-interest-earning assets | 149,684 | 165,041 | ||||
| Total assets | $1,847,276 | $1,790,043 | ||||
| Interest-bearing liabilities: | ||||||
| Transaction accounts | 934,082 | 387 | 0.17 | 882,084 | 355 | 0.16 |
| Time deposits | 300,759 | 482 | 0.64 | 333,774 | 579 | 0.70 |
| Borrowings | 79,455 | 250 | 1.26 | 74,927 | 238 | 1.27 |
| Total interest-bearing liabilities | 1,314,296 | 1,119 | 0.34 | 1,290,785 | 1,172 | 0.36 |
| Non-interest-bearing liabilities | 343,033 | 327,665 | ||||
| Total liabilities | 1,657,329 | 1,618,450 | ||||
| Shareholders' equity | 189,947 | 171,593 | ||||
| Total liabilities and shareholders' equity | $1,847,276 | $1,790,043 | ||||
| Net interest income | $14,319 | $14,021 | ||||
| Interest rate spread | 3.31% | 3.39% | ||||
| Net interest margin (net interest income as a percent of average interest-earning assets) | 3.38% | 3.46% | ||||
| (1) Includes non-accrual loans. |
| (2) Income presented on a tax equivalent basis using a 35.00% tax rate in 2014 and 2013. The tax equivalent adjustment was $337,000 and $313,000 in 2014 and 2013, 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 ) | ||||||
| Six Months ended June 30,2014 | Six Months ended June 30, 2013 | |||||
| Average | Interest | Average | Interest | |||
| outstanding | earned/ | Yield/ | outstanding | earned/ | Yield/ | |
| balance | paid | rate | balance | paid | rate | |
| Interest-earning assets: | ||||||
| Loans receivable (1)(2) | $1,261,997 | $26,478 | 4.23% | $1,192,612 | $26,785 | 4.53% |
| Securities (2) | 407,522 | 4,094 | 2.03 | 381,979 | 3,404 | 1.80 |
| Other interest-earning assets | 28,005 | 129 | 0.93 | 66,390 | 174 | 0.53 |
| Total interest-earning assets | 1,697,524 | 30,701 | 3.65 | 1,640,981 | 30,363 | 3.73 |
| Non-interest-earning assets | 150,559 | 159,819 | ||||
| Total assets | $1,848,083 | $1,800,800 | ||||
| Interest-bearing liabilities: | ||||||
| Transaction accounts | 940,614 | 773 | 0.17 | 887,317 | 754 | 0.17 |
| Time deposits | 299,398 | 920 | 0.62 | 342,714 | 1,224 | 0.72 |
| Borrowings | 76,481 | 486 | 1.28 | 75,149 | 477 | 1.28 |
| Total interest-bearing liabilities | 1,316,493 | 2,179 | 0.33 | 1,305,180 | 2,455 | 0.38 |
| Non-interest-bearing liabilities | 344,674 | 323,975 | ||||
| Total liabilities | 1,661,167 | 1,629,155 | ||||
| Shareholders' equity | 186,916 | 171,645 | ||||
| Total liabilities and shareholders' equity | $1,848,083 | $1,800,800 | ||||
| Net interest income | $28,522 | $27,908 | ||||
| Interest rate spread | 3.32% | 3.35% | ||||
| Net interest margin (net interest income as a percent of average interest-earning assets) | 3.39% | 3.43% | ||||
| (1) Includes non-accrual loans. |
| (2) Income presented on a tax equivalent basis using a 35.00% tax rate in 2014 and 2013. The tax equivalent adjustment was $672,000 and $617,000 in 2014 and 2013, respectively. |
| The Bank of Kentucky Financial Corporation | |||||
| Selected Consolidated Financial Data | |||||
| (Dollars in thousands, except per share data) | |||||
| Five-Quarter Comparison | |||||
| Income Statement Data | 6/30/14 | 3/31/14 | 12/31/13 | 9/30/13 | 6/30/13 |
| Net interest income | $13,981 | $13,869 | $14,041 | $13,922 | $13,708 |
| Provision for loan losses | 1,000 | 900 | 500 | 600 | 1,600 |
| Net interest income after provision for loan losses | 12,981 | 12,969 | 13,541 | 13,322 | 12,108 |
| Service charges and fees | 2,496 | 2,434 | 2,782 | 2,829 | 2,581 |
| Gain on sale of real estate loans | 248 | 165 | 165 | 282 | 672 |
| Gain on sale of securities | 305 | -- | -- | -- | -- |
| Trust fee income | 984 | 941 | 854 | 846 | 850 |
| Bankcard transaction revenue | 1,105 | 999 | 1,008 | 1,012 | 1,044 |
| Gains/(losses) on other real estate owned | (106) | (81) | (22) | (201) | (308) |
| Other non-interest income | 1,262 | 1,124 | 1,466 | 1,288 | 1,001 |
| Total non-interest income | 6,294 | 5,582 | 6,253 | 6,056 | 5,840 |
| Salaries and employee benefits expense | 6,026 | 5,873 | 5,691 | 5,969 | 5,988 |
| Occupancy and equipment expense | 1,404 | 1,435 | 1,330 | 1,366 | 1,315 |
| Data processing expense | 520 | 535 | 551 | 533 | 537 |
| State bank taxes | 642 | 642 | 584 | 615 | 615 |
| Other real estate owned and loan collection | 346 | 342 | 384 | 457 | 350 |
| Amortization of intangible assets | 117 | 133 | 148 | 151 | 157 |
| FDIC Insurance | 595 | 554 | 376 | 317 | 335 |
| Other non-interest expenses | 2,498 | 2,604 | 2,528 | 2,311 | 2,368 |
| Total non-interest expense | 12,148 | 12,118 | 11,592 | 11,719 | 11,665 |
| Net income before income tax expense | 7,127 | 6,433 | 8,202 | 7,659 | 6,283 |
| Income tax expense | 2,062 | 1,815 | 2,427 | 2,244 | 1,798 |
| Net income | $5,065 | $4,618 | $5,775 | $5,415 | $4,485 |
| Per Common Share Data | |||||
| Diluted earnings per common share | 0.66 | 0.60 | 0.76 | 0.72 | 0.59 |
| Cash dividends declared | 0.18 | 0.18 | 0.18 | 0.17 | 0.17 |
| Weighted average common shares outstanding | |||||
| Basic | 7,662,927 | 7,640,872 | 7,565,121 | 7,516,770 | 7,491,619 |
| Diluted | 7,702,231 | 7,687,106 | 7,611,879 | 7,549,530 | 7,564,121 |
| Earnings Performance Data | |||||
| Return on common equity | 10.70% | 10.18% | 12.86% | 12.44% | 10.48% |
| Return on assets | 1.10% | 1.01% | 1.25% | 1.21% | 1.00% |
| Net interest margin | 3.30% | 3.31% | 3.32% | 3.42% | 3.38% |
| Net interest margin (tax equivalent) | 3.38% | 3.39% | 3.39% | 3.50% | 3.46% |
| The Bank of Kentucky Financial Corporation | |||||
| Selected Consolidated Financial Data | |||||
| (Dollars in thousands, except per share data) | |||||
| Balance Sheet Data | 6/30/14 | 3/31/14 | 12/31/13 | 9/30/13 | 6/30/13 |
| Assets: | |||||
| Cash and cash equivalents | $74,447 | $89,102 | $78,621 | $102,448 | $80,941 |
| Investments | 400,444 | 396,733 | 418,385 | 389,179 | 384,653 |
| Loans held for sale | 4,437 | 6,248 | 3,214 | 2,435 | 9,909 |
| Total loans | 1,272,152 | 1,261,863 | 1,249,645 | 1,201,193 | 1,185,449 |
| Allowance for loan losses | (16,334) | (16,349) | (16,306) | (16,632) | (16,650) |
| Premises and equipment, net | 22,704 | 22,845 | 22,444 | 22,517 | 22,560 |
| Goodwill and acquisition intangibles, net | 23,620 | 23,737 | 23,871 | 24,018 | 24,169 |
| Other assets & accrued interest receivable | 76,317 | 75,244 | 77,618 | 77,066 | 74,859 |
| Total assets | $1,857,787 | $1,859,423 | $1,857,492 | $1,802,224 | $1,765,890 |
| Liabilities & Shareholders' Equity: | |||||
| Total deposits | $1,572,819 | $1,584,076 | $1,587,585 | $1,529,505 | $1,504,829 |
| Short-term borrowings | 21,012 | 29,220 | 27,643 | 32,167 | 26,934 |
| Notes payable | 55,451 | 45,515 | 45,577 | 50,695 | 50,702 |
| Accrued interest payable & other liabilities | 16,242 | 13,981 | 15,548 | 14,606 | 13,196 |
| Total liabilities | 1,665,524 | 1,672,792 | 1,676,353 | 1,626,973 | 1,595,661 |
| Shareholders' equity | 192,263 | 186,631 | 181,139 | 175,251 | 170,229 |
| Total liabilities and shareholders' equity | $1,857,787 | $1,859,423 | $1,857,492 | $1,802,224 | $1,765,890 |
| Common shares outstanding | 7,671,045 | 7,649,493 | 7,619,999 | 7,528,618 | 7,498,014 |
| Average Balance Sheet Data | |||||
| Average investments | $403,047 | $412,047 | $404,687 | $386,644 | $387,526 |
| Average other earning assets | 26,175 | 29,854 | 55,521 | 29,039 | 46,886 |
| Average loans | 1,268,370 | 1,255,552 | 1,218,140 | 1,199,824 | 1,190,590 |
| Average earning assets | 1,697,592 | 1,697,453 | 1,678,348 | 1,615,507 | 1,625,002 |
| Average assets | 1,847,276 | 1,856,303 | 1,839,242 | 1,771,491 | 1,790,043 |
| Average deposits | 1,564,626 | 1,576,944 | 1,568,764 | 1,506,101 | 1,529,159 |
| Average interest bearing deposits | 1,234,841 | 1,245,241 | 1,215,455 | 1,164,947 | 1,215,858 |
| Average interest bearing transaction deposits | 934,082 | 947,221 | 911,075 | 848,512 | 882,084 |
| Average interest bearing time deposits | 300,759 | 298,020 | 304,380 | 316,435 | 333,774 |
| Average borrowings | 79,455 | 73,529 | 78,197 | 80,733 | 74,927 |
| Average interest bearing liabilities | 1,314,296 | 1,318,770 | 1,293,652 | 1,248,680 | 1,290,785 |
| Average common stockholders equity | 189,947 | 183,885 | 178,135 | 172,740 | 171,593 |
| The Bank of Kentucky Financial Corporation | |||||
| Selected Consolidated Financial Data | |||||
| (Dollars in thousands, except per share data) | |||||
| Five-Quarter Comparison | |||||
| Asset Quality Data | 6/30/2014 | 3/31/2014 | 12/31/2013 | 9/30/2013 | 6/30/2013 |
| Allowance for loan losses to total loans | 1.28% | 1.30% | 1.30% | 1.38% | 1.40% |
| Allowance for loan losses to non-performing loans | 94% | 105% | 106% | 101% | 88% |
| Nonaccrual loans | $17,384 | $15,531 | $15,417 | $16,197 | $18,934 |
| Loans – 90 days past due & still accruing | 24 | 12 | 21 | 207 | 11 |
| Total non-performing loans | 17,408 | 15,543 | 15,438 | 16,404 | 18,945 |
| OREO and repossessed assets | 4,931 | 5,557 | 5,305 | 6,141 | 5,207 |
| Total non-performing assets | 22,339 | 21,100 | 20,743 | 22,545 | 24,152 |
| Restructured loans-accruing | 8,154 | 11,825 | 8,816 | 7,109 | 7,204 |
| Non-performing loans to total loans | 1.37% | 1.23% | 1.24% | 1.37% | 1.60% |
| Non-performing assets to total assets | 1.21% | 1.14% | 1.12% | 1.26% | 1.38% |
| Annualized charge-offs to average loans | 0.32% | 0.27% | 0.27% | 0.21% | 0.54% |
| Net charge-offs | $1,015 | $857 | $826 | $618 | $1,591 |
| Other Information | |||||
| Total assets under management (in millions) | $876 | $858 | $836 | $766 | $747 |
| Full-time equivalent employees | 346 | 345 | 346 | 351 | 361 |
About BKFC
BKFC, a bank holding company with assets of approximately $1.858 billion, offers banking and related financial services to both individuals and business customers. BKFC operates thirty-two branch locations and fifty-two ATMs in the Northern Kentucky market.