The Bank Of Kentucky Financial Corporation Announces Second Quarter Earnings

By GlobeNewswire,  July 17, 2014, 05:16:00 PM EDT


Net Income of $5,065,000 for the Second Quarter, Up 13% From 2013

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.

CONTACT: For more information contact:

         Martin Gerrety
         Executive Vice President and CFO
         (859) 372-5169
         mgerrety@bankofky.com
Source: The Bank of Kentucky Financial Corp.

This article appears in: News Headlines

Referenced Stocks: BKYF


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