BANK OF KENTUCKY FINANCIAL CORP - FORM 8-K - EX-99.1 - PRESS RELEASE DATED APRIL 21, 2011

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Exhibit 99.1


		NEWS RELEASE

THE BANK OF KENTUCKY FINANCIAL CORPORATION

ANNOUNCES FIRST QUARTER EARNINGS

Earnings per share up 83% for the first quarter of 2011

CRESTVIEW HILLS, KENTUCKY, April 21, 2011 – 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 first quarter ended March 31, 2011. For the first quarter, the Company reported an increase in diluted earnings per common share of 83% from the same period in 2010.

A summary of the Company’s results follows:


First Quarter ended March 31,	2011		2010		Change
Net income	$	3,512,000	$	1,860,000		89	%
Net income available to common shareholders	$	3,255,000	$	1,350,000		141	%
Earnings per common share, basic	$	0.44	$	0.24		83	%
Earnings per common share, diluted	$	0.44	$	0.24		83	%

Robert Zapp, President & CEO stated, “We continue to experience a steady improvement in several key areas of our company, which helped drive earnings higher during the first quarter of 2011. Non-performing loans and charge-offs declined, allowing the Bank to lower its provision for loan losses substantially as compared to last year. We increased our interest income, kept expenses in check, and benefited from increased revenue from bankcard usage, and our wealth advisory group continues to contribute new revenue to the Bank. Overall lending is showing signs of life and we hope to expand our business further as the year progresses.”

Driving the increase in earnings in the first quarter of 2011 was a $1,500,000 (33%) decrease in the provision for loan losses as compared to the first quarter of 2010. Also contributing to increased earnings was a 4% increase in total revenue, a 2% decrease in noninterest expense and a 50% reduction in preferred stock dividends and amortization. The decrease in the provision for loan losses reflected improving credit metrics as compared to March of 2010, while the reduction of preferred stock dividends and amortization reflects the December 2010 repurchase of $17 million of the outstanding $34 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 increased $414,000, or 3% in the first quarter of 2011, as compared to the same period in 2010. The net interest margin, on a tax equivalent basis, decreased 6 basis points from 3.69% in the first quarter of 2010 to 3.63% in the first quarter of 2011. Contributing to the increase in net interest income was the growth in average earning assets which increased $76 million, or 5% on average from the first quarter of 2010.

The provision for loan losses decreased by $1,500,000 (33%) in the first quarter of 2011, as compared to the same period in 2010. Contributing to this decrease were lower levels of non-performing loans and charge-offs as compared to March 2010. The Company’s non-performing loans as a percentage of total loans were 1.82% as of March 31, 2011, as compared to 1.91% as of March 31, 2010, while annualized net charge-offs to average loans decreased from 1.41% in the first quarter of 2010 to .98% in the first quarter of 2011. The Company recorded

$2,680,000 in net charge-offs in the first quarter of 2011 as compared to $4,046,000 in the first quarter of 2010. On a sequential basis, the provision for loan losses of $3,000,000 in the first quarter of 2011 was equal to the provision in the fourth quarter of 2010, while non-performing loans decreased from $21.1 million (1.90% of total loans) at December 31, 2010 to $20.4 million (1.82% of total loans) at March 31, 2011. Net charge-offs on a sequential basis decreased from $2,795,000 (1.00% of loans) in the fourth quarter of 2010 to $2,680,000 (.98% of loans) in the first quarter of 2011. The allowance for loan losses (ALL) increased $2,081,000 or 13% from March 2010, and $320,000 from December 31, 2010. As a result of the added allowance, the ALL has increased from 1.37% of loans at the end of the first quarter of 2010 to 1.58% of loans at the end of the first quarter of 2011. 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.

Non-interest income increased 7% ($318,000) in the first quarter of 2011, as compared to the same period in 2010, while non-interest expense decreased 2% ($264,000) from the same period last year. Contributing to the increase in non-interest income was gains on the sale of securities which increase $231,000 (100%) from the first quarter of 2010. Contributing to the decrease in non-interest expense was $163,000 (42%) reduction in the amortization of intangible assets and $117,000 (32%) decrease in loan collection expense.

Total assets were $1.637 billion at the end of the first quarter of 2011, which was $42 million or 3% higher than the same date a year ago. Total loans decreased $24 million (2%) while investments in securities increased $88 million (36%) from March of 2010. The increased investments in securities were funded by an increase in deposits of $14 million, or 1%, and an increase in Shareholders’ equity of $20 million or 14%. The growth in equity was a result of earnings and the net increase in capital from the Company’s December 2010 common stock offering less the Series A Preferred Stock repurchase.

The Bank of Kentucky Financial Corporation

Selected Consolidated Financial Data

(Dollars in thousands, except per share data)


	First Quarter Comparison
	03/31/11			03/31/10			% Chg
Income Statement Data
Interest income	$	15,999		$	16,773			(5	)%
Interest expense		2,651			3,839			(31	)%

Net interest income		13,348			12,934			3	%
Provision for loan losses		3,000			4,500			(33	)%

Net interest income after provision for loan losses		10,348			8,434			23	%
Non interest income		4,923			4,605			7	%
Non interest expense		10,349			10,613			(2	)%

Net income before income taxes		4,922			2,426			103	%
Provision for income taxes		1,410			566			149	%

Net income		3,512			1,860			89	%
Preferred stock dividends & amortization		257			510			(50	)%

Net income available to common shareholders	$	3,255		$	1,350			141	%

Per Common Share Data
Diluted earnings per common share		0.44			0.24			83	%
Cash dividends declared		0.28			0.28			0	%
Earnings Performance Data
Return on common equity		9.21	%		5.03	%		418bps
Return on assets		.86	%		.48	%		38bps
Net interest margin		3.56	%		3.63	%		(7)bps

The Bank of Kentucky Financial Corporation

Selected Consolidated Financial Data

(Dollars in thousands, except per share data)


	March 31, 2011			December 31, 2010
Balance Sheet Data

Assets:
Cash and cash equivalents	$	97,712		$	172,664
Investments		328,271			285,326
Loans held for sale		1,223			15,279
Total loans, gross		1,118,136			1,106,009
Allowance for loan losses		(17,688	)		(17,368	)
Premises and equipment, net		22,856			23,170
Goodwill and acquisition intangibles, net		25,242			25,464
Other assets and accrued interest receivable		61,684			54,340

Total assets	$	1,637,436		$	1,664,884


Liabilities & Shareholders’ Equity
Total deposits	$	1,390,706		$	1,422,312
Short-term borrowings		24,667			23,419
Notes payable		48,756			48,761
Accrued interest payable and other liabilities		12,289			11,022

Total liabilities		1,476,418			1,505,514
Common stockholders’ equity		144,183			142,580
Preferred stock		16,835			16,790

Shareholders’ equity		161,018			159,370

Total liabilities and shareholders’ equity	$	1,637,436		$	1,664,884

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 March 31, 2011							Quarter ended March 31, 2010
	Average outstanding balance		Interest earned/ paid		Yield/ rate			Average outstanding balance		Interest earned/ paid		Yield/ rate
Interest-earning assets:
Loans receivable (1)(2)	$	1,108,477	$	14,462		5.29	%	$	1,153,099	$	15,397		5.42	%
Securities (2)		302,331		1,692		2.27			216,280		1,510		2.83
Other interest-earning assets		111,484		138		0.50			77,147		109		0.57

Total interest-earning assets		1,522,292		16,292		4.34			1,446,526		17,016		4.77

Non-interest-earning assets		127,655							125,648

Total assets	$	1,649,947						$	1,572,174

Interest-bearing liabilities:
Transaction accounts		729,022		671		0.37			702,534		950		0.55
Time deposits		439,361		1,726		1.59			458,603		2,595		2.29
Borrowings		73,555		254		1.41			67,144		294		1.78

Total interest-bearing liabilities		1,241,938		2,651		.87			1,228,281		3,839		1.27

Non-interest-bearing liabilities		247,815							202,695

Total liabilities		1,489,753							1,430,976
Shareholders’ equity		160,194							141,198

Total liabilities and shareholders’ equity	$	1,649,947						$	1,572,174

Net interest income			$	13,641						$	13,177

Interest rate spread						3.47	%						3.50	%

Net interest margin (net interest income as a percent of average interest-earning assets)						3.63	%						3.69	%

(1)	Includes non-accrual loans.

(2)	Income presented on a tax equivalent basis using a 34.83% and 34.00% tax rate in 2011 and 2010, respectively. The tax equivalent adjustment was $293,000 and $243,000 in 2011 and 2010, respectively.

The Bank of Kentucky Financial Corporation

Selected Consolidated Financial Data

(Dollars in thousands, except per share data)


	Five-Quarter Comparison
	03/31/11			12/31/10			9/30/10			6/30/10			3/31/10
Income Statement Data
Net interest income	$	13,348		$	13,429		$	13,592		$	13,454		$	12,934
Provision for loan losses		3,000			3,000			3,500			4,500			4,500


Net interest income after provision for loan losses		10,348			10,429			10,092			8,954			8,434

Service charges and fees		2,157			2,411			2,589			2,622			2,267
Gain on sale of real estate loans		278			946			1,041			337			322
Gain on sale of securities		231			—			—			—			—
Trust fee income		663			601			620			602			550
Bankcard transaction revenue		789			774			727			749			673
Gains/(losses) on Other Real Estate Owned		16			(125	)		(110	)		30			141
Other non-interest income		789			935			760			600			652

Total non-interest income		4,923			5,542			5,627			4,940			4,605

Salaries and employee benefits expense		4,754			4,959			5,110			4,764			4,565
Occupancy and equipment expense		1,248			1,185			1,195			1,187			1,450
Data processing expense		494			484			442			443			461
State bank taxes		536			477			492			507			490
Amortization of intangible assets		221			357			357			375			384
FDIC Insurance		583			566			504			587			585
Other non-interest expenses		2,513			2,742			2,625			2,453			2,678

Total non-interest expense		10,349			10,770			10,725			10,316			10,613

Net income before income tax expense		4,922			5,201			4,994			3,578			2,426
Income tax expense		1,410			1,528			1,466			968			566

Net income		3,512			3,673			3,528			2,610			1,860
Preferred stock dividends & amortization		257			707			515			514			510

Net income available to common shareholders	$	3,255		$	2,966		$	3,013		$	2,096		$	1,350

Per Common Share Data
Diluted earnings per common share		0.44			0.46			0.53			0.37			0.24
Cash dividends declared		0.28			0.00			0.28			0.00			0.28
Weighted average common shares outstanding
Basic		7,432,295			6,434,354			5,666,707			5,666,707			5,666,707
Diluted		7,459,220			6,434,354			5,666,707			5,666,707			5,681,515
Earnings Performance Data
Return on common equity		9.21	%		9.33	%		10.68	%		7.59	%		5.03	%
Return on assets		.86	%		.91	%		.93	%		.67	%		.48	%
Net interest margin		3.56	%		3.62	%		3.90	%		3.74	%		3.63	%
Net interest margin (tax equivalent)		3.63	%		3.70	%		3.97	%		3.81	%		3.69	%

The Bank of Kentucky Financial Corporation

Selected Consolidated Financial Data

(Dollars in thousands, except per share data)


	Five-Quarter Comparison
	03/31/11			12/31/10			9/30/10			6/30/10			3/31/10
Balance Sheet Data
Assets:
Cash and cash equivalents	$	97,712		$	172,664		$	41,280		$	69,094		$	121,299
Investments		328,271			285,326			240,657			233,817			240,650
Loans held for sale		1,223			15,279			21,903			6,795			2,072
Total loans		1,118,136			1,106,009			1,120,168			1,122,964			1,142,609
Allowance for loan losses		(17,688	)		(17,368	)		(17,163	)		(16,531	)		(15,607	)
Premises and equipment, net		22,856			23,170			23,373			23,690			23,883
Goodwill and acquisition intangibles, net		25,242			25,464			25,820			26,178			26,552
Other assets & accrued interest receivable		61,684			54,340			54,028			53,613			54,096

Total assets	$	1,637,436		$	1,664,884		$	1,510,066			1,519,620			1,595,554

Liabilities & Shareholders’ Equity
Total deposits	$	1,390,706		$	1,422,312		$	1,271,455		$	1,300,949		$	1,376,468
Short-term borrowings		24,667			23,419			36,175			18,097			22,833
Notes payable		48,756			48,761			44,766			44,770			44,776
Accrued interest payable & other liabilities		12,289			11,022			11,307			10,894			10,214

Total liabilities		1,476,418			1,505,514			1,363,703			1,374,710			1,454,291
Common stockholders’ equity		144,183			142,580			112,873			111,510			107,952
Preferred stock		16,835			16,790			33,490			33,400			33,311

Shareholders’ equity		161,018			159,370			146,363			144,910			141,263
Total liabilities and shareholders’ equity	$	1,637,436		$	1,664,884		$	1,510,066			1,519,620			1,595,554

Common shares outstanding		7,432,295			7,432,295			5,666,707			5,666,707			5,666,707
Average Balance Sheet Data
Average investments	$	302,331		$	252,793		$	234,335		$	243,572		$	216,280
Average other earning assets		111,484			85,384			28,232			60,416			77,147
Average loans		1,108,477			1,133,524			1,123,503			1,139,730			1,153,099
Average earning assets		1,522,292			1,471,701			1,386,070			1,443,718			1,446,526
Average assets		1,649,947			1,595,835			1,509,821			1,567,837			1,572,174
Average deposits		1,406,861			1,366,256			1,285,557			1,347,906			1,354,035
Average interest bearing deposits		1,168,383			1,130,890			1,083,935			1,146,120			1,161,137
Average interest bearing transaction deposits		729,022			682,826			637,835			695,866			702,534
Average interest bearing time deposits		439,361			448,064			446,100			450,254			458,603
Average borrowings		73,555			69,784			67,153			66,333			67,144
Average interest bearing liabilities		1,241,938			1,200,674			1,151,088			1,212,453			1,288,281
Average common stockholders equity		143,382			126,068			112,192			109,732			107,929
Average preferred stock		16,813			31,710			33,445			33,355			33,269

The Bank of Kentucky Financial Corporation

Selected Consolidated Financial Data

(Dollars in thousands, except per share data)


	Five-Quarter Comparison
	03/31/11			12/31/10			9/30/10			6/30/10			3/31/10
Asset Quality Data
Allowance for loan losses to total loans		1.58	%		1.57	%		1.53	%		1.47	%		1.37	%
Allowance for loan losses to non-performing loans		87	%		82	%		90	%		74	%		72	%
Nonaccrual loans	$	19,735		$	20,648		$	18,768		$	22,184		$	21,692
Loans – 90 days past due & still accruing		637			414			207			213			114

Total non-performing loans		20,372			21,062			18,975			22,397			21,806
OREO and repossessed assets		1,083			795			1,392			1,397			1,535

Total non-performing assets		21,455			21,857			20,367			23,794			23,341

Restructured loans-accruing		3,294			6,135			3,901			3,441			6,332
Non-performing loans to total loans		1.82	%		1.90	%		1.69	%		1.99	%		1.91	%
Non-performing assets to total assets		1.32	%		1.32	%		1.35	%		1.57	%		1.47	%
Annualized charge-offs to average loans		0.98	%		1.00	%		1.02	%		1.26	%		1.41	%
Net charge-offs	$	2,680		$	2,795		$	2,867		$	3,577		$	4,046

About BKFC

BKFC, a bank holding company with assets of approximately $1.637 billion, offers banking and related financial services to both individuals and business customers. BKFC operates thirty-one branch locations and forty-seven ATMs in the Northern Kentucky market.

For more information contact:

Martin Gerrety

Executive Vice President and CFO

(859) 372-5169

mgerrety@bankofky.com

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