BANK OF KENTUCKY FINANCIAL CORP - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - April 19, 2012

Attached files

file filename
8-K - 8-K - BANK OF KENTUCKY FINANCIAL CORPv309942_8k.htm

 

N E W S     R E L E A S E

 ____________________________________________________________

 

THE BANK OF KENTUCKY FINANCIAL CORPORATION

ANNOUNCES FIRST QUARTER EARNINGS

 

Net income available to common shareholders up 39% for the first quarter

 

CRESTVIEW HILLS, KENTUCKY, April 19, 2012 – 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, 2012. For the first quarter, the Company reported an increase in diluted earnings per common share of 36% from the same period in 2011.

A summary of the Company’s results follows:

 

First Quarter ended March 31,   2012    2011    Change 
Net income  $4,515,000   $3,512,000    29%
Net income available to common shareholders  $4,515,000   $3,255,000    39%
Earnings per common share, basic  $0.61   $0.44    39%
Earnings per common share, diluted  $0.60   $0.44    36%

 

Robert Zapp, President & CEO stated, “I am pleased with our solid performance in the first quarter. We continue to benefit from positive credit trends and no longer have the obligation associated with TARP. Increased revenue from our investment business and strong growth in our mortgage division helped fuel our overall revenue increase. Growth in the Bank’s deposit accounts, both personal and business, supported increases in fee income across the board.” Mr. Zapp added, “As we observe the steady, albeit slow, economic recovery, we anticipate increased demand for credit as businesses expand and invest, which will support asset growth in our commercial lending operations. We are pleased with the success of our first location in downtown Cincinnati that opened in late January and we will continue our strategy of organic growth in conjunction with potential acquisitions and new branches in Cincinnati and Northern Kentucky.”

 

Driving the increase in earnings available to common shareholders in the first quarter of 2012 was a $1,200,000 (40%) decrease in the provision for loan losses and a $257,000 (100%) decrease in preferred stock dividends and amortization as compared to the first quarter of 2011. Also contributing to increased earnings was a 6% increase in total revenue, which was partially offset with a 10% increase in noninterest expense. The decrease in the provision for loan losses reflected improving credit metrics as compared to March of 2011, while 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 increased $496,000, or 4% in the first quarter of 2012, as compared to the same period in 2011. The net interest margin, on a tax equivalent basis, decreased 6 basis points from 3.63% in the first quarter of 2011 to 3.57% in the first quarter of 2012. Contributing to the increase in net interest income was the growth in average earning assets which increased $74 million, or 5% on average from the first quarter of 2011. Contributing to the decrease in the net interest margin was the mix of the growth in earning assets. Of the $74 million in growth, $49 million or 66% of the growth was attributed to the Bank’s securities portfolio and fed funds sold, which generally have lower yields than loans.

  

1
 

 

The provision for loan losses decreased by $1,200,000 (40%) in the first quarter of 2012, as compared to the same period in 2011. Contributing to this decrease were lower levels of non-performing loans and charge-offs as compared to March 2011. The Company’s non-performing loans as a percentage of total loans were 1.54% as of March 31, 2012, as compared to 1.82% as of March 31, 2011, while annualized net charge-offs to average loans decreased from .98% in the first quarter of 2011 to .62% in the first quarter of 2012. The Company recorded $1,726,000 in net charge-offs in the first quarter of 2012 as compared to $2,680,000 in the first quarter of 2011. On a sequential basis, the provision for loan losses of $1,800,000 in the first quarter of 2012 was $400,000 lower than the provision in the fourth quarter of 2011, while non-performing loans increased from $15.9 million (1.40% of total loans) at December 31, 2011 to $17.5 million (1.54% of total loans) at March 31, 2012. Net charge-offs on a sequential basis decreased from $1,853,000 (.65% of loans) in the fourth quarter of 2011 to $1,726,000 (.62% of loans) in the first quarter of 2012. The allowance for loan losses (ALL) as of March 31, 2012 increased $674,000 or 4% from March 2011, and $74,000 from December 31, 2011. As a result of the first quarter provision for loan losses, the ALL has increased from 1.58% of loans at the end of the first quarter of 2011 to 1.62% of loans at the end of the first 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 1.36% as of March 31, 2012, as compared to 1.32% as of March 31, 2011. While non-performing loans decreased $2,913,000 from March 2011 to March 2012, other real estate owned increased $5,245,000 in the same time period. On a sequential quarterly basis, other real estate owned increased $484,000 from December 2011. The increase in other real estate owned from March 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 estimated net realizable value with the difference between this value and the loan balance being recorded as a charge-off.

 

Non-interest income increased 14% ($683,000) in the first quarter of 2012, as compared to the same period in 2011, while non-interest expense increased 10% ($993,000) from the same period last year. Contributing to the increase in non-interest income was a $308,000 or 111% increase in the gains on sale of real estate loans. These gains were driven by a drop in interest rates from the first quarter of 2011, which has prompted increased demand for home mortgage loan refinancing. Contributing to the increase in non-interest expense was $697,000 (15%) increase in the salaries and benefits expense. The increase in salaries and benefits included approximately $125,000 in higher bonus accruals and $125,000 in higher commission expense. The added bonus accrual reflects the end of the TARP restriction on bonus pay for executives, while the increased commission expense included higher commissions paid for the higher gains on the sale of real estate loans.

 

Total assets were $1.753 billion at the end of the first quarter of 2012, which was $115 million or 7% higher than the same date a year ago. Total loans increased $12 million (1%), investments in securities increased $46 million (14%) and cash and cash equivalents increased $35 million (36%) from March of 2011. The balance sheet increases were funded by an increase in deposits of $115 million, or 8%. Total equity decreased $1.5 million from the same date in 2011 as a result of the repurchase of the Series A Preferred Stock.

 

2
 

  

The Bank of Kentucky Financial Corporation

Selected Consolidated Financial Data

(Dollars in thousands, except per share data)

First Quarter Comparison

 

Income Statement Data   3/31/12    3/31/11    % Chg 
Interest income  $15,688   $15,999    (2)%
Interest expense   1,844    2,651    (30)%
Net interest income   13,844    13,348    4%
Provision for loan losses   1,800    3,000    (40)%
Net interest income after provision for loan losses   12,044    10,348    16%
Non interest income   5,606    4,923    14%
Non  interest expense   11,342    10,349    10%
Net income before income taxes   6,308    4,922    28%
Provision for income taxes   1,793    1,410    27%
Net income   4,515    3,512    29%
Preferred stock dividends & amortization   -    257    (100)%
Net income available to common shareholders  $4,515   $3,255    39%
Per Common Share Data               
Diluted earnings per common share   0.60    0.44    36%
Cash dividends declared   0.30    0.28    7%
Earnings Performance Data               
Return on common equity   11.49%   9.21%   228bps
Return on assets   1.04%   0.86%   18bps
Net interest margin   3.49%   3.56%   (7 bps)

3
 

 

The Bank of Kentucky Financial Corporation

Selected Consolidated Financial Data

(Dollars in thousands, except per share data)

 

Balance Sheet Data          
    March 31, 2012    December 31, 2011 
Assets:          
Cash and cash equivalents  $133,153   $135,964 
Investments   374,336    371,737 
Loans held for sale   10,863    8,920 
Total loans, gross   1,130,200    1,129,954 
Allowance for loan losses   (18,362)   (18,288)
Premises and equipment, net   23,159    22,827 
Goodwill and acquisition intangibles, net   25,051    25,251 
Other assets and accrued interest receivable   74,381    68,359 
Total assets  $1,752,781   $1,744,724 
           
Liabilities & Shareholders’ Equity          
Total deposits  $1,505,709   $1,498,821 
Short-term borrowings   29,334    29,300 
Notes payable   48,733    48,739 
Accrued interest payable and other liabilities   9,531    11,294 
Total liabilities   1,593,307    1,588,154 
Common stockholders’ equity   159,474    156,570 
Total liabilities and shareholders’ equity  $1,752,781   $1,744,724 
           

 

4
 

 

 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, 2012   Quarter ended March 31, 2011 
 

Average

outstanding balance

   Interest earned/
paid		  

 

Yield/
rate

  

Average

outstanding balance

   Interest earned/
paid		  

 

Yield/
rate

 
                 
Interest-earning assets:                              
Loans receivable (1)(2)  $1,133,367   $13,958    4.95%  $1,108,477   $14,462    5.29%
Securities (2)   374,027    1,960    2.11    302,331    1,692    2.27 
Other interest-earning assets   88,597    92    0.42    111,484    138    0.50 
Total interest-earning assets   1,595,991    16,010    4.03    1,522,292    16,292    4.34 
Non-interest-earning assets   149,178              127,655           
Total assets  $1,745,169             $1,649,947           
Interest-bearing liabilities:                              
Transaction accounts   821,643    470    0.23    729,022    671    0.37 
Time deposits   403,100    1,096    1.09    439,361    1,726    1.59 
Borrowings   80,798    278    1.38    73,555    254    1.41 
Total interest-bearing liabilities   1,305,541    1,844    0.57    1,241,938    2,651    0.87 
Non-interest-bearing liabilities   281,606              247,815           
Total liabilities   1,587,147              1,489,753           
Shareholders’ equity   158,022              160,194           
Total liabilities and shareholders’ equity  $1,745,169             $1,649,947           
Net interest income       $14,166             $13,641      
Interest rate spread             3.46%             3.47%
Net interest margin (net interest income as a percent of average interest-earning assets)             3.57%            3.63%

 

 

 

  

(1)Includes non-accrual loans.
(2)Income presented on a tax equivalent basis using a 35.00% and 34.83% tax rate in 2012 and 2011, respectively. The tax equivalent adjustment was $322,000 and $293,000 in 2012 and 2011, respectively.

 

5
 

 

The Bank of Kentucky Financial Corporation

Selected Consolidated Financial Data

(Dollars in thousands, except per share data)

 Five-Quarter Comparison

 

Income Statement Data  3/31/12   12/31/11   9/30/11   6/30/11   3/31/11 
Net interest income  $13,844   $14,087   $14,076   $14,027   $13,348 
Provision for loan losses   1,800    2,200    2,550    3,000    3,000 
Net interest income after provision for loan losses   12,044    11,887    11,526    11,027    10,348 
Service charges and fees   2,201    2,390    2,470    2,424    2,157 
Gain on sale of real estate loans   586    580    703    228    278 
Gain on sale of securities   207    -    -    -    231 
Trust fee income   689    625    630    723    663 
Bankcard transaction revenue   902    885    849    859    789 
Gains/(losses) on other real estate owned   (94)   (85)   (98)   (94)   16 
Other non-interest income   1,115    1,135    743    834    789 
Total non-interest income   5,606    5,530    5,297    4,974    4,923 
Salaries and employee benefits expense   5,451    5,044    5,351    5,045    4,754 
Occupancy and equipment expense   1,277    1,192    1,216    1,241    1,248 
Data processing expense   535    522    500    467    494 
State bank taxes   559    415    550    550    536 
Amortization of intangible assets   200    220    202    215    221 
FDIC Insurance   305    305    269    384    583 
Other non-interest expenses   3,015    2,705    2,639    2,733    2,513 
Total non-interest expense   11,342    10,403    10,727    10,635    10,349 
Net income before income tax expense   6,308    7,014    6,096    5,366    4,922 
Income tax expense   1,793    2,105    1,822    1,572    1,410 
Net income   4,515    4,909    4,274    3,794    3,512 
Preferred stock dividends & amortization   -    195    261    259    257 
Net income available to common shareholders  $4,515   $4,714   $4,013   $3,535   $3,255 
Per Common Share Data                         
Diluted earnings per common share   0.60    0.63    0.54    0.47    0.44 
Cash dividends declared   0.30    0.00    0.28    0.00    0.28 
Weighted average common shares outstanding                         
Basic   7,448,604    7,432,995    7,432,995    7,432,487    7,432,295 
Diluted   7,520,062    7,465,606    7,488,743    7,501,731    7,459,220 
Earnings Performance Data                         
Return on common equity   11.49%   12.21%   10.51%   9.59%   9.21%
Return on assets   1.04%   1.13%   1.05%   0.93%   0.86%
Net interest margin   3.49%   3.55%   3.76%   3.76%   3.56%
Net interest margin (tax equivalent)   3.57%   3.63%   3.83%   3.84%   3.63%

 

6
 

 

The Bank of Kentucky Financial Corporation

Selected Consolidated Financial Data

(Dollars in thousands, except per share data)

Five-Quarter Comparison

  

Balance Sheet Data  3/31/12   12/31/11   9/30/11   6/30/11   3/31/11 
Assets:                         
Cash and cash equivalents  $133,153   $135,964   $67,657   $61,098   $97,712 
Investments   374,336    371,737    339,780    320,202    328,271 
Loans held for sale   10,863    8,920    6,612    1,107    1,223 
Total loans   1,130,200    1,129,954    1,118,630    1,128,511    1,118,136 
Allowance for loan losses   (18,362)   (18,288)   (17,941)   (17,816)   (17,688)
Premises and equipment, net   23,159    22,827    22,653    22,576    22,856 
Goodwill and acquisition intangibles, net   25,051    25,251    24,826    25,028    25,242 
Other assets & accrued interest receivable   74,381    68,359    62,182    61,013    61,684 
Total assets  $1,752,781   $1,744,724   $1,624,399   $1,601,719   $1,637,436 
Liabilities & Shareholders’ Equity                         
Total deposits  $1,505,709   $1,498,821   $1,369,215   $1,355,284   $1,390,706 
Short-term borrowings   29,334    29,300    26,248    20,610    24,667 
Notes payable   48,733    48,739    48,745    48,750    48,756 
Accrued interest payable & other liabilities   9,531    11,294    10,905    10,682    12,289 
Total liabilities   1,593,307    1,588,154    1,455,113    1,435,326    1,476,418 
Common stockholders’ equity   159,474    156,570    152,356    149,511    144,183 
Preferred stock   -    -    16,930    16,882    16,835 
Shareholders’ equity   159,474    156,570    169,286    166,393    161,018 
Total liabilities and shareholders’ equity  $1,752,781   $1,744,724   $1,624,399   $1,601,719   $1,637,436 
Common shares outstanding   7,464,811    7,432,995    7,432,995    7,432,995    7,432,295 
Average Balance Sheet Data                         
Average investments  $374,027   $360,265   $324,144   $319,377   $302,331 
Average other earning assets   88,597    76,258    39,721    57,607    111,484 
Average loans   1,133,367    1,139,767    1,126,118    1,119,767    1,108,477 
Average earning assets   1,595,991    1,576,290    1,489,983    1,496,751    1,522,292 
Average assets   1,745,169    1,717,816    1,623,719    1,633,990    1,649,947 
Average deposits   1,494,332    1,464,550    1,372,244    1,385,624    1,406,861 
Average interest bearing deposits   1,224,743    1,190,716    1,122,239    1,144,986    1,168,383 
Average interest bearing transaction deposits   821,643    783,753    711,046    721,948    729,022 
Average interest bearing time deposits   403,100    406,963    411,193    423,038    439,361 
Average borrowings   80,798    77,832    72,421    72,580    73,555 
Average interest bearing liabilities   1,305,541    1,268,548    1,194,660    1,217,566    1,241,938 
Average common stockholders equity   158,022    153,175    150,934    146,848    143,382 
Average preferred stock   -    9,753    16,906    16,858    16,813 

  

7
 

  

The Bank of Kentucky Financial Corporation

Selected Consolidated Financial Data

(Dollars in thousands, except per share data)

Five-Quarter Comparison 

 

                          
Asset Quality Data   3/31/12    12/31/11    9/30/11    6/30/11    3/31/11 
Allowance for loan losses to total loans   1.62%   1.62%   1.60%   1.58%   1.58%
Allowance for loan losses to non-performing loans   105%   1.15%   1.12%   1.07%   87%
Nonaccrual loans  $16,779   $15,651   $15,964   $16,322   $19,735 
Loans – 90 days past due & still accruing   680    219    45    100    637 
Total non-performing loans   17,459    15,870    16,009    16,422    20,372 
OREO and repossessed assets   6,328    5,844    1,894    1,902    1,083 
Total non-performing assets   23,787    21,714    17,903    18,324    21,455 
Restructured loans-accruing   15,492    13,306    13,108    7,022    3,294 
Non-performing loans to total loans   1.54%   1.40%   1.43%   1.46%   1.82%
Non-performing assets to total assets   1.36%   1.25%   1.11%   1.15%   1.32%
Annualized charge-offs to average loans   0.62%   0.65%   0.86%   1.03%   0.98%
Net charge-offs  $1,726   $1,853   $2,425   $2,871   $2,680 

 

 

About BKFC

 

BKFC, a bank holding company with assets of approximately $1.753 billion, offers banking and related financial services to both individuals and business customers. BKFC operates thirty-three branch locations and fifty-six ATMs in the Northern Kentucky market.

For more information contact:

 

Martin Gerrety

Executive Vice President and CFO

(859) 372-5169

mgerrety@bankofky.com

###

 

8

 

 

Stock widget

Investing forum

BANK OF KENTUCKY FINANCIAL CORP Reports