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| 8-K - 8-K - BANK OF KENTUCKY FINANCIAL CORP | v375037_8k.htm |
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NEWS RELEASE |
THE BANK OF KENTUCKY FINANCIAL CORPORATION
ANNOUNCES FIRST QUARTER EARNINGS
Net income of $4,618,000 for the first quarter, up 13% from 2013
CRESTVIEW HILLS, KENTUCKY, April 17, 2014 – 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, 2014. For the first 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 follows:
| First Quarter ended March 31, | 2014 | 2013 | Change | |||||||||
| Net income | $ | 4,618,000 | $ | 4,090,000 | 13 | % | ||||||
| Earnings per common share, basic | $ | 0.60 | $ | 0.55 | 9 | % | ||||||
| Earnings per common share, diluted | $ | 0.60 | $ | 0.54 | 11 | % | ||||||
Robert W. Zapp, President & CEO, commented, “The positive first quarter results for the Company were underscored by solid loan growth, specifically in our commercial lending divisions. In addition, improving credit metrics and revenue growth from our Wealth Advisory Group helped offset the significant decline in mortgage loan volume compared to last year. We continued to invest in technology and people in the first quarter. We are in the process of improving how we process loans with an upgraded system; we continue to roll out new mobile and online banking services; and we added talent and resources to help us grow quality loans while addressing the increased regulatory demands on our business. Going forward, we will maintain this path, maximizing opportunities to expand, grow, and improve the Bank.”
The increase in net income in the first quarter of 2014 was primarily due to a $1,100,000 (55%) decrease in the provision for loan losses and a $286,000 (2%) increase in net interest income compared with the first 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 March of 2013. Contributing to the increase in net interest income was the $74,121,000 (6%) growth in loans from March 31, 2013.
Non-interest income decreased 5% ($280,000) in the first quarter of 2014, compared with the same period in 2013, while non-interest expense increased 3% ($349,000) from the same period last year. Contributing to the decrease in non-interest income was a $274,000 or 100% decrease in gain on the sale of securities and a $374,000 or 69% decrease in gains on the sale of real estate loans, which was partially offset with $303,000 or 14% increase in service charges on deposits and an $89,000 or 10% increase in trust fee income. The decrease in gains on the sale of real estate was the result of lower refinancing volume due to slightly higher long term rates compared with 2013.
Net interest income increased $286,000, or 2% in the first quarter of 2014, compared with the same period in 2013. The net interest margin, on a tax equivalent basis, decreased 1 basis point from 3.40% in the first quarter of 2013 to 3.39% in the first quarter of 2014. The increase in the net interest income was the result of a $40.3 million or 2% growth in earning assets compared with the first quarter of 2013. The yield on earning assets decreased 6 basis points from 3.71% in the first quarter of 2013 to 3.65% in the first quarter of 2014, while the cost of interest bearing liabilities also decreased 6 basis points from .39% to .33% in the same period.
The provision for loan losses decreased by $1,100,000 (55%) in the first quarter of 2014, compared with the same period in 2013. Contributing to this decrease were lower levels of charge-offs compared with the first quarter of 2013. The Company’s annualized net charge-offs to average loans decreased from .66% in the first quarter of 2013 to .27% in the first quarter of 2014 while non-performing loans as a percentage of total loans were 1.23% as of March 31, 2014, compared with 1.84% as of March 31, 2013. The Company recorded $857,000 in net charge-offs in the first quarter of 2014 compared with $1,927,000 in the first quarter of 2013. On a quarterly sequential basis, the provision for loan losses of $900,000 in the first quarter of 2014 was $400,000 higher than the provision in the fourth quarter of 2013, while non-performing loans increased from $15.4 million (1.24% of total loans) at December 31, 2013 to $15.5 million (1.23% of total loans) at March 31, 2014. Net charge-offs on a quarterly sequential basis increased slightly from $826,000 (.27% of loans) in the fourth quarter of 2014 to $857,000 (.27% of loans) in the first quarter of 2014. As a result of improving credit metrics, the Allowance for Loan Losses (ALL) has decreased from 1.40% of loans at the end of the first quarter of 2013 to 1.30% of loans at the end of the first quarter of 2014. On a quarterly sequential basis the ALL remained stable at 1.30% at the end of the fourth quarter of 2013 and the end of the first 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 $1.859 billion at the end of the first quarter of 2014, which was $39 million or 2% higher than on the same date a year ago. The increase of $74 million (6%) in total loans and $20 million (5%) in investments were offset by a $49 million (38%) decrease in cash and cash equivalents. The decrease in cash and cash equivalents included a $53 million (67%) decrease in fed funds sold. The increase in assets was funded by an increase in deposits of $25 million, or 2%, and an increase in equity of $13.7 million or 8% from the same date in 2013.
The Bank of Kentucky Financial Corporation
Selected Consolidated Financial Data
(Dollars in thousands, except per share data)
First Quarter Comparison
| Income Statement Data | 3/31/14 | 3/31/13 | % Chg | |||||||||
| Interest income | $ | 14,929 | $ | 14,866 | 0 | % | ||||||
| Interest expense | 1,060 | 1,283 | (17 | )% | ||||||||
| Net interest income | 13,869 | 13,583 | 2 | % | ||||||||
| Provision for loan losses | 900 | 2,000 | (55 | )% | ||||||||
| Net interest income after provision for loan losses | 12,969 | 11,583 | 12 | % | ||||||||
| Non interest income | 5,582 | 5,862 | (5 | )% | ||||||||
| Non interest expense | 12,118 | 11,769 | 3 | % | ||||||||
| Net income before income taxes | 6,433 | 5,676 | 13 | % | ||||||||
| Provision for income taxes | 1,815 | 1,586 | 14 | % | ||||||||
| Net income | $ | 4,618 | $ | 4,090 | 13 | % | ||||||
| Per Common Share Data | ||||||||||||
| Diluted earnings per common share | 0.60 | 0.54 | 11 | % | ||||||||
| Cash dividends declared | 0.18 | 0.17 | 6 | % | ||||||||
| Earnings Performance Data | ||||||||||||
| Return on common equity | 10.18 | % | 9.66 | % | 52 | bps | ||||||
| Return on assets | 1.01 | % | 0.92 | % | 9 | bps | ||||||
| Net interest margin | 3.31 | % | 3.32 | % | (1 | )bps | ||||||
The Bank of Kentucky Financial Corporation
Selected Consolidated Financial Data
(Dollars in thousands, except per share data)
| Balance Sheet Data | ||||||||
| March 31, 2014 | December 31, 2013 | |||||||
| Assets: | ||||||||
| Cash and cash equivalents | $ | 89,102 | $ | 78,621 | ||||
| Investments | 396,733 | 418,385 | ||||||
| Loans held for sale | 6,248 | 3,214 | ||||||
| Total loans, gross | 1,261,863 | 1,249,645 | ||||||
| Allowance for loan losses | (16,349 | ) | (16,306 | ) | ||||
| Premises and equipment, net | 22,845 | 22,444 | ||||||
| Goodwill and acquisition intangibles, net | 23,737 | 23,871 | ||||||
| Other assets and accrued interest receivable | 75,244 | 77,618 | ||||||
| Total assets | $ | 1,859,423 | $ | 1,857,492 | ||||
| Liabilities & Shareholders’ Equity | ||||||||
| Total deposits | $ | 1,584,076 | $ | 1,587,585 | ||||
| Short-term borrowings | 29,220 | 27,643 | ||||||
| Notes payable | 45,515 | 45,577 | ||||||
| Accrued interest payable and other liabilities | 13,981 | 15,548 | ||||||
| Total liabilities | 1,672,792 | 1,676,353 | ||||||
| Common stockholders’ equity | 186,631 | 181,139 | ||||||
| Total liabilities and shareholders’ equity | $ | 1,859,423 | $ | 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 )
| Quarter ended March 31, 2014 | Quarter ended March 31, 2013 | |||||||||||||||||||||||
| Average outstanding balance | Interest earned/ paid | Yield/ rate | Average outstanding balance | Interest earned/ paid | Yield/ rate | |||||||||||||||||||
| Interest-earning assets: | ||||||||||||||||||||||||
| Loans receivable (1)(2) | $ | 1,255,552 | $ | 13,123 | 4.24 | % | $ | 1,194,657 | $ | 13,396 | 4.55 | % | ||||||||||||
| Securities (2) | 412,047 | 2,074 | 2.04 | 376,370 | 1,679 | 1.81 | ||||||||||||||||||
| Other interest-earning assets | 29,854 | 67 | 0.91 | 86,110 | 96 | 0.45 | ||||||||||||||||||
| Total interest-earning assets | 1,697,453 | 15,264 | 3.65 | 1,657,137 | 15,171 | 3.71 | ||||||||||||||||||
| Non-interest-earning assets | 158,850 | 154,538 | ||||||||||||||||||||||
| Total assets | $ | 1,856,303 | $ | 1,811,675 | ||||||||||||||||||||
| Interest-bearing liabilities: | ||||||||||||||||||||||||
| Transaction accounts | 947,221 | 386 | 0.17 | 892,609 | 399 | 0.18 | ||||||||||||||||||
| Time deposits | 298,020 | 438 | 0.60 | 351,751 | 645 | 0.74 | ||||||||||||||||||
| Borrowings | 73,529 | 236 | 1.30 | 75,375 | 239 | 1.29 | ||||||||||||||||||
| Total interest-bearing liabilities | 1,318,770 | 1,060 | 0.33 | 1,319,735 | 1,283 | 0.39 | ||||||||||||||||||
| Non-interest-bearing liabilities | 353,648 | 320,242 | ||||||||||||||||||||||
| Total liabilities | 1,672,418 | 1,639,977 | ||||||||||||||||||||||
| Shareholders’ equity | 183,885 | 171,698 | ||||||||||||||||||||||
| Total liabilities and shareholders’ equity | $ | 1,856,303 | $ | 1,811,675 | ||||||||||||||||||||
| Net interest income | $ | 14,204 | $ | 13,888 | ||||||||||||||||||||
| Interest rate spread | 3.32 | % | 3.32 | % | ||||||||||||||||||||
| Net interest margin (net interest income as a percent of average interest-earning assets) | 3.39 | % | 3.40 | % | ||||||||||||||||||||
| (1) | Includes non-accrual loans. |
| (2) | Income presented on a tax equivalent basis using a 35.00% tax rate in 2014 and 2013, respectively. The tax equivalent adjustment was $335,000 and $305,000 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 | 3/31/14 | 12/31/13 | 9/30/13 | 6/30/13 | 3/31/13 | |||||||||||||||
| Net interest income | $ | 13,869 | $ | 14,041 | $ | 13,922 | $ | 13,708 | $ | 13,583 | ||||||||||
| Provision for loan losses | 900 | 500 | 600 | 1,600 | 2,000 | |||||||||||||||
| Net interest income after provision for loan losses | 12,969 | 13,541 | 13,322 | 12,108 | 11,583 | |||||||||||||||
| Service charges and fees | 2,434 | 2,782 | 2,829 | 2,581 | 2,131 | |||||||||||||||
| Gain on sale of real estate loans | 165 | 165 | 282 | 672 | 539 | |||||||||||||||
| Gain on sale of securities | - | - | - | - | 274 | |||||||||||||||
| Trust fee income | 941 | 854 | 846 | 850 | 852 | |||||||||||||||
| Bankcard transaction revenue | 999 | 1,008 | 1,012 | 1,044 | 957 | |||||||||||||||
| Gains/(losses) on other real estate owned | (81 | ) | (22 | ) | (201 | ) | (308 | ) | (4 | ) | ||||||||||
| Other non-interest income | 1,124 | 1,466 | 1,288 | 1,001 | 1,113 | |||||||||||||||
| Total non-interest income | 5,582 | 6,253 | 6,056 | 5,840 | 5,862 | |||||||||||||||
| Salaries and employee benefits expense | 5,873 | 5,691 | 5,969 | 5,988 | 5,913 | |||||||||||||||
| Occupancy and equipment expense | 1,435 | 1,330 | 1,366 | 1,315 | 1,306 | |||||||||||||||
| Data processing expense | 535 | 551 | 533 | 537 | 550 | |||||||||||||||
| State bank taxes | 642 | 584 | 615 | 615 | 575 | |||||||||||||||
| Other real estate owned and loan collection | 342 | 384 | 457 | 350 | 334 | |||||||||||||||
| Amortization of intangible assets | 133 | 148 | 151 | 157 | 159 | |||||||||||||||
| FDIC Insurance | 554 | 376 | 317 | 335 | 295 | |||||||||||||||
| Other non-interest expenses | 2,604 | 2,528 | 2,311 | 2,368 | 2,637 | |||||||||||||||
| Total non-interest expense | 12,118 | 11,592 | 11,719 | 11,665 | 11,769 | |||||||||||||||
| Net income before income tax expense | 6,433 | 8,202 | 7,659 | 6,283 | 5,676 | |||||||||||||||
| Income tax expense | 1,815 | 2,427 | 2,244 | 1,798 | 1,586 | |||||||||||||||
| Net income | $ | 4,618 | $ | 5,775 | $ | 5,415 | $ | 4,485 | $ | 4,090 | ||||||||||
| Per Common Share Data | ||||||||||||||||||||
| Diluted earnings per common share | 0.60 | 0.76 | 0.72 | 0.59 | 0.54 | |||||||||||||||
| Cash dividends declared | 0.18 | 0.18 | 0.17 | 0.17 | 0.17 | |||||||||||||||
| Weighted average common shares outstanding | ||||||||||||||||||||
| Basic | 7,640,872 | 7,565,121 | 7,516,770 | 7,491,619 | 7,478,901 | |||||||||||||||
| Diluted | 7,687,106 | 7,611,879 | 7,549,530 | 7,564,121 | 7,583,544 | |||||||||||||||
| Earnings Performance Data | ||||||||||||||||||||
| Return on common equity | 10.18 | % | 12.86 | % | 12.44 | % | 10.48 | % | 9.66 | % | ||||||||||
| Return on assets | 1.01 | % | 1.25 | % | 1.21 | % | 1.00 | % | 0.92 | % | ||||||||||
| Net interest margin | 3.31 | % | 3.32 | % | 3.42 | % | 3.38 | % | 3.32 | % | ||||||||||
| Net interest margin (tax equivalent) | 3.39 | % | 3.39 | % | 3.50 | % | 3.46 | % | 3.40 | % | ||||||||||
The Bank of Kentucky Financial Corporation
Selected Consolidated Financial Data
(Dollars in thousands, except per share data)
Five-Quarter Comparison
| Balance Sheet Data | 3/31/14 | 12/31/13 | 9/30/13 | 6/30/13 | 3/31/13 | |||||||||||||||
| Assets: | ||||||||||||||||||||
| Cash and cash equivalents | $ | 89,102 | $ | 78,621 | $ | 102,448 | $ | 80,941 | $ | 138,561 | ||||||||||
| Investments | 396,733 | 418,385 | 389,179 | 384,653 | 376,704 | |||||||||||||||
| Loans held for sale | 6,248 | 3,214 | 2,435 | 9,909 | 14,038 | |||||||||||||||
| Total loans | 1,261,863 | 1,249,645 | 1,201,193 | 1,185,449 | 1,187,742 | |||||||||||||||
| Allowance for loan losses | (16,349 | ) | (16,306 | ) | (16,632 | ) | (16,650 | ) | (16,641 | ) | ||||||||||
| Premises and equipment, net | 22,845 | 22,444 | 22,517 | 22,560 | 22,559 | |||||||||||||||
| Goodwill and acquisition intangibles, net | 23,737 | 23,871 | 24,018 | 24,169 | 24,325 | |||||||||||||||
| Other assets & accrued interest receivable | 75,244 | 77,618 | 77,066 | 74,859 | 73,223 | |||||||||||||||
| Total assets | $ | 1,859,423 | $ | 1,857,492 | $ | 1,802,224 | $ | 1,765,890 | $ | 1,820,511 | ||||||||||
| Liabilities & Shareholders’ Equity: | ||||||||||||||||||||
| Total deposits | $ | 1,584,076 | $ | 1,587,585 | $ | 1,529,505 | $ | 1,504,829 | $ | 1,558,933 | ||||||||||
| Short-term borrowings | 29,220 | 27,643 | 32,167 | 26,934 | 28,309 | |||||||||||||||
| Notes payable | 45,515 | 45,577 | 50,695 | 50,702 | 48,709 | |||||||||||||||
| Accrued interest payable & other liabilities | 13,981 | 15,548 | 14,606 | 13,196 | 11,604 | |||||||||||||||
| Total liabilities | 1,672,792 | 1,676,353 | 1,626,973 | 1,595,661 | 1,647,555 | |||||||||||||||
| Shareholders’ equity | 186,631 | 181,139 | 175,251 | 170,229 | 172,956 | |||||||||||||||
| Total liabilities and shareholders’ equity | $ | 1,859,423 | $ | 1,857,492 | $ | 1,802,224 | $ | 1,765,890 | $ | 1,820,511 | ||||||||||
| Common shares outstanding | 7,649,493 | 7,619,999 | 7,528,618 | 7,498,014 | 7,482,776 | |||||||||||||||
| Average Balance Sheet Data | ||||||||||||||||||||
| Average investments | $ | 412,047 | $ | 404,687 | $ | 386,644 | $ | 387,526 | $ | 376,370 | ||||||||||
| Average other earning assets | 29,854 | 55,521 | 29,039 | 46,886 | 86,110 | |||||||||||||||
| Average loans | 1,255,552 | 1,218,140 | 1,199,824 | 1,190,590 | 1,194,657 | |||||||||||||||
| Average earning assets | 1,697,453 | 1,678,348 | 1,615,507 | 1,625,002 | 1,657,137 | |||||||||||||||
| Average assets | 1,856,303 | 1,839,242 | 1,771,491 | 1,790,043 | 1,811,675 | |||||||||||||||
| Average deposits | 1,576,944 | 1,568,764 | 1,506,101 | 1,529,159 | 1,551,953 | |||||||||||||||
| Average interest bearing deposits | 1,245,241 | 1,215,455 | 1,164,947 | 1,215,858 | 1,244,360 | |||||||||||||||
| Average interest bearing transaction deposits | 947,221 | 911,075 | 848,512 | 882,084 | 892,609 | |||||||||||||||
| Average interest bearing time deposits | 298,020 | 304,380 | 316,435 | 333,774 | 351,751 | |||||||||||||||
| Average borrowings | 73,529 | 78,197 | 80,733 | 74,927 | 75,375 | |||||||||||||||
| Average interest bearing liabilities | 1,318,770 | 1,293,652 | 1,248,680 | 1,290,785 | 1,319,735 | |||||||||||||||
| Average common stockholders equity | 183,885 | 178,135 | 172,740 | 171,593 | 171,698 | |||||||||||||||
The Bank of Kentucky Financial Corporation
Selected Consolidated Financial Data
(Dollars in thousands, except per share data)
Five-Quarter Comparison
| Asset Quality Data | 3/31/14 | 12/31/13 | 9/30/13 | 6/30/13 | 3/31/13 | |||||||||||||||
| Allowance for loan losses to total loans | 1.30 | % | 1.30 | % | 1.38 | % | 1.40 | % | 1.40 | % | ||||||||||
| Allowance for loan losses to non-performing loans | 105 | % | 106 | % | 101 | % | 88 | % | 76 | % | ||||||||||
| Nonaccrual loans | $ | 15,531 | $ | 15,417 | $ | 16,197 | $ | 18,934 | $ | 21,771 | ||||||||||
| Loans – 90 days past due & still accruing | 12 | 21 | 207 | 11 | 36 | |||||||||||||||
| Total non-performing loans | 15,543 | 15,438 | 16,404 | 18,945 | 21,807 | |||||||||||||||
| OREO and repossessed assets | 5,557 | 5,305 | 6,141 | 5,207 | 5,454 | |||||||||||||||
| Total non-performing assets | 21,100 | 20,743 | 22,545 | 24,152 | 27,261 | |||||||||||||||
| Restructured loans-accruing | 11,825 | 8,816 | 7,109 | 7,204 | 7,499 | |||||||||||||||
| Non-performing loans to total loans | 1.23 | % | 1.24 | % | 1.37 | % | 1.60 | % | 1.84 | % | ||||||||||
| Non-performing assets to total assets | 1.14 | % | 1.12 | % | 1.26 | % | 1.38 | % | 1.50 | % | ||||||||||
| Annualized charge-offs to average loans | 0.27 | % | 0.27 | % | 0.21 | % | 0.54 | % | 0.66 | % | ||||||||||
| Net charge-offs | $ | 857 | $ | 826 | $ | 618 | $ | 1,591 | $ | 1,927 | ||||||||||
| Other Information | ||||||||||||||||||||
| Total assets under management (in millions) | 858 | 836 | 766 | 747 | 744 | |||||||||||||||
| Full-time equivalent employees | 345 | 346 | 351 | 361 | 364 | |||||||||||||||
About BKFC
BKFC, a bank holding company with assets of approximately $1.859 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.
For more information contact:
Martin Gerrety
Executive Vice President and CFO
(859) 372-5169
mgerrety@bankofky.com
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