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-The Bank of Kentucky Financial 3Q earnings up 4%.

BANKING AND CREDIT NEWS-October 22, 2012--The Bank of Kentucky Financial 3Q earnings up 4%(C)2012 M2 COMMUNICATIONS http://www.m2.com

22 October 2012 - The Bank of Kentucky, Inc. holding company The Bank of Kentucky Financial Corp. (NASDAQ: BKYF) reported its earnings for the third quarter and nine months ended September 30, 2012, showed an increase in diluted earnings per common share of 4% from the same period in 2011.

Robert Zapp, president & CEO, stated, "The positive trends we have seen in lending over the past several months continued into the third quarter of 2012, with most of the growth coming in the past few months. In addition, increased mortgage volume at a time when interest rates were at historic lows helped to increase fee revenue for the quarter."

Net interest income decreased USD114,000 in the third quarter of 2012, as compared to the same period in 2011. The net interest margin, on a tax equivalent basis, decreased 19 basis points from 3.83% in the third quarter of 2011 to 3.64% in the third quarter of 2012. Contributing to the decrease in the net interest margin was the mix of the growth in earning assets. Of the USD71m growth in average earning assets from the third quarter of 2011 to third quarter of 2012, USD46m or 65% of the growth was attributed to the Bank's securities portfolio, which generally has lower yields than loans.

The company's non-performing assets as a percentage of total assets were 1.23% as of September 30, 2012, as compared to 1.11% as of September 30, 2011. Non-performing loans decreased USD1,091,000 from September 2011 to September 2012 and other real estate owned increased USD4,298,000 in the same time period. On a sequential quarterly basis, other real estate owned increased USD242,000 from June 2012. The increase in other real estate owned from September of 2011 was primarily the result of one commercial real estate relationship which added USD3,475,000 in other real estate owned in the fourth quarter of 2011. These properties are recorded at their fair value less estimated costs to sell with the difference between this value and the loan balance being recorded as a charge-off.

Non-interest income increased 11% (USD564,000) in the third quarter of 2012, as compared to the same period in 2011, while non-interest expense increased 10% (USD1,072,000) from the same period last year. Contributing to the increase in non-interest income was a USD214,000 or a 30% increase in the gains on sale of real estate loans. These gains were driven by the low current interest rates, which has prompted increased demand for home mortgage loan refinancing. Contributing to the increase in non-interest expense was a USD558,000 (10%) increase in salaries and benefits expense. The increase in salaries and benefits included USD181,000 in higher commission expense. The increase in commission expense included higher commissions paid based on higher real estate loan originations.

Total assets were USD1.722bn at the end of the third quarter of 2012, which was USD98m or 6% higher than the same date a year ago. Total loans increased USD40m (4%), investments in securities increased USD21m (6%) and cash and cash equivalents increased USD14m (21%) from September of 2011. The balance sheet increases were funded by an increase in deposits of USD102m, or 7%. Total equity decreased USD1.7m from the same date in 2011 as a result of the repurchase of the series A preferred stock.

USD 1 = 0.62376 GBP

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Publication:M2 Banking & Credit News (BCN)
Article Type:Financial report
Date:Oct 22, 2012
Words:613
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