The Bank of Kentucky Financial Corp. (BKYF, Financial) filed Annual Report for the period ended 2010-12-31.
The Bank Of Kentucky Financial Corp. has a market cap of $152.4 million; its shares were traded at around $20.5 with a P/E ratio of 12.8 and P/S ratio of 1.7. The dividend yield of The Bank Of Kentucky Financial Corp. stocks is 2.7%. The Bank Of Kentucky Financial Corp. had an annual average earning growth of 6.4% over the past 10 years. GuruFocus rated The Bank Of Kentucky Financial Corp. the business predictability rank of 2.5-star.
On December 11, 2009, the Bank completed the purchase of three banking offices of Integra Bank Corporations wholly-owned bank subsidiary, Integra Bank N.A. (Integra Bank), located in Crittenden, Dry Ridge and Warsaw, Kentucky and a portfolio of selected commercial loans originated by Integra Banks Covington, Kentucky loan production office. This transaction also included the deposits of two additional branches in northern Kentucky where the banking offices were excluded. This transaction added $76 million in deposits and $51 million in loans. The deposits were purchased at a premium of 6.50%, while the loans were purchased at an approximate 1% discount. The acquisition included a core deposit intangible asset of $1.579 million and goodwill of $5.31 million. In a separate transaction, the Bank also bought an additional $49 million in loans from Integra Bank in the third quarter and $7 million in the fourth quarter of 2009 at an approximate 1% discount. None of these purchased loans had shown evidence of credit deterioration since origination
On December 31, 2009, the Bank completed the purchase of Tapke Asset Management, LLC (TAM). TAM was an independent investment advisory firm, headquartered in Fort Wright, Kentucky, and one of northern Kentuckys largest independent investment advisory firms. As a result of this transaction, the Banks client assets increased to over $650 million at December 31, 2009. TAM was purchased for $3 million, consisting of $2 million in cash and $1 million in Common Stock, with an additional $500,000 in contingent consideration payable in three years based on revenue retention, which had a fair value of $395,000. The acquisition included a customer relationship intangible of $1,525,000, a non-compete agreement intangible of $320,000, a trade name intangible of $165,000 and goodwill of $1,370,000.
BKFC has not experienced the stress or deterioration in its residential real estate portfolio that other financial institutions may be experiencing, as residential real estate loans represent a small portion of the Banks overall loan portfolio. The Bank has not created or marketed any sub-prime loan products to its customers and does not service mortgages on behalf of other institutions. The Bank follows a strategy of selling a majority of its originated residential loans in the secondary market. In the majority of situations, the Bank follows the underwriting guidelines of the various government agencies on residential real estate loans the Bank seeks to portfolio. For the year ended December 31, 2010, the Banks residential real estate loan production was $166.3 million. Of this, sold loans totaled $148.1 million, while portfolio and construction loans totaled $7.4 million and $10.8 million, respectively. Residential real estate charge-offs in this portfolio in 2010 and 2009
were .91% and .58% respectively. Delinquencies have been moderate, and non-accruals were at $3.45 million as of December 31, 2010 versus $112.7 million outstanding (amortizing portfolio loan balances) or 3.06%. The foregoing measures are a reflection of the Banks underwriting and collection practices. The Bank also added full time equivalent resources to its collections department, allowing the Bank to make more frequent and earlier collection calls, resulting in better working relationships with those borrowers who may have difficulty in making timely payments.
Management believes BKFC has been responsive to its obligations to the Federal government to expand the flow of credit to U.S. consumers and businesses. In particular, by purchasing U.S. government agency mortgage-backed securities (MBS) following the Treasury Departments investment of $34.0 million in BKFCs Series A Preferred Stock, BKFC provided incremental liquidity to that market. The Bank increased its holdings of U.S. government MBS from $13.8 million at December 31, 2007 to $43.9 million, $83.1 million and $99.3 million at December 31, 2008, 2009 and 2010, respectively.
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The Bank Of Kentucky Financial Corp. has a market cap of $152.4 million; its shares were traded at around $20.5 with a P/E ratio of 12.8 and P/S ratio of 1.7. The dividend yield of The Bank Of Kentucky Financial Corp. stocks is 2.7%. The Bank Of Kentucky Financial Corp. had an annual average earning growth of 6.4% over the past 10 years. GuruFocus rated The Bank Of Kentucky Financial Corp. the business predictability rank of 2.5-star.
Highlight of Business Operations:
BKFC and the Bank participated in two government programs enacted in response to the recession. First, in October 2008 the Bank participated in the transaction account guarantee component of the Federal Deposit Insurance Corporations (the FDIC) Temporary Liquidity Guarantee Program (the TLGP), whereby the FDIC will temporarily guarantee all depositor funds in qualifying noninterest-bearing transaction accounts. Second, in February 2009 BKFC participated in the Troubled Asset Relief Program (TARP)Capital Purchase Program (CPP) sponsored by the United States Department of the Treasury (the Treasury Department), in order to enhance BKFCs liquidity and capital position. BKFC received $34.0 million under the CPP in exchange for issuing 34,000 shares of Fixed Rate Cumulative Perpetual Preferred Stock, Series A (the Series A Preferred Stock), and a warrant (the Warrant) to purchase approximately 274,784 shares of BKFC common stock (Common Stock). The Treasury Departments authority to make new investments under the CPP expired in October 2010. On December 22, 2010, BKFC effected the repurchase of one-half of the outstanding $34 million of Series A Preferred Stock held by the Treasury Department. Neither BKFC nor the Bank have participated in any of the other wide-ranging programs that were instituted by the federal government in response to the economic recession. For a discussion of the impact of the current economic conditions on the financial condition and results of operations of BKFC and its subsidiaries, as well as a discussion of how curtailment or ending any such programs would effect BKFC and/or the Bank, see below under The Current Economic Environment, as well as Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations in this Annual Report.On December 11, 2009, the Bank completed the purchase of three banking offices of Integra Bank Corporations wholly-owned bank subsidiary, Integra Bank N.A. (Integra Bank), located in Crittenden, Dry Ridge and Warsaw, Kentucky and a portfolio of selected commercial loans originated by Integra Banks Covington, Kentucky loan production office. This transaction also included the deposits of two additional branches in northern Kentucky where the banking offices were excluded. This transaction added $76 million in deposits and $51 million in loans. The deposits were purchased at a premium of 6.50%, while the loans were purchased at an approximate 1% discount. The acquisition included a core deposit intangible asset of $1.579 million and goodwill of $5.31 million. In a separate transaction, the Bank also bought an additional $49 million in loans from Integra Bank in the third quarter and $7 million in the fourth quarter of 2009 at an approximate 1% discount. None of these purchased loans had shown evidence of credit deterioration since origination
On December 31, 2009, the Bank completed the purchase of Tapke Asset Management, LLC (TAM). TAM was an independent investment advisory firm, headquartered in Fort Wright, Kentucky, and one of northern Kentuckys largest independent investment advisory firms. As a result of this transaction, the Banks client assets increased to over $650 million at December 31, 2009. TAM was purchased for $3 million, consisting of $2 million in cash and $1 million in Common Stock, with an additional $500,000 in contingent consideration payable in three years based on revenue retention, which had a fair value of $395,000. The acquisition included a customer relationship intangible of $1,525,000, a non-compete agreement intangible of $320,000, a trade name intangible of $165,000 and goodwill of $1,370,000.
BKFC has not experienced the stress or deterioration in its residential real estate portfolio that other financial institutions may be experiencing, as residential real estate loans represent a small portion of the Banks overall loan portfolio. The Bank has not created or marketed any sub-prime loan products to its customers and does not service mortgages on behalf of other institutions. The Bank follows a strategy of selling a majority of its originated residential loans in the secondary market. In the majority of situations, the Bank follows the underwriting guidelines of the various government agencies on residential real estate loans the Bank seeks to portfolio. For the year ended December 31, 2010, the Banks residential real estate loan production was $166.3 million. Of this, sold loans totaled $148.1 million, while portfolio and construction loans totaled $7.4 million and $10.8 million, respectively. Residential real estate charge-offs in this portfolio in 2010 and 2009
were .91% and .58% respectively. Delinquencies have been moderate, and non-accruals were at $3.45 million as of December 31, 2010 versus $112.7 million outstanding (amortizing portfolio loan balances) or 3.06%. The foregoing measures are a reflection of the Banks underwriting and collection practices. The Bank also added full time equivalent resources to its collections department, allowing the Bank to make more frequent and earlier collection calls, resulting in better working relationships with those borrowers who may have difficulty in making timely payments.
Management believes BKFC has been responsive to its obligations to the Federal government to expand the flow of credit to U.S. consumers and businesses. In particular, by purchasing U.S. government agency mortgage-backed securities (MBS) following the Treasury Departments investment of $34.0 million in BKFCs Series A Preferred Stock, BKFC provided incremental liquidity to that market. The Bank increased its holdings of U.S. government MBS from $13.8 million at December 31, 2007 to $43.9 million, $83.1 million and $99.3 million at December 31, 2008, 2009 and 2010, respectively.
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