Bank of Kentucky Financial 8K Announces First Quarter Earnings | BKYF 21 Apr 06

Exhibit 99.1

LOGO

NEWS RELEASE

THE BANK OF KENTUCKY FINANCIAL CORPORATION

ANNOUNCES FIRST QUARTER EARNINGS

CRESTVIEW HILLS, KENTUCKY, April 21, 2006 – The Bank of Kentucky Financial Corporation (the “Company”) (OTC/BB: BKYF), the holding company of the Bank of Kentucky, Inc., today reported its earnings for the first quarter of 2006. Net income decreased 11% to $2,266,000 and diluted earnings per share decreased 12% to $0.38 per share, as compared to the same period in 2005. The Company also recorded stock option expense of $241,000 in the first quarter of 2006 in accordance with Statement of Financial Accounting Standards No. 123(R),Share-BasedPayment (“FAS 123(R)”), adopted on January 1, 2006. For comparison purposes, applying the new standards of FAS 123(R) to the first quarter of 2005 would have resulted in recording stock option compensation expense of $197,000. When the first quarter of 2005 is adjusted for this additional expense, net income and diluted earnings per share would have only decreased 5%, or $109,000 and $.02 per share, from the first quarter of 2005 as compared to the first quarter of 2006.

A summary of the Company’s results follows:


First Quarter ended March 31,	2006		2005		Change
Net income	$	2,266,000	$	2,545,000	(11	)%
Net income per share, basic	$	0.39	$	0.43	(9	)%
Net income per share, diluted	$	0.38	$	0.43	(12	)%

Net interest income increased $248,000 or 3% in the first quarter of 2006, as compared to the same period in 2005, while the net interest margin decreased from 4.09% in the first quarter of 2005 to 3.82% in the first quarter of 2006. Strong deposit growth, up 13% or $96 million from a year earlier, contributed to both the increase in net interest income and the decrease in the net interest margin from the first quarter of 2005. The increase in net interest income was driven by the growth in deposits, which funded the increase in average earning assets of $83 million from the first quarter of 2005, while the mix of these added earning assets contributed to the decrease in the net interest margin. Of the additional $83 million average earning assets added from the first quarter of 2005, $24 million consisted of higher yielding loans and $59 million consisted of lower yielding overnight investments and securities. Also contributing to the lower net interest margin was higher levels of non-performing loans in the first quarter of 2006, as compared to the same period in 2005.

Non-interest income increased 27% ($527,000) in the first quarter of 2006, as compared to the same period in 2005, while non-interest expense increased 21% ($1,199,000) from the same period last year. Contributing to the increase in non-interest income was service charges and fees (up $338,000, 43%). Contributing to the increase in service charge income was increased revenue from cash management products. The largest increases in non-interest expense were salaries and employee benefits expense which increased $860,000 or 31%, and included the additional compensation cost for the added staffing for the Bank’s cash management operations center which opened in February of 2005 and the $241,000 in compensation cost for stock options.

Total assets were $951 million at the end of the first quarter of 2006, which was $71 million or 8% higher than the same date a year ago. Total loans, securities and federal funds grew $19 million, $46 million and $7 million respectively, or 3%, 75% and 100% growth respectively from March 31, 2005. The growth in assets was funded by an increase in deposits of $96 million or 13% and stockholders’ equity of $6 million or 8%, which was offset with a $33 million or 48% decrease in borrowings.

The Bank of Kentucky Financial Corporation

Selected Consolidated Financial Data

(Dollars in thousands, except per share data)


	First Quarter Comparison
	3/31/06			3/31/05			% Change
Income Statement Data
Net interest income	$	8,159		$	7,911		3	%
Provision for loan losses		400			350		14	%
Service charges and fees		1,129			791		43	%
Gains on the sale of mortgage loans		239			175		37	%
Other non-interest income		1,080			955		13	%
Salaries and employee benefits expense		3,617			2,757		31	%
Occupancy and equipment expense		979			941		4	%
Other non-interest expense		2,302			2,001		15	%
Net income		2,266			2,545		(11	)%
Per Share Data
Basic earnings per share	$	0.39		$	0.43		(9	)%
Diluted earnings per share		0.38			0.43		(12	)%
Cash dividends declared		0.18			0.14		29	%
Earnings Performance Data
Return on equity		11.37	%		13.83	%	(246	)bps
Return on assets		.97	%		1.18	%	(21	)bps
Net interest margin		3.82	%		4.09	%	(27	)bps

	3/31/06			3/31/05			% Change
Balance Sheet Data
Investments	$	106,153		$	60,632		75	%
Total loans		746,211			727,525		3	%
Allowance for loan losses		7,389			7,320		1	%
Total assets		951,432			880,200		8	%
Total deposits		827,719			731,479		13	%
Total borrowings		35,534			68,637		(48	)%
Stockholders’ equity		80,528			74,547		8	%
Asset Quality Data
Allowance for loan losses to total loans		.99	%		1.01	%
Non-performing loans to total loans		1.22	%		.72	%
Annualized charge-offs to average loans		.33	%		.14	%


	Five-Quarter Comparison
	3/31/06			12/31/05			9/30/05			6/30/05			3/31/05
Income Statement Data
Net interest income	$	8,159		$	8,159		$	8,316		$	8,237		$	7,911
Provision for loan losses		400			350			650			475			350
Service charges and fees		1,129			1,184			1,230			1,092			791
Gains on the sale of mortgage loans		239			225			289			276			175
Other non-interest income		1,080			900			996			972			955
Salaries and employee benefits expense		3,617			3,147			3,317			3,007			2,757
Occupancy and equipment expense		979			971			982			987			941
Other non-interest expense		2,302			2,546			2,289			2,216			2,001
Net income		2,266			2,499			2,468			2,615			2,545
Per Share Data
Basic earnings per share	$	0.39		$	0.42		$	0.42		$	0.44		$	0.43
Diluted earnings per share		0.38			0.42			0.42			0.44			0.43
Cash dividends declared		0.18			0.00			0.16			0.00			0.14
Earnings Performance Data
Return on equity		11.37	%		12.43	%		12.52	%		13.74	%		13.83	%
Return on assets		.97	%		1.06	%		1.11	%		1.20	%		1.18	%
Net interest margin		3.82	%		3.77	%		4.07	%		4.15	%		4.09	%

	3/31/06			12/31/05			9/30/05			6/30/05			3/31/05
Balance Sheet Data
Investments	$	106,153		$	94,375		$	62,569		$	59,468		$	60,632
Total loans		746,211			731,059			730,859			733,579			727,525
Allowance for loan losses		7,389			7,581			7,581			7,364			7,320
Total assets		951,432			957,338			896,859			872,841			880,200
Total deposits		827,719			831,110			770,414			740,192			731,479
Total borrowings		35,534			38,516			40,976			49,675			68,637
Stockholders’ equity		80,528			80,447			78,467			77,230			74,547
Asset Quality Data
Allowance for loan losses to total loans		.99	%		1.04	%		1.04	%		1.00	%		1.01	%
Non-performing loans to total loans		1.22	%		1.24	%		.96	%		.94	%		.72	%
Annualized charge-offs to average loans		.33	%		.20	%		.20	%		.19	%		.14	%

About BKFC

BKFC, a bank holding company with assets of approximately $951 million, offers banking and related financial services to both individuals and business customers. BKFC operates twenty-seven branch locations and thirty-six ATMs in the Northern Kentucky market.

For more information contact:

Martin Gerrety

Senior Vice President and CFO

(859) 372-5169

mgerrety@bankofky.com

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Bank of Kentucky Financial (BKYF) Inactive 8-KAnnounces First Quarter Earnings