Bank of Kentucky Financial (BKYF) 8-K Announces Second Quarter Earnings

Exhibit 99.1

NEWS RELEASE

THE BANK OF KENTUCKY FINANCIAL CORPORATION

ANNOUNCES SECOND QUARTER EARNINGS

CRESTVIEW HILLS, KENTUCKY, July 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 second quarter and the six months ended June 30, 2006. For the second quarter and the first six months of 2006, the Company reported a decrease in diluted net income per share of 7% and 9% respectively, as compared to the same periods in 2005. Contributing to the decrease was the recording of stock option expense of $250,000 and $490,000 respectively, in the second quarter and first six months 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 second quarter and the six months ended June 30, 2005 would have resulted in recording stock option compensation expense of $201,000 and $397,000 respectively. When the second quarter and the six months ended June 30, 2005 are adjusted for this additional expense, diluted earnings per share would have been $.41 and $.81 per share respectively, which is equal to the diluted earnings per share for the second quarter of 2006 and 2% above the diluted earnings per share for the six months ended June 30, 2006.

A summary of the Company’s results follows:

Second Quarter ended June 30,	2006		2005		Change
Net income	$	2,380,000	$	2,615,000	(9	)%
Net income per share, basic	$	0.41	$	0.44	(7	)%
Net income per share, diluted	$	0.41	$	0.44	(7	)%
Six Months ended June 30,	2006		2005		Change
Net income	$	4,646,000	$	5,160,000	(10	)%
Net income per share, basic	$	.79	$	.87	(9	)%
Net income per share, diluted	$	.79	$	.87	(9	)%

Net interest income increased $306,000 or 4% in the second quarter of 2006, as compared to the same period in 2005, while the net interest margin decreased from 4.15% in the second quarter of 2005 to 3.94% in the second quarter of 2006. The increase in net interest income was the result of the growth in earnings assets by $74 million, as compared to the second quarter of 2005, while the reduction in the net interest margin was the result of the mix of assets added and the flattening yield curve. The mix of the $74 million of earning assets added since the second quarter of 2005 consisted of $39 million in higher yielding loans and $35 million in lower yielding overnight investments and securities. On a consecutive quarter basis, net interest income increased $384,000 or 5% from the first quarter of 2006 and the net interest margin improved 12 basis points, from 3.84 % to 3.94%.

Non-interest income increased 10% ($234,000) in the second quarter of 2006, as compared to the same period in 2005, while non-interest expense increased 17% ($1,084,000) from the same period last year. Contributing to

the increase in non-interest income was service charges and fees (up $137,000, 13%). 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 $711,000 or 24%, and included the additional compensation cost of $250,000 for stock options.

Total assets were $957 million at the end of the second quarter of 2006, which was $84 million or 10% higher than the same date a year ago. Total loans, securities and federal funds grew $54 million, $13 million and $3 million respectively, or 7%, 22% and 100% respectively from June 30, 2005. The growth in assets was funded by an increase in deposits of $68 million or 9%, borrowings of $9 million or 18%, and stockholders’ equity of $6 million or 7%.

The Bank of Kentucky Financial Corporation

Selected Consolidated Financial Data

(Dollars in thousands, except per share data)

	Second Quarter Comparison								Six months ended June 30, Comparison
	6/30/06			6/30/05			% Change		2006			2005			% Change
Income Statement Data
Net interest income	$	8,543		$	8,237		4	%	$	16,702		$	16,148		3	%
Provision for loan losses		400			475		(16	)%		800			825		(3	)%
Service charges on deposit accounts		1,229			1,092		13	%		2,358			1,883		25	%
Gains on the sale of mortgage loans		220			276		(20	)%		459			451		2	%
Other non-interest income		1,125			972		16	%		2,205			1,927		14	%
Salaries and employee benefits expense		3,718			3,007		24	%		7,335			5,764		27	%
Occupancy and equipment expense		1,018			987		3	%		1,997			1,928		4	%
Other non-interest expense		2,558			2,216		15	%		4,860			4,217		15	%
Net income		2,380			2,615		(9	)%		4,646			5,160		(10	)%
Per Share Data
Basic earnings per share	$	0.41		$	0.44		(7	)%	$	.79		$	.87		(9	)%
Diluted earnings per share		0.41			0.44		(7	)%		.79			.87		(9	)%
Cash dividends declared		0.00			0.00		00	%		0.18			0.14		29	%
Earnings Performance Data
Return on equity		11.73	%		13.74	%	(201	)bps		11.55	%		13.78	%	(223	)bps
Return on assets		1.00	%		1.20	%	(20	)bps		.98	%		1.19	%	(21	)bps
Net interest margin		3.94	%		4.15	%	(21	)bps		3.88	%		4.12	%	(24	)bps
									6/30/06			6/30/05			% Change
Balance Sheet Data
Investments									$	72,801		$	59,468		22	%
Total loans										787,807			733,579		7	%
Allowance for loan losses										7,650			7,364		4	%
Total assets										957,144			872,841		10	%
Total deposits										808,068			740,192		9	%
Total borrowings										58,485			49,675		18	%
Stockholders’ equity										82,895			77,230		7	%
Asset Quality Data
Allowance for loan losses to total loans										.97	%		1.00	%
Non-performing loans to total loans										.77	%		.94	%
Annualized charge-offs to average loans										.20	%		.19	%

	Five-Quarter Comparison
	6/30/06			3/31/06			12/31/05			9/30/05			6/30/05
Income Statement Data
Net interest income	$	8,543		$	8,159		$	8,159		$	8,316		$	8,237
Provision for loan losses		400			400			350			650			475
Service charges and fees		1,229			1,129			1,184			1,230			1,092
Gains on the sale of mortgage loans		220			239			225			289			276
Other non-interest income		1,125			1,080			900			996			972
Salaries and employee benefits expense		3,718			3,617			3,147			3,317			3,007
Occupancy and equipment expense		1,018			979			971			982			987
Other non-interest expense		2,558			2,302			2,546			2,289			2,216
Net income		2,380			2,266			2,499			2,468			2,615
Per Share Data
Basic earnings per share	$	0.41		$	0.39		$	0.42		$	0.42		$	0.44
Diluted earnings per share		0.41			0.38			0.42			0.42			0.44
Cash dividends declared		0.00			0.18			0.00			0.16			0.00
Earnings Performance Data
Return on equity		11.73	%		11.37	%		12.43	%		12.52	%		13.74	%
Return on assets		1.00	%		.97	%		1.06	%		1.11	%		1.20	%
Net interest margin		3.94	%		3.82	%		3.77	%		4.07	%		4.15	%
	6/30/06			3/31/06			12/31/05			9/30/05			6/30/05
Balance Sheet Data
Investments	$	72,801		$	106,153		$	94,375		$	62,569		$	59,468
Total loans		787,807			746,211			731,059			730,859			733,579
Allowance for loan losses		7,650			7,389			7,581			7,581			7,364
Total assets		957,144			951,432			957,338			896,859			872,841
Total deposits		808,068			827,719			831,110			770,414			740,192
Total borrowings		58,485			35,534			38,516			40,976			49,675
Stockholders’ equity		82,895			80,528			80,447			78,467			77,230
Asset Quality Data
Allowance for loan losses to total loans		.97	%		.99	%		1.04	%		1.04	%		1.00	%
Non-performing loans to total loans		.77	%		1.22	%		1.24	%		.96	%		.94	%
Annualized charge-offs to average loans		.20	%		.33	%		.20	%		.20	%		.19	%

About BKFC

BKFC, a bank holding company with assets of approximately $957 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

Executive Vice President and CFO

(859) 372-5169

mgerrety@bankofky.com

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