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

Exhibit 99.1

THE BANK OF KENTUCKY FINANCIAL CORPORATION

ANNOUNCES FIRST QUARTER EARNINGS

Net Income up 12% for 2009

CRESTVIEW HILLS, KENTUCKY, April 17, 2009 – 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 of 2009. The Company reported an increase in diluted earnings per common share of 5% for the first quarter of 2009, as compared to the same period in 2008. The first quarter results reflect the sale of $34 million in preferred stock and the issuance of a warrant for common shares to the U.S. Department of Treasury (“Treasury”) on February 13, 2009 in connection with the Company’s participation in the Capital Purchase Program. The effect of Treasury’s investment on the first quarter results includes the accrual for the payment of dividends on the preferred stock and the related preferred stock amortization expense. The first quarter results included an increase in net interest income of $629,000 and gains on the sales of securities of $263,000, which were partially offset with an additional $725,000 provision for loan losses as compared to the first quarter of 2008. Contributing to this increase in the provision for loan losses was management’s continuing concerns over the effect the current deteriorating economic conditions will have on the Company’s loan portfolio.

A summary of the Company’s results follows:

First Quarter ended March 31,	2009		2008		Change
Net income	$	2,816,000	$	2,504,000	12	%
Net income available for common shareholders	$	2,558,000	$	2,504,000	2	%
Earnings per common share, basic	$	0.46	$	0.44	5	%
Earnings per common share, diluted	$	0.46	$	0.44	5	%

Net interest income increased $629,000, or 7% in the first quarter of 2009, as compared to the same period in 2008, while the net interest margin increased from 3.44% in the first quarter of 2008 to 3.50% in the first quarter of 2009. These increases resulted primarily from the cost of interest bearing liabilities decreasing more than the yield on earning assets. The cost of interest bearing liabilities decreased 171 basis points, from 3.67% for the first quarter of 2008 to 1.96% for the first quarter of 2009, while the yield on interest earning assets decreased only 142 basis points, from 6.67% for the first quarter of 2008 to 5.25% for the first quarter of 2009.

The provision for loan losses increased by $725,000 (91%) in the first quarter of 2009 as compared to the same period in 2008. Contributing to this increase was higher levels of charge-offs in the first quarter of 2009, as compared to the same period in 2008, and management’s concerns over the declining housing market and overall deteriorating economic conditions. The Company recorded $682,000 in net charge-offs in the first quarter of 2009 as compared to $485,000 in the first quarter of 2008. The Company’s non-performing loans as a percentage of total loans were 1.18% as of March 31, 2009, as compared to 1.23% as of March 31, 2008, and the annualized net charge-offs to average loans increased from .20% in the first quarter of 2008 to .27% in the first quarter of 2009.

Non-interest income increased 15% ($548,000) in the first quarter of 2009, as compared to the same period in 2008, while non-interest expense increased 1% ($108,000) from the same period last year. Contributing to the increase in non-interest income was $263,000 in gains on the sales of securities and an 8% ($145,000) increase in service charges on deposits. Non-interest expense in the first quarter of 2009 included a $218,000 (120%) increase in FDIC insurance expense which was offset by a $297,000 (7%) decrease in salaries and employee benefits expense as compared to the first quarter of 2008. The reduction in salaries and benefits included a $229,000 decrease in accruals for the bonus and profit sharing plans in the first quarter of 2009 as compared to the first quarter of 2008. The decreases in these incentive plans cost was the result of the Company not meeting earnings expectations.

Total assets were $1.315 billion at the end of the first quarter of 2009, which was $77 million or 6% higher than the same date a year ago. Total loans and investments grew $66 million or 7% and $48 million or 40% respectively from March of 2008 and were funded by an increase in deposits of $56 million or 5% and an increase in preferred stock and warrants of $34 million.

The Bank of Kentucky Financial Corporation

Selected Consolidated Financial Data

(Dollars in thousands, except per share data)

	First Quarter Comparison
	3/31/09			3/31/08			% Chg
Income Statement Data
Interest income	$	15,113		$	18,510		(18	)%
Interest expense		4,877			8,903		(45	)%
Net interest income		10,236			9,607		7	%
Provision for loan losses		1,525			800		91	%
Net interest income after provision for loan losses		8,711			8,807		(1	)%
Non – interest income		4,102			3,554		15	%
Non – interest expense		8,848			8,740		1	%
Net income before income taxes		3,965			3,621		10	%
Provision for income taxes		1,149			1,117		3	%
Net income		2,816			2,504		12	%
Preferred Stock Dividends & Amortization		258			—		100	%
Net Income Available to Common Shareholders	$	2,558		$	2,504		2	%
Per Common Share Data
Diluted earnings per common share		0.46			0.44		5	%
Cash dividends declared		0.28			0.26		8	%
Earnings Performance Data
Return on common equity		10.11	%		10.77	%	(66)	bps
Return on assets		.89	%		.83	%	6	bps
Net interest margin		3.50	%		3.44	%	6	bps
Balance Sheet Data
Investments	$	159,192		$	111,204		43	%
Total loans		1,026,845			960,737		7	%
Allowance for loan losses		10,753			8,820		22	%
Total assets		1,315,329			1,238,643		6	%
Total deposits		1,097,811			1,041,852		5	%
Total borrowings		71,050			92,415		(23	)%
Common Stockholders’ equity		103,711			93,596		11	%
Preferred Stock		33,007			—		100	%
Common Shares Outstanding		5,612,607			5,624,607		—	%

	Five-Quarter Comparison
	3/31/09			12/31/08			9/30/08			6/30/08			3/31/08
Income Statement Data
Net interest income	$	10,236		$	10,394		$	10,544		$	10,117		$	9,607
Provision for loan losses		1,525			1,675			775			1,600			800
Net interest income after provision for loan losses		8,711			8,719			9,769			8,517			8,807
Service charges and fees		2,015			2,269			2,452			2,327			1,870
Gain on sale of real estate loans		526			220			116			165			436
Gain on sale of securities		263			—			—			—			—
Trust fee income		230			252			284			283			292
Bankcard transaction revenue		491			489			502			500			433
Other non-interest income		577			420			553			382			523
Total non-interest income		4,102			3,650			3,907			3,657			3,554
Salaries and employee benefits expense		3,999			3,886			4,224			3,979			4,296
Occupancy and equipment expense		1,237			1,132			1,191			1,183			1,212
Data processing expense		394			330			336			339			360
State bank taxes		452			336			420			420			400
Amortization of intangible assets		296			296			296			333			352
FDIC Insurance		399			194			194			195			181
Other non-interest expenses		2,071			2,183			2,073			1,943			1,939
Total non-interest expense		8,848			8,357			8,734			8,392			8,740
Net income before income tax expense		3,965			4,012			4,942			3,782			3,621
Income tax expense		1,149			1,221			1,523			1,155			1,117
Net income		2,816			2,791			3,419			2,627			2,504
Preferred Stock Dividends & Amortization		258			—			—			—			—
Net Income Available to Common Shareholders	$	2,558			2,791			3,419			2,627			2,504
Per Common Share Data
Diluted earnings per common share		0.46			0.50			0.61			0.47			0.44
Cash dividends declared		0.28			0.00			0.28			0.00			0.26
Weighted average common shares outstanding
Basic		5,611,607			5,606,607			5,606,607			5,613,530			5,658,002
Diluted		5,611,607			5,606,749			5,606,980			5,615,496			5,670,435
Earnings Performance Data
Return on common equity		10.11	%		11.15	%		14.08	%		11.17	%		10.77	%
Return on assets		.89	%		.90	%		1.14	%		.87	%		.83	%
Net interest margin		3.50	%		3.64	%		3.82	%		3.63	%		3.44	%
Net interest margin (tax equivalent)		3.58	%		3.70	%		3.86	%		3.68	%		3.48	%

	3/31/09			12/31/08			9/30/08			6/30/08			3/31/08
Balance Sheet Data
Investments	$	159,192		$	119,212		$	97,819		$	101,142		$	111,204
Total loans		1,026,845			1,026,557			999,393			982,916			960,737
Allowance for loan losses		10,753			9,910			9,464			9,099			8,820
Total assets		1,315,329			1,255,382			1,214,339			1,208,176			1,238,643
Total deposits		1,097,811			1,071,153			992,493			1,031,990			1,041,852
Total borrowings		71,050			72,951			113,256			70,555			92,415
Common Stockholders’ equity		103,711			101,448			97,720			95,514			93,596
Preferred Stock		33,007			—			—			—			—
Common Shares Outstanding		5,612,607			5,606,607			5,606,607			5,606,607			5,624,607
Average Balance Sheet Data
Average investments	$	123,123		$	106,903		$	99,185		$	110,174		$	123,958
Average other earning assets		35,120			17,872			7,865			38,578			46,825
Average loans		1,027,391			1,011,395			991,206			971,573			953,592
Average earning assets		1,185,634			1,136,170			1,098,256			1,120,325			1,124,375
Average assets		1,282,008			1,236,114			1,195,289			1,214,158			1,218,466
Average deposits		1,080,699			1,046,289			1,003,548			1,030,671			1,044,996
Average interest bearing deposits		936,503			899,434			852,399			887,201			910,592
Average interest bearing transaction deposits		536,141			516,082			492,501			523,734			537,275
Average interest bearing time deposits		400,362			383,352			359,898			363,467			373,317
Average borrowings		73,397			78,631			79,227			72,707			63,791
Average interest bearing liabilities		1,009,900			978,065			931,626			959,908			974,383
Average Common stockholders equity		102,579			99,584			96,618			94,556			93,541
Average Preferred stock		16,504			—			—			—			—
Asset Quality Data
Allowance for loan losses to total loans		1.05	%		.97	%		.95	%		.93	%		.92	%
Allowance for loan losses to non-performing loans		89	%		98	%		85	%		74	%		75	%
Nonaccrual loans	$	7,636		$	8,211		$	8,226		$	9,745		$	8,744
Restructured loans		3,492			575			575			—			—
Loans – 90 days past due & still accruing		1,022			1,350			2,844			2,490			3,066
Total non-performing loans		12,150			10,136			11,645			12,235			11,810
OREO and repossessed assets		1,259			712			3,673			3,474			4,373
Total non-performing assets		13,409			10,848			15,318			15,709			16,183
Non-performing loans to total loans		1.18	%		.99	%		1.17	%		1.24	%		1.23	%
Non-performing assets to total assets		1.02	%		.87	%		1.26	%		1.30	%		1.31	%
Annualized charge-offs to average loans		.27	%		.48	%		.16	%		.54	%		.20	%
Net charge-offs	$	682		$	1,229		$	410		$	1,321		$	485

About BKFC

BKFC, a bank holding company with assets of approximately $1.315 billion, offers banking and related financial services to both individuals and business customers. BKFC operates twenty-eight branch locations and forty-five 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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