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

Exhibit 99.1

NEWS RELEASE

THE BANK OF KENTUCKY FINANCIAL CORPORATION

ANNOUNCES THIRD QUARTER EARNINGS

Earnings per share up 194% for the third quarter and 25% for the nine

months of 2010

CRESTVIEW HILLS, KENTUCKY, October 21, 2010 – 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 third quarter and nine months ended September 30, 2010. For the third quarter and the first nine months of 2010, the Company reported an increase in diluted earnings per common share of 194% and 25% respectively from the same periods in 2009.

A summary of the Company’s results follows:

Third Quarter ended September 30,	2010		2009		Change
Net income	$	3,528,000	$	1,545,000		128	%
Net income available to common shareholders	$	3,013,000	$	1,039,000		190	%
Earnings per common share, basic	$	0.53	$	0.19		179	%
Earnings per common share, diluted	$	0.53	$	0.18		194	%
Nine Months ended September 30,	2010		2009		Change
Net income	$	7,998,000	$	6,432,000		24	%
Net income available to common shareholders	$	6,459,000	$	5,149,000		25	%
Net income per common share, basic	$	1.14	$	0.92		24	%
Net income per common share, diluted	$	1.14	$	0.91		25	%

Robert Zapp, President and Chief Executive Officer stated, “We celebrated our twentieth year in business in August and it is equally pleasing to present our third quarter numbers. Strong revenue growth from across the organization helped boost earnings at a time when regulatory and economic pressures persist. We continue to see a steady improvement on the credit side, which allows for a lower provision. We remain proactive, however, and recognize there is much work to do. In addition to these positive trends, we were pleased to learn of the Bank’s number one ranking in total market share in Northern Kentucky, according to FDIC data recently released. Our core deposit growth has been unmatched and we are proud to be in the top spot for the first time. It is a testament to our strategy and commitment to the community. Although we can enjoy these accomplishments and milestones, our management team is realistic about the challenges facing all of us. We are focused on improving all areas of the Bank to further drive revenue, find efficiencies, and expand each line of business.”

Driving the increase in earnings in the third quarter was strong revenue growth and a lower provision for loan losses as compared to the third quarter of 2009. Total revenue increased $4,226,000 or 28% from the third quarter of 2009 while the provision for loan losses decreased $500,000 13% in the same period. The growth in revenue included a $2,175,000 or 19% increase in net interest income and a $2,051,000 or 57% increase in non interest income. The decrease in the provision for loan losses reflected improving credit metrics. Two acquisitions that

were completed in the fourth quarter of 2009 also had a significant impact on the Company’s balance sheet and income statement as compared to the third quarter of 2009. In the fourth quarter of 2009, the Bank completed the purchase of three banking offices of Integra Bank Corporation’s wholly-owned bank subsidiary, Integra Bank N.A., located in Crittenden, Dry Ridge and Warsaw, Kentucky and a portfolio of selected commercial loans originated by Integra Bank’s Covington, Kentucky loan production office. This transaction added $76 million in deposits and $107 million in loans. The Bank also completed the purchase of Tapke Asset Management, LLC (“TAM”) in the fourth quarter of 2009.

Net interest income increased $2,175,000, or 19% in the third quarter of 2010, as compared to the same period in 2009, while the net interest margin, on a tax equivalent basis, increased 25 basis points from 3.72% in the third quarter of 2009 to 3.97% in the third quarter of 2010. Contributing to the increase in net interest income was the growth in average earning assets, which increased $139 million, or 11% on average from the third quarter of 2009.

The provision for loan losses decreased by $500,000 (13%) in the third quarter of 2010, as compared to the same period in 2009. Contributing to this decrease was lower levels on non-performing loans from September 2009 and lower levels of charge-offs on a sequential basis. The Company’s non-performing loans as a percentage of total loans were 1.69% as of September 30, 2010, as compared to 2.29% as of September 30, 2009, and while annualized net charge-offs to average loans increased from .76% in the third quarter of 2009 to 1.02% in the third quarter of 2010 the net charge-off ratio was lower than the levels experienced over the last three quarters. The Company recorded $2,867,000 in net charge-offs in the third quarter of 2010 as compared to $2,038,000 in the third quarter of 2009. On a sequential basis, the provision for loan losses of $3,500,000 in the third quarter of 2010 was $1,000,000 lower than the provision in the second quarter of 2010, while non-performing loans decreased from $22.4 million (1.99% of total loans) at June 30, 2010 to $18.9 million (1.69% of total loans) at September 30, 2010. Net charge-offs also on a sequential basis decreased from $3,577,000 (1.26% of loans) in the second quarter of 2010 to $2,867,000 (1.02% of loans) in the third quarter of 2010. As a result of the impact that current economic conditions have had on the Company’s loan portfolio, the allowance for loan losses (ALL) increased $3,385,000 (25%) from September 30, 2009. As a result of the added allowance, the ALL has increased from 1.24% of loans at the end of the third quarter of 2009 to 1.53% of loans at the end of the third quarter of 2010. Removing the loans purchased from Integra, the ALL would be approximately 1.68% of loans at the end of third quarter 2010. The portfolio of commercial loans purchased from Integra in the fourth quarter of 2009 were purchased at a discount of .98%, and current accounting does not allow this discount to be added to the ALL. The adequacy of the ALL is analyzed quarterly and adjusted as necessary to maintain appropriate reserves for probable incurred losses in the Bank’s loan portfolio.

Non-interest income increased 57% ($2,051,000) in the third quarter of 2010, as compared to the same period in 2009, while non-interest expense increased 19% ($1,727,000) from the same period last year. Contributing to the increase in non-interest income was gains on the sale of real estate loans which increase $818,000 (367%) from the third quarter of 2009. These fees were driven by extremely low interest rates, which have prompted a strong demand for home mortgage loan refinancing. Also contributing to the increase in non-interest income was a lower amount of losses on other real estate owned. The third quarter of 2009 included $594,000 in losses on other real estate owned, of which $462,000 was from one property. Other increases in non-interest income included trust income, service charges and bankcard revenue. Contributing to the increase in trust fees was the TAM acquisition. Non-interest expense in the third quarter of 2010 included the full quarter effect of both the Integra branch acquisition and the TAM acquisition. Added personnel from the TAM and Integra acquisitions and higher commissions associated with the gains on the sale of real estate loans contributed to the 28% ($1,104,000) increase

in salaries and benefits. Commissions accounted for $250,000 of this increase in salaries and benefits, which was 319% higher than the third quarter of 2009.

Total assets were $1.510 billion at the end of the third quarter of 2010, which was $118 million or 9% higher than the same date a year ago. Total loans and investments grew $10 million (1%) and $87 million (56%) respectively, from September of 2009 and were funded by an increase in deposits of $121 million or 10%.

The Bank of Kentucky Financial Corporation

Selected Consolidated Financial Data

(Dollars in thousands, except per share data)

	Third Quarter Comparison									Nine months ended September 30, Comparison
	9/30/10			9/30/09			% Chg			9/30/10			9/30/09			% Chg
Income Statement Data
Interest income	$	16,694		$	15,787			6	%	$	50,280		$	46,428			8	%
Interest expense		3,102			4,370			(29	)%		10,300			13,797			(25	)%
Net interest income		13,592			11,417			19	%		39,980			32,631			23	%
Provision for loan losses		3,500			4,000			(13	)%		12,500			8,325			50	%
Net interest income after provision for loan losses		10,092			7,417			36	%		27,480			24,306			13	%
Non interest income		5,627			3,576			57	%		15,172			11,900			28	%
Non interest expense		10,725			8,998			19	%		31,654			27,431			15	%
Net income before income taxes		4,994			1,995			150	%		10,998			8,775			25	%
Provision for income taxes		1,466			450			226	%		3,000			2,343			28	%
Net income		3,528			1,545			128	%		7,998			6,432			24	%
Preferred stock dividends & amortization		515			506			2	%		1,539			1,283			20	%
Net income available to common shareholders	$	3,013		$	1,039			190	%	$	6,459		$	5,149			25	%
Per Common Share Data
Diluted earnings per common share		0.53			0.18			194	%		1.14			0.91			25	%
Cash dividends declared		0.28			0.28			0	%		0.56			0.56			0	%
Earnings Performance Data
Return on common equity		10.68	%		3.95	%		673	bps		7.81	%		6.63	%		118	bps
Return on assets		.93	%		.46	%		47	bps		.69	%		.65	%		4	bps
Net interest margin		3.90	%		3.64	%		26	bps		3.75	%		3.56	%		19	bps

The Bank of Kentucky Financial Corporation

Selected Consolidated Financial Data

(Dollars in thousands, except per share data)

Balance Sheet Data

	September 30, 2010			December 31, 2009			September 30, 2009
Assets:
Cash and cash equivalents	$	41,280		$	98,738		$	56,418
Investments		240,657			214,667			153,832
Loans held for sale		21,903			6,798			2,926
Total loans, gross		1,120,168			1,154,984			1,110,202
Allowance for loan losses		(17,163	)		(15,153	)		(13,778	)
Premises and equipment, net		23,373			23,588			18,793
Goodwill and acquisition intangibles, net		25,820			26,936			16,925
Other assets and accrued interest receivable		54,028			54,440			46,351
Total assets	$	1,510,066		$	1,564,998		$	1,391,669
Liabilities & Shareholders’ Equity
Total deposits	$	1,271,455		$	1,343,272		$	1,150,764
Short-term borrowings		36,175			21,669			46,220
Notes payable		44,766			44,781			44,785
Accrued interest payable and other liabilities		11,307			14,143			11,030
Total liabilities		1,363,703			1,423,865			1,252,799
Common stockholders’ equity		112,873			107,907			105,728
Preferred stock		33,490			33,226			33,142
Shareholders’ equity		146,363			141,133			138,870
Total liabilities and shareholders’ equity	$	1,510,066		$	1,564,998		$	1,391,669

The Bank of Kentucky Financial Corporation

Selected Consolidated Financial Data

(Dollars in thousands, except per share data)

	Average Balance Sheet Rates (presented on a tax equivalent basis )
	Three Months ended September 30, 2010							Three Months ended September 30, 2009
	Average outstanding balance		Interest earned/ paid		Yield/ rate			Average outstanding balance		Interest earned/ paid		Yield/ rate
Interest-earning assets:
Loans receivable (1)(2)	$	1,123,503	$	15,497		5.47	%	$	1,065,031		14,650		5.46	%
Securities (2)		234,335		1,384		2.34			161,026		1,327		3.27
Other interest-earning assets		28,232		76		1.07			20,516		73		1.41
Total interest-earning assets		1,386,070		16,957		4.85			1,246,573		16,050		5.11
Non-interest-earning assets		123,751							100,101
Total assets	$	1,509,821						$	1,346,674
Interest-bearing liabilities:
Transaction accounts		637,835		732		0.46			546,114		944		0.69
Time deposits		446,100		2,049		1.82			421,854		3,075		2.89
Borrowings		67,153		321		1.90			67,553		351		2.06
Total interest-bearing liabilities		1,151,088		3,102		1.07			1,035,521		4,370		1.67
Non-interest-bearing liabilities		213,096							172,547
Total liabilities		1,364,184							1,208,068
Shareholders’ equity		145,637							138,606
Total liabilities and shareholders’ equity	$	1,509,821						$	1,346,674
Net interest income			$	13,855						$	11,680
Interest rate spread						3.78	%						3.44	%
Net interest margin (net interest income as a percent of average interest-earning assets)						3.97	%						3.72	%

(1) Includes non-accrual loans.

(2) Income presented on a tax equivalent basis using a 34.37% and 34.70% tax rate in 2010 and 2009, respectively. The tax equivalent adjustment was $263,000 and $263,000 in 2010 and 2009, respectively.

The Bank of Kentucky Financial Corporation

Selected Consolidated Financial Data

(Dollars in thousands, except per share data)

	Average Balance Sheet Rates (presented on a tax equivalent basis )
	Nine Months ended September 30, 2010							Nine Months ended September 30, 2009
	Average outstanding balance		Interest earned/ paid		Yield/ rate			Average outstanding balance		Interest earned/ paid		Yield/ rate
Interest-earning assets:
Loans receivable (1)(2)	$	1,138,669	$	46,303		5.44	%	$	1,047,862	$	42,992		5.50	%
Securities (2)		231,462		4,456		2.57			148,111		3,972		3.60
Other interest-earning assets		55,086		282		.68			30,457		213		0.94
Total interest-earning assets		1,425,217		51,041		4.77			1,226,430		47,177		5.14
Non-interest-earning assets		124,499							98,069
Total assets	$	1,549,716						$	1,324,499
Interest-bearing liabilities:
Transaction accounts		678,509		2,328		0.46			547,619		2,856		0.70
Time deposits		451,607		7,059		2.09			409,725		9,730		3.18
Borrowings		66,877		913		1.83			66,729		1,211		2.43
Total interest-bearing liabilities		1,196,993		10,300		1.15			1,024,073		13,797		1.81
Non-interest-bearing liabilities		210,045							168,680
Total liabilities		1,407,038							1,192,753
Shareholders’ equity		142,678							131,746
Total liabilities and shareholders’ equity	$	1,549,716						$	1,324,499
Net interest income			$	40,741						$	33,380
Interest rate spread						3.62	%						3.33	%
Net interest margin (net interest income as a percent of average interest-earning assets)						3.82	%						3.65	%

(1) Includes non-accrual loans.

(2) Income presented on a tax equivalent basis using a 34.37% and 34.70% tax rate in 2010 and 2009, respectively. The tax equivalent adjustment was $761,000 and $749,000 in 2010 and 2009, respectively.

The Bank of Kentucky Financial Corporation

Selected Consolidated Financial Data

(Dollars in thousands, except per share data)

	Five-Quarter Comparison
	9/30/10			6/30/10			3/31/10			12/31/09			9/30/09
Income Statement Data
Net interest income	$	13,592		$	13,454		$	12,934		$	12,162		$	11,417
Provision for loan losses		3,500			4,500			4,500			4,500			4,000
Net interest income after provision for loan losses		10,092			8,954			8,434			7,662			7,417
Service charges and fees		2,589			2,622			2,267			2,408			2,444
Gain on sale of real estate loans		1,041			337			322			276			223
Gain on sale of securities		—			—			—			465			—
Trust fee income		620			602			550			322			288
Bankcard transaction revenue		727			749			673			615			579
Gains/(losses) on Other Real Estate Owned		(110	)		30			141			14			(594	)
Other non-interest income		760			600			652			616			636
Total non-interest income		5,627			4,940			4,605			4,716			3,576
Salaries and employee benefits expense		5,110			4,764			4,565			4,086			4,006
Occupancy and equipment expense		1,195			1,187			1,450			1,139			1,158
Data processing expense		442			443			461			426			392
State bank taxes		492			507			490			433			456
Amortization of intangible assets		357			375			384			258			258
FDIC Insurance		504			587			585			553			429
Other non-interest expenses		2,625			2,453			2,678			2,351			2,299
Total non-interest expense		10,725			10,316			10,613			9,246			8,998
Net income before income tax expense		4,994			3,578			2,426			3,132			1,995
Income tax expense		1,466			968			566			804			450
Net income		3,528			2,610			1,860			2,328			1,545
Preferred stock dividends & amortization		515			514			510			509			506
Net income available to common shareholders	$	3,013		$	2,096		$	1,350		$	1,819		$	1,039
Per Common Share Data
Diluted earnings per common share		0.53			0.37			0.24			0.32			0.18
Cash dividends declared		0.28			0.00			0.28			0.00			0.28
Weighted average common shares outstanding
Basic		5,666,707			5,666,707			5,666,707			5,622,142			5,615,475
Diluted		5,666,707			5,666,707			5,681,515			5,652,722			5,695,096
Earnings Performance Data
Return on common equity		10.68	%		7.59	%		5.03	%		6.76	%		3.95	%
Return on assets		.93	%		.67	%		.48	%		.63	%		.46	%
Net interest margin		3.90	%		3.74	%		3.63	%		3.57	%		3.64	%
Net interest margin (tax equivalent)		3.97	%		3.81	%		3.69	%		3.65	%		3.72	%

The Bank of Kentucky Financial Corporation

Selected Consolidated Financial Data

(Dollars in thousands, except per share data)

	Five-Quarter Comparison
	9/30/10			6/30/10			3/31/10			12/31/09			9/30/09
Balance Sheet Data
Assets:
Cash and cash equivalents	$	41,280		$	69,094		$	121,299		$	98,738		$	56,418
Investments		240,657			233,817			240,650			214,667			153,832
Loans held for sale		21,903			6,795			2,072			6,798			2,926
Total loans		1,120,168			1,122,964			1,142,609			1,154,984			1,110,202
Allowance for loan losses		(17,163	)		(16,531	)		(15,607	)		(15,153	)		(13,778	)
Premises and equipment, net		23,373			23,690			23,883			23,588			18,793
Goodwill and acquisition intangibles, net		25,820			26,178			26,552			26,936			16,925
Other assets & accrued interest receivable		54,028			53,613			54,096			54,440			46,351
Total assets	$	1,510,066			1,519,620			1,595,554			1,564,998			1,391,669
Liabilities & Shareholders’ Equity
Total deposits	$	1,271,455		$	1,300,949		$	1,376,468		$	1,343,272		$	1,150,764
Short-term borrowings		36,175			18,097			22,833			21,669			46,220
Notes payable		44,766			44,770			44,776			44,781			44,785
Accrued interest payable & other liabilities		11,307			10,894			10,214			14,143			11,030
Total liabilities		1,363,703			1,374,710			1,454,291			1,423,865			1,252,799
Common stockholders’ equity		112,873			111,510			107,952			107,907			105,728
Preferred stock		33,490			33,400			33,311			33,226			33,142
Shareholders’ equity		146,363			144,910			141,263			141,133			138,870
Total liabilities and shareholders’ equity	$	1,510,066			1,519,620			1,595,554			1,564,998			1,391,669
Common shares outstanding		5,666,707			5,666,707			5,666,707			5,666,707			5,616,707
Average Balance Sheet Data
Average investments	$	234,335		$	243,572		$	216,280		$	182,769		$	161,026
Average other earning assets		28,232			60,416			77,147			44,822			20,516
Average loans		1,123,503			1,139,730			1,153,099			1,123,355			1,065,031
Average earning assets		1,386,070			1,443,718			1,446,526			1,350,946			1,246,573
Average assets		1,509,821			1,567,837			1,572,174			1,455,496			1,346,674
Average deposits		1,285,557			1,347,906			1,354,035			1,236,465			1,128,342
Average interest bearing deposits		1,083,935			1,146,120			1,161,137			1,064,344			967,968
Average interest bearing transaction deposits		637,835			695,866			702,534			629,018			546,114
Average interest bearing time deposits		446,100			450,254			458,603			435,326			421,854
Average borrowings		67,153			66,333			67,144			67,517			67,553
Average interest bearing liabilities		1,151,088			1,212,453			1,288,281			1,131,861			1,035,521
Average common stockholders equity		112,192			109,732			107,929			106,818			105,506
Average preferred stock		33,445			33,355			33,269			33,184			33,100

The Bank of Kentucky Financial Corporation

Selected Consolidated Financial Data

(Dollars in thousands, except per share data

	Five-Quarter Comparison
	9/30/10			6/30/10			3/31/10			12/31/09			9/30/09
Asset Quality Data
Allowance for loan losses to total loans		1.53	%		1.47	%		1.37	%		1.31	%		1.24	%
Allowance for loan losses to non-performing loans		90	%		74	%		72	%		59	%		54	%
Nonaccrual loans	$	18,768		$	22,184		$	21,692		$	23,826		$	24,046
Loans – 90 days past due & still accruing		207			213			114			1,736			1,351
Total non-performing loans		18,975			22,397			21,806			25,562			25,397
OREO and repossessed assets		1,392			1,397			1,535			1,381			1,015
Total non-performing assets		20,367			23,794			23,341			26,943			26,412
Restructured loans-accruing		3,901			3,441			6,332			3,568			—
Non-performing loans to total loans		1.69	%		1.99	%		1.91	%		2.21	%		2.29	%
Non-performing assets to total assets		1.35	%		1.57	%		1.47	%		1.73	%		1.91	%
Annualized charge-offs to average loans		1.02	%		1.26	%		1.41	%		1.12	%		.76	%
Net charge-offs	$	2,867		$	3,577		$	4,046		$	3,125		$	2,038

About BKFC

BKFC, a bank holding company with assets of approximately $1.510 billion, offers banking and related financial services to both individuals and business customers. BKFC operates thirty-one branch locations and forty-seven ATMs in the Northern Kentucky market.

For more information contact:

Martin Gerrety

Executive Vice President and CFO

(859) 372-5169

mgerrety@bankofky.com

###