ELIZABETHTOWN, Ky.,
April 26 /PRNewswire-FirstCall/ --
First Financial Service Corporation (the Company), (Nasdaq: FFKY)
today announced flat diluted net income per common share of
$0.10 for the quarter ended
March 31, 2010 and 2009.
"Our associates and management continue to work tirelessly
through this challenging recessionary environment" stated Chief
Executive Officer B. Keith Johnson.
"I am very impressed with the efforts of our associates
during these times with their focus and commitment to serving our
customers. This commitment allowed us to cultivate additional
relationships across all of our markets generating a $42 million, or 4% increase in total deposits for
the quarter, continuing the momentum from 2009 of a $274 million, or 33% increase in total deposits –
one of the strongest years for deposit growth in our history.
Highlighting the growth for the quarter was a 19% growth in
deposits in our Louisville
footprint and a 6% growth in our Southern
Indiana footprint. Checking deposits grew $9 million, or 5% during the quarter following an
8% growth in checking deposits for 2009.
The strength of our core franchise will contribute to our
ability to profitably navigate through this recession, which has
been challenging for many of our land development and commercial
real estate customers leading to deterioration in our overall
credit quality. While our credit quality metrics will
continue to be under pressure, the pace of deterioration has slowed
and some of our metrics have stabilized over the past several
quarters. Classified loans as a percent of total loans was
6.77% at March 31, 2010 compared to
6.73% at December 31, 2009, and 6.63%
for March 31, 2009. This is a
positive sign. Non-performing loans as a percent of total
loans was 3.43% at March 31, 2010, an
improvement from 3.82% at December 31,
2009, but elevated from 2.30% for March 31, 2009. Our annualized net charge
offs as a percent of total loans were 0.27% as of March 31, 2010, an improvement from 0.54% for the
year ended December 31, 2009, and an
increase from 0.23% for the quarter ended March 31, 2009. We continued our efforts to
ensure the adequacy of the allowance for the quarter by increasing
the allowance for loan loss to 1.95% of total loans at March 31, 2010, from 1.78% at December 31, 2009 and 1.60% at March 31, 2009. The increase in reserves
boosts our coverage ratio of allowance for loan loss as a percent
of total loans which stood at 57% at March
31, 2010 compared to 47% at December
31, 2009. We are aggressively working with our
borrowers and look forward to sharing prosperous times with them
again as our nation returns to more stable economic
conditions."
Balance sheet changes during the first quarter of 2010 include
an increase in total assets of $43.3 million
to $1.25 billion. This increase was due to an increase
of cash and cash equivalents of $40.7
million and an increase of investment securities of
$32.9 million since December 31, 2009. These increases were
partially off-set by a decline in gross loans of $28.5 million. This shift in the balance
sheet reflects a conscious effort by management to add on-balance
sheet liquidity to protect the Bank against any adverse changes to
its current wholesale funding position.
Commercial loans were $681.3
million at March 31, 2010, a
decrease of $24.0 million, or 3.4%,
from December 31, 2008. The
decline in the Company's commercial loan portfolio is a result of
pay-offs on several large commercial relationships. Although
there remains a high demand for loans from quality borrowers,
management has elected to shift its focus to preserve capital as
the nation continues to pull out of this recession.
Total deposits were $1.09 billion
at March 31, 2010, an increase of
$42.4 million from December 31, 2009. The increase was
the result of a deposit promotion held in February.
Competition for deposits remains very competitive in all of
the markets we serve. Competition for deposits combined with
continued repricing of variable rate loans could add to additional
margin compression over the next several quarters.
The percentage of non-performing loans to total loans decreased
to 3.43% at March 31, 2010 compared
to 3.82% at December 31, 2009.
The decrease was primarily attributed to a reduction in
restructured loans and well as a few non-accrual loans being
transferred to other real estate owned in the first quarter of 2010
compared to the most recent quarter ended December 31, 2009. Annualized net
charge-offs as a percentage of average total loans marginally
increased to 0.27% for the quarter ended March 31, 2010, compared to 0.23% for the quarter
ended March 31, 2009.
Average earning assets increased by $193.9 million as of March
31, 2010, compared to March 31,
2009. Despite the large increase in earning assets,
the Company's net interest margin realized a sharp decline of 61
basis points. Net interest margin decreased to 3.12% for the
quarter ended March 31, 2010,
compared to 3.73% for the same period in 2009. The decline is
mostly attributed to the Bank's increased liquidity efforts by
placing assets into lowering yielding investments other than loans.
The current Federal Funds rate remains in a range of 0.00% to
0.25%. Correspondingly, variable rate loans that are tied to
the federal prime rate have been repriced downward in relation to
the prime rate. However, interest rates paid on customer
deposits have not adjusted downward proportionately with the
declining interest yields on loans and investments.
Fifty-nine percent of deposits are time deposits that reprice
over a longer period of time. The increase in the volume of
earning assets and the change to the mix of earning assets had
basically no impact on net interest income, which only increased
$12,000 for the three months ended
March 31, 2010, compared to the
respective period ended March 31,
2009.
Provision for loan loss expense was lower by $293,000 at $1.8
million for the three months ended March 31, 2010, compared to the same period ended
March 31, 2009. During the
first quarter of 2010, the Company continued its efforts to ensure
the adequacy of the allowance by adding specific reserves to
several large commercial real estate relationships based on updated
appraisals received by the Bank. The provision was lower for
the current period compared to the same period a year ago due to
the $28.5 million decline in total
loans for the first three months of the year from December 31, 2009, which lowered the overall
level of general reserves. As economic conditions continue to
impact our loan portfolio, management's emphasis will be to
proactively review credit quality and the adequacy of the allowance
for loan losses. As a result of this provisioning, allowance
for loan losses as a percent of total loans increased to 1.95% from
1.78% at December 31, 2009 and 1.60%
at March 31, 2009.
Non-interest income increased $135,000 for the three months ended March 31, 2010, compared to the three months
ended March 31, 2009. Customer
service fees on deposit accounts increased $48,000 for the first quarter 2010 compared to
the same quarter in 2009. Gain on sale of mortgage loans
increased $122,000 due to continued
refinancing activity, while brokerage commissions were flat, for
the current quarter compared to the same quarter in the prior year.
The increase in non-interest income for the quarter was also
reflective of a $26,000 loss on the
sale of other real estate owned, a $23,000 loss on the sale of an equity investment
security and an increase of $17,000
of other-than-temporary credit losses on trust preferred security
investments. Additionally, other non-interest income
increased $14,000 for the first
quarter compared to same quarter in 2009.
Non-interest expense increased $491,000
to $8.3 million for the three months ended March 31, 2010, compared to the same periods
ended March 31, 2009. Employee
compensation and benefits expense increased $88,000 due to normal cost of living increases
over the prior year. FDIC insurance premiums also increased
for the quarter by $481,000 due to
increased deposit levels combined with higher assessment rates.
The increases in non-interest expenses were off-set by
decreases in outside services and data processing of $63,000, marketing and advertising of
$40,000, office occupancy expense and
equipment of $44,000 and amortization
of core deposit intangible of $43,000. Other non-interest expense was
also slightly higher in the first quarter of 2010 by $26,000 compared to the first quarter of 2009.
First Financial Service Corporation is the parent bank holding
company of First Federal Savings Bank of Elizabethtown, which was chartered in 1923.
The Bank serves the needs and caters to the economic
strengths of the local communities in which it operates and strives
to provide a high level of personal and professional customer
service. The Bank offers a variety of financial services to
its retail and commercial banking customers. These services
include personal and corporate banking services, and personal
investment financial counseling services. Today, the Bank
serves eight contiguous counties encompassing Central Kentucky and the Louisville Metropolitan area, including
Southern Indiana, through its 22
full-service banking centers and a commercial private banking
center.
This press release contains forward-looking statements under the
Private Securities Litigation Reform Act of 1995 that are subject
to certain risks and uncertainties that could cause actual results
to differ materially from historical income and those presently
anticipated or projected. The Company cautions readers not to
place undue reliance on any such forward-looking statements, which
speak only as of the date of this release. Such risks and
uncertainties include those detailed in the Company's filings with
the Securities and Exchange Commission, risks of adversely changing
results of operations, risks related to the Company's acquisition
strategy, risk of loans and investments, including the effect of
the change of the local economic conditions, risks associated with
the adverse effects of the changes in interest rates, and
competition for the Company's customers by other providers of
financial services, all of which are difficult to predict and many
of which are beyond the control of the Company.
First Financial Service Corporation's stock is traded on the
Nasdaq Global Market under the symbol "FFKY." Market makers
for the stock are:
Keefe, Bruyette & Woods, Inc.
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FTN Midwest Securities
|
|
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J.J.B. Hilliard, W.L. Lyons Company,
Inc.
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Howe Barnes Investments, Inc.
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Stifel Nicolaus & Company
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Knight Securities, LP
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FIRST FINANCIAL
SERVICE CORPORATION
Consolidated
Balance Sheets
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
March
31,
|
December
31,
|
|
(Dollars in thousands, except share
data)
|
2010
|
2009
|
|
|
|
|
|
ASSETS:
|
|
|
|
Cash and due from banks
|
$
19,811
|
$
21,253
|
|
Interest bearing deposits
|
119,377
|
77,280
|
|
Total cash and cash
equivalents
|
139,188
|
98,533
|
|
|
|
|
|
Securities
available-for-sale
|
79,512
|
45,764
|
|
Securities held-to-maturity, fair
value of $367 Mar (2010)
|
|
|
|
and $1,176 Dec (2009)
|
362
|
1,167
|
|
Total
securities
|
79,874
|
46,931
|
|
|
|
|
|
Loans held for sale
|
5,227
|
8,183
|
|
Loans, net of unearned fees
|
966,392
|
994,926
|
|
Allowance for loan losses
|
(18,810)
|
(17,719)
|
|
Net
loans
|
952,809
|
985,390
|
|
|
|
|
|
Federal Home Loan Bank
stock
|
8,515
|
8,515
|
|
Cash surrender value of life
insurance
|
9,096
|
9,008
|
|
Premises and equipment, net
|
32,312
|
31,965
|
|
Real estate owned:
|
|
|
|
Acquired through
foreclosure
|
10,169
|
8,428
|
|
Held for development
|
45
|
45
|
|
Other repossessed assets
|
62
|
103
|
|
Core deposit intangible
|
1,236
|
1,300
|
|
Accrued interest receivable
|
5,862
|
5,658
|
|
Deferred income taxes
|
4,442
|
4,515
|
|
Prepaid FDIC premium
|
6,408
|
7,022
|
|
Other assets
|
2,807
|
2,091
|
|
|
|
|
|
TOTAL ASSETS
|
$
1,252,825
|
$
1,209,504
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY
|
|
|
|
LIABILITIES:
|
|
|
|
Deposits:
|
|
|
|
Non-interest bearing
|
$
69,098
|
$
63,950
|
|
Interest bearing
|
1,023,116
|
985,865
|
|
Total
deposits
|
1,092,214
|
1,049,815
|
|
|
|
|
|
Short-term borrowings
|
842
|
1,500
|
|
Advances from Federal Home Loan
Bank
|
52,627
|
52,745
|
|
Subordinated debentures
|
18,000
|
18,000
|
|
Accrued interest payable
|
314
|
360
|
|
Accounts payable and other
liabilities
|
2,955
|
1,952
|
|
|
|
|
|
TOTAL LIABILITIES
|
1,166,952
|
1,124,372
|
|
Commitments and contingent
liabilities
|
-
|
-
|
|
|
|
|
|
STOCKHOLDERS' EQUITY:
|
|
|
|
Serial preferred stock, $1 par value
per share;
|
|
|
|
authorized 5,000,000
shares; issued and
|
|
|
|
outstanding, 20,000
shares with a liquidation
|
|
|
|
preference of
$1,000/share Mar (2010)
|
19,795
|
19,781
|
|
Common stock, $1 par value per
share;
|
|
|
|
authorized 10,000,000 shares;
issued and
|
|
|
|
outstanding, 4,717,682 shares
Mar (2010), and 4,709,839
|
|
|
|
shares Dec (2009)
|
4,718
|
4,710
|
|
Additional paid-in capital
|
35,071
|
34,984
|
|
Retained earnings
|
27,211
|
26,720
|
|
Accumulated other comprehensive
loss
|
(922)
|
(1,063)
|
|
|
|
|
|
TOTAL STOCKHOLDERS'
EQUITY
|
85,873
|
85,132
|
|
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY
|
$
1,252,825
|
$
1,209,504
|
|
|
|
|
|
|
FIRST FINANCIAL
SERVICE CORPORATION
Consolidated
Statements of Operations
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
(Dollars in thousands, except per
share data)
|
March
31,
|
|
|
|
2010
|
2009
|
|
Interest and Dividend
Income:
|
|
|
|
Loans, including fees
|
|
$
14,047
|
$
13,944
|
|
Taxable securities
|
|
493
|
308
|
|
Tax exempt securities
|
|
171
|
106
|
|
|
Total interest income
|
14,711
|
14,358
|
|
|
|
|
|
|
Interest Expense:
|
|
|
|
|
Deposits
|
|
4,869
|
4,500
|
|
Short-term borrowings
|
|
21
|
43
|
|
Federal Home Loan Bank
advances
|
593
|
597
|
|
Subordinated
debentures
|
327
|
329
|
|
|
Total interest expense
|
5,810
|
5,469
|
|
|
|
|
|
|
Net interest income
|
|
8,901
|
8,889
|
|
Provision for loan losses
|
1,752
|
2,045
|
|
Net interest income after provision
for loan losses
|
7,149
|
6,844
|
|
|
|
|
|
|
Non-interest Income:
|
|
|
|
|
Customer service fees on deposit
accounts
|
1,525
|
1,477
|
|
Gain on sale of mortgage
loans
|
299
|
177
|
|
Loss on sale of
investments
|
(23)
|
-
|
|
Net impairment losses recognized
in earnings
|
(172)
|
(155)
|
|
Loss on sale and write downs of
real estate acquired
|
|
|
|
through
foreclosure
|
|
(26)
|
(17)
|
|
Brokerage commissions
|
93
|
93
|
|
Other income
|
|
442
|
428
|
|
|
Total non-interest income
|
2,138
|
2,020
|
|
|
|
|
|
|
Non-interest Expense:
|
|
|
|
Employee compensation and
benefits
|
4,090
|
4,002
|
|
Office occupancy expense and
equipment
|
804
|
848
|
|
Marketing and
advertising
|
225
|
265
|
|
Outside services and data
processing
|
730
|
793
|
|
Bank franchise tax
|
|
350
|
264
|
|
FDIC insurance
premiums
|
660
|
179
|
|
Amortization of intangible
assets
|
87
|
130
|
|
Other expense
|
|
1,328
|
1,302
|
|
|
Total non-interest expense
|
8,274
|
7,783
|
|
|
|
|
|
|
Income before income taxes
|
1,013
|
1,081
|
|
Income taxes
|
|
258
|
303
|
|
Net Income
|
|
755
|
778
|
|
Less:
|
|
|
|
|
Dividends on preferred
stock
|
(250)
|
(267)
|
|
Accretion on preferred
stock
|
(14)
|
(11)
|
|
Net income available to common
shareholders
|
$
491
|
$
500
|
|
|
|
|
|
|
Shares applicable to basic income per
common share
|
4,715,721
|
4,676,587
|
|
Basic income per common
share
|
$
0.10
|
$
0.10
|
|
|
|
|
|
|
Shares applicable to diluted income
per common share
|
4,715,721
|
4,676,690
|
|
Diluted income per common
share
|
$
0.10
|
$
0.10
|
|
|
|
|
|
|
Cash dividends declared per common
share
|
$
-
|
$
0.19
|
|
|
|
|
|
|
|
FIRST FINANCIAL
SERVICE CORPORATION
Unaudited Selected
Ratios and Other Data
|
|
|
|
|
|
|
|
|
|
As of and For
the
|
|
|
|
Three Months
Ended
|
|
|
|
March
31,
|
|
Selected Data
|
|
2010
|
|
2009
|
|
|
|
|
|
|
|
Performance Ratios
|
|
|
|
|
|
|
|
|
|
|
|
Return on average assets
|
|
0.16%
|
|
0.30%
|
|
|
|
|
|
|
|
Return on average equity
|
|
2.31%
|
|
3.37%
|
|
|
|
|
|
|
|
Average equity to average
assets
|
|
6.98%
|
|
8.82%
|
|
|
|
|
|
|
|
Net interest margin
|
|
3.12%
|
|
3.73%
|
|
|
|
|
|
|
|
Efficiency ratio from continuing
operations
|
|
74.95%
|
|
71.46%
|
|
|
|
|
|
|
|
Book value per common share
|
|
$
14.01
|
|
$
15.62
|
|
|
|
|
|
|
|
Average Balance Sheet
Data
|
|
|
|
|
|
|
|
|
|
|
|
Average total assets
|
|
$
1,233,356
|
|
$
1,039,731
|
|
|
|
|
|
|
|
Average interest earning
assets
|
|
1,167,210
|
|
973,336
|
|
|
|
|
|
|
|
Average loans
|
|
988,646
|
|
939,647
|
|
|
|
|
|
|
|
Average interest-bearing
deposits
|
|
1,005,553
|
|
760,753
|
|
|
|
|
|
|
|
Average total deposits
|
|
1,071,631
|
|
814,870
|
|
|
|
|
|
|
|
Average total stockholders'
equity
|
|
86,139
|
|
91,711
|
|
|
|
|
|
|
|
Asset Quality Ratios
|
|
|
|
|
|
|
|
|
|
|
|
Non-performing loans as a percent of
total loans (1)
|
|
3.43%
|
|
2.30%
|
|
|
|
|
|
|
|
Non-performing assets as a percent of
total loans (1)
|
|
4.49%
|
|
2.87%
|
|
|
|
|
|
|
|
Allowance for loan losses as a percent
of total loans (1)
|
|
1.95%
|
|
1.60%
|
|
|
|
|
|
|
|
Allowance for loan losses as a percent
of
|
|
|
|
|
|
non-performing
loans
|
|
57%
|
|
70%
|
|
|
|
|
|
|
|
Annualized net charge-offs to total
loans (1)
|
|
0.27%
|
|
0.23%
|
|
__________________________________
|
|
|
|
|
|
(1) Excludes loans held for
sale.
|
|
|
|
|
|
|
SOURCE First Financial Service Corporation