ELIZABETHTOWN, Ky., Oct. 23 /PRNewswire-FirstCall/ -- First
Financial Service Corporation (the Company, Nasdaq: FFKY) today
announced diluted net income per common share of $0.07 for the
quarter ended September 30, 2009, compared to $0.21 for the quarter
ended September 30, 2008. Diluted net income per common share for
the nine months ended September 30, 2009, was $0.27, compared to
$1.06 for the nine months ended September 30, 2008. The third
quarter and year-to-date earnings decline were driven by higher
provision for loan losses, margin compression, other-than-temporary
losses on security investments and higher operating expenses.
Earnings available to common shareholders were also impacted by
dividends paid on preferred shares. "Our loan portfolio remains
exposed to the weak economic conditions that persist on both a
local and national level," stated Chief Executive Officer, B. Keith
Johnson. "The Bank has recorded large provisions for loan losses in
each of the first three quarters of 2009. The Company is working
aggressively to manage the continued credit quality deterioration
in the commercial real estate sector of our portfolio. However, if
depressed economic conditions continue to impact real estate
values, it is likely that additional elevated provisions will need
to be made to ensure the adequacy of our allowance for loan losses.
Further adding pressure to our earnings this year, the FDIC
increased insurance premiums on the base assessment as well as
imposed a special assessment. Despite these pressures, we have been
able to grow our core relationships as well as attract new
customers due to our exceptional customer service model. Our
proactive approach to navigating through these turbulent times will
position the Bank to be able to continue to capitalize on
profitable opportunities as the economy begins its long recovery
cycle." During the third quarter of 2009, the Company opened its
twenty-second full-service banking center, which expanded the
Bank's current footprint in Louisville, Kentucky. The Blankenbaker
Banking Center complements the existing branches located in
Jefferson County, Kentucky and is the fourth branch in the area. We
have been able to grow our deposit base to over $100 million in our
four Louisville branches since entering that market in 2004. Total
deposits were $937.7 million at September 30, 2009, an increase of
$162.3 million from December 31, 2008. The increase was the result
of several actions taken by the Company, including deposit
promotions, an increase in public fund accounts as well as
utilizing our wholesale funding sources. 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 demand for commercial lending
continues to be strong across all of our markets. Commercial loans
were $692.7 million at September 30, 2009, an increase of $55.1
million, or 8.6%, from December 31, 2008. The growth in the
Company's commercial loan portfolio has favorably impacted the
level of interest income generated by the Company. Average earning
assets increased by $151.5 million as of September 30, 2009,
compared to September 30, 2008. Despite the increase in earning
assets, the Company's net interest margin realized a modest decline
of 12 basis points. Net interest margin decreased to 3.69% for the
nine months ended September 30, 2009, compared to 3.81% for the
same period in 2008. 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 did
have a positive impact on net interest income, which increased
$963,000 and $3,355,000 for the three and nine months ended
September 30, 2009, compared to the respective periods ended
September 30, 2008. The percentage of non-performing loans to total
loans increased to 3.55% at September 30, 2009 compared to 1.86% at
December 31, 2008 and 1.41% at September 30, 2008. Annualized net
charge-offs as a percent of average total loans increased to 0.52%
for the nine months ended September 30, 2009, compared to 0.07% for
December 31, 2008 and 0.09% for the nine months ended September 30,
2008. This increase was primarily attributed to a charge-down of
$2.0 million on one large commercial real estate loan the Company
foreclosed on during the second quarter of 2009. $1.7 million of
the $2.0 million charge-down was previously reserved during the
prior year. Additionally, charge-offs were generally higher in all
areas of the loan portfolio year-to-date. Provision for loan loss
expense increased $762,000 to $2.5 million for the three months
ended September 30, 2009, compared to the same period ended
September 30, 2008. For the nine months ended September 30, 2009,
provision for loan loss expense increased $3.6 million to $6.4
million compared to the nine months ended September 30, 2008. The
increase for the quarter and year-to-date periods in 2009 was
partially related to growth in the loan portfolio, but primarily
from the specific reserves set aside for loans classified during
2009. Provision expense was also higher due to increasing the
general reserve factors for commercial real estate loans during the
year as the level of classified loans has increased sharply since
2008. As economic conditions continue to deteriorate, management's
emphasis will be to proactively review credit quality and the
adequacy of the allowance for loan losses. Although resulting in
substantial provisioning in the second half of 2008 and continuing
into 2009, we believe that this proactive approach will put the
Company in a better position to withstand the uncertainty over the
next few quarters. Non-interest income decreased $472,000 for the
three months ended September 30, 2009, compared to the three months
September 30, 2008. Customer service fees on deposit accounts
decreased $67,000 for the third quarter 2009 compared to the same
quarter in 2008. Gain on sale of mortgage loans increased $121,000
due to continued refinance activity, while brokerage commissions
decreased $20,000, for the current quarter compared to same quarter
in the prior year. The decrease in non-interest income for the
quarter was also reflective of an increase of $154,000 in
write-downs on other real estate owned and $304,000 of
other-than-temporary credit losses on trust preferred security
investments. For the nine months ended September 30, 2009
non-interest income decreased $470,000, compared to the nine months
ended September 30, 2008. Gain on sale of mortgage loans increased
$266,000, while brokerage commissions decreased $71,000, for the
first nine months of 2009 compared to same period in the prior
year. Other income increased $262,000 year-to-date in 2009 compared
to year-to-date 2008. The increase in other income is attributable
to gains on sale of other real estate owned and fees associated
with loan underwriting. The decrease in non-interest income was
also reflective of an increase in other-than-temporary impairment
losses of $487,000 trust preferred security investments and by an
increase of $395,000 in write-downs on other real estate owned
during 2009. Other-than-temporary impairment charges recorded in
2008 were on equity securities. Non-interest expense increased
$391,000 to $8.0 million and $3.8 million to $24.3 million for the
three and nine months ended September 30, 2009, compared to the
same periods ended September 30, 2008. Contributing to the increase
in non-interest expense for the year was an increase in employee
compensation expense. Employee compensation expense was higher due
to expansion efforts as well as a higher cost for employee
benefits. Further contributing to the increase to non-interest
expense were increases in office occupancy expense and equipment,
information systems and outside services, amortization for core
deposit intangible and marketing and advertising. FDIC insurance
premiums also increased for the quarter and year-to-date periods
ended September 30, 2009 compared to the same periods ended
September 30, 2008. All financial institutions were subject to
higher FDIC premiums beginning in the second quarter 2009. The FDIC
also imposed a special assessment on all financial institutions
that was paid on September 30, 2009, which was fully accrued by the
Company as of the end of the second quarter. Additionally, other
expenses increased $493,000 for the year-to-date period ended
September 30, 2009 over the same period in 2008. The increase was
related to higher interchange expenses, postage and courier, loan
expenses and repair and maintenance of other real estate owned.
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. FTN
Midwest Securities J.J.B. Hilliard, W.L. Lyons Company, Inc. Howe
Barnes Investments, Inc. Stifel Nicolaus & Company Knight
Securities, LP MORE FIRST FINANCIAL SERVICE CORPORATION
Consolidated Balance Sheets (Unaudited) (Dollars in thousands,
September 30, December 31, except share data) 2009 2008 ---- ----
ASSETS: Cash and due from banks $17,535 $17,310 Interest bearing
deposits 2,566 3,595 ----- ----- Total cash and cash equivalents
20,101 20,905 ------ ------ Securities available-for-sale 35,144
15,775 Securities held-to-maturity, fair value of $1,359 Sept
(2009) and $6,846 Dec (2008) 1,346 7,022 ----- ----- Total
securities 36,490 22,797 ------ ------ Loans held for sale 7,729
9,567 Loans, net of unearned fees 980,121 903,434 Allowance for
loan losses (16,173) (13,565) ------- ------- Net loans 971,677
899,436 ------- ------- Federal Home Loan Bank stock 8,515 8,515
Cash surrender value of life insurance 8,923 8,654 Premises and
equipment, net 32,345 30,068 Real estate owned: Acquired through
foreclosure 8,184 5,925 Held for development 45 45 Other
repossessed assets 40 91 Goodwill 11,931 11,931 Core deposit
intangible 1,401 1,703 Accrued interest receivable 5,064 4,379
Deferred income taxes 468 1,147 Other assets 2,382 1,451 -----
----- TOTAL ASSETS $1,107,566 $1,017,047 ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES: Deposits:
Non-interest bearing $59,373 $55,668 Interest bearing 878,345
719,731 ------- ------- Total deposits 937,718 775,399 -------
------- Short-term borrowings 2,200 94,869 Advances from Federal
Home Loan Bank 52,777 52,947 Subordinated debentures 18,000 18,000
Accrued interest payable 340 288 Accounts payable and other
liabilities 2,366 2,592 ----- ----- TOTAL LIABILITIES 1,013,401
944,095 --------- ------- 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 Sept (2009)
19,768 - Common stock, $1 par value per share; authorized
10,000,000 shares; issued and outstanding, 4,707,898 shares Sept
(2009), and 4,668,030 shares Dec (2008) 4,708 4,668 Additional
paid-in capital 34,965 34,145 Retained earnings 35,744 36,476
Accumulated other comprehensive loss (1,020) (2,337) ------ ------
TOTAL STOCKHOLDERS' EQUITY 94,165 72,952 ------ ------ TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY $1,107,566 $1,017,047
========== ========== FIRST FINANCIAL SERVICE CORPORATION
Consolidated Statements of Income (Unaudited) Three Months Ended
Nine Months Ended (Dollars in thousands, September 30, September
30, except per share data) 2009 2008 2009 2008 ---- ---- ---- ----
Interest and Dividend Income: Loans, including fees $14,410 $14,337
$42,509 $41,718 Taxable securities 312 403 925 1,095 Tax exempt
securities 137 90 361 297 --- --- --- --- Total interest income
14,859 14,830 43,795 43,110 ------ ------ ------ ------ Interest
Expense: Deposits 4,513 5,325 13,359 15,815 Short-term borrowings
27 156 117 661 Federal Home Loan Bank advances 601 610 1,798 1,808
Subordinated debentures 331 315 989 649 --- --- --- --- Total
interest expense 5,472 6,406 16,263 18,933 ----- ----- ------
------ Net interest income 9,387 8,424 27,532 24,177 Provision for
loan losses 2,482 1,720 6,441 2,819 ----- ----- ----- ----- Net
interest income after provision for loan losses 6,905 6,704 21,091
21,358 ----- ----- ------ ------ Non-interest Income: Customer
service fees on deposit accounts 1,750 1,817 4,872 4,865 Gain on
sale of mortgage loans 300 179 832 566 Gain on sale of investments
- 52 - 52 Net impairment losses recognized in earnings (304) -
(703) (216) Write down on real estate acquired through foreclosure
(305) (151) (555) (160) Brokerage commissions 89 109 281 352 Other
income 365 361 1,263 1,001 --- --- ----- ----- Total non-interest
income 1,895 2,367 5,990 6,460 ----- ----- ----- ----- Non-interest
Expense: Employee compensation and benefits 4,042 3,867 12,193
10,765 Office occupancy expense and equipment 832 779 2,488 2,112
Marketing and advertising 225 215 735 638 Outside services and data
processing 793 882 2,381 2,365 Bank franchise tax 257 258 778 761
FDIC insurance premiums 414 102 1,381 286 Amortization of core
deposit intangible 100 56 302 59 Other expense 1,365 1,478 3,998
3,505 ----- ----- ----- ----- Total non-interest expense 8,028
7,637 24,256 20,491 ----- ----- ------ ------ Income before income
taxes 772 1,434 2,825 7,327 Income taxes 196 443 773 2,354 --- ---
--- ----- Net Income 576 991 2,052 4,973 Less: Dividends on
preferred stock (250) - (730) - Accretion on preferred stock (14) -
(39) - --- --- --- --- Net income available to common shareholders
$312 $991 $1,283 $4,973 ==== ==== ====== ====== Shares applicable
to basic income per common share 4,704,289 4,667,081 4,689,917
4,665,058 Basic income per common share $0.07 $0.21 $0.27 $1.07
===== ===== ===== ===== Shares applicable to diluted income per
common share 4,734,037 4,683,978 4,703,432 4,689,458 Diluted income
per common share $0.07 $0.21 $0.27 $1.06 ===== ===== ===== =====
Cash dividends declared per common share $0.050 $0.190 $0.430
$0.570 ====== ====== ====== ====== FIRST FINANCIAL SERVICE
CORPORATION Unaudited Selected Ratios and Other Data As of and As
of and For the For the Three Months Nine Months Ended Ended
September 30, September 30, -------------- --------------- Selected
Data 2009 2008 2009 2008 ------------- ---- ---- ---- ----
Performance Ratios Return on average assets 0.11% 0.40% 0.16% 0.72%
Return on average equity 1.32% 5.18% 1.85% 8.80% Average equity to
average assets 8.49% 7.76% 8.65% 8.21% Net interest margin 3.64%
3.72% 3.69% 3.81% Efficiency ratio from continuing operations
71.16% 70.77% 72.36% 66.89% Book value per share $15.80 $15.95
Average Balance Sheet Data Average total assets $1,104,012 $980,700
$1,074,926 $919,624 Average interest earning assets 1,030,908
905,459 1,004,492 852,966 Average loans 984,468 861,230 963,728
811,036 Average interest-bearing Deposits 820,602 735,301 784,067
678,791 Average total deposits 878,778 797,907 841,297 737,638
Average total stockholders' equity 93,730 76,147 92,933 75,510
Asset Quality Ratios Non-performing loans as a percent of total
loans (1) 3.55% 1.41% Non-performing assets as a percent of total
loans (1) 4.39% 2.07% Allowance for loan losses as a percent of
total loans (1) 1.65% 1.21% Allowance for loan losses as a percent
of non-performing loans 46% 85% Annualized net charge-offs to total
loans (1) 0.52% 0.09% --------------------------------- (1)
Excludes loans held for sale. DATASOURCE: First Financial Service
Corporation CONTACT: Steven M. Zagar, Chief Financial Officer,
First Financial Service Corporation, +1-270-765-2131 Web Site:
http://www.ffsbky.com/
Copyright