1st Financial Services Corporation (OTC Bulletin Board:
FFIS), parent company of Mountain 1st Bank & Trust Company,
today announced financial results for the second quarter and first half
of 2010. The Corporation reported net income of $365,000 for the second
quarter of 2010, compared with a net loss of $(1.5) million for the same
quarter in 2009. Net income available to common stockholders, after
deduction for preferred stock dividends, was $109,000 for the second
quarter of 2010, or $0.02 per diluted share, an improvement of $1.8
million, or $0.36 per diluted share, compared with a net loss available
to common shareholders of $(1.7) million, or $(0.34) per diluted share,
in the year-ago quarter. Annualized returns on average assets and
average common equity were 0.06% and 1.57%, respectively, for the 2010
second quarter, both ratios significantly improved compared to the 2009
second quarter of (0.98)% and (15.05)%, respectively. The Corporation's
efficiency ratio improved from 96.7% in the 2009 quarter to 87.6% in the
2010 quarter. The improved profitability in 2010 was driven principally
by a lower provision for loan losses, assisted by stronger noninterest
income, including higher gains on the sale of securities and SBA loans,
and controlled noninterest expense, partially offset by a declining net
interest margin. Also contributing to the favorable year-over-year
second quarter comparison were $1.4 million of losses taken in the 2009
second quarter in connection with foreclosed real estate and other
assets, versus $175,000 in the 2010 second quarter, and a $424,000 loss
on an equity investment in Silverton Bank during the 2009 quarter.
Results for the first half of 2010 are highlighted by net income
available to common shareholders of $203,000, or $0.04 per diluted
share, a $1.8 million increase, or $0.36 per diluted share, over the
comparable measures in the first half of 2009 of $(1.6) million, or
$(0.32) per diluted share, respectively. Annualized returns on average
assets and average common equity were 0.05% and 1.46%, respectively, for
the first half of 2010, both ratios up sharply compared to the 2009
first half of (0.45)% and (6.93)%, respectively. The Corporation's
efficiency ratio was 88.2% in the 2010 first half, versus 81.6% in the
2009 first half, resulting principally from lower net interest income.
Similar to the second-quarter comparison, overall, the significantly
improved first-half 2010 financial performance was propelled by a
substantially lower provision for loan losses, partially offset by a
falling net interest margin and aided by higher noninterest income. In
addition, the previously-cited variances in securities gains and losses
and other foreclosed real estate expense impacted the comparison of
results between periods. Noninterest expense in the first half of 2010
was also adversely affected by increased FDIC deposit insurance
assessments and costs of data processing when compared with the prior
year.
Michael Mayer, Chief Executive Officer, stated, ?We are pleased to again
report a quarterly profit. In this difficult economic environment, our
dedicated employees continue to exceed the expectations of our customers
by not only meeting their banking needs, but more importantly, by
knowing each of them personally. Our exceptional customer service team
continues to deliver exemplary core deposit growth.? Mayer added,
?Although we believe we appropriately reserved for our problem assets at
year-end 2009, we nonetheless continue to experience the effects of
asset devaluation in our markets as the economy and businesses struggle
to recover. We have recently allocated significant additional resources
toward expeditious resolution of our nonperforming loans and those
assets we have foreclosed upon. We anticipate additional provisioning
and charge-offs during the remainder of the year to stay ahead of this
aggressive resolution process.? As of June 30, 2010, nonperforming
assets were $36.9 million, up $2.4 million from $34.5 million at
December 31, 2009, yet down $1.8 million from $38.7 million at March 31,
2010. As a percentage of period-end portfolio loans, nonperforming
assets were 5.61% at June 30, 2010, versus 5.92% at year-end 2009. The
allowance for loan losses as of percentage of period-end loans stood at
3.98% at June 30, 2010, down from 5.09% at December 31, 2009, mainly
reflecting charge-offs taken during 2010.
Mayer continued, ?Banks across the nation have been struggling through
the economic crisis and have been adversely affected by declining real
estate values, delinquent loans, and weak loan demand. Locally and
nationwide, job losses, weak consumer spending and struggling businesses
have made it more difficult for people to repay loans, credit cards, and
other debt. Accordingly, we continue to see our asset quality measures
reflecting the trends of the national and local economies. We have seen
our nonperforming loans decrease, yet our foreclosed real estate has
increased as we move through this economic cycle.?
?In addition to our tremendous retail banking franchise, Mountain 1st
Bank & Trust Company, a preferred lender in the Small Business
Government Guaranteed Loan Program, has been recognized as the top SBA
lender in western North Carolina and one of the fastest-growing SBA
lenders in the state. Loan demand for our SBA portfolio is increasing
and loan closings remain on an upward trajectory. We are strongly
committed to this line of business and are proud of our accomplishments
in meeting the needs of small businesses in our communities.?
Total assets were $802.2 million at June 30, 2010, up from $793.0
million at December 31, 2009, yet down from $810.1 million at March 31,
2010. The funding provided by $15.7 million of deposit growth since
year-end 2009 was used to reduce $20 million of borrowings with the
Federal Home Loan Bank in April 2010. Net portfolio loans, excluding
loans held for sale, decreased $28.0 million, generally reflecting a
$35.6 million reduction in the real estate loan portfolio, offset by a
$7.6 million reduction in the allowance for loan losses as the
Corporation moved forward on the resolution of certain
previously-identified problem credits. The Corporation increased its
investment portfolio to $169.1 million at June 30, 2010, a $68.0 million
increase over December 31, 2009, using excess interest-bearing deposits
with the Federal Reserve and the proceeds from loan repayments to fund
these investment purchases.
As of June 30, 2010, shareholders' equity to total assets was 5.53%,
common shareholders' equity to assets was 3.57%, and book value per
common share was $5.63, all relatively consistent with those same
measures at December 31, 2009. Regulatory capital ratios improved
significantly since December 31, 2009. As of June 30, 2010, the
Corporation's estimated Leverage, Tier 1 Capital, and Total Capital
ratios were 5.42%, 8.52%, and 9.80%, respectively, each up from 4.80%,
7.70%, and 9.00%, respectively, as of December 31, 2009. Similarly, as
of June 30, 2010, the Bank's estimated Leverage, Tier 1 Capital, and
Total Capital ratios climbed to 5.40%, 8.50%, and 9.78%, respectively,
each up from 4.73%, 7.59%, and 8.90%, respectively, as of December 31,
2009. Mayer stated, ?We are encouraged by the progress we have made
toward improving our capital ratios at both the Corporation and the Bank.
About 1st Financial
Services Corporation
Formed in May 2008, 1st Financial Services Corporation is the
parent company of Mountain 1st Bank & Trust Company, and is
currently traded on the Over The Counter Bulletin Board under the symbol
FFIS. Established in May 2004, Mountain 1st Bank and Trust
has over $800 million in assets and more than 180 employees, serving
nine counties in western North Carolina through 14 full-service
branches. For more information, visit us at www.mountain1st.com.
Forward-Looking Statements
This press release may contain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995,
including Section 21E of the Securities Exchange Act of 1934 and
Section 27A of the Securities Act of 1933. Such statements involve known
and unknown risks, uncertainties and other factors that may cause actual
results to differ materially. For the purposes of these discussions, any
statements that are not statements of historical fact may be deemed to
be forward-looking statements. Such statements are often characterized
by the use of qualifying words such as ?expects,? ?anticipates,?
?believes,? ?estimates,? ?plans,? ?projects,? or other statements
concerning opinions or judgments of the Corporation and its management
about future events. The accuracy of such forward-looking statements
could be affected by factors including, but not limited to, the
financial success or changing conditions or strategies of the Bank's
customers or vendors, fluctuations in interest rates, actions of
government regulators, the availability of capital and personnel or
general economic conditions. Additional factors that could cause actual
results to differ materially from those anticipated by forward looking
statements are discussed in the Corporation's filings with the
Securities and Exchange Commission, including without limitation its
Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current
Reports on Form 8-K. The Corporation undertakes no obligation to revise
or update these statements following the date of this press release.
|
1st Financial Services Corporation
|
|
Consolidated Financial Highlights
|
|
($ in 000s, except shares and per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
$
|
|
|
%
|
|
|
|
|
June 30
|
|
Increase/
|
|
Increase/
|
|
|
|
|
2010
|
|
|
|
2009
|
|
|
(Decrease)
|
|
(Decrease)
|
|
Selected Income Statement Data and Ratios
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income
|
|
$
|
5,064
|
|
|
$
|
5,940
|
|
|
$
|
(876
|
)
|
|
|
-14.7
|
%
|
|
Provision for loan losses
|
|
|
720
|
|
|
|
2,670
|
|
|
|
(1,950
|
)
|
|
|
-73.0
|
%
|
|
Net interest income after provision for loan losses
|
|
|
4,344
|
|
|
|
3,270
|
|
|
|
1,074
|
|
|
|
32.8
|
%
|
|
Noninterest income
|
|
|
1,820
|
|
|
|
1,048
|
|
|
|
772
|
|
|
|
73.7
|
%
|
|
Noninterest expense
|
|
|
5,631
|
|
|
|
6,585
|
|
|
|
(954
|
)
|
|
|
-14.5
|
%
|
|
Income (loss) before income taxes
|
|
|
533
|
|
|
|
(2,267
|
)
|
|
|
2,800
|
|
|
|
-123.5
|
%
|
|
Income tax expense (benefit)
|
|
|
168
|
|
|
|
(806
|
)
|
|
|
974
|
|
|
|
-120.8
|
%
|
|
Net income (loss)
|
|
|
365
|
|
|
|
(1,461
|
)
|
|
|
1,826
|
|
|
|
-125.0
|
%
|
|
Accretion of discount on preferred stock
|
|
|
51
|
|
|
|
51
|
|
|
|
-
|
|
|
|
0.0
|
%
|
|
Preferred stock dividend
|
|
|
205
|
|
|
|
205
|
|
|
|
-
|
|
|
|
0.0
|
%
|
|
Net income (loss) available to common stockholders
|
|
$
|
109
|
|
|
$
|
(1,717
|
)
|
|
$
|
1,826
|
|
|
|
-106.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Net interest margin (1)
|
|
|
2.65
|
%
|
|
|
3.51
|
%
|
|
|
-0.86
|
%
|
|
|
-24.5
|
%
|
|
Return on average assets (1) (2)
|
|
|
0.06
|
%
|
|
|
-0.98
|
%
|
|
|
1.04
|
%
|
|
|
-106.1
|
%
|
|
Return on average common equity (1) (3)
|
|
|
1.57
|
%
|
|
|
-15.05
|
%
|
|
|
16.62
|
%
|
|
|
-110.4
|
%
|
|
Efficiency ratio (2) (4)
|
|
|
87.6
|
%
|
|
|
96.7
|
%
|
|
|
-9.10
|
%
|
|
|
-9.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per common share
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.02
|
|
|
$
|
(0.34
|
)
|
|
$
|
0.36
|
|
|
|
105.9
|
%
|
|
Diluted
|
|
$
|
0.02
|
|
|
$
|
(0.34
|
)
|
|
$
|
0.36
|
|
|
|
105.9
|
%
|
|
Weighted average common shares outstanding
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
5,024,482
|
|
|
|
5,000,831
|
|
|
|
23,651
|
|
|
|
0.5
|
%
|
|
Diluted
|
|
|
5,024,482
|
|
|
|
5,000,831
|
|
|
|
23,651
|
|
|
|
0.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
|
|
|
$
|
|
|
|
%
|
|
|
|
|
June 30
|
|
Increase/
|
|
Increase/
|
|
|
|
|
2010
|
|
|
|
2009
|
|
|
(Decrease)
|
|
(Decrease)
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income
|
|
$
|
10,056
|
|
|
$
|
11,457
|
|
|
$
|
(1,401
|
)
|
|
|
-12.2
|
%
|
|
Provision for loan losses
|
|
|
1,020
|
|
|
|
4,975
|
|
|
|
(3,955
|
)
|
|
|
-79.5
|
%
|
|
Net interest income after provision for loan losses
|
|
|
9,036
|
|
|
|
6,482
|
|
|
|
2,554
|
|
|
|
39.4
|
%
|
|
Noninterest income
|
|
|
3,051
|
|
|
|
2,639
|
|
|
|
412
|
|
|
|
15.6
|
%
|
|
Noninterest expense
|
|
|
11,055
|
|
|
|
10,979
|
|
|
|
76
|
|
|
|
0.7
|
%
|
|
Income (loss) before income taxes
|
|
|
1,032
|
|
|
|
(1,858
|
)
|
|
|
2,890
|
|
|
|
-155.5
|
%
|
|
Income tax expense (benefit)
|
|
|
319
|
|
|
|
(773
|
© Business Wire 2010
| Latest news on 1ST FINL SRVCS |
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