FIRST FINANCIAL SERVICE CORP. (KY) 
By ELIZABETHTOWN, Ky., Aug. 9, 2013 /PRNewswire/ -- First Financial Service Corporation (the Company, NASDAQ: FFKY) today reported a net loss to common stockholders of $1.4 million for the quarter ended June 30, 2013, an improvement from the net loss to common stockholders of $4.4 million for the same quarter in 2012. The net loss per diluted common share was $0.29 for the quarter ended June 30, 2013, compared to a net loss per diluted common share of $0.92 for the same quarter in 2012, an improvement of 68%.
First Financial also reported a net loss of $1.5 million for the six months ended June 30, 2013, an improvement from the net loss to common stockholders of $5.0 million for the same six-month period in 2012. The net loss per diluted common share was $0.32 for the six months ended June 30, 2013, compared to a net loss per diluted common share of $1.04 for the six months ended June 30, 2012, an improvement of 69%.
"We continue to see significant progress in credit trends with an improvement in the overall loan portfolio," said President, Greg Schreacke. "This is extremely important to us as we continue to shift our focus from dealing with problem assets to positioning the Company for profitable performance. While net loans declined 3.2% from the previous quarter mainly due to normal pay downs in the loan portfolio and continued reduction in non-performing loans, new loan production is accelerating. The Company generated $38 million in new loans during the second quarter following $34 million in the first quarter of 2013 and $26 million in quarter ended December 31, 2012."
SECOND QUARTER 2013 HIGHLIGHTS
-- Non-performing assets, excluding restructured loans that are accruing
and paying as agreed, declined by $8.3 million or 20.6%, to $32.1
million from March 31, 2013 and $42.6 million or 57.0% from June 30,
2012. This represents the fifth consecutive quarterly reduction in
non-performing assets, excluding restructured loans that are accruing
and paying as agreed.
-- Allowance for loan losses to total non-performing loans, excluding
restructured loans that are accruing and paying as agreed, was 89.3% at
June 30, 2013 compared to 42.0% for the same quarter last year.
-- Annualized net charge-offs were 0.06% at June 30, 2013 compared to 1.37%
for the same quarter last year.
-- Other real estate expenses have declined 69.4% for the six months ended
June 30, 2013 to $800,000 when compared to $2.7 million for the same
period last year.
-- Net interest margin improved to 2.87% for the quarter ended June 30,
2013, up from 2.66% last quarter and 2.42% for the quarter ended June
30, 2012. The yield on interest earning assets improved by 12 basis
points and the cost of interest bearing liabilities improved by 9 basis
points when compared to the quarter ended March 31, 2013.
-- Regulatory capital ratios continue to improve at the bank level. The
tier I leverage ratio was 7.27%, the tier I risk-based ratio was 11.09%,
and the total risk-based ratio was 12.36% for the quarter ended June 30,
2013 compared to 5.73%, 9.42%, and 10.68% respectively for the quarter
ended June 30, 2012.
"The improvement to the net interest margin is consistent with our expectations," said Chief Financial Officer, Frank Perez. "The combination of improved net interest margin and better asset quality are key factors as we move forward and put our challenges behind us."
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. Currently, the Bank serves six contiguous counties in central Kentucky through its 17 full-service banking centers.
This release includes forward-looking statements. The words "expect," "anticipate," "goal," "objective," "intend," "plan," "believe," "should," "seek," "estimate" and similar expressions identify forward-looking statements, but other statements not limited to historical information may also be considered forward-looking. All forward-looking statements are subject to risks, uncertainties and other factors that may cause our actual results to differ materially from any results expressed or implied by such forward-looking statements. Such risks and uncertainties include, without limitation, (i) events or conditions that adversely affect the financial condition of borrowers; (ii) continuation of the current historically low short-term interest rate environment; (iii) our ability to attract performing loans; (iv) changes in loan underwriting, credit review or loss reserve policies resulting from economic conditions, regulatory oversight or regulatory developments; (v) the effectiveness of our efforts to improve, resolve or liquidate lower-quality assets; (vi) increased competition from other financial institutions; (vii) greater than anticipated adverse conditions in the national or local economies, particularly in commercial and residential real estate markets; (viii) rapid fluctuations or unanticipated changes in interest rates; (ix) events that would cause us to conclude that there was impairment of any asset, including intangible assets; (x) events that further reduce the value of, or increase expenses associated with, other real estate owned; (xi) our ability to comply with regulatory capital requirements; and (xiii) changes in state and federal legislation, regulations or policies applicable to banks and other financial service providers, including implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act. A more detailed description of these and other risks and uncertainties is contained in our most recent annual report on Form 10-K and our most recent quarterly report on Form 10-Q filed with the Securities and Exchange Commission. Many of the risks and uncertainties described above are beyond our ability to control or predict, and therefore readers are cautioned not to put undue reliance on the forward-looking statements made in this release. First Financial Service Corporation disclaims any obligation to update or revise any forward-looking statements made in this release, whether as a result of new information, future events or otherwise, unless required by law.
FIRST FINANCIAL SERVICE CORPORATION
Consolidated Balance Sheets
(Unaudited)
June 30, December 31,
(Dollars in thousands, except per share data) 2013 2012
---- ----
ASSETS:
Cash and due from banks $11,947 $12,598
Interest bearing deposits 15,978 50,505
------ ------
Total cash and cash equivalents 27,925 63,103
------ ------
Securities available-for-sale 309,132 354,131
Loans held for sale 3,595 3,887
Loans, net of unearned fees 490,586 524,835
Allowance for loan losses (15,947) (17,265)
------- -------
Net loans 474,639 507,570
------- -------
Federal Home Loan Bank stock 4,430 4,805
Cash surrender value of life insurance 10,244 10,060
Premises and equipment, net 26,742 27,048
Real estate owned:
Acquired through foreclosure, net of valuation
allowance of $721 Jun (2013) and $500 Dec (2012) 14,169 22,286
Other repossessed assets 37 34
Accrued interest receivable 2,390 2,690
Accrued income taxes 2,907 2,928
Low-income housing investments 6,821 7,061
Other assets 1,487 1,459
----- -----
TOTAL ASSETS $884,518 $1,007,062
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposits:
Non-interest bearing $80,584 $75,842
Interest bearing 717,793 846,778
------- -------
Total deposits 798,377 922,620
------- -------
Advances from Federal Home Loan Bank 22,526 12,596
Subordinated debentures 18,000 18,000
Accrued interest payable 3,798 3,121
Accrued senior preferred dividend 2,969 2,469
Accounts payable and other liabilities 4,246 3,884
----- -----
TOTAL LIABILITIES 849,916 962,690
Commitments and contingent liabilities - -
STOCKHOLDERS' EQUITY:
Senior preferred stock, $1 par value per share;
authorized 5,000,000 shares; issued and
outstanding, 20,000 shares with a liquidation
preference of $23.0 million Jun (2013), and
$22.5 million Dec (2012) 19,970 19,943
Common stock, $1 par value per share;
authorized 35,000,000 shares; issued and
outstanding, 4,855,890 shares Jun (2013), and 4,775,114
shares Dec (2012) 4,856 4,775
Additional paid-in capital 35,990 35,782
Accumulated deficit (18,929) (17,398)
Accumulated other comprehensive income (7,285) 1,270
------ -----
TOTAL STOCKHOLDERS' EQUITY 34,602 44,372
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $884,518 $1,007,062
======================
FIRST FINANCIAL SERVICE CORPORATION
Consolidated Statements of Operations
(Unaudited)
Three Months Ended Six Months Ended
(Amounts in thousands, except per share data) June 30, June 30,
2013 2012 2013 2012
---- ---- ---- ----
Loans, including fees $6,603 $8,868 $13,421 $18,829
Taxable securities 1,541 1,726 3,198 3,436
Tax exempt securities 67 144 132 357
--- --- --- ---
Total interest
income 8,211 10,738 16,751 22,622
----- ------
Interest Expense:
Deposits 1,774 3,444 3,910 7,389
Federal Home Loan Bank advances 132 283 264 567
Subordinated debentures 341 341 682 682
--- --- --- ---
Total interest
expense 2,247 4,068 4,856 8,638
----- -----
Net interest income 5,964 6,670 11,895 13,984
Provision for loan losses 212 915 (825) 1,927
--- --- ---- -----
Net interest income after provision for loan losses 5,752 5,755 12,720 12,057
----- ----- ------ ------
Non-interest Income:
Customer service fees on deposit accounts 1,307 1,399 2,498 2,782
Gain on sale of mortgage loans 161 384 588 695
Gain on sale of investments 334 598 843 1,309
Loss on sale of investments (334) (303) (616) (303)
Other than temporary impairment loss:
Total other-than-temporary impairment losses - - - (26)
Portion of loss recognized in other comprehensive
income/(loss) (before taxes) - - - -
--- --- --- ---
Net impairment losses recognized in earnings - - - (26)
--- --- --- ---
Loss on sale and write downs on real estate acquired
through foreclosure (532) (2,016) (1,592) (3,582)
Gain on sale of premises and equipment - 322 - 322
Gain on sale on real estate acquired through foreclosure 150 210 207 613
Gain on sale of real estate held for development - - - 175
Brokerage commissions 139 112 257 207
Other income 461 617 955 1,028
--- --- --- -----
Total non-
interest
income 1,686 1,323 3,140 3,220
----- -----
Non-interest Expense:
Employee compensation and benefits 3,757 3,822 7,550 7,675
Office occupancy expense and equipment 690 782 1,398 1,550
Marketing and advertising 74 135 174 168
Outside services and data processing 941 893 1,804 1,704
Bank franchise tax 315 402 630 744
FDIC insurance premiums 505 682 1,194 1,097
Amortization of intangible assets - 62 - 127
Real estate acquired through foreclosure expense 524 2,336 818 2,676
Loan expense 385 656 607 1,164
Other expense 1,372 1,446 2,688 2,800
----- ----- ----- -----
Total non-
interest
expense 8,563 11,216 16,863 19,705
----- ------
Loss before income taxes (1,125) (4,138) (1,003) (4,428)
Income tax expense/(benefit) 1 1 1 1
--- --- --- ---
Net Loss (1,126) (4,139) (1,004) (4,429)
Less:
Dividends on preferred stock (250) (250) (500) (500)
Accretion on preferred stock (13) (13) (27) (27)
--- --- --- ---
Net loss attributable to common shareholders $(1,389) $(4,402) $(1,531) $(4,956)
======= ======= ======= =======
Shares applicable to basic loss per common share 4,806,444 4,767,464 4,797,259 4,764,240
Basic loss per common share $(0.29) $(0.92) $(0.32) $(1.04)
====== ====== ====== ======
Shares applicable to diluted loss per common share 4,806,444 4,767,464 4,797,259 4,764,240
Diluted loss per common share $(0.29) $(0.92) $(0.32) $(1.04)
====== ====== ====== ======
Cash dividends declared per common share $ - $ - $ - $ -
============== ============= =============== ==============
Quarter Ended June 30,
2013 2012
---- ----
(Dollars in thousands)
Average Average Average Average
Balance Interest Yield/Cost (5) Balance Interest Yield/Cost (5)
------- -------- -------------- ------- -------- --------------
ASSETS
Interest earning assets:
U.S. Government and federal agency $ - $ - -% $19,399 $98 2.03%
Mortgage-backed securities 244,501 1,031 1.69% 309,475 1,498 1.94%
State and political subdivision
securities (1) 15,501 248 6.42% 13,755 218 6.36%
Trust Preferred Securities - - -% 1,032 16 6.22%
Corporate bonds 59,231 377 2.55% 412 1 0.97%
Loans (2) (3) (4) 499,079 6,603 5.31% 662,340 8,868 5.37%
FHLB stock 4,430 47 4.26% 4,805 56 4.67%
Interest bearing deposits 24,982 16 0.26% 107,296 57 0.21%
------ --- ---- ------- --- ----
Total interest earning assets 847,724 8,322 3.94% 1,118,514 10,812 3.88%
----- ----- ------ -----
Less: Allowance for loan losses (16,156) (17,759)
Non-interest earning assets 78,642 92,289
------ ------
Total assets $910,210 $1,193,044
======== ==========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Interest bearing liabilities:
Savings accounts $91,122 $52 0.23% $98,445 $72 0.29%
NOW and money market
accounts 265,784 153 0.23% 305,064 390 0.51%
Certificates of deposit and
other time deposits 390,885 1,569 1.61% 605,531 2,983 1.98%
FHLB advances 13,762 132 3.85% 27,678 282 4.09%
Subordinated debentures 18,000 341 7.60% 18,000 341 7.60%
------ --- ---- ------ --- ----
Total interest bearing liabilities 779,553 2,247 1.16% 1,054,718 4,068 1.55%
----- ----- ----- -----
Non-interest bearing liabilities:
Non-interest bearing deposits 80,433 82,698
Other liabilities 11,060 5,069
------ -----
Total liabilities 871,046 1,142,485
Stockholders' equity 39,164 50,559
------ ------
Total liabilities and
stockholders' equity $910,210 $1,193,044
======== ==========
Net interest income $6,075 $6,744
====== ======
Net interest spread 2.78% 2.33%
==== ====
Net interest margin 2.87% 2.42%
==== ====
(1) Taxable equivalent yields are calculated assuming a 34% federal income tax rate.
(2) Includes loan fees, immaterial in amount, in both interest income and the calculation of yield on loans.
(3) Calculations include non-accruing loans in the average loan amounts outstanding.
(4) Includes loans held for sale.
(5) Annualized
Six Months Ended June 30,
2013 2012
---- ----
(Dollars in thousands)
Average Average Average Average
Balance Interest Yield/Cost (5) Balance Interest Yield/Cost (5)
------- -------- -------------- ------- -------- --------------
ASSETS
Interest earning assets:
U.S. Government and federal agency $3,822 $28 1.48% $21,537 $230 2.15%
Mortgage-backed securities 266,443 2,241 1.70% 294,883 2,969 2.03%
State and political subdivision
securities (1) 15,078 421 5.63% 16,636 541 6.56%
Trust Preferred Securities - - -% 1,055 29 5.54%
Corporate bonds 50,862 651 2.58% 206 1 0.98%
Loans (2) (3) (4) 510,593 13,421 5.30% 694,733 18,829 5.47%
FHLB stock 4,555 98 4.34% 4,805 103 4.32%
Interest bearing deposits 27,701 34 0.25% 95,855 104 0.22%
------ --- ---- ------ --- ----
Total interest earning assets 879,054 16,894 3.88% 1,129,710 22,806 4.07%
------ ----- ------ -----
Less: Allowance for loan losses (16,587) (17,868)
Non-interest earning assets 81,181 92,995
------ ------
Total assets $943,648 $1,204,837
======== ==========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Interest bearing liabilities:
Savings accounts $88,947 $107 0.24% $96,491 $143 0.30%
NOW and money market
accounts 272,224 355 0.26% 304,972 838 0.55%
Certificates of deposit and
other time deposits 419,536 3,448 1.66% 621,632 6,408 2.08%
FHLB advances 13,168 264 4.04% 27,761 567 4.12%
Subordinated debentures 18,000 682 7.64% 18,000 682 7.64%
------ --- ---- ------ --- ----
Total interest bearing liabilities 811,875 4,856 1.21% 1,068,856 8,638 1.63%
----- ----- ----- -----
Non-interest bearing liabilities:
Non-interest bearing deposits 79,492 79,215
Other liabilities 10,727 4,858
------ -----
Total liabilities 902,094 1,152,929
Stockholders' equity 41,554 51,908
------ ------
Total liabilities and
stockholders' equity $943,648 $1,204,837
======== ==========
Net interest income $12,038 $14,168
======= =======
Net interest spread 2.67% 2.44%
==== ====
Net interest margin 2.76% 2.53%
==== ====
(1) Taxable equivalent yields are calculated assuming a 34% federal income tax rate.
(2) Includes loan fees, immaterial in amount, in both interest income and the calculation of yield on loans.
(3) Calculations include non-accruing loans in the average loan amounts outstanding.
(4) Includes loans held for sale.
(5) Annualized
Three Months Ended Six Months Ended
June 30, June 30,
(Dollars in thousands) 2013 2012 2013 2012
---- ---- ---- ----
Balance at beginning of period $15,812 $17,329 $17,265 $17,181
------- ------- ------- -------
Loans charged-off:
Residential mortgage - 31 - 62
Consumer & home equity 92 158 155 276
Commercial & commercial real estate 61 2,190 546 2,990
--- ----- --- -----
Total charge-offs 153 2,379 701 3,328
--- ----- --- -----
Recoveries:
Residential mortgage 4 - 4 1
Consumer & home equity 48 42 90 86
Commercial & commercial real estate 24 75 114 102
--- --- --- ---
Total recoveries 76 117 208 189
--- --- --- ---
Net loans charged-off 77 2,262 493 3,139
--- ----- --- -----
Provision for loan losses 212 915 (825) 1,927
--- --- ---- -----
Balance at end of period 15,947 15,982 15,947 15,969
Less: Allowance allocated to loans held for
sale in probable branch divestiture - (682) - (669)
--- ---- --- ----
Balance at end of period, net $15,947 $15,300 $15,947 $15,300
======= ======= ======= =======
Allowance for loan losses to total loans (1) (2) 3.25% 2.50% 3.25% 2.50%
Annualized net charge-offs to average
loans outstanding 0.06% 1.37% 0.19% 0.91%
Allowance for loan losses to
total non-performing loans (2) 89% 42% 89% 42%
(1) Includes loans held for sale in probable branch divestiture and probable loan sale for 2012
(2) Includes allowance allocated to loans held for sale in probable branch divestiture for 2012
June 30, March 31, December 31, September 30, June 30,
(Dollars in thousands) 2013 2013 2012 2012 2012
---- ---- ---- ---- ----
Restructured on non-accrual status $8,639 $9,099 $9,753 $16,151 $21,844
Past due 90 days still on accrual - 1,950 - - -
Loans on non-accrual status 9,215 9,596 11,702 15,565 16,217
----- ----- ------ ------ ------
Total non-performing loans 17,854 20,645 21,455 31,716 38,061
Real estate acquired through
foreclosure 14,169 19,705 22,286 28,649 36,529
Other repossessed assets 37 32 34 24 30
--- --- --- --- ---
Total non-performing assets $32,060 $40,382 $43,775 $60,389 $74,620
======= ======= ======= ======= =======
Ratios: Non-performing loans
to total loans (includes loans held for sale in
probable branch divestiture and probable
loan sale for 2012) 3.64% 4.08% 4.09% 5.53% 5.97%
Non-performing assets
to total loans (includes loans held for sale in
probable branch divestiture and probable
loan sale for 2012) 6.54% 7.98% 8.34% 10.53% 11.71%
SOURCE First Financial Service Corporation
