FIRST FINANCIAL SERVICE CORP. (KY) 
By ELIZABETHTOWN, Ky., Nov. 12, 2013 /PRNewswire/ -- First Financial Service Corporation (the Company, NASDAQ: FFKY) today reported net income to common stockholders of $1.2 million for the quarter ended September 30, 2013, an improvement from the net loss to common stockholders of $1.0 million for the same quarter in 2012. Net income per diluted common share was $0.25 for the quarter ended September 30, 2013, compared to a net loss per diluted common share of $0.21 for the same quarter in 2012.
First Financial also reported a net loss of $328,000 for the nine months ended September 30, 2013, an improvement from the net loss to common stockholders of $6.0 million for the same nine-month period in 2012. The net loss per diluted common share was $0.07 for the nine months ended September 30, 2013, compared to a net loss per diluted common share of $1.25 for the nine months ended September 30, 2013.
"We continue to execute on improving the overall profitability and risk profile of the Company," said President, Greg Schreacke. "Non-performing assets improved for the sixth consecutive quarter, net interest margin trends remain favorable, and capital ratios continue to improve with the net income posted for the quarter. More importantly, serving our customers remains at the heart of everything we do. New loan production for portfolio loans exceeded $30 million for the third consecutive quarter, though net loan growth declined 3.0% for the quarter. Retail and commercial checking continue to grow with a 5% increase in deposits for the year."
THIRD QUARTER 2013 HIGHLIGHTS
-- Net interest margin improved to 2.96% for the quarter ended September
30, 2013, up from 2.87% last quarter and 2.54% for the quarter ended
September 30, 2012.
-- Non-performing assets, excluding restructured loans that are accruing
and paying as agreed, declined by $1.7 million or 5.0%, to $30.4 million
from June 30, 2013 and $30.0 million or 49.7% from September 30, 2012.
This represents the sixth consecutive quarterly reduction in
non-performing assets, excluding restructured loans that are accruing
and paying as agreed.
-- Other real estate owned has decreased $13.4 million or 60.2% to $8.9
million for the quarter ended September 30, 2013 compared to $22.3 for
the quarter ended December 31, 2012. Related expenses have declined
61.7% for the nine months ended September 30, 2013 to $1.3 million when
compared to $3.3 million for the same period last year. Also, a gain of
$1.5 million was realized during the quarter on a piece of commercial
real estate property that was sold.
-- Regulatory capital ratios continue to improve at the bank level. The
tier I leverage ratio was 7.80%, the tier I risk-based ratio was 11.83%
and the total risk-based ratio was 13.09% for the quarter ended
September 30, 2013 compared to 6.50%, 10.61%, and 11.88% respectively
for the quarter ended September 30, 2012.
"Third quarter 2013 noninterest expenses were relatively flat with a slight increase of approximately $41,000 over the second quarter. Noninterest income in the second quarter of 2013 improved by $1.9 million and included a $1.5 million gain on the sale of one other real estate owned property," said Chief Financial Officer, Frank Perez. "Noninterest income also benefited from increased overdraft and mortgage fee income."
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)
September 30, December 31,
(Dollars in thousands, except per share data) 2013 2012
---- ----
ASSETS:
Cash and due from banks $13,441 $12,598
Interest bearing deposits 18,076 50,505
------ ------
Total cash and cash equivalents 31,517 63,103
------ ------
Securities available-for-sale 290,183 354,131
Loans held for sale 1,068 3,887
Loans, net of unearned fees 476,031 524,835
Allowance for loan losses (12,224) (17,265)
------- -------
Net loans 463,807 507,570
------- -------
Federal Home Loan Bank stock 4,430 4,805
Cash surrender value of life insurance 10,336 10,060
Premises and equipment, net 25,907 27,048
Real estate owned:
Acquired through foreclosure, net of valuation
allowance of $721 Sept (2013) and $500 Dec (2012) 8,859 22,286
Other repossessed assets 16 34
Accrued interest receivable 2,283 2,690
Accrued income taxes 2,907 2,928
Low-income housing investments 7,039 7,061
Other assets 1,804 1,459
----- -----
TOTAL ASSETS $850,156 $1,007,062
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposits:
Non-interest bearing $80,308 $75,842
Interest bearing 666,570 846,778
Total deposits 746,878 922,620
Advances from Federal Home Loan Bank 38,424 12,596
Subordinated debentures 18,000 18,000
Accrued interest payable 4,137 3,121
Accrued senior preferred dividend 3,219 2,469
Accounts payable and other liabilities 4,977 3,884
----- -----
TOTAL LIABILITIES 815,635 962,690
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 $23.2 million Sept (2013), and
$22.5 million Dec (2012) 19,984 19,943
Common stock, $1 par value per share;
authorized 35,000,000 shares; issued and
outstanding, 4,861,523 shares Sept (2013), and 4,775,114
shares Dec (2012) 4,861 4,775
Additional paid-in capital 36,137 35,782
Accumulated deficit (17,726) (17,398)
Accumulated other comprehensive income (8,735) 1,270
------ -----
TOTAL STOCKHOLDERS' EQUITY 34,521 44,372
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $850,156 $1,007,062
===================================
FIRST FINANCIAL SERVICE
CORPORATION
Consolidated Statements of
Operations
(Unaudited)
Three Months Ended Nine Months Ended
(Amounts in thousands, except per share data) September 30, September 30,
2013 2012 2013 2012
---- ---- ---- ----
Interest and Dividend Income:
Loans, including fees $6,308 $8,082 $19,729 $26,911
Taxable securities 1,700 1,666 4,898 5,303
Tax exempt securities 53 74 185 230
--- --- --- ---
Total interest income 8,061 9,822 24,812 32,444
Interest Expense:
Deposits 1,561 2,952 5,471 10,341
Federal Home Loan Bank advances 133 216 397 783
Subordinated debentures 340 421 1,022 1,103
--- --- ----- -----
Total interest
expense 2,034 3,589 6,890 12,227
----- -----
Net interest income 6,027 6,233 17,922 20,217
Provision for loan losses (500) 2,671 (1,325) 4,598
---- ----- ------ -----
Net interest income after provision for loan losses 6,527 3,562 19,247 15,619
----- ----- ------ ------
Non-interest Income:
Customer service fees on deposit accounts 1,444 1,339 3,942 4,121
Gain on sale of mortgage loans 230 505 818 1,200
Gain on sale of investments 235 2,054 1,078 3,363
Loss on sale of investments (223) (350) (839) (653)
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 (365) (1,587) (1,957) (5,169)
Gain on branch divesture - 3,124 - 3,124
Gain on sale of premises and equipment - - - 322
Gain on sale on real estate acquired through foreclosure 1,632 630 1,839 1,243
Gain on sale of real estate held for development - - - 175
Brokerage commissions 127 109 384 316
Other income 466 632 1,421 1,660
--- --- ----- -----
Total non-interest
income 3,546 6,456 6,686 9,676
----- -----
Non-interest Expense:
Employee compensation and benefits 3,955 3,609 11,505 11,284
Office occupancy expense and equipment 653 777 2,051 2,327
Marketing and advertising 99 113 273 281
Outside services and data processing 900 853 2,704 2,557
Bank franchise tax 315 402 708 1,146
FDIC insurance premiums 460 663 1,654 1,760
Amortization of intangible assets - - - 127
Real estate acquired through foreclosure expense 452 638 1,270 3,314
Loan expense 485 568 1,092 1,732
FHLB advance perpayment penalty - 1,548 - 1,548
Other expense 1,286 1,682 4,211 4,482
----- ----- ----- -----
Total non-interest
expense 8,605 10,853 25,468 30,558
----- ------
Income (Loss) before income taxes 1,468 (835) 465 (5,263)
Income tax expense/(benefit) 1 (84) 2 (83)
--- --- --- ---
Net Income (Loss) 1,467 (751) 463 (5,180)
Less:
Dividends on preferred stock (250) (250) (750) (750)
Accretion on preferred stock (14) (14) (41) (41)
--- --- --- ---
Net income (loss) attributable to common shareholders $1,203 $(1,015) $(328) $(5,971)
====== ======= ===== =======
Shares applicable to basic income (loss) per common share 4,860,115 4,772,987 4,816,538 4,766,898
Basic income (loss) per common share $0.25 $(0.21) $(0.07) $(1.25)
===== ====== ====== ======
Shares applicable to diluted income (loss) per common share 4,905,542 4,772,987 4,816,538 4,766,898
Diluted income (loss) per common share $0.25 $(0.21) $(0.07) $(1.25)
===== ====== ====== ======
Cash dividends declared per common share $ - $ - $ - $ -
================ ================ ================= =================
Quarter Ended September 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 $ - $ - -% $13,174 $63 1.90%
Mortgage-backed securities 235,530 1,173 1.98% 280,664 1,328 1.88%
State and political subdivision
securities (1) 14,251 188 5.23% 13,529 242 7.10%
Trust Preferred Securities - - -% 1,040 9 3.43%
Corporate bonds 56,013 400 2.83% 14,109 84 2.36%
Loans (2) (3) (4) 488,494 6,308 5.12% 590,418 8,082 5.43%
FHLB stock 4,430 47 4.21% 4,805 49 4.05%
Interest bearing deposits 17,150 9 0.21% 69,444 47 0.27%
------ --- ---- ------ --- ----
Total interest earning assets 815,868 8,125 3.95% 987,183 9,904 3.98%
----- ----- ----- -----
Less: Allowance for loan losses (15,871) (16,507)
Non-interest earning assets 74,394 90,665
------ ------
Total assets $874,391 $1,061,341
======== ==========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Interest bearing liabilities:
Savings accounts $89,356 $40 0.18% $83,542 $66 0.31%
NOW and money market
accounts 243,533 82 0.13% 280,913 317 0.45%
Certificates of deposit and
other time deposits 365,675 1,439 1.56% 521,093 2,569 1.96%
FHLB advances 32,750 133 1.61% 21,300 216 4.02%
Subordinated debentures 18,000 340 7.49% 18,000 421 9.28%
------ --- ---- ------ --- ----
Total interest bearing liabilities 749,314 2,034 1.08% 924,848 3,589 1.54%
----- ----- ----- -----
Non-interest bearing liabilities:
Non-interest bearing deposits 80,523 79,266
Other liabilities 11,759 8,467
------ -----
Total liabilities 841,596 1,012,581
Stockholders' equity 32,795 48,760
------ ------
Total liabilities and
stockholders' equity $874,391 $1,061,341
======== ==========
Net interest income $6,091 $6,315
====== ======
Net interest spread 2.87% 2.44%
==== ====
Net interest margin 2.96% 2.54%
==== ====
(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
Nine Months Ended September 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 $2,548 $28 1.47% $18,749 $293 2.09%
Mortgage-backed securities 256,138 3,414 1.78% 290,143 4,297 1.98%
State and political subdivision
securities (1) 14,803 609 5.50% 15,600 783 6.71%
Trust Preferred Securities - - -% 1,050 38 4.84%
Corporate bonds 52,579 1,051 2.67% 4,840 85 2.35%
Loans (2) (3) (4) 503,227 19,729 5.24% 659,961 26,911 5.45%
FHLB stock 4,513 145 4.30% 4,805 152 4.23%
Interest bearing deposits 24,184 43 0.24% 87,051 151 0.23%
------ --- ---- ------ --- ----
Total interest earning assets 857,992 25,019 3.90% 1,082,199 32,710 4.04%
------ ------
Less: Allowance for loan losses (16,348) (17,415)
Non-interest earning assets 78,918 92,218
------ ------
Total assets $920,562 $1,157,002
======== ==========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Interest bearing liabilities:
Savings accounts $89,083 $147 0.22% $92,174 $209 0.30%
NOW and money market
accounts 262,660 437 0.22% 296,952 1,155 0.52%
Certificates of deposit and
other time deposits 401,583 4,887 1.63% 588,119 8,977 2.04%
FHLB advances 19,695 397 2.70% 25,607 783 4.09%
Subordinated debentures 18,000 1,022 7.59% 18,000 1,103 8.19%
------ ----- ---- ------ ----- ----
Total interest bearing liabilities 791,021 6,890 1.16% 1,020,852 12,227 1.60%
----- ---- ------ ----
Non-interest bearing liabilities:
Non-interest bearing deposits 79,836 79,230
Other liabilities 11,071 6,061
------ -----
Total liabilities 881,928 1,106,143
Stockholders' equity 38,634 50,859
------ ------
Total liabilities and
stockholders' equity $920,562 $1,157,002
======== ==========
Net interest income $18,129 $20,483
======= =======
Net interest spread 2.74% 2.44%
==== ====
Net interest margin 2.83% 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 Nine Months
Ended Ended
September 30, September 30,
(Dollars in thousands) 2013 2012 2013 2012
---- ---- ---- ----
Balance at beginning of period $15,947 $15,300 $17,265 $17,181
------- ------- ------- -------
Loans charged-off:
Residential mortgage 73 - 73 62
Consumer & home equity 156 110 311 386
Commercial & commercial real estate 3,124 361 3,670 3,351
----- --- ----- -----
Total charge-offs 3,353 471 4,054 3,799
----- --- ----- -----
Recoveries:
Residential mortgage 13 - 17 1
Consumer & home equity 44 59 134 145
Commercial & commercial real estate 73 64 187 166
--- --- --- ---
Total recoveries 130 123 338 312
--- --- --- ---
Net loans charged-off 3,223 348 3,716 3,487
----- --- ----- -----
Provision for loan losses (500) 2,671 (1,325) 4,598
---- ----- ------ -----
Balance at end of period 12,224 17,623 12,224 18,292
Less: Allowance allocated to loans held for
sale in probable branch divestiture - 201 - (468)
--- --- --- ----
Balance at end of period, net $12,224 $17,824 $12,224 $17,824
======= ======= ======= =======
Allowance for loan losses to total loans
(1) (2) 2.57% 3.19% 2.57% 3.19%
Annualized net charge-offs to average
loans outstanding 2.62% 0.23% 0.99% 0.71%
Allowance for loan losses to
total non-performing loans (2) 57% 58% 57% 58%
(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
September 30, June 30, March 31, December 31, September 30,
(Dollars in thousands) 2013 2013 2013 2012 2012
---- ---- ---- ---- ----
Restructured on non-accrual status $7,927 $8,639 $9,099 $9,753 $16,151
Restructured past due 90 days still on accrual 4,837 - - - -
Past due 90 days still on accrual 2,238 - 1,950 - -
Loans on non-accrual status 6,511 9,215 9,596 11,702 15,565
----- ----- ----- ------ ------
Total non-performing loans 21,513 17,854 20,645 21,455 31,716
Real estate acquired through
foreclosure 8,859 14,169 19,705 22,286 28,649
Other repossessed assets 16 37 32 34 24
--- --- --- --- ---
Total non-performing assets $30,388 $32,060 $40,382 $43,775 $60,389
======= ======= ======= ======= =======
Interest income that would have
been earned on non-performing loans $1,127 $946 $1,094 $1,163 $1,729
Interest income recognized
on non-performing loans 38 - 16 - -
Ratios: Non-performing loans
to total loans (includes loans held for sale in
probable branch divestiture and probable
loan sale for 2012) 4.52% 3.64% 4.08% 4.09% 5.53%
Non-performing assets
to total loans (includes loans held for sale in
probable branch divestiture and probable
loan sale for 2012) 6.38% 6.54% 7.98% 8.34% 10.53%
SOURCE First Financial Service Corporation
