Market Overview

First Financial Service Corporation Reports Improved Credit Quality for the Fifth Consecutive Quarter

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Net interest margin improves by 21 basis points compared to the March 2013 quarter

Non-performing assets improve 20.6% compared to the March 2013 quarter

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

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