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09.08.2013 23:23:00
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First Financial Service Corporation Reports Improved Credit Quality for the Fifth Consecutive 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 | $ 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
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