EX-99.1 2 a05-18772_1ex99d1.htm EX-99.1

Exhibit 99.1

 

FOR IMMEDIATE RELEASE

 

 

October 20, 2005

 

For More Information Contact:

 

 

Gregory Schreacke

 

 

Chief Financial Officer

 

 

First Financial Service Corporation

 

 

(270) 765-2131

 

First Financial Service Corporation Announces Third Quarter Results

 

Elizabethtown, Kentucky, October 20, 2005 – First Financial Service Corporation (the Company, Nasdaq: FFKY) today announced diluted net income per share for the third quarter ended September 30, 2005 of $0.57, an increase of 33% from $0.43 for the third quarter ended September 30, 2004.  Return on equity was 14.7% for the third quarter and return on assets was 1.23%.

 

Diluted net income per share for the nine months ended September 30, 2005, was $1.68, an increase of 24% from $1.35 for the nine months ended September 30, 2004.  For the nine months ended September 30, 2005, return on equity was 14.6% and return on assets was 1.21%.

 

On September 22, 2005, the Company declared a 10% stock dividend payable on October 21, 2005 to shareholders of record at the close of business on October 7, 2005.  All per share information has been restated to reflect the 10% stock dividend.

 

“We are pleased to report another record quarter for the Company,” noted President and Chief Executive Officer, B. Keith Johnson.  “Results for the third quarter reflect the continued success of our retail and commercial expansion efforts.  We believe our investment in these initiatives along with our continued commitment to superior customer service will enhance our existing market share and effectively support our expansion into the Louisville metropolitan market.”

 

The enhancement of the Company’s retail branch network continues to produce positive results.  Total deposits have grown at a 7% compound annual growth rate over the past four years.  Total deposits were $596 million at September 30, 2005, an increase of $61 million, or 11% from September 30, 2004.

 

The development of the retail branch network into the Metro Louisville market has also generated positive results.  The Company has a combined $29 million in deposits in its two new full-service facilities in the Metro Louisville market.  The Company opened these new facilities in the second quarter of 2004 to support its growing customer base in this market.  Twenty-one percent of the Company’s loan portfolio resides in its Metro Louisville market.

 

The Company also has been significantly investing in its branch network outside of the Louisville metropolitan market, where the Company has a commanding 21% deposit market share.  The Company has renovated several of its existing branches and has under construction a new full-service banking center in Hardin County opening in early 2006.  The design of the new and enhanced facilities represents the Company’s state of the art prototype branch with a retail-focused design, complimenting the Company’s commitment to providing superior customer service.

 

The Company’s emphasis on commercial lending generated a 5% compound annual growth rate in the total loan portfolio and a 33% compound annual growth rate in commercial loans over the past four years.  Commercial loans were $380 million at September 30, 2005, an increase of $32 million from September 30, 2004.

 

The growth in the Company’s commercial loan portfolio, coupled with the rising interest rate environment, has favorably impacted the level of interest income generated by the Company.  Net interest margin increased to 3.90% for the nine months ended September 30, 2005, compared to 3.73% for the same nine months ended a year ago.  This has resulted in an $765,000 increase in net interest income to $7.0 million for the third quarter ended September 30, 2005 and a $2.5 million increase in net interest income to $20.4 million for the nine months ended September 30, 2005, compared to the respective periods in 2004.  The increasing interest rate environment positively impacted net interest margin due to the growth in the adjustable rate commercial loans coupled with the decrease in residential fixed rate loans in the Company’s loan portfolio.  Net interest margin has increased in each of the last six quarters and is likely to continue to benefit from continued increases in the Prime lending rate.  However, the flattening of the yield curve will likely slow the increases in net interest margin over future quarters.

 


 

The Company’s asset quality remains favorable.  Net charge-offs as a percent of total loans were 0.03% for the nine months ended September 30, 2005, compared to 0.11% for the same period year ago.  The allowance for loan losses as a percent of total loans, increased to 1.13% at September 30, 2005 compared to 1.07% at December 31, 2004.  The percentage of non-performing loans to total loans was 1.03% at September 30, 2005, compared to 0.87% at December 31, 2004.

 

Provision for loan loss expense decreased $384,000 to $440,000 for the quarter ended September 30, 2005, compared to $824,000 for the quarter ended September 30, 2004.  For the nine months ended September 30, 2005, provision for loan loss expense decreased $717,000 to $756,000, compared to $1.5 million for the same nine months ended a year ago.  The decrease in the provision was related to the softer expansion in the commercial loan portfolio for the year, as compared to a year ago, as well as a decrease in net charge offs of $494,000 to $156,000 for the nine months ended September 30, 2005 compared to $650,000 the prior year.

 

Non-interest income decreased $61,000 to $2.1 million for the quarter ended September 30, 2005.  For the nine months ended, non-interest income decreased $96,000 to $6.1 million.  The Company recorded a $177,000 in gains on the sale of a lots and investments during the third quarter of 2004, resulting in the decrease in non-interest income for the third quarter of 2005.  The nine months ended September 30, 2005, includes a $524,000 in gains on the sale of lots and investment securities.  This compares to a $553,000 in gains on the sale of lots, land and investment securities for the nine months ended September 30, 2004.

 

Non-interest expense increased $186,000, to $5.2 million for the quarter ended September 30, 2005, and $1.2 million to $15.6 million for the nine months ended September 30, 2005, compared to the same periods a year ago.  The primary contributing factors to this increase were the additional operating and employee compensation expenses related to the recent expansion efforts.  Twenty-four retail staff positions were added for the expansion into the Louisville metropolitan market, coupled with expanded facilities in Hardin County and Bullitt County, Kentucky.  Additional increases in staff have taken place during 2004 and 2005 to continue the transformation towards a stronger retail sales culture and to provide expanded products and services to our retail and commercial customers.  The Company’s efficiency ratio was 59% for the nine months ended September 30, 2005 and 60% for the nine months ended September 30, 2004, indicating an operationally efficient financial institution.

 

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, trust and estate planning, and personal investment financial counseling services.  Today, the Bank serves Central Kentucky through its 14 full-service banking centers.

 

This press release contains forward-looking statements under the Private Securities Litigation Reform Act of 1995 that are subject to certain risks and uncertainties that could cause actual results to differ materially from historical income and those presently anticipated or projected.  The Company cautions readers not to place undue reliance on any such forward-looking statements, which speak only as of the date of this release.  Such risks and uncertainties include those detailed in the Company’s filings with the Securities and Exchange Commission, risks of adversely changing results of operations, risks related to the Company’s acquisition strategy, risk of loans and investments, including the effect of the change of the local economic conditions, risks associated with the adverse effects of the changes in interest rates, and competition for the Company’s customers by other providers of financial services, all of which are difficult to predict and many of which are beyond the control of the Company.

 

First Financial Service Corporation’s stock is traded on the Nasdaq National Market under the symbol “FFKY.”  Market makers for the stock are:

 

J.J.B. Hilliard, W.L. Lyons Company, Inc.

 

Keefe, Bruyette & Woods, Inc.

 

 

 

Stifel Nicolaus & Company

 

Goldman, Sachs & Company

 

 

 

First Tennessee Securities

 

Knight Securities, LP

 

 

 

Spear, Leeds & Kellogg

 

Sandler O’Neill

 

 

 

Howe Barnes Investments, Inc.

 

 

 


 

MORE

 


 

News Release

First Financial Service Corporation

October 20, 2005

 

FIRST FINANCIAL SERVICE CORPORATION

Consolidated Statements of Financial Condition (Unaudited)

 

 

 

 

September 30,

 

December 31,

 

(Dollars in thousands, except share data)

 

2005

 

2004

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

Cash and due from banks

 

$

21,321

 

$

27,910

 

Federal funds sold

 

—

 

8,000

 

Cash and cash equivalents

 

21,321

 

35,910

 

 

 

 

 

 

 

Securities available-for-sale

 

37,187

 

21,928

 

Securities held-to-maturity, fair value of $33,043 Sep (2005) and $34,557 Dec (2004)

 

33,577

 

34,915

 

Total securities

 

70,764

 

56,843

 

 

 

 

 

 

 

Loans held for sale

 

1,134

 

1,219

 

Loans receivable, net of unearned fees

 

625,223

 

604,698

 

Allowance for loan losses

 

(7,089

)

(6,489

)

Net loans receivable

 

619,268

 

599,428

 

 

 

 

 

 

 

Federal Home Loan Bank stock

 

7,091

 

6,845

 

Cash surrender value of life insurance

 

7,566

 

7,353

 

Premises and equipment, net

 

19,180

 

17,469

 

Real estate owned:

 

 

 

 

 

Acquired through foreclosure

 

893

 

681

 

Held for development

 

337

 

389

 

Other repossessed assets

 

83

 

40

 

Goodwill

 

8,384

 

8,384

 

Accrued interest receivable

 

2,934

 

2,487

 

Other assets

 

1,437

 

1,817

 

 

 

 

 

 

 

TOTAL ASSETS

 

$

759,258

 

$

737,646

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

LIABILITIES:

 

 

 

 

 

Deposits:

 

 

 

 

 

Non-interest bearing

 

$

41,770

 

$

38,441

 

Interest bearing

 

553,795

 

547,945

 

Total deposits

 

595,565

 

586,386

 

 

 

 

 

 

 

Federal funds purchased

 

9,000

 

—

 

Advances from Federal Home Loan Bank

 

78,415

 

78,904

 

Subordinated debentures

 

10,000

 

10,000

 

Accrued interest payable

 

355

 

413

 

Accounts payable and other liabilities

 

1,346

 

637

 

Deferred income taxes

 

1,187

 

1,505

 

 

 

 

 

 

 

TOTAL LIABILITIES

 

695,868

 

677,845

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY:

 

 

 

 

 

Serial preferred stock, 5,000,000 shares authorized and unissued

 

—

 

—

 

Common stock, $1 par value per share; authorized 10,000,000 shares; issued and outstanding, 3,626,188 shares Sep (2005), and 3,645,438 shares Dec (2004)

 

3,626

 

3,645

 

Common stock to be distributed 362,619 shares

 

363

 

—

 

Additional paid-in capital

 

17,485

 

8,226

 

Retained earnings

 

41,777

 

47,174

 

Accumulated other comprehensive income, net of tax

 

139

 

756

 

 

 

 

 

 

 

TOTAL STOCKHOLDERS’ EQUITY

 

63,390

 

59,801

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

 

$

759,258

 

$

737,646

 

 

3


 

FIRST FINANCIAL SERVICE CORPORATION

Consolidated Statements of Income (Unaudited)

 

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

(Dollars in thousands, except per share data)

 

2005

 

2004

 

2005

 

2004

 

Interest Income:

 

 

 

 

 

 

 

 

 

Interest and fees on loans

 

$

10,839

 

$

9,374

 

$

31,065

 

$

27,502

 

Interest and dividends on investments and deposits

 

754

 

410

 

2,185

 

1,273

 

Total interest income

 

11,593

 

9,784

 

33,250

 

28,775

 

 

 

 

 

 

 

 

 

 

 

Interest Expense:

 

 

 

 

 

 

 

 

 

Deposits

 

3,482

 

2,489

 

9,519

 

7,741

 

Federal funds purchased

 

12

 

22

 

12

 

23

 

Federal Home Loan Bank advances

 

956

 

943

 

2,851

 

2,792

 

Subordinated debentures

 

184

 

136

 

517

 

385

 

Total interest expense

 

4,634

 

3,590

 

12,899

 

10,941

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

6,959

 

6,194

 

20,351

 

17,834

 

Provision for loan losses

 

440

 

824

 

756

 

1,473

 

Net interest income after provision for loan losses

 

6,519

 

5,370

 

19,595

 

16,361

 

 

 

 

 

 

 

 

 

 

 

Non-interest Income:

 

 

 

 

 

 

 

 

 

Customer service fees on deposit accounts

 

1,371

 

1,271

 

3,810

 

3,674

 

Gain on sale of mortgage loans

 

251

 

221

 

602

 

683

 

Brokerage commissions

 

79

 

82

 

236

 

268

 

Gain on sale of real estate held for development

 

—

 

150

 

143

 

526

 

Gain on sale of investments

 

—

 

26

 

381

 

26

 

Other income

 

360

 

372

 

887

 

978

 

Total non-interest income

 

2,061

 

2,122

 

6,059

 

6,155

 

 

 

 

 

 

 

 

 

 

 

Non-interest Expense:

 

 

 

 

 

 

 

 

 

Employee compensation and benefits

 

2,769

 

2,611

 

8,403

 

7,666

 

Office occupancy expense and equipment

 

519

 

460

 

1,517

 

1,351

 

Marketing and advertising

 

197

 

187

 

580

 

539

 

Outside services and data processing

 

609

 

558

 

1,837

 

1,628

 

Bank franchise tax

 

195

 

201

 

593

 

620

 

Other expense

 

867

 

953

 

2,648

 

2,622

 

Total non-interest expense

 

5,156

 

4,970

 

15,578

 

14,426

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

3,424

 

2,522

 

10,076

 

8,090

 

Income taxes

 

1,113

 

808

 

3,285

 

2,611

 

Net Income

 

$

2,311

 

$

1,714

 

$

6,791

 

$

5,479

 

 

 

 

 

 

 

 

 

 

 

(1) Shares applicable to basic income per share

 

3,988,806

 

4,009,982

 

4,002,584

 

4,029,782

 

(1) Basic income per share

 

$

0.58

 

$

0.43

 

$

1.70

 

$

1.36

 

 

 

 

 

 

 

 

 

 

 

(1) Shares applicable to diluted income per share

 

4,027,271

 

4,027,356

 

4,035,646

 

4,042,815

 

(1) Diluted income per share

 

$

0.57

 

$

0.43

 

$

1.68

 

$

1.35

 

 

(1) Adjusted to reflect the impact of the stock dividend declared September 22, 2005.

 

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