EX-99.1 2 a08-3721_1ex99d1.htm EX-99.1

 

Exhibit 99.1

FOR IMMEDIATE RELEASE

January 24, 2008

 

For More Information Contact:

 

 

Gregory Schreacke

 

 

Chief Financial Officer

 

 

First Financial Service Corporation

 

 

(270) 765-2131

 

 

First Financial Service Corporation

Announces Annual and Quarterly Results

 

 

Elizabethtown, Kentucky, January 24, 2008 — First Financial Service Corporation (the Company, Nasdaq: FFKY) today announced diluted net income per share of $0.50 for the quarter ended December 31, 2007, compared to $0.55 for the quarter ended December 31, 2006.  Return on equity was 12.7% for the quarter ended December 31, 2007 and return on assets was 1.07%.  Diluted net income per share for the year ended December 31, 2007, was $1.96, compared to $2.12 for the year ended December 31, 2006.  For the year ended December 31, 2007, return on equity was 12.9% and return on assets was 1.10%.

 

On August 16, 2007, the Company declared a 10% stock dividend payable on September 14, 2007 to shareholders of record at the close of business on August 29, 2007.  All per share information has been restated to reflect the 10% stock dividend.

 

“We finished the year with diluted earnings per share of $1.96, an 8% decline from $2.12 last year,” noted President and Chief Executive Officer, B. Keith Johnson.  “Our provision for loan losses increased $669,000 to $1.2 million for the year, as our provision increased to levels experienced during 2005 and 2004.  This is an increase from the favorable low level of provision for loan loss experienced during 2006.  Our non-interest expense was higher for the year increasing our efficiency ratio to 61% for 2007 from 59% for 2006 as we continue to invest in our retail and commercial franchise.  We opened a new full-service banking center on Taylorsville Road in Louisville in the second quarter of 2007 and plan construction on two new full service banking centers during 2008 in our current footprint of Hardin and Bullitt County, Kentucky.  We are encouraged by the success in our retail and commercial franchise and continue to anticipate returns from our continued investment in this area.”

 

The Company’s retail branch network continued to generate positive results.  Total deposits have grown at an 8% compound annual growth rate over the past three years.  Total deposits were $689 million at December 31, 2007, an increase of $48.2 million, or 8% for the year.  The continued development of the retail branch network in the Louisville market also yielded positive results.  The Company had a combined $54.2 million in deposits in its three full-service facilities in the Louisville market experiencing a 39% increase in deposits for the year and a 208% increase from December 31, 2004.  The Company opened these facilities in the second quarter of 2004 to support its growing customer base in this market.  Twenty-four percent of the Company’s loan portfolio and 8% of its deposit portfolio reside in the Louisville market.

 

The Company’s emphasis on commercial lending generated an 8% compound annual growth rate in the total loan portfolio and a 16% compound annual growth rate in commercial loans over the past three years.  Commercial loans were $544.9 million at December 31, 2007, an increase of $69.9 million, or 15% for the year.  The growth in the Company’s commercial loan portfolio has favorably impacted the level of interest income generated by the Company.  Average earning assets increased $54.0 million for December 31, 2007, compared to December 31, 2006.  Despite the increase in earning assets, the Company’s net interest margin realized a decline.  Net interest margin decreased to 3.89% for the year ended December 31, 2007, compared to 4.04% for the year ended December 31, 2006.  The increase in the volume of earning assets had a positive impact on net interest income, which increased $243,000 and $1.1 million for the three months and year ended December 31, 2007, compared to the respective periods ended December 31, 2006.

 

The percentage of non-performing loans to total loans increased to 1.16% at December 31, 2007, compared to 0.69% at December 31, 2006.  Annualized net charge-offs as a percent of average total loans were 0.13% for the year ended December 31, 2007, compared to 0.03% for December 31, 2006.  During the fourth quarter ended

 


 

December 31, 2007, the Company charged off $880,000, which was primarily the result of a $751,000 charge off on a commercial loan.   The loan was fully reserved for in a prior quarter.  The $751,000 reduction in the allowance for loan loss related to this credit resulted in a decrease in the allowance for loan loss as a percent of total loans ratio, which decreased to 1.03% at December 31, 2007 compared to 1.09% at December 31, 2006.

 

Provision for loan loss expense increased $68,000 to $261,000 for the three months ended December 31, 2007, compared to the same period ended September 30, 2006.  For the year ended December 31, 2007, provision for loan loss expense increased $669,000 to $1.2 million compared to the year ended December 31, 2006.  The increase in provision for loan loss expense for the respective periods was largely related to growth in the loan portfolio for the year as well as the specific reserve set aside for a loan classified during the third quarter ended September 30, 2007.  In addition, improvements in the Company’s security and position of certain classified loans during 2006, resulted in a reduction in the reserves allocated to the loans.  Therefore the Company recorded a lower provision for loan loss expense during 2006, resulting in a higher increase in the provision for loan loss expense for the year ended December 31, 2007.

 

Non-interest income increased $98,000 for the three months ended December 31, 2007, compared to the three months ended December 31, 2006.  For the year ended December 31, 2007 non-interest income increased $464,000, compared to the year ended December 31, 2006.  Contributing to the increase for the year was a $227,000 gain on the sale of real estate held for development.  This real estate was held for development through the Company’s wholly owned subsidiary, First Federal Office Park, LLC.  Only one other property remains for sale in this development.  Also contributing to the increase in non-interest income for the year was a $332,000 increase in customer service fees on deposit accounts.  Gain on the sale of mortgage loans declined $214,000 for the year ended December 31, 2007.

 

Non-interest expense increased $176,000 to $6.0 million for the three months ended December 31, 2007, compared to the same three months ended December 31, 2006.  For the year ended December 31, 2007, non-interest expense increased $1.8 million compared to the year ended December 31, 2006.  Included in the increase for the year was $229,000 of unamortized issuance cost from redemption of all of its $10.0 million issuance of cumulative trust preferred securities.  Contributing to the increase in non-interest expense for the respective further quarter and annual periods for 2007 was an $87,000 increase and a $690,000 increase in employee compensation expense.  Three commercial lending associates and twenty-one retail associates have been added with our expansion efforts.

 

Income tax expense increased $408,000 or $0.09 diluted earnings per share for the quarter ended December 31, 2007, compared to the quarter ended December 31, 2006.  During the fourth quarter the Company accrued $151,000 in Indiana state income tax for the years 2007, 2006, and 2005.  The Company’s level of interest income generated from properties financed in Indiana increased to a level which required the Company to pay Indiana state income tax.  The Company accrued for this liability during the fourth quarter, resulting in a tax rate of 34% for the quarter ended December 31, 2007.  Also contributing to the increase in income tax was a $281,000 reduction of federal income tax during the fourth quarter ended December 31, 2006.  During the fourth quarter ended December 31, 2006 the Company re-evaluated its tax contingency reserves and determined that approximately $281,000 was no longer required.  As a result, tax expense was reduced by this amount, resulting in an effective tax rate of 25% in the fourth quarter of 2006.

 

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.  Today, the Bank serves Central Kentucky through its 15 full-service banking centers and a commercial private banking center.

 

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 Global Market under the symbol “FFKY.”  Market makers for the stock are:

 

Keefe, Bruyette & Woods, Inc.

 

FTN Midwest Securities

 

 

 

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

 

Howe Barnes Investments, Inc.

 

 

 

Stifel Nicolaus & Company

 

Knight Securities, LP

 

 

 

MORE

 


 

FIRST FINANCIAL SERVICE CORPORATION

Consolidated Balance Sheets

(Unaudited)

 

 

 

 

 

 

 

 

 

December 31,

 

(Dollars in thousands, except share data)

 

2007

 

2006

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

Cash and due from banks

 

$

14,948

 

$

19,082

 

 

 

 

 

 

 

Securities available-for-sale

 

22,004

 

28,223

 

Securities held-to-maturity, fair value of $17,624 (2007) and $23,817 (2006)

 

17,681

 

24,224

 

Total securities

 

39,685

 

52,447

 

 

 

 

 

 

 

Loans held for sale

 

780

 

673

 

Loans, net of unearned fees

 

767,256

 

705,037

 

Allowance for loan losses

 

(7,922

)

(7,684

) 

Net loans

 

760,114

 

698,026

 

 

 

 

 

 

 

Federal Home Loan Bank stock

 

7,621

 

7,621

 

Cash surrender value of life insurance

 

8,290

 

7,947

 

Premises and equipment, net

 

26,335

 

22,500

 

Real estate owned:

 

 

 

 

 

Acquired through foreclosure

 

1,749

 

918

 

Held for development

 

45

 

337

 

Other repossessed assets

 

52

 

82

 

Goodwill

 

8,384

 

8,384

 

Accrued interest receivable

 

4,324

 

4,094

 

Other assets

 

1,144

 

1,388

 

 

 

 

 

 

 

TOTAL ASSETS

 

$

872,691

 

$

822,826

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

LIABILITIES:

 

 

 

 

 

Deposits:

 

 

 

 

 

Non-interest bearing

 

$

46,978

 

$

40,349

 

Interest bearing

 

642,265

 

600,688

 

Total deposits

 

689,243

 

641,037

 

 

 

 

 

 

 

Short-term borrowings

 

42,800

 

68,500

 

Advances from Federal Home Loan Bank

 

53,083

 

28,224

 

Subordinated debentures

 

10,000

 

10,000

 

Accrued interest payable

 

1,093

 

273

 

Accounts payable and other liabilities

 

3,012

 

2,694

 

 

 

 

 

 

 

TOTAL LIABILITIES

 

799,231

 

750,728

 

Commitments and contingent liabilities

 

—

 

—

 

 

 

 

 

 

 

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, 4,661,083 shares (2007), and 4,384,088 shares (2006)

 

4,661

 

4,384

 

Additional paid-in capital

 

33,886

 

27,419

 

Retained earnings

 

35,225

 

40,210

 

Accumulated other comprehensive income/(loss)

 

(312

)

85

 

 

 

 

 

 

 

TOTAL STOCKHOLDERS’ EQUITY

 

73,460

 

72,098

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

 

$

872,691

 

$

822,826

 

 

 

 

 

 

 

 


 

FIRST FINANCIAL SERVICE CORPORATION

Consolidated Statements of Income

(Unaudited)

 

 

 

Three Months Ended

 

 

 

Year Ended

 

(Dollars in thousands, except per share data)

 

December 31,

 

 

 

December 31,

 

 

 

2007

 

2006

 

 

 

2007

 

2006

 

Interest and Dividend Income:

 

 

 

 

 

 

 

 

 

 

 

Loans, including fees

 

$

14,954

 

$

13,696

 

 

 

$

58,019

 

$

50,803

 

Taxable securities

 

470

 

616

 

 

 

$

2,108

 

$

2,726

 

Tax exempt securities

 

101

 

95

 

 

 

418

 

303

 

Total interest income

 

15,525

 

14,407

 

 

 

60,545

 

53,832

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Expense:

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

6,438

 

5,185

 

 

 

25,519

 

18,688

 

Short-term borrowings

 

483

 

1,015

 

 

 

1,935

 

1,904

 

Federal Home Loan Bank advances

 

558

 

341

 

 

 

1,580

 

2,621

 

Subordinated debentures

 

167

 

230

 

 

 

717

 

895

 

Total interest expense

 

7,646

 

6,771

 

 

 

29,751

 

24,108

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

7,879

 

7,636

 

 

 

30,794

 

29,724

 

Provision for loan losses

 

261

 

193

 

 

 

1,209

 

540

 

Net interest income after provision for loan losses

 

7,618

 

7,443

 

 

 

29,585

 

29,184

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest Income:

 

 

 

 

 

 

 

 

 

 

 

Customer service fees on deposit accounts

 

1,518

 

1,352

 

 

 

5,792

 

5,460

 

Gain on sale of mortgage loans

 

134

 

175

 

 

 

569

 

783

 

Gain on sale of real estate held for development

 

—

 

—

 

 

 

227

 

—

 

Brokerage commissions

 

116

 

96

 

 

 

424

 

346

 

Other income

 

246

 

293

 

 

 

1,191

 

1,150

 

Total non-interest income

 

2,014

 

1,916

 

 

 

8,203

 

7,739

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest Expense:

 

 

 

 

 

 

 

 

 

 

 

Employee compensation and benefits

 

3,227

 

3,140

 

 

 

12,593

 

11,903

 

Office occupancy expense and equipment

 

607

 

516

 

 

 

2,373

 

2,106

 

Marketing and advertising

 

237

 

231

 

 

 

914

 

859

 

Outside services and data processing

 

658

 

657

 

 

 

2,632

 

2,567

 

Bank franchise tax

 

224

 

204

 

 

 

923

 

871

 

Write off of issuance cost of Trust Preferred Securities

 

—

 

—

 

 

 

229

 

—

 

Other expense

 

1,014

 

1,043

 

 

 

4,126

 

3,646

 

Total non-interest expense

 

5,967

 

5,791

 

 

 

23,790

 

21,952

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

3,665

 

3,568

 

 

 

13,998

 

14,971

 

Income taxes

 

1,304

 

896

 

 

 

4,646

 

4,634

 

Net Income

 

$

2,361

 

$

2,672

 

 

 

$

9,352

 

$

10,337

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Shares applicable to basic income per share

 

4,662,833

 

4,822,693

 

 

 

4,721,559

 

4,821,472

 

(1) Basic income per share

 

$

0.51

 

$

0.55

 

 

 

$

1.98

 

$

2.14

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Shares applicable to diluted income per share

 

4,710,352

 

4,879,222

 

 

 

4,774,361

 

4,869,558

 

(1) Diluted income per share

 

$

0.50

 

$

0.55

 

 

 

$

1.96

 

$

2.12

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividends declared per share

 

$

0.190

 

$

0.173

 

 

 

$

0.726

 

$

0.660

 

(1) Adjusted to reflect the impact of the 10% stock dividend declared August 16, 2007.

 

 


 

FIRST FINANCIAL SERVICE CORPORATION

Unaudited Selected Ratios and Other Data

 

 

 

As of and For the

 

As of and For the

 

 

 

Three Months Ended

 

Year Ended

 

 

 

December 31,

 

December 31,

 

Selected Data

 

2007

 

2006

 

2007

 

2006

 

 

 

 

 

 

 

 

 

 

 

Performance Ratios

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets

 

1.07

%

1.31

%

1.10

%

1.31

%

 

 

 

 

 

 

 

 

 

 

Return on average equity

 

12.74

%

14.81

%

12.88

%

15.03

%

 

 

 

 

 

 

 

 

 

 

Average equity to average assets

 

8.40

%

8.85

%

8.54

%

8.71

%

 

 

 

 

 

 

 

 

 

 

Net interest margin

 

3.84

%

4.02

%

3.89

%

4.04

%

 

 

 

 

 

 

 

 

 

 

Efficiency ratio from continuing operations

 

60.32

%

60.63

%

61.00

%

58.60

%

 

 

 

 

 

 

 

 

 

 

Book value per share

 

 

 

 

 

$

15.76

 

$

14.95

 

 

 

 

 

 

 

 

 

 

 

Average Balance Sheet Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average total assets

 

$

874,919

 

$

808,744

 

$

850,221

 

$

788,986

 

 

 

 

 

 

 

 

 

 

 

Average interest earning assets

 

820,011

 

757,920

 

796,275

 

739,215

 

 

 

 

 

 

 

 

 

 

 

Average loans

 

771,267

 

694,841

 

741,274

 

667,793

 

 

 

 

 

 

 

 

 

 

 

Average interest-bearing deposits

 

646,622

 

577,201

 

644,231

 

572,845

 

 

 

 

 

 

 

 

 

 

 

Average total deposits

 

695,184

 

617,951

 

690,574

 

615,134

 

 

 

 

 

 

 

 

 

 

 

Average total stockholders’ equity

 

73,506

 

71,581

 

72,624

 

68,755

 

 

 

 

 

 

 

 

 

 

 

Asset Quality Ratios

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-performing loans as a percent of total loans (1)

 

 

 

 

 

1.16

%

0.69

%

 

 

 

 

 

 

 

 

 

 

Non-performing assets as a percent of total loans (1)

 

 

 

 

 

1.39

%

0.83

%

 

 

 

 

 

 

 

 

 

 

Allowance for loan losses as a percent of total loans (1)

 

 

 

 

 

1.03

%

1.09

%

 

 

 

 

 

 

 

 

 

 

Allowance for loan losses as a percent of non-performing loans

 

 

 

 

 

89

%

159

%

 

 

 

 

 

 

 

 

 

 

Net charge-offs to total loans (1)

 

 

 

 

 

0.13

%

0.03

%

 

(1) Excludes loans held for sale.