8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Current Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

April 26, 2010

(Date of earliest event reported)

First Financial Service Corporation

(Exact name of registrant as specified in its charter)

Securities and Exchange Commission File Number: 0-18832

KENTUCKY	61-1168311
(State or other jurisdiction	(I.R.S. Employer Identification No.)
of incorporation or organization)

2323 Ring Road, Elizabethtown, Kentucky, 42701

(Address of principal executive offices) (Zip Code)

Registrant’s telephone, including area code: (270) 765-2131

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[  ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[  ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[  ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[  ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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Item 2.02:  Results of Operations and Financial Condition

On April 26, 2010, First Financial Service Corporation issued a press release announcing its 2010 first quarter results.  A copy of the press release as well as supplemental information is furnished with this report as Exhibit 99.1, and is incorporated herein by reference.

The information in this report is being furnished, not filed, for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and pursuant to Item 2.02 of Form 8-K will not be incorporated by reference into any filing under the Securities Act of 1933, as amended, unless specifically identified therein as being incorporated therein by reference.

Item 9.01:  Financial Statements and Exhibits

Attached is the press release for the first quarter results.

(d) Exhibits

Exhibit Number	Description
99.1	Press release dated April 26, 2010

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	FIRST FINANCIAL SERVICE CORPORATION
Date: April 26, 2010	By:	/s/ Steven M. Zagar
		Steven M. Zagar
		Chief Financial Offcer & Principal Accounting Officer

2

EX-99.1

FOR IMMEDIATE RELEASE

April 26, 2010 For More Information Contact: Steven M. Zagar Chief Financial Officer First Financial Service Corporation (270) 765-2131

First Financial Service Corporation

Announces Quarterly Results

Elizabethtown, Kentucky, April 26, 2010 – First Financial Service Corporation (the Company, NASDAQ: FFKY) today announced flat diluted net income per common share of $0.10 for the quarter ended March 31, 2010 and 2009.

“Our associates and management continue to work tirelessly through this challenging recessionary environment” stated Chief Executive Officer B. Keith Johnson.  “I am very impressed with the efforts of our associates during these times with their focus and commitment to serving our customers.  This commitment allowed us to cultivate additional relationships across all of our markets generating a $42 million, or 4% increase in total deposits for the quarter, continuing the momentum from 2009 of a $274 million, or 33% increase in total deposits – one of the strongest years for deposit growth in our history.  Highlighting the growth for the quarter was a 19% growth in deposits in our Louisville footprint and a 6% growth in our Southern Indiana footprint.  Checking deposits grew $9 million, or 5% during the quarter following an 8% growth in checking deposits for 2009.

The strength of our core franchise will contribute to our ability to profitably navigate through this recession, which has been challenging for many of our land development and commercial real estate customers leading to deterioration in our overall credit quality.  While our credit quality metrics will continue to be under pressure, the pace of deterioration has slowed and some of our metrics have stabilized over the past several quarters.  Classified loans as a percent of total loans was 6.77% at March 31, 2010 compared to 6.73% at December 31, 2009, and 6.63% for March 31, 2009.  This is a positive sign.  Non-performing loans as a percent of total loans was 3.43% at March 31, 2010, an improvement from 3.82% at December 31, 2009, but elevated from 2.30% for March 31, 2009.  Our annualized net charge offs as a percent of total loans were 0.27% as of March 31, 2010, an improvement from 0.54% for the year ended December 31, 2009, and an increase from 0.23% for the quarter ended March 31, 2009.  We continued our efforts to ensure the adequacy of the allowance for the quarter by increasing the allowance for loan loss to 1.95% of total loans at March 31, 2010, from 1.78% at December 31, 2009 and 1.60% at March 31, 2009.  The increase in reserves boosts our coverage ratio of allowance for loan loss as a percent of total loans which stood at 57% at March 31, 2010 compared to 47% at December 31, 2009.  We are aggressively working with our borrowers and look forward to sharing prosperous times with them again as our nation returns to more stable economic conditions.”

Balance sheet changes during the first quarter of 2010 include an increase in total assets of $43.3 million to $1.25 billion.  This increase was due to an increase of cash and cash equivalents of $40.7 million and an increase of investment securities of $32.9 million since December 31, 2009.  These increases were partially off-set by a decline in gross loans of $28.5 million.  This shift in the balance sheet reflects a conscious effort by management to add on-balance sheet liquidity to protect the Bank against any adverse changes to its current wholesale funding position.

Commercial loans were $681.3 million at March 31, 2010, a decrease of $24.0 million, or 3.4%, from December 31, 2008.  The decline in the Company’s commercial loan portfolio is a result of pay-offs on several large commercial relationships.  Although there remains a high demand for loans from quality borrowers, management has elected to shift its focus to preserve capital as the nation continues to pull out of this recession.

Total deposits were $1.09 billion at March 31, 2010, an increase of $42.4 million from December 31, 2009.    The increase was the result of a deposit promotion held in February.  Competition for deposits remains very competitive in all of the markets we serve.  Competition for deposits combined with continued repricing of variable rate loans could add to additional margin compression over the next several quarters.

The percentage of non-performing loans to total loans decreased to 3.43% at March 31, 2010 compared to 3.82% at December 31, 2009.  The decrease was primarily attributed to a reduction in restructured loans and well as a few non-accrual loans being transferred to other real estate owned in the first quarter of 2010 compared to the most recent quarter ended December 31, 2009.  Annualized net charge-offs as a percentage of average total loans marginally increased to 0.27% for the quarter ended March 31, 2010, compared to 0.23% for the quarter ended March 31, 2009.

Average earning assets increased by $193.9 million as of March 31, 2010, compared to March 31, 2009.  Despite the large increase in earning assets, the Company’s net interest margin realized a sharp decline of 61 basis points.  Net interest margin decreased to 3.12% for the quarter ended March 31, 2010, compared to 3.73% for the same period in 2009.  The decline is mostly attributed to the Bank’s increased liquidity efforts by placing assets into lowering yielding investments other than loans.  The current Federal Funds rate remains in a range of 0.00% to 0.25%.  Correspondingly, variable rate loans that are tied to the federal prime rate have been repriced downward in relation to the prime rate.  However, interest rates paid on customer deposits have not adjusted downward proportionately with the declining interest yields on loans and investments.  Fifty-nine percent of deposits are time deposits that reprice over a longer period of time.  The increase in the volume of earning assets and the change to the mix of earning assets had basically no impact on net interest income, which only increased $12,000 for the three months ended March 31, 2010, compared to the respective period ended March 31, 2009.

Provision for loan loss expense was lower by $293,000 at $1.8 million for the three months ended March 31, 2010, compared to the same period ended March 31, 2009.  During the first quarter of 2010, the Company continued its efforts to ensure the adequacy of the allowance by adding specific reserves to several large commercial real estate relationships based on updated appraisals received by the Bank.  The provision was lower for the current period compared to the same period a year ago due to the $28.5 million decline in total loans for the first three months of the year from December 31, 2009, which lowered the overall level of general reserves.  As economic conditions continue to impact our loan portfolio, management’s emphasis will be to proactively review credit quality and the adequacy of the allowance for loan losses.  As a result of this provisioning, allowance for loan losses as a percent of total loans increased to 1.95% from 1.78% at December 31, 2009 and 1.60% at March 31, 2009.

Non-interest income increased $135,000 for the three months ended March 31, 2010, compared to the three months ended March 31, 2009.  Customer service fees on deposit accounts increased $48,000 for the first quarter 2010 compared to the same quarter in 2009.  Gain on sale of mortgage loans increased $122,000 due to continued refinancing activity, while brokerage commissions were flat, for the current quarter compared to the same quarter in the prior year.  The increase in non-interest income for the quarter was also reflective of a $26,000 loss on the sale of other real estate owned, a $23,000 loss on the sale of an equity investment security and an increase of $17,000 of other-than-temporary credit losses on trust preferred security investments.  Additionally, other non-interest income increased $14,000 for the first quarter compared to same quarter in 2009.

Non-interest expense increased $491,000 to $8.3 million for the three months ended March 31, 2010, compared to the same periods ended March 31, 2009.  Employee compensation and benefits expense increased $88,000 due to normal cost of living increases over the prior year.  FDIC insurance premiums also increased for the quarter by $481,000 due to increased deposit levels combined with higher assessment rates.  The increases in non-interest expenses were off-set by decreases in outside services and data processing of $63,000, marketing and advertising of $40,000, office occupancy expense and equipment of $44,000 and amortization of core deposit intangible of $43,000.  Other non-interest expense was also slightly higher in the first quarter of 2010 by $26,000 compared to the first quarter of 2009.

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 eight contiguous counties encompassing Central Kentucky and the Louisville Metropolitan area, including Southern Indiana, through its 22 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

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FIRST FINANCIAL SERVICE CORPORATION

Consolidated Balance Sheets

(Unaudited)

		March 31,			December 31,
(Dollars in thousands, except share data)		2010			2009
ASSETS:
Cash and due from banks		$	19,811		$	21,253
Interest bearing deposits			119,377			77,280
Total cash and cash equivalents			139,188			98,533
Securities available-for-sale			79,512			45,764
Securities held-to-maturity, fair value of $367 Mar (2010)
and $1,176 Dec (2009)			362			1,167
Total securities			79,874			46,931
Loans held for sale			5,227			8,183
Loans, net of unearned fees			966,392			994,926
Allowance for loan losses			(18,810	)		(17,719	)
Net loans			952,809			985,390
Federal Home Loan Bank stock			8,515			8,515
Cash surrender value of life insurance			9,096			9,008
Premises and equipment, net			32,312			31,965
Real estate owned:
Acquired through foreclosure			10,169			8,428
Held for development			45			45
Other repossessed assets			62			103
Core deposit intangible			1,236			1,300
Accrued interest receivable			5,862			5,658
Deferred income taxes			4,442			4,515
Prepaid FDIC premium			6,408			7,022
Other assets			2,807			2,091
	TOTAL ASSETS	$	1,252,825		$	1,209,504
	LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposits:
Non-interest bearing		$	69,098		$	63,950
Interest bearing			1,023,116			985,865
Total deposits			1,092,214			1,049,815
Short-term borrowings			842			1,500
Advances from Federal Home Loan Bank			52,627			52,745
Subordinated debentures			18,000			18,000
Accrued interest payable			314			360
Accounts payable and other liabilities			2,955			1,952
	TOTAL LIABILITIES		1,166,952			1,124,372
Commitments and contingent liabilities			-			-
STOCKHOLDERS' EQUITY:
Serial preferred stock, $1 par value per share;
authorized 5,000,000 shares; issued and
outstanding, 20,000 shares with a liquidation
preference of $1,000/share Mar (2010)			19,795			19,781
Common stock, $1 par value per share;
authorized 10,000,000 shares; issued and
outstanding, 4,717,682 shares Mar (2010), and 4,709,839
shares Dec (2009)			4,718			4,710
Additional paid-in capital			35,071			34,984
Retained earnings			27,211			26,720
Accumulated other comprehensive loss			(922	)		(1,063	)
	TOTAL STOCKHOLDERS' EQUITY		85,873			85,132
	TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	1,252,825		$	1,209,504

FIRST FINANCIAL SERVICE CORPORATION

Consolidated Statements of Operations

(Unaudited)

	Three Months Ended
(Dollars in thousands, except per share data)	March 31,
	2010			2009
Interest and Dividend Income:
Loans, including fees	$	14,047		$	13,944
Taxable securities		493			308
Tax exempt securities		171			106
Total interest income		14,711			14,358
Interest Expense:
Deposits		4,869			4,500
Short-term borrowings		21			43
Federal Home Loan Bank advances		593			597
Subordinated debentures		327			329
Total interest expense		5,810			5,469
Net interest income		8,901			8,889
Provision for loan losses		1,752			2,045
Net interest income after provision for loan losses		7,149			6,844
Non-interest Income:
Customer service fees on deposit accounts		1,525			1,477
Gain on sale of mortgage loans		299			177
Loss on sale of investments		(23	)		-
Net impairment losses recognized in earnings		(172	)		(155	)
Loss on sale and write downs of real estate acquired
through foreclosure		(26	)		(17	)
Brokerage commissions		93			93
Other income		442			428
Total non-interest income		2,138			2,020
Non-interest Expense:
Employee compensation and benefits		4,090			4,002
Office occupancy expense and equipment		804			848
Marketing and advertising		225			265
Outside services and data processing		730			793
Bank franchise tax		350			264
FDIC insurance premiums		660			179
Amortization of intangible assets		87			130
Other expense		1,328			1,302
Total non-interest expense		8,274			7,783
Income before income taxes		1,013			1,081
Income taxes		258			303
Net Income		755			778
Less:
Dividends on preferred stock		(250	)		(267	)
Accretion on preferred stock		(14	)		(11	)
Net income available to common shareholders	$	491		$	500
Shares applicable to basic income per common share		4,715,721			4,676,587
Basic income per common share	$	0.10		$	0.10
Shares applicable to diluted income per common share		4,715,721			4,676,690
Diluted income per common share	$	0.10		$	0.10
Cash dividends declared per common share	$	-		$	0.19

FIRST FINANCIAL SERVICE CORPORATION

Unaudited Selected Ratios and Other Data

	As of and For the
	Three Months Ended
	March 31,
Selected Data	2010			2009
Performance Ratios
Return on average assets		0.16	%		0.30	%
Return on average equity		2.31	%		3.37	%
Average equity to average assets		6.98	%		8.82	%
Net interest margin		3.12	%		3.73	%
Efficiency ratio from continuing operations		74.95	%		71.46	%
Book value per common share	$	14.01		$	15.62
Average Balance Sheet Data
Average total assets	$	1,233,356		$	1,039,731
Average interest earning assets		1,167,210			973,336
Average loans		988,646			939,647
Average interest-bearing deposits		1,005,553			760,753
Average total deposits		1,071,631			814,870
Average total stockholders' equity		86,139			91,711
Asset Quality Ratios
Non-performing loans as a percent of total loans (1)		3.43	%		2.30	%
Non-performing assets as a percent of total loans (1)		4.49	%		2.87	%
Allowance for loan losses as a percent of total loans (1)		1.95	%		1.60	%
Allowance for loan losses as a percent of
non-performing loans		57	%		70	%
Annualized net charge-offs to total loans (1)		0.27	%		0.23	%

__________________________________

(1) Excludes loans held for sale.