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

January 27, 2011

(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))

Item 1.01:  Entry Into a Material Definitive Agreement

First Federal Savings Bank (the “Bank”), the wholly owned subsidiary of First Financial Service Corporation (the “Company”), has entered into a Stipulation and Consent to the Issuance of a Consent Order with the Federal Deposit Insurance Corporation (“FDIC”), and the Kentucky Department of Financial Institutions (“KDFI”).  The Consent Order was issued and became effective on January 27, 2011.

Under the terms of the Consent Order, the Bank cannot declare dividends without the prior written approval of the FDIC and KDFI.  Other material provisions of the Consent Order require the Bank to:

· obtain an independent assessment of executive management and senior commercial lending staff;

· increase the Bank’s capital ratios;

· develop and implement a plan to reduce the level of non-performing assets;

· develop and implement a plan to reduce concentrations of credit in commercial real estate loans;

· maintain adequate reserves for loan and lease losses;

· implement revised credit risk management practices and credit administration policies and procedures;

· implement procedures to ensure compliance with applicable laws, rules, regulations and policy statements;

· periodically evaluate the Bank’s strategic plan and budget for fiscal 2011;

· develop revisions to the Bank’s funding contingency plan, which identifies available sources of liquidity and plans for dealing with potential adverse economic and market conditions; and

· prepare and submit progress reports to the FDIC and KDFI.

The Consent Order will remain in effect until modified or terminated by the FDIC and KDFI.

All customer deposits remain fully insured to the fullest extent by the FDIC.  The Bank will continue to serve its customers in all areas including making loans, establishing lines of credit, accepting deposits and processing bank transactions.  Neither the Company nor the Bank admitted any wrongdoing in consenting to issuance of the Consent Order.

The description of the Consent Order set forth in this Item 1.01 is qualified in its entirety by reference to the Consent Order and the related Stipulation and Consent, copies of which are attached hereto as Exhibits 10.1 and 10.2, respectively, and are incorporated by reference herein in their entirety.

On January 27, 2011, the Company issued a press release with respect to the foregoing matters, a copy of which is attached hereto as Exhibit 99.1

Item 9.01:  Financial Statements and Exhibits

(d) Exhibits

The following exhibits are being furnished herewith and this list shall constitute the exhibit index:

10.1 Consent Order with the FDIC and KDFI

10.2 Stipulation and Consent to the Issuance of a Consent Order

99.1 Press Release of First Financial Service Corporation dated January 27, 2011

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: January 27, 2011	By:  /s/	Gregory S. Schreacke
		Gregory S. Schreacke
		President

2

EX-10.1

FEDERAL DEPOSIT INSURANCE CORPORATION

WASHINGTON, D.C.

AND

COMMONWEALTH OF KENTUCKY

DEPARTMENT OF FINANCIAL INSTITUTIONS

FRANKFORT, KENTUCKY

	)
In the Matter of	)	CONSENT ORDER
	)
	)
FIRST FEDERAL SAVINGS BANK OF	)
ELIZABETHTOWN	)
ELIZABETHTOWN, KENTUCKY	)	FDIC-10-817b
	)
	)
(KENTUCKY CHARTERED	)
INSURED NONMEMBER BANK)	)
	)

           First Federal Savings Bank of Elizabethtown, Elizabethtown, Kentucky (“Bank”), having been advised of its right to a NOTICE OF CHARGES AND OF HEARING detailing the unsafe or unsound banking practices and violations of law, rule or regulation alleged to have been committed by the Bank, and of its right to a hearing on the charges under section 8(b) of the Federal Deposit Insurance Act (“Act”), 12 U.S.C. § 1818(b), and under section 286.3-690 of the Kentucky Revised Statutes, Ky. Rev. Stat. Ann. § 286.3-690 (Michie 2006), regarding hearings before the Department of Financial Institutions for the Commonwealth of Kentucky (“DFI”), and having waived those rights, entered into a STIPULATION AND CONSENT TO THE ISSUANCE OF A CONSENT ORDER (“STIPULATION”) with representatives of the Federal Deposit Insurance Corporation (“FDIC”) and the DFI, dated January 27, 2011, whereby, solely for the purpose of this proceeding and without admitting or denying any charges of unsafe or unsound banking practices relating to weaknesses in asset quality, earnings, liquidity, management, and capital, the Bank has consented to the issuance of this CONSENT ORDER (“ORDER”) by the FDIC and the DFI.

The FDIC and the DFI considered the matter and determined to accept the STIPULATION.

Having also determined that the requirements for issuance of an order under 12 U.S.C. § 1818(b) and section 286.3-690 of the Kentucky Revised Statutes, Ky. Rev. Stat. Ann. § 286.3-690 (Michie 2006), have been satisfied, the FDIC and DFI HEREBY ORDER that the Bank, its institution-affiliated parties, as that term is defined in section 3(u) of the Act, 12 U.S.C. § 1813(u), and its successors and assigns take affirmative action as follows:

MANAGEMENT

1.           (a)           During the life of this ORDER, the Bank shall have and retain qualified management. Management shall be provided the necessary written authority to implement the provisions of this ORDER.  The qualifications of management shall be assessed on its ability to:

(i) Comply with the requirements of this ORDER;

(ii) Operate the Bank in a safe and sound manner;

(iii) Comply with applicable statutes, rules, and regulations; and

(iv) Restore all aspects of the Bank to a safe and sound condition, including capital adequacy, asset quality, management effectiveness, liquidity, earnings, and sensitivity to interest rate risk.

(b)           During the life of this ORDER, prior to the addition of any individual to the board of directors (“Board”) or the employment of any individual as a senior executive officer, the Bank shall request and obtain the FDIC’s and DFI’s written approval.  For purposes of this ORDER, “senior executive officer” is defined as in section 32 of the Act (“section 32”), 12 U.S.C. § 1831(i), and section 303.101(b) of the FDIC Rules and Regulations, 12 C.F.R. § 303.101(b).

MANAGEMENT PLAN

2.           (a)           Within 30 days from the effective date of this ORDER, the Bank shall retain a bank consultant acceptable to the Regional Director of the Chicago Regional Office of the FDIC (“FDIC Regional Director”) and the Commissioner of the Kentucky Department of Financial Institutions (“Commissioner”) who will develop a written analysis and assessment of the Bank’s management needs (“Management Study”) for the purpose of providing qualified management for the Bank.

(b)           The Bank shall provide the FDIC Regional Director and the Commissioner with a copy of the proposed engagement letter or contract with the consultant for review.

(c)           The Management Study shall be developed within 120 days from the effective date of this ORDER.  The Management Study shall include, at a minimum:

(i) Identification of both the type and number of officer positions needed to properly manage and supervise the affairs of the Bank;

(ii) Identification and establishment of such Bank committees as are needed to provide guidance and oversight to active management;

(iii) Evaluation of all executive Bank officers and senior commercial lending staff (having the title of Vice President or above) to determine whether these individuals possess the ability, experience and other qualifications required to perform present and anticipated duties, including adherence to the Bank’s established policies and practices, and restoration and maintenance of the Bank in a safe and sound condition;

(iv) Evaluation of all executive Bank officers and senior lending staff (having the title of Vice President or above) compensation, including salaries, director fees, and other benefits; and

(v) A plan to recruit and hire any additional or replacement personnel with the requisite ability, experience and other qualifications to fill those officer or staff member positions identified by this paragraph of this ORDER.

(d)           Within 30 days after receipt of the Management Study, the Bank shall formulate a plan to implement the recommendations of the Management Study.

(e)           The plan required by this paragraph shall be submitted to and approved by the FDIC Regional Director and the Commissioner.

CAPITAL

3.           (a)           By March 31, 2011, the Bank shall have and maintain its level of Tier 1 capital as a percentage of its total assets (“capital ratio”) at a minimum of 8.5 percent and its level of qualifying total capital as a percentage of risk-weighted assets (“total risk based capital ratio”) at a minimum of 11.5 percent.  By June 30, 2011, the Bank shall have and maintain its level of Tier 1 capital as a percentage of its total assets (“capital ratio”) at a minimum of 9.0 percent and its level of qualifying total capital as a percentage of risk-weighted assets (“total risk based capital ratio”) at a minimum of 12.0 percent. For purposes of this ORDER, Tier 1 capital, qualifying total capital, total assets, and risk-weighted assets shall be calculated in accordance with Part 325 of the FDIC Rules and Regulations (“Part 325”), 12 C.F.R. Part 325.

(b)           If, while this ORDER is in effect, the Bank increases capital by the sale of new securities, the Board shall adopt and implement a plan for the sale of such additional securities, including the voting of any shares owned or proxies held by or controlled by them in favor of said plan.  Should the implementation of the plan involve public distribution of Bank securities, including a distribution limited only to the Bank’s existing shareholders, the Bank shall prepare detailed offering materials fully describing the securities being offered, including an accurate description of the financial condition of the Bank and the circumstances giving rise to the offering, and other material disclosures necessary to comply with Federal securities laws.  Prior to the implementation of the plan and, in any event, not less than 20 days prior to the dissemination of such materials, the materials used in the sale of the securities shall be submitted to the FDIC Registration and Disclosure Section, 550 17th Street, N.W., Washington, D.C. 20429 and to the Kentucky Department of Financial Institutions, 1025 Capital Center Drive, Suite 200, Frankfort, Kentucky 40601, for their review. Any changes requested to be made in the materials by the FDIC or the DFI shall be made prior to their dissemination.

(c)           In complying with the provisions of this paragraph, the Bank shall provide to any subscriber and/or purchaser of Bank securities written notice of any planned or existing development or other changes which are materially different from the information reflected in any offering materials used in connection with the sale of Bank securities.  The written notice required by this paragraph shall be furnished within 10 calendar days of the date any material development or change was planned or occurred, whichever is earlier, and shall be furnished to every purchaser and/or subscriber of the Bank’s original offering materials.

DIVIDEND RESTRICTION

4.           As of the effective date of this ORDER, the Bank shall not declare or pay any dividend without the prior written consent of the FDIC Regional Director and the Commissioner.

LOSS CHARGE-OFF

5.           As of the effective date of this Order the Bank shall eliminate from its books, by charge-off or collection, all assets or portions of assets classified as “Loss” in the Report of Examination dated July 19, 2010 (“Report”) and in subsequent Reports or Examinations that have not been previously collected or charged off.

PROHIBITION OF ADDITIONAL LOANS TO CLASSIFIED BORROWERS

6.           (a)           As of the effective date of this ORDER, the Bank shall not extend, directly or indirectly, any additional credit to, or for the benefit of, any borrower who is already obligated in any manner to the Bank on any extensions of credit (including any portion thereof) that has been charged off the books of the Bank or classified “Loss” in the Report, so long as such credit remains uncollected.

(b)           As of the effective date of this ORDER, the Bank shall not extend, directly or indirectly, any additional credit  (including any extension of credit for the payment of interest) to, or for the benefit of, any borrower whose loan or other credit has been classified “Substandard” or “Doubtful” or is listed for “Special Mention” in the Report, and is uncollected unless the Bank’s Board has adopted, prior to such extension of credit, a detailed written statement giving the reasons why such extension of credit is in the best interest of the Bank.  A copy of the statement shall be signed by each Director participating in the decision, and incorporated in the minutes of the applicable Board meeting. A copy of the statement shall be placed in the appropriate loan file.

REDUCTION OF DELINQUENCIES AND CLASSIFIED LOANS

7.                (a)           Within 60 days from the effective date of this ORDER, the Bank shall adopt, implement, and adhere to, a written plan to reduce the Bank’s risk position in each loan in excess of $800,000 which is delinquent in excess of 90 days or classified “Substandard” or “Doubtful” in the Report. The plan shall include, but not be limited to, provisions which:

(i) Provide for review of the current financial condition of each delinquent or classified borrower, including a review of borrower cash flow and collateral value;

(ii) Delineate areas of responsibility for loan officers;

(iii) Establish target dollar levels to which the Bank plans to reduce delinquencies and classified loans within 6, 12, and 24 months from the effective date of this ORDER; and

(iv) Provide for the submission of monthly written progress reports to the Bank’s Board for review and notation in minutes of the meetings of the Board.

(b)           As used in this paragraph, “reduce” means to: (1) collect; (2) charge off; (3) sell; or (4) improve the quality of such assets so as to warrant removal of any adverse classification by the FDIC and the DFI.

(c)           A copy of the plan required by this paragraph shall be submitted to the FDIC Regional Director and the Commissioner.

(d)           While this ORDER remains in effect, the plan shall be revised to include assets which become delinquent after the effective date of this ORDER or are adversely classified at any subsequent examinations.

ALLOWANCE FOR LOAN AND LEASE LOSSES

 8.           (a)           Prior to submission or publication of all Reports of Condition and Income required by the FDIC after the effective date of this ORDER, the Bank’s Board shall review the adequacy of the Bank’s ALLL, provide for an adequate ALLL, and accurately report the same. The minutes of the Board meeting at which such review is undertaken shall indicate the findings of the review, the amount of increase in the ALLL recommended, if any, and the basis for determination of the amount of ALLL provided.  In making these determinations, the Board shall consider the FFIEC Instructions for the Reports of Condition and Income and any analysis of the Bank’s ALLL provided by the FDIC or DFI.

(b)           Regarding ALLL methodology, management will ensure FAS 114 calculations utilize values which are updated on an ongoing basis as warranted by changes in market conditions.

LOAN REVIEW AND GRADING

9.           Within 60 days from the date of this ORDER, the Bank shall implement revised comprehensive loan grading and review procedures in order to effectively manage and control risks in the loan portfolio.  The procedures shall require that such loan grading and review will be performed by a qualified individual who is not a member of the Bank’s lending staff.  The loan review procedures shall, at a minimum:

(a)          Require periodic confirmation of the accuracy and completeness of the watch list and all risk grades assigned by the Bank’s loan officers;

(b)          Identify loans or relationships that warrant special attention of management, including but not limited to, loans requiring loss recognition, adjustments to ALLL allocations, or nonaccrual status;

(c)          Identify credit and collateral documentation exceptions and track corrective measures;

(d)          Identify violations of law, rules, or regulations and track corrective measures; and

(e)           Identify loans not in conformance with the Bank’s loan policy.

APPRAISAL POLICIES

10.           (a)         Within 60 days from the effective date of this ORDER, the Bank shall revise, adopt, and implement its real estate appraisal policy to ensure compliance with Part 323 of the FDIC’s Rules and Regulations.  In addition, appropriate criteria for obtaining re-appraisals and or re-evaluations as part of an overall program to review and monitor portfolio risk should be developed.

(b)           Copies of the Appraisal Policy and revisions thereto required by this paragraph shall be submitted to the Regional Director and the Commissioner.

CONCENTRATIONS OF CREDIT

11.         (a)           Within 60 days from the effective date of this ORDER, the Bank shall formulate, adopt and implement a written plan to reduce the construction and land development loan concentration of credit and the total commercial real estate loan concentration of credit identified in the Report.    Such plan shall prohibit any additional advances that would increase the concentrations or create new concentrations unless the Bank’s board of directors has adopted, prior to such extension of credit, a detailed written statement giving the reasons why such extension of credit is in the best interests of the Bank.  A copy of the statement shall be signed by each Director, incorporated in the minutes of the applicable board of directors’ meeting, and placed in the appropriate loan file.  The plan shall include, but not be limited to:

(i) Target dollar level and target percentage of of capital to which the Bank plans to reduce each concentration; and

(ii) Provision for the submission of monthly written progress reports to the Bank’s board of directors for review and notation in the minutes of the board of directors’ meetings.

CORRECTION OF VIOLATIONS

12.          (a)          Within 60 days from the effective date of this ORDER, the Bank shall eliminate and/or correct all violations of law, rule, and regulation and shall comply with the interest rate risk policy statement listed in the Report.

(b)         Within 60 days from the effective date of this ORDER, the Bank shall implement procedures to ensure future compliance with all applicable laws, rules, regulations, and policy statements.

PROFIT PLAN AND BUDGET

13.         (a)           Within 60 days from the effective date of this ORDER, the Bank shall revise, and implement revisions to, its written profit plan and adopt a realistic, comprehensive budget for all categories of income and expense for calendar year 2011.  The plan required by this paragraph shall contain formal goals and strategies, consistent with sound banking practices, to reduce discretionary expenses and to improve the Bank’s overall earnings, and shall contain a description of the operating assumptions that form the basis for major projected income and expense components.

(b)           The written profit plan shall address, at a minimum:

(i) Realistic and comprehensive budgets;

(ii) A budget review process to monitor the income and expenses of the Bank to compare actual figures with budgetary projections;

(iii) Identification of major areas in, and means by which, earnings will be improved;

(iv) A description of the operating assumptions that form the basis for and adequately support major projected income and expense components.

(c)           Within 30 days from the end of each calendar quarter following completion of the profit plan and budget required by this paragraph, the Bank’s Board shall evaluate the Bank’s actual performance in relation to the plan and budget, record the results of the evaluation, and note any actions taken by the Bank in the minutes of the Board meeting at which such evaluation is undertaken.

(d)           A written profit plan and budget shall be prepared for each calendar year for which this ORDER is in effect and shall be completed at least 30 days prior to the beginning of the applicable calendar year.

(e)           Copies of the plan and budget required by this paragraph shall be submitted to and approved by the FDIC Regional Director and the Commissioner.

LIQUIDITY PLAN

14.           (a)           Within 60 days from the effective date of this ORDER, the Bank shall revise, and implement revisions to, its written contingency funding plan (“Liquidity Plan”).  At a minimum, the Liquidity Plan shall be prepared in conformance with the Liquidity Risk Management Guidance found at FIL-84-2008 and include provisions which address the issues identified in the Report.

(b)           On each Friday that the Bank is open for business, the Bank shall submit to the FDIC Regional Director and the Commissioner a liquidity analysis report in a format that is acceptable to the FDIC Regional Director and the Commissioner until the Board is notified that submission of such report is no longer warranted.

(c)           A copy of the plan required by this paragraph shall be submitted to and approved by the FDIC Regional Director and the Commissioner.

NOTIFICATION TO SHAREHOLDER

15.       Following the effective date of this ORDER, the Bank shall send to its shareholder a copy of this ORDER: (1) in conjunction with the Bank’s next shareholder communication; or (2) in conjunction with its notice or proxy statement preceding the Bank’s next shareholder meeting.

PROGRESS REPORTS

16.              Within 30 days from the end of each calendar quarter following the effective date of this ORDER, the Bank shall furnish to the FDIC Regional Director and the Commissioner written progress reports signed by each member of the Bank’s Board detailing the actions taken to secure compliance with the ORDER and the results thereof.

The effective date of this ORDER shall be upon issuance by the FDIC and the DFI.

The provisions of this ORDER shall be binding upon the Bank, its institution-affiliated parties, and any successors and assigns thereof.

The provisions of this ORDER shall remain effective and enforceable except to the extent that, and until such time as, any provision has been modified, terminated, suspended, or set aside by the FDIC and the DFI.

Issued Pursuant to Delegated Authority.

Dated: January 27, 2011

/s/ M. Anthony Lowe	/s/ Charles A. Vice
M. Anthony Lowe	Charles A. Vice
Regional Director	Commissioner
Chicago Regional Office	Department of Financial
Federal Deposit Insurance	Institutions
Corporation	Commonwealth of Kentucky

EX-10.2

FEDERAL DEPOSIT INSURANCE CORPORATION

WASHINGTON, D.C.

AND

COMMONWEALTH OF KENTUCKY

DEPARTMENT OF FINANCIAL INSTITUTIONS

FRANKFORT, KENTUCKY

	)
In the Matter of	)	STIPULATION AND CONSENT
	)	TO THE ISSUANCE OF A
FIRST FEDERAL SAVINGS BANK OF	)	CONSENT ORDER
ELIZABETHTOWN	)
ELIZABETHTOWN,KENTUCKY	)	FDIC-10-817b
	)
(Insured State Nonmember Bank)	)
	)

Subject to the acceptance of this STIPULATION AND CONSENT TO THE ISSUANCE OF A CONSENT ORDER ("STIPULATION") by the Federal Deposit Insurance Corporation ("FDIC") and the Commonwealth of Kentucky, Department of Financial Institutions (“DFI”), it is hereby stipulated and agreed by and among representatives of the FDIC, the DFI and First Federal Savings Bank of Elizabethtown, Elizabethtown, Kentucky ("Bank") as follows:

1.           The Bank has been advised of its right to receive a NOTICE OF CHARGES AND OF HEARING ("NOTICE") detailing the unsafe and unsound banking practices and violations of law, rule or regulation alleged to have been committed by the Bank and of its right to a hearing on the charges under section 8(b) of the Federal Deposit Insurance Act ("Act"), 12 U.S.C. § 1818(b), and under section 286.3-690 of the Kentucky Revised Statutes, Ky. Rev. Stat. Ann. § 286.3-690 (Michie 2006), regarding hearings before the DFI, and has knowingly waived that right.

2.           The Bank, solely for the purpose of this proceeding and without admitting or denying any of the charges of unsafe or unsound banking practices and violations of law, rule or regulation, hereby consents and agrees to the issuance of a CONSENT ORDER ("ORDER") by the FDIC and DFI.

3.           The Bank further stipulates and agrees that such ORDER shall be deemed to be a consent order which has become final and unappealable, and that the ORDER shall become effective upon its issuanceby the FDIC and the DFI and fully enforceable by the FDIC and the DFI pursuant to the provisions of section 8(i) of the Act, 12 U.S.C. § 1818(i), and under section 286.3-690 of the Kentucky Revised Statutes, Ky. Rev. Stat. Ann. § 286.3-690 (Michie 2006), respectively, subject only to the conditions set forth in paragraph 4 of this STIPULATION.

4.           In the event the FDIC and the DFI accept this STIPULATION and issue the ORDER, it is agreed that no action to enforce the ORDER will be taken by the FDIC in the United States District Court or the appropriate Federal Circuit Court or by the DFI in the appropriate State Circuit Court unless the Bank, any Bank institution-affiliated party, as that term is defined in section 3(u) of the Act, 12 U.S.C. § 1813(u), or any of its successors or assigns, has violated or is about to violate any provision of the ORDER.

2

5.           The Bank hereby waives:

(a)           The receipt of a NOTICE;

(b)           All defenses and counterclaims of any kind to this proceeding;

(c)           A hearing for the purpose of taking evidence on the allegations in the NOTICE;

(d)           The filing of proposed findings of fact and conclusions of law;

(e)           A recommended decision of an Administrative Law Judge; and

(f)           Exceptions and briefs with respect to such recommended decision.

Dated this 18th day of January, 2011.

FEDERAL DEPOSIT INSURANCE	FIRST FEDERAL SAVINGS BANK OF
CORPORATION,	ELIZABETHTOWN
LEGAL DIVISION	ELIZABETHTOWN, KENTUCKY
By:	By:
/s/ Erin O. Gallaher	/s/Robert M. Brown
Erin O. Gallagher	Robert M. Brown
Senior Regional Attorney	Director
Federal Deposit Insurance
Corporation
	/s/ Walter D. Huddleston
And,	Walter D. Huddleston
	Chairman of the Board

3

COMMONWEALTH OF KENTUCKY,	/s/ B. Keith Johnson
DEPARTMENT OF FINANCIAL	B. Keith Johnson
INSTITUTIONS	Chief Executive Officer

/s/ Charles A. Vice
Charles A. Vice
Commissioner	/s/ Diane E. Logsdon
	Diane E. Logsdon
	Director
	/s/ Stephen Mouser
	Stephen Mouser
	Director
	/s/ John L. Newcomb
	John L. Newcomb
	Director
	/s/ J. Alton Rider
	J. Alton Rider
	Director
	/s/ Donald M. Scheer
	Donald M. Scheer
	Director
	/s/ Gail L. Schomp
	Gail L. Schomp
	Director
	/s/ Michael L. Thomas
	Michael L. Thomas
	Director
	Comprising the Board of
	Directors of
	FIRST FEDERAL SAVINGS BANK OF
	ELIZABETHTOWN
	ELIZABETHTOWN, KENTUCKY

4

EX-99.1

FOR IMMEDIATE RELEASE

January 27, 2011	For More Information Contact:
	Gregory S. Schreacke
	President
	First Financial Service Corporation
	(270) 765-2131

First Financial Service Corporation

Announces Agreement With Regulators

Elizabethtown, Kentucky, January 27, 2011 – First Financial Service Corporation (NASDAQ: FFKY) today announced that its subsidiary, First Federal Savings Bank of Elizabethtown, has entered into a consent order with the Federal Deposit Insurance Corporation (FDIC) and the Kentucky Department of Financial Institutions (KDFI).  The Company has voluntarily agreed to take various steps to improve the balance sheet, including increasing capital ratios and reducing its concentration in commercial real estate loans and the level of non-performing assets. 

B. Keith Johnson, Chief Executive Officer of First Federal Savings Bank stated, “A key issue resulting in the consent order was the increase in non-performing assets in 2010.  The non-performing assets are predominantly comprised of residential housing and residential housing development loans in Jefferson and Oldham Counties.  Many high-end subdivisions, while showing initial progress, have stalled due to the recession.  Residential markets in other areas, such as Hardin and Meade Counties, have shown improvement as a result of a projected local population increase of 14,000 from the Base Realignment and Closure Act affecting the Fort Knox Military Base.”

First Federal Savings Bank’s ability to serve its customers will not be impacted by these actions and customer deposits remain fully insured to the highest limits set by the FDIC.

The consent order was negotiated between First Federal Savings Bank and the FDIC and KDFI.  “We are striving to meet all of its requirements in the time frames specified. Many of the items stipulated in the agreement are items the Bank has already been focusing on improving.  The Bank has been focused on working through these credits and reducing commercial real estate concentrations since the regulatory examination.  We anticipate continued progress during the first two quarters of 2011.  We’re proud of our strong history and we are confident that we will work through these challenging times.  We have a solid plan in place and very good bankers on our team.  We value our customer relationships and look forward to serving them for many years to come” said Johnson.

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. Statements that are not historical or current facts, including statements about beliefs and expectations, are forward-looking statements and are based on the information available to, and assumptions and estimates made by, management as of the date made. These forward-looking statements cover, among other things, anticipated future revenue and expenses and the future plans and prospects of First Federal Savings Bank. Forward-looking statements involve inherent risks and uncertainties, and important factors could cause actual results to differ materially from those anticipated. Adverse conditions in the commercial real estate markets, as well as a delay or failure of recovery in the residential real estate markets, could cause additional credit losses and deterioration in asset values. First Financial Service Corporation’s results also be adversely affected by further deterioration in business and economic conditions both generally and in the markets we serve; changes in interest rates; deterioration in the credit quality of its loan portfolios or in the value of the collateral securing those loans; deterioration in the value of securities held in its investment securities portfolio; legal and regulatory developments; increased competition from both banks and non-banks; changes in customer behavior and preferences; effects of critical accounting policies and judgments; and management’s ability to effectively manage credit risk, residual value risk, market risk, operational risk, interest rate risk, and liquidity risk.

For discussion of these and other risks that may cause actual results to differ from expectations, refer to First Financial Service Corporation’s Annual Report on Form 10-K for the year ended December 31, 2009, on file with the Securities and Exchange Commission, including the section entitled “Risk Factors,” and all subsequent filings with the Securities and Exchange Commission. Forward-looking statements speak only as of the date they are made, and First Financial Service Corporation undertakes no obligation to update them in light of new information or future events.

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

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