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

August 9, 2013

(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 2.02: Results of Operations and Financial Condition

On August 9, 2013, First Financial Service Corporation issued a press release announcing its 2013 second quarter results. A copy of the press release 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 2013 second quarter results.

(d) Exhibits

Exhibit Number	Description
99.1	Press release dated August 9, 2013

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: August 12, 2013	By:  /s/	Frank Perez
		Frank Perez
		Chief Financial Officer &
		Principal Accounting Officer

2

EX-99.1

FOR IMMEDIATE RELEASE
August 9, 2013	For More Information Contact:
	Frank Perez
	Chief Financial Officer
	First Financial Service Corporation
	(270) 765-2131

First Financial Service Corporation Reports Improved Credit Quality for the Fifth Consecutive Quarter

Net interest margin improves by 21 basis points compared to the March 2013 quarter

Non-performing assets improve 20.6% compared to the March 2013 quarter

ELIZABETHTOWN, KY – August 9, 2013, – 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, 2013, 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	%