First Financial Service Corp. (FFKY, Financial) filed Quarterly Report for the period ended 2009-03-31.
First Financial Service Corporation is the parent bank holding company of First Federal Savings Bank of Elizabethtown. The Bank serves Central Kentucky through its full-service banking centers. First Financial Service Corp. has a market cap of $76.6 million; its shares were traded at around $16.38 with a P/E ratio of 22.8 and P/S ratio of 1.2. The dividend yield of First Financial Service Corp. stocks is 4.6%. First Financial Service Corp. had an annual average earning growth of 25.4% over the past 10 years.
Our retail branch network continues to generate encouraging results. Total deposits have grown 28% over the past three years. Total deposits were $821.5 million at March 31, 2009, an increase of $46.1 million from December 31, 2008. After our acquisition of Farmers State Bank in 2008, our retail branch network in the Louisville market has broadened to fifteen offices. Additional sites within the Louisville market are under development with another location scheduled to open early in the third quarter of 2009. Competition for deposits continues to be challenging in all of the markets we serve. This intense competition and any additional actions taken by the Federal Open Market Committee (FOMC) to change interest rates could add to additional margin compression as the rate environment remains uncertain.
Our emphasis on commercial lending generated 35% growth in the total loan portfolio and 40% growth in commercial loans over the past three years. Commercial loans were $666.2 million at March 31, 2009, an increase of $28.6 million, or 4.5% from December 31, 2008.
Although we had growth in the loan portfolio during the quarter, credit quality remained challenging in 2009. There was a significant migration of loans into the Substandard loan categories during the quarter, resulting in higher provision for loan losses. At March 31, 2009, the allowance for loan losses was $15.1 million compared to $13.6 million at December 31, 2008. Allowance for loan loss to total loans increased to 1.60% at March 31, 2009 compared to 1.50% at December 31, 2008. The allowance for loan losses to non-performing loans fell to 70% from 81% at March 31, 2009 compared to December 31, 2008.
Based on our calculation, an allowance of $15.1 million or 1.60% of total loans was our estimate of probable losses within the loan portfolio as of March 31, 2009. This estimate resulted in a provision for loan losses on the income statement of $2.0 million for the 2009 period. If the mix and amount of future charge off percentages differ significantly from those assumptions used by management in making its determination, the allowance for loan losses and provision for loan losses on the income statement could be materially increased.
Net income for the quarter ended March 31, 2009 was $761,000 or $0.10 per common share diluted compared to $1.9 million or $0.40 per common share diluted for the same period in 2008. Earnings decreased for 2009 compared to 2008 due to a decrease in our net interest margin, an increase in provision for loan loss expense, a write down taken on investment securities that were other-than-temporary impaired, and a higher level of non-interest expense related to our expansion efforts. Net income available to common shareholders was also impacted by dividends paid on preferred shares. Our book value per common share decreased from $16.01 at March 31, 2008 to $15.62 at March 31, 2009. Annualized net income for 2009 represented a return on average assets of .30% and a return on average equity of 3.37%. These compare with a return on average assets of .87% and a return on average equity of 10.16% for the 2008 period also annualized.
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First Financial Service Corporation is the parent bank holding company of First Federal Savings Bank of Elizabethtown. The Bank serves Central Kentucky through its full-service banking centers. First Financial Service Corp. has a market cap of $76.6 million; its shares were traded at around $16.38 with a P/E ratio of 22.8 and P/S ratio of 1.2. The dividend yield of First Financial Service Corp. stocks is 4.6%. First Financial Service Corp. had an annual average earning growth of 25.4% over the past 10 years.
Highlight of Business Operations:
On June 25, 2008, we expanded our operations into southern Indiana with the acquisition of FSB Bancshares, Inc., the bank holding company for The Farmers State Bank. The Farmers State Bank had approximately $65.7 million in total assets and $55.8 million in deposits. The Farmers State Bank had four banking offices in Harrison and Floyd Counties in Indiana, which are adjacent to four Kentucky counties where we currently operate and are part of the Louisville MSA. Upon completion of the acquisition, these four offices became branches of First Federal Savings Bank. The acquisition is anticipated to be accretive to our earnings during the first full year of the combined operations.Our retail branch network continues to generate encouraging results. Total deposits have grown 28% over the past three years. Total deposits were $821.5 million at March 31, 2009, an increase of $46.1 million from December 31, 2008. After our acquisition of Farmers State Bank in 2008, our retail branch network in the Louisville market has broadened to fifteen offices. Additional sites within the Louisville market are under development with another location scheduled to open early in the third quarter of 2009. Competition for deposits continues to be challenging in all of the markets we serve. This intense competition and any additional actions taken by the Federal Open Market Committee (FOMC) to change interest rates could add to additional margin compression as the rate environment remains uncertain.
Our emphasis on commercial lending generated 35% growth in the total loan portfolio and 40% growth in commercial loans over the past three years. Commercial loans were $666.2 million at March 31, 2009, an increase of $28.6 million, or 4.5% from December 31, 2008.
Although we had growth in the loan portfolio during the quarter, credit quality remained challenging in 2009. There was a significant migration of loans into the Substandard loan categories during the quarter, resulting in higher provision for loan losses. At March 31, 2009, the allowance for loan losses was $15.1 million compared to $13.6 million at December 31, 2008. Allowance for loan loss to total loans increased to 1.60% at March 31, 2009 compared to 1.50% at December 31, 2008. The allowance for loan losses to non-performing loans fell to 70% from 81% at March 31, 2009 compared to December 31, 2008.
Based on our calculation, an allowance of $15.1 million or 1.60% of total loans was our estimate of probable losses within the loan portfolio as of March 31, 2009. This estimate resulted in a provision for loan losses on the income statement of $2.0 million for the 2009 period. If the mix and amount of future charge off percentages differ significantly from those assumptions used by management in making its determination, the allowance for loan losses and provision for loan losses on the income statement could be materially increased.
Net income for the quarter ended March 31, 2009 was $761,000 or $0.10 per common share diluted compared to $1.9 million or $0.40 per common share diluted for the same period in 2008. Earnings decreased for 2009 compared to 2008 due to a decrease in our net interest margin, an increase in provision for loan loss expense, a write down taken on investment securities that were other-than-temporary impaired, and a higher level of non-interest expense related to our expansion efforts. Net income available to common shareholders was also impacted by dividends paid on preferred shares. Our book value per common share decreased from $16.01 at March 31, 2008 to $15.62 at March 31, 2009. Annualized net income for 2009 represented a return on average assets of .30% and a return on average equity of 3.37%. These compare with a return on average assets of .87% and a return on average equity of 10.16% for the 2008 period also annualized.
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