SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 06, 2003
FIRST FEDERAL FINANCIAL CORPORATION OF KENTUCKY
(Exact Name of Registrant as specified in Charter)
Kentucky 0-18832 61-1168311
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
2323 Ring Road, Elizabethtown, Kentucky 42701
(Address of principal executive offices) (Zip code)
(270) 765-2131
(Registrant's telephone number, including area code)
N/A
(Former name or former address, if changed since last report.)
INFORMATION TO BE INCLUDED IN THE REPORT
Item 9. Regulation FD Disclosure
First Federal Financial
Corporation of Kentucky
Presentation for Trident Securities
February 13, 2003
Safe Harbor Statement
This presentation contains forward-looking statements, including statements
about management's beliefs and expectations regarding First Federal Financial
Corporation of Kentucky's future financial outlook and the business environment,
that are intended to assist in assessing FFKY's future financial performance.
These statements are based on current expectations, estimates and assumptions,
all of which are subject to risks and uncertainties that may cause actual
results to differ materially from the forward-looking statements. Factors that
may adversely affect FFKY's future performance are discussed in it's Form 10-K
and other reports filed with the Securities and Exchange Commission.
First Federal Financial Corporation of Kentucky
Management Overview
>> Keith Johnson President amp; CEO
President since 1997
Joined bank in 1993 as Chief Financial Officer
Formerly a partner in CPA firm
>> Charles Chaney COO / CFO
Joined bank in 1972
Involved in various operational areas
>> Larry Hawkins Chief Lending Officer
Joined bank in 2000
Formerly commercial lender with PNC Bank; 3 years of service.
Formerly held several loan positions with local credit union, including head of collection department.
>> Anne Moran Chief Retail Officer
Joined bank in 1999
Formerly Louisville, KY Market Manager for over 50 Bank One branches; 25 years of service.
First Federal Financial Corporation of Kentucky
Company Overview
>> Founded in 1923
>> Subsidiary - First Federal Savings Bank
>> Bank Subsidiaries
- First Heartland Mortgage Company (100%)
- First Service Corporation (100%) / Raymond James, authorized Broker
- First Heartland Title, LLC (48%)
>> IPO - May, 1987
>> "FFKY"
>> 1995 - Acquired $50 million savings bank
>> 1998 - Acquired $72 million in deposits from Bank One (three banking centers)
>> 13 Banking Centers
>> Number 1 Market Share with 23%
FFKY STOCK PERFORMANCE
[Graphic Omitted]
6/00 9/00 12/00 3/01 6/01 9/01 12/01 3/02 6/02 9/02 12/02
$17.00 $16.00 $15.00 $15.00 $16.50 $16.50 $16.75 $20.50 $23.20 $22.33 $24.50
First Federal Financial Corporation of Kentucky
Diluted Earnings Per Share
[Graphic Omitted]
9/00 12/00 3/01 6/01 9/01 12/01 3/02 6/02 9/02 12/02
$0.37 $0.35 $0.37 $0.41 $0.47 $0.53 $0.51 $0.47 $0.59 $0.60
First Federal Financial Corporation of Kentucky
Return on Average Equity
[Graphic Omitted]
6/98 6/99 6/00 6/01 6/02 *12/02
11.81% 10.53% 10.52% 10.62% 13.08% 14.89%
*Annualized based on results for six months ended 12/31/02
First Federal Financial Corporation of Kentucky
Keys to Successful Earnings Growth
1. Improvement in Net Interest Margin
First Federal Financial Corporation of Kentucky
Net Interest Margin
[Graphic Omitted]
9/00 12/00 3/01 6/01 9/01 12/01 3/02 6/02 9/02 12/02
3.12% 2.96% 3.32% 3.45% 3.71% 3.96% 3.96% 3.68% 3.79% 3.85%
First Federal Financial Corporation of Kentucky
Keys to Successful Earnings Growth
1. Improvement in Net Interest Margin
2. Improvement in Non-Interest Income
First Federal Financial Corporation of Kentucky
Non-Interest Income (In Millions)
[Graphic Omitted]
6/98 6/99 6/00 6/01 6/02 *12/02
$2.9 $4.0 $3.9 $5.1 $5.4 $6.4
*Annualized based on results for six months ended 12/31/02
First Federal Financial Corporation of Kentucky
Keys to Successful Earnings Growth
1. Improvement in Net Interest Margin
2. Improvement in Non-Interest Income
3. Improvement in Efficiency Ratio
First Federal Financial Corporation of Kentucky
Efficiency Ratio
[Graphic Omitted]
6/98 6/99 6/00 6/01 6/02 12/02
45% 56% 59% 59% 54% 50%
First Federal Financial Corporation of Kentucky
Transformation to a "Commercial Bank"
>> 1998 - Acquisition of Three Bank One Branches
- Computer hardware upgrade
- Teller Platform upgrade
- New customer product / service line
>> 1999 - Hiring of Chief Retail Officer
>> 2000 - Hiring of Chief Lending Officer
>> 2003 - Conversion to state chartered non-member bank (FDIC regulated)
First Federal Financial Corporation of Kentucky
Transformation to a "Commercial Bank"
o New Commercial Products o New Retail Products
- - Sweep Account - Check Imaging
- - Checking Analysis account - Simply Free Checking
- - Cash Management - Powerdraft (overdraft privilege program)
- - Internet Banking - Internet Banking
- - Commercial Loan product expansion
First Federal Financial Corporation of Kentucky
Loan Breakdown by Percent of Total
[Graphic Omitted]
6/98 6/99 6/00 6/01 6/02 12/02
Residential 81% 77% 67% 62% 58% 53%
Consumer (1) 13% 12% 16% 17% 16% 16%
Commercial(2) 6% 11% 17% 21% 26% 31%
(1) Consumer loans include Second Mortgage Loans & Home Equity Lines of Credit
(2) Commercial loans include Commercial & Commercial Real Estate Loans
First Federal Financial Corporation of Kentucky
Residential Mortgage Loans (in Millions)
[Graphic Omitted]
6/98 6/99 6/00 6/01 6/02 12/02
$289 $309 $317 $324 $305 $283
First Federal Financial Corporation of Kentucky
*Commercial Loans (in Millions)
[Graphic Omitted]
6/98 6/99 6/00 6/01 6/02 12/02
$23 $44 $81 $107 $134 $164
*Commercial loans include Commercial & Commercial Real Estate Loans
First Federal Financial Corporation of Kentucky
*Consumer Loans (in Millions)
[Graphic Omitted]
6/98 6/99 6/00 6/01 6/02 12/02
$45 $49 $75 $88 $83 $82
*Consumer loans include Second Mortgage Loans and Home Equity Lines of Credit
First Federal Financial Corporation of Kentucky
Total Loans (in Millions)
[Graphic Omitted]
6/98 6/99 6/00 6/01 6/02 12/02
$357 $402 $473 $519 $522 $529
First Federal Savings Bank
As of June 30, 2002
Net Charge Offs to Total Loans
[Graphic Omitted]
6/00 6/01 6/02
National Banks 0.31% 0.43% 0.48%
KY Banks 0.08% 0.30% 0.29%
All Institutions 0.51% 0.68% 0.95%
FFSB 0.09% 0.08% 0.15%
*Non-Current Loans to Total Loans
[Graphic Omitted]
6/00 6/01 6/02
National Banks 0.70% 0.87% 0.95%
KY Banks 0.40% 0.49% 1.02%
All Institutions 0.93% 1.17% 1.37%
FFSB 0.28% 0.27% 0.19%
* Non-current loans include non-accrual or past due 90 days still on accrual.
ALLL to *Non-Current Loans
[Graphic Omitted]
6/00 6/01 6/02
National Banks 207.00% 176.00% 163.00%
KY Banks 334.00% 282.00% 146.00%
All Institutions 172.00% 133.00% 125.00%
FFSB 165.00% 210.00% 373.00%
* Non-current loans include non-accrual or past due 90 days still on accrual.
ALLL to Total Loans
[Graphic Omitted]
6/00 6/01 6/02
National Banks 1.45% 1.52% 1.54%
KY Banks 1.35% 1.37% 1.49%
All Institutions 1.53% 1.55% 1.71%
FFSB 0.48% 0.56% 0.71%
First Federal Financial Corporation of Kentucky
Why own FFKY?
>> Strong recent earnings growth and potential
>> Building a strong franchise
>> Conversion to a commercial bank charter
>> Expanding to Louisville in 2003
>> Restructuring the balance sheet
>> P/E ratio continues to be low compared to FFKY historical
>> P/E ratio of 12 times LTM earnings
>> P/E ratio of 11 times forward earnings
>> Experienced Management Team
>> Good Credit Quality
FFKY's press release dated February 06, 2003, announcing its six months ended December 31, 2002 earnings is attached as
Exhibit 99 to this report.
Exhibit 99 - Press Release dated February 06, 2003.
SIGNATURE
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 thereunto duly authorized.
FIRST FEDERAL FINANCIAL CORPORATION
OF KENTUCKY
Date: February 13, 2003 By /s/ B. Keith Johnson
B. Keith Johnson
President and Chief Executive Officer
Exhibit 99
For Immediate Release - February 6, 2003
Contact: B. Keith Johnson
President & CEO
FIRST FEDERAL FINANCIAL CORPORATION OF KENTUCKY
ANNOUNCES SIX MONTHS ENDED DECEMBER 31, 2002 EARNINGS
ELIZABETHTOWN, Kentucky (February 6, 2003) - First Federal Financial Corporation of Kentucky (NASDAQ: FFKY), the parent company of
First Federal Savings Bank of Elizabethtown, (the "Bank"), today announced a 17% earnings increase for the six-month period ended
December 31, 2002. Earnings were $1.19 per share diluted or $4.4 million for the six months ended December 31, 2002, as compared to
earnings of $.99 per share diluted or $3.7 million for the six months ended December 31, 2001. In connection with the Bank's recent
conversion to a state chartered commercial bank, the Corporation has changed its fiscal year-end to December 31. Accordingly, a Form
10-K will be prepared for the six-month conversion period ended December 31, 2002.
The Bank's net interest margin held steady at 3.82% for the six months ended December 31, 2002, compared to 3.83% for the six months
ended December 31, 2001. Net interest income increased by $1.2 million on a comparative basis due to a growth in interest-earning
assets and declines in the cost of interest-bearing liabilities.
Non-interest income increased to $3.2 million for the six-month 2002 period from $2.6 million during the 2001 period. Customer
service fees on deposit accounts grew by 50% or $711,000 primarily resulting from a growth in overdraft fee income on retail checking
accounts. Gains on the sales of loans increased by $164,000, resulting from heavier refinancing activity in the residential mortgage
market.
The Bank's provision for loan losses increased to $1,161,000 in 2002 compared to $760,000 in 2001. A more conservative asset
classification policy adopted during 2002 required an increase in loans classified as special mention, resulting in the need for a
higher loan loss reserve. However, delinquencies remain low at .40% of total loans on December 31, 2002, compared to .45% on
December 31, 2001. Net loan losses were $320,000 during 2002 compared to $382,000 during 2001.
Non-interest expense increased by $316,000 or 4% during the six-month 2002 period compared to the 2001 six-month period. A
continuing growth in the retail and business banking divisions resulted in a 16% or $542,000 increase in employee costs. A change in
accounting rules for goodwill amortization expense effective July 1, 2002, eliminated $416,000 in expense in 2002 compared to 2001.
All other expenses increased by $190,000 or 6% during the 2002 six-month period. The Bank's efficiency ratio improved to 50% in 2002
from 53% in 2001.
Commenting on the six month period's results, B. Keith Johnson, President and Chief Executive Officer said, "The financial
performance of the Bank reflects the fruition of the long-term investments made during the past several years such as new banking
centers, expanded market areas, upgraded technology, and a commitment towards personnel. The business banking strategy has been well
received within the markets we serve. For the six months ended December 31, 2002, return on equity reached a record high of 14.89%."
First Federal Financial Corporation of Kentucky is a financial services holding company and is the parent of First Federal Savings
Bank of Elizabethtown which was chartered in 1923. Today the Bank serves Central Kentucky through its 13 full-service banking
centers.
First Federal Financial Corporation's stock is traded on the NASDAQ National Market System under the symbol "FFKY." Market makers
for the stock are:
J.J.B. Hilliard, W.L. Lyons Spear, Leeds & Kellog
Knight Securities, LP Stifel Nicholas & Company
First Tennessee Securities Keefe, Bruyette & Woods, Inc.
Goldman, Sachs & Company
News Release
First Federal Financial Corporation of Kentucky
February 6, 2003
Page 3
CONDENSED STATEMENTS OF INCOME
(Dollars in thousands, except net income per share)
Six Months Ended
December 31,
2002 2001
---- ----
Interest Income $21,556 $22,532
Interest Expense 9,394 11,533
----- ------
Net Interest Income 12,162 10,999
Provision for Loan Losses (1,161) (760)
Customer Service Fees on Deposit Accounts 2,139 1,428
Gain on Sale of Mortgage Loans 518 354
Brokerage and Insurance Commissions 230 276
Other Income 290 584
Employee Compensation and Benefits (4,005) (3,463)
Office Occupancy and Equipment Expense (786) (745)
Marketing and Advertising (287) (263)
Outside Services and Data Processing (855) (752)
State Franchise Tax (268) (214)
Amortization of intangibles 0 (416)
Other Expense (1,396) (1,428)
Income Taxes (2,199) (1,869)
------ ------
Net Income $4,382 $3,731
====== ======
Earnings Per Share:
Basic $1.19 $0.99
Diluted $1.19 $0.99
Weighted average shares outstanding 3,667,791 3,758,491
CONDENSED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands, except per share data)
December 31, June 30,
2002 2002
---- ----
Assets:
Cash and Cash Equivalents $91,776 $40,016
Interest Bearing Deposits 0 64,000
Investment Securities 18,575 23,693
Loans Held for Sale 3,676 1,511
Loans Receivable, net 524,859 518,750
Other Assets 31,570 31,140
-------- --------
Total Assets $670,456 $679,110
======== ========
Liabilities and Stockholders' Equity:
Deposits $521,121 $529,882
Federal Home Loan Bank Advances 77,683 77,778
Trust Preferred Securities 9,728 9,715
Other Liabilities 2,277 3,120
Stockholders' Equity 59,647 58,615
-------- --------
Total Liabilities and Stockholders' Equity $670,456 $679,110
======== ========
Book Value Per Share $16.37 $15.72
