SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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): July 23, 2003
FIRST FEDERAL FINANCIAL CORPORATION OF KENTUCKY
(Exact Name of Registrant as specified in Charter)
Kentucky 1-18832 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)
Registrant's telephone number,
including area code: (270) 765-2131
N/A
(Former name or former address, if changed since last report.)
INFORMATION TO BE INCLUDED IN THE REPORT
Items 1, 2, 3, 4, 5, 6, 7, 8, and 10, are not applicable and are omitted from this Report.
Item 9 and 12. Regulation FD Disclosure
FFKY's press release dated July 23, 2003, announcing its second quarter ended June 30, 2003, earnings is attached as
Exhibit 99 to this report.
The following exhibits are filed with this Report on Form 8-K:
REGULATION S-K
EXHIBIT NUMBERS EXHIBIT
99 Press Release dated July 23, 2003, announcing second quarter ended June 30, 2003 earnings.
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 hereunto duly authorized.
FIRST FEDERAL FINANCIAL CORPORATION
OF KENTUCKY
Date: July 29, 2003 By /s/ B. Keith Johnson
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B. Keith Johnson
President and Chief Executive Officer
EHIBIT 99
For Immediate Release - July 23, 2003
Contact: B. Keith Johnson
President & CEO
FIRST FEDERAL FINANCIAL CORPORATION OF KENTUCKY
ANNOUNCES RECORD EARNINGS PER SHARE FOR THE SECOND QUARTER
ELIZABETHTOWN, Kentucky (July 23, 2003) - First Federal Financial Corporation of Kentucky (the "Company") NASDAQ NMS: FFKY, the
parent bank holding company of First Federal Savings Bank, (the "Bank"), today announced diluted earnings per share of $.52 for the
quarter ended June 30, 2003, a 21% increase from the June 2002 diluted earnings per share of $.43. Return on equity improved to
14.5% for the 2003 quarter compared to 12.3% for the 2002 quarter.
Commenting on the quarter's results, B. Keith Johnson, President and Chief Executive Officer said, "I am pleased to report the
results of another financially successful quarter. For the six months ended June 30, 2003, diluted earnings per share have increased
by 19% while the Company's return on average equity hit a new record high of 14.5%. Additionally, the Bank has taken a new strategic
step by beginning construction on two traditional banking centers in Louisville, Kentucky, while continuing to have significant
growth in its existing market areas."
Net Interest Income
Net interest income was $5.8 million during the June 2003 quarter compared to $5.8 million during the June 2002 quarter. The net
interest margin declined eight basis points to 3.63% for the 2003 quarter compared to the 2002 quarter. Reductions in the federal
discount rate by the Federal Open Market Committee tightened the margin during the past twelve months as customer deposit interest
rates could not adjust downward in a corresponding relationship to the declining interest yields on loans and investments. However,
on a comparative basis to the March 2003 quarter, the net interest margin experienced no further decline.
Also impacting the net interest margin was a decline in net loans. Commercial real estate and other commercial loans experienced
robust growth of $29 million (or 32% annualized) during the six months ended June 30, 2003. However, the unprecedented pace of
residential mortgage loan refinancing resulted in a decline of $41 million in the residential portfolio during the six-month period.
Consistent with the Bank's long-term strategy, residential mortgage loans have declined as a percentage of net loans to 48% at June
30, 2003 from 53% at December 31, 2002. The commercial loan portfolio has grown to 35% of net loans at June 30, 2003 from 31% at
December 31, 2003. The decline in net loans, coupled with a growth in customer deposits, resulted in a $10 million rise in
liquidity and short-term investments with
MORE
News Release
First Federal Financial Corporation of Kentucky
July 23, 2003
Page Two
low interest yields. Although the lower yields are affecting the net interest margin currently, the short-term liquidity affords the
Bank the opportunity to invest at higher yields should rates rise and thereby improve the Bank's future net interest margin.
Non-Interest Income
Non-interest income increased by $454,000 or 32% during the June 2003 quarter compared to the June 2002 quarter. Gains on sales of
residential mortgage loans increased by $292,000 to $432,000 during the quarter ended June 30, 2003. All other non-interest income
increased by $163,000 or 13% during the 2003 quarter compared to the 2002 quarter, resulting from the growth in customer deposits and
the sale of fee-based products.
Non-Interest Income
Non-interest expense increased by $247,000 or 6% during the June 2003 quarter compared to the June 2002 quarter. During the 2003
quarter, the Bank achieved a 56% efficiency ratio. Total personnel costs increased by $508,000. Employee compensation expense
increased by $354,000 from the 2002 quarter, resulting from 26 new positions in the retail, commercial, and support staff, coupled
with higher incentive bonuses for performance and Bank profitability. Other employee expenses increased by $154,000 or 39% primarily
due to the increased cost for the defined benefit plan. Although the plan was frozen as of March 2003, continuing plan contributions
may be required based on economic conditions in the stock and bond markets. Offsetting the growth in personnel costs was a decline
in goodwill amortization expense of $208,000 for the 2003 quarter, resulting from a change in accounting effective July 1, 2002, for
the Company. All other non-interest expenses declined $53,000 to $1.9 million during the 2003 quarter compared to the 2002 quarter.
Other Highlights
During the quarter ended June 30, 2003, the volume of FFKY shares increased significantly related to the speculation that the
Company's market capitalization was sufficient to qualify for the Russell 2000 Index. Effective July 1, 2003, the Company has earned
the privilege of the Russell 2000 status through June 30, 2004, at which time all participants are re-evaluated.
On May 14, 2003, a 10% stock dividend was paid on the Company's common stock. Subsequently, a quarterly cash dividend of $.18 was
declared on May 20, 2003, effectively resulting in a 10% annualized increase in the cash dividend.
MORE
News Release
First Federal Financial Corporation of Kentucky
July 23, 2003
Page Three
Also during May 2003, the Bank broke ground on two traditional banking centers in high-growth market areas in Louisville, Kentucky.
These banking centers are anticipated to be operational during the March 2004 quarter. The Bank intends to close its existing
supermarket banking center located within one-half mile of the southern Louisville banking center under construction.
First Federal Financial Corporation of Kentucky is the parent bank holding company 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.
In this release, and from time to time in its public disclosures, First Federal makes forward-looking statements relating to its
financial condition, results of operations, plans, objectives, future performance and business. Words such as "believes,"
"anticipates," "expects," "intends," "plans," "targeted," "strategy," and similar expressions are intended to identify forward-looking
statements, but are not the exclusive means of identifying such statements.
Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those indicated by
the forward-looking statements. In its annual and quarterly reports filed with the Securities and Exchange Commission, First Federal
identifies important factors that could cause the Company's results to differ materially from those contained in such forward-looking
statements. Please refer to the discussion of those factors in First Federal's filed reports.
First Federal's stock is traded on the Nasdaq National Market under the symbol "FFKY." Market makers for the stock are:
J.J.B. Hilliard, W.L. Lyons Company, Inc. Keefe, Bruyette & Woods, Inc.
Stifel Nicholas & Company Goldman, Sachs & Company
First Tennessee Securities Knight Securities, LP
Trident Securities Spear, Leeds & Kellogg
Sandler O'Neill Howe Barnes Investments, Inc.
CONDENSED STATEMENTS OF INCOME
(Dollars in thousands, except net income per share)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2003 2002 2003 2002
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Interest Income $9,971 $10,832 $20,095 $21,567
Interest Expense 4,174 5,010 8,470 9,892
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Net Interest Income 5,797 5,822 11,625 11,675
Provision for Loan Losses (420) (428) (749) (844)
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Net Interest Income After Provision for Loan Losses 5,377 5,394 10,876 10,831
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Customer Service Fees on Deposit Accounts 1,133 1,006 2,133 1,855
Gain on Sale of Mortgage Loans 431 140 838 297
Brokerage and Insurance Commissions 101 136 197 277
Other Income 217 146 432 327
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Total Non-interest Income 1,882 1,428 3,600 2,756
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Employee Compensation and Benefits (2,433) (1,925) (4,669) (3,798)
Office Occupancy and Equipment Expense (379) (375) (747) (742)
Marketing and Advertising (150) (187) (298) (350)
Outside Services and Data Processing (464) (403) (931) (350)
State Franchise Tax (141) (129) (282) (259)
Goodwill Amortization 0 (208) 0 (416)
Other Expense (766) (859) (1,450) (1,642)
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Total Non-interest Expense (4,333) (4,086) (8,377) (8,000)
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Income Before Income Taxes 2,926 2,736 6,099 5,587
Income Taxes (976) (933) (2,027) (1,859)
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Net Income $1,950 $1,803 $4,072 $3,728
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(1)Earnings Per Share:
Basic $0.52 $0.44 $1.06 $0.90
Diluted $0.52 $0.43 $1.06 $0.89
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(1)Weighted average shares outstanding 3,710,469 4,114,396 3,835,565 4,122,994
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CONDENSED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands, except per share data)
(Unaudited at June 30, 2003)
June 30, December 31,
2003 200
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Assets:
Cash and Cash Equivalents $93,317 $91,776
Investment Securities 28,155 18,575
Loans Held for Sale 5,107 3,676
Loans Receivable, net 513,988 524,859
Other Assets 33,233 31,570
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Total Assets $673,800 $670,456
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Liabilities and Stockholders' Equity:
Deposits $530,470 $521,121
Federal Home Loan Bank Advances 77,687 77,683
Trust Preferred Securities 9,733 9,728
Other Liabilities 2,399 2,277
Stockholders' Equity 53,511 59,647
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Total Liabilities and Stockholders' Equity $673,800 $670,456
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(1)Book Value Per Share $14.48 $14.88
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(1) Reflects the impact of the 10% stock dividend paid on May 14, 2003.
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