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): November 3, 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 November 3, 2003, announcing its third quarter ended September 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 November 3, 2003, announcing third quarter ended September 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: November 5, 2003 By /s/ B. Keith Johnson
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B. Keith Johnson
President and Chief Executive Officer
EHIBIT 99
For Immediate Release - November 3, 2003
Contact: B. Keith Johnson
President & CEO
FIRST FEDERAL FINANCIAL CORPORATION OF KENTUCKY
ANNOUNCES THIRD QUARTER EARNINGS
ELIZABETHTOWN, Kentucky (November 3, 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 $.51 for the
quarter ended September 30, 2003, compared to $.53 for the quarter ended September 30, 2002. For the nine-month period ended
September 30, diluted earnings per share increased 9% to $1.56 in 2003 from $1.43 in 2002.
Net interest income declined $278,000 or 5% during the September 2003 quarter compared to September 2002 due to a narrowing interest
margin. During the September 2003 quarter, the net interest margin declined to 3.64%. The Bank's yield on interest earning assets
declined by 67 basis points while the cost of funds declined by 57 basis points, resulting in a net reduction to the net interest
margin of 15 basis points. The declining yield on interest earning assets was the cumulative result of the heavier refinancing of
residential mortgage loans. During the 2003 three-month and nine-month periods, residential mortgage loans held in the Bank's
portfolio decreased $17 million and $55 million respectively, as a majority of the new and refinanced residential mortgage loan
originations were sold during 2003.
The Bank's new strategy of focusing on commercial and commercial real estate lending resulted in a growth of $29 million and $48
million during the three-month and nine-month 2003 periods. Commercial and commercial real estate loans have grown to $213 million
at September 30, 2003, representing a 39% annualized growth rate for the nine-month period.
The substitution of residential mortgage loans for commercial and commercial real estate loans
has resulted in a declining yield on the Bank's loan portfolio. However, one of the underlying benefits of this strategy is to
substantially reduce the Bank's interest rate risk in the event of a rising rate environment.
During the 2003 September quarter, the Bank's provision for loan losses was $438,000. For the 2002 September quarter, the provision
was $726,000 due to changes in loan classifications.
MORE
News Release
First Federal Financial Corporation of Kentucky
November 3, 2003
Page Two
During the quarter ended September 30, 2003, non-interest income improved to $1,974,000, a $442,000 or 29% increase from the
comparable 2002 quarter. Fueling the growth was a $248,000 increase in the gains on sales of residential mortgage loans. The
remaining increase was a $194,000 growth in fees and service charges resulting from a higher volume of retail and commercial
transactions.
Total non-interest expense rose to $4,405,000 during the September 2003 quarter, a $796,000 or 22% increase from the comparable 2002
quarter. The largest contributing factor was an increase of $369,000 in employee compensation and benefits. During the 2003
nine-month period, ten new retail positions have been filled in preparation of the upcoming expansion into Jefferson County,
Kentucky, coupled with an expanded facility in Hardin County, Kentucky. Additional increases to staff have taken place during 2003
to continue the transformation to a stronger retail sales culture and to provide expanded banking products and services.
Commenting on the quarter's results, B. Keith Johnson, President and Chief Executive Officer said, "The rapid decrease in the Bank's
residential mortgage portfolio has resulted in a declining net interest margin and a negative impact on earnings. However, the shift
in the Bank's loan portfolio should yield positive long-term earnings results. Until the federal discount rate begins to rise, the
banking industry will continue to face pressures on margins."
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.
MORE
News Release
First Federal Financial Corporation of Kentucky
November 3, 2003
Page Three
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.
MORE
CONDENSED STATEMENTS OF INCOME
(Dollars in thousands, except net income per share)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
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Interest Income $9,745 $10,865 $29,841 $32,432
Interest Expense 3,988 4,830 12,458 14,722
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Net Interest Income 5,757 6,035 17,383 17,710
Provision for Loan Losses (438) (726) (1,187) (1,569)
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Net Interest Income After Provision for Loan Losses 5,319 5,309 16,196 16,141
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Customer Service Fees on Deposit Accounts 1,142 1,041 3,275 2,896
Gain on Sale of Mortgage Loans 473 225 1,311 522
Brokerage and Insurance Commissions 81 128 278 405
Other Income 278 138 710 465
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Total Non-interest Income 1,974 1,532 5,574 4,288
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Employee Compensation and Benefits (2,347) (1,978) (7,016) (5,776)
Office Occupancy Expense and Equipment (396) (357) (1,144) (1,099)
Marketing and Advertising (150) (143) (448) (494)
Outside Services and Data Processing (458) (371) (1,389) (1,164)
Bank Franchise Tax (141) (129) (423) (388)
Goodwill Amortization 0 0 0 (416)
Other Expense (913) (631) (2,363) (2,273)
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Total Non-interest Expense (4,405) (3,609) (12,783) (11,610)
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Income Before Income Taxes 2,888 3,232 8,987 8,819
Income Taxes (967) (1,078) (2,994) (2,938)
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Net Income $1,921 $2,154 $5,993 $5,881
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(1) Earnings Per Share:
Basic $0.52 $0.53 $1.58 $1.44
Diluted $0.51 $0.53 $1.56 $1.43
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(1) Weighted average shares outstanding 3,710,078 4,048,893 3,799,259 4,095,419
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CONDENSED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands, except per share data)
(Unaudited at September 30, 2003)
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September 30, December 31,
2003 2002
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Assets:
Cash and Cash Equivalents $77,771 $91,776
Investment Securities 25,083 18,575
Loans Held for Sale 2,054 3,676
Loans Receivable, net 528,166 524,859
Other Assets 37,684 31,570
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Total Assets $670,758 $670,456
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Liabilities and Stockholders' Equity:
Deposits $525,845 $521,121
Federal Home Loan Bank Advances 77,643 77,683
Trust Preferred Securities 9,736 9,728
Other Liabilities 2,446 2,277
Stockholders' Equity 55,088 59,647
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Total Liabilities and Stockholders' Equity $670,758 $670,456
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(1) Book Value Per Share $14.80 $14.88
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(1) Reflects the impact of the 10% stock dividend paid on May 14, 2003.
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