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
January 29, 2004
(Date of earliest event reported)
First Federal Financial Corporation of Kentucky
(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
Item 7: Financial Statements and Exhibits
Attached is the press release for the annual and fourth quarter results.
(c) Exhibits
Exhibit Number Description
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99.1 Press release dated January 29, 2004
Item 12: Results of Operations and Financial Condition
On January 29, 2004, First Federal Corporation of Kentucky issued a press release announcing annual and fourth quarter 2003 results.
A copy of the press release as well as supplemental information is furnished with this report as Exhibit 99.1, and in 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 12 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.
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 FEDERAL CORPORATION OF KENTUCKY
Date: February 3, 2004 By: /s/ Gregory S. Schreacke
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Gregory S. Schreacke
Chief Financial Officer
Exhibit 99.1
FOR RELEASE AFTER 5:00 pm
January 29, 2004 For More Information Contact:
B. Keith Johnson
President and Chief Executive Officer
First Federal Financial Corporation of Kentucky
(270) 765-2131
First Federal Financial Corporation of Kentucky
Announces Annual and Quarterly Results
Elizabethtown, Kentucky, January 29, 2004 - 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 $0.54 for the quarter ended December 31, 2003, compared to $0.55 for the quarter
ended December 31, 2002. For the year ended December 31, 2003, diluted earnings per share increased 7%, to
$2.10, compared to $1.97 for the year ended December 31, 2002.
The Company's emphasis on commercial lending continued to produce positive results generating a $91 million, or
50% increase in commercial loans to $273 million at December 31, 2003, compared to $182 million at December 31,
2002. This favorable trend has resulted in a $144 million, or 112% increase in commercial loans from December
31, 2001, and a $172 million, or 170% increase in commercial loans from December 31, 2000. The mix of commercial
loans in the Company's portfolio has increased from 35% at December 31, 2002, to 49% at December 31, 2003.
"We are pleased with the success we have experienced with our emphasis in commercial lending as well as the
progress we have made in our transformation to a stronger sales culture," noted President and Chief Executive
Officer, B Keith Johnson. "However, our current period earnings remained challenged by a declining net interest
margin."
A declining net interest margin during 2003 resulted in a decrease in net interest income of $536,000, or 10% for
the fourth quarter ended December 31, 2003, compared to the same quarter a year ago. The net interest margin
tightened from 3.84% for the 2002 calender year to 3.61% for 2003, resulting in a decrease in net interest income
of $864,000, or 4%. Interest rates paid on customer deposits did not adjust downward proportionately with the
declining interest yields on loans and investments. The surge in refinancing of residential mortgage loans held
in the Company's portfolio resulted in a net decrease of $79 million in the residential mortgage portfolio at
December 31, 2003, compared to December 31. 2002. Although the Bank's net interest margin has been negatively
impacted, the shift from fixed-rate residential mortgage loans to commercial loans has reduced the Company's
interest rate risk in the event of a rising interest rate environment and has positioned the Company to improve
its net interest margin, should rates begins to rise.
MORE
News Release
First Federal Financial Corporation of Kentucky
January 29, 2004
Page Two
Provision for loan loss expense increased $34,000, or 8% to $469,000 for the quarter ended December 31, 2003, and
decreased $349,000, or 17% to $1.7 million for the year ended December 31, 2003, compared to the respective
periods a year ago. The higher provision expense for 2002 was the due to changes in loans classifications.
Non-interest income increased $763,000, or 46% to $2.4 million for the quarter ended December 31, 2003, and
increased $2.0 million, or 35% to $8.0 million for the year ended December 31, 2003, compared to the respective
periods a year ago. The growth in non-interest income was primarily due to the increase in the gains on sales of
mortgage loans, growth in fees and services charges resulting from a higher volume of retail and commercial
transactions, and the sale of a lot held for investment during the December 31, 2003 quarter.
Non-interest expense increased $521,000, or 13% to $4.5 million for the quarter ended December 31, 2003, and $1.7
million, or 11% to $17.3 million for the year ended December 31, 2003, compared to the respective periods a year
ago. The primary contributing factor was a $407,000 increase in employee compensation and benefits for the
quarter, and a $1.6 million increase for the year. During the year, ten new retail positions have been filled in
preparation of the upcoming expansions 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 products and services to our retail and
commercial customers.
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.
MORE
News Release
First Federal Financial Corporation of Kentucky
January 29, 2004
Page Three
First Federal Financial Corporation's stock is traded on the Nasdaq National Market under the symbol "FFKY."
Market makers for the stock are:
FTN Midwest Research Securities Knight Securities, LP
Howe Barnes Investments, Inc. Sandler O'Neill & Partners
J.J.B. Hilliard, W.L. Lyons Company, Inc. Stifel Nicholas & Company
Keefe, Bruyette & Woods, Inc. Trident Securities
MORE
News Release
First Federal Financial Corporation of Kentucky
January 29, 2004
Page Four
CONDENSED STATEMENTS OF INCOME
(Dollars in thousands, except net income per share)
Year Ended Six Months Ended
December 31, December 31,
2003 2002
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Interest Income $39,339 $21,556
Interest Expense 16,365 9,394
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Net Interest Income 22,974 12,162
Provision for Loan Losses (1,656) (1,161)
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Net Interest Income After Provision for Loan Losses 21,318 11,001
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Customer Service Fees on Deposit Accounts 4,556 2,139
Gain on Sale of Mortgage Loans 1,564 518
Brokerage and Insurance Commissions 353 230
Gain on Sale of Lots 452 0
Other Income 1,056 290
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Total Non-interest Income 7,981 3,177
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Employee Compensation and Benefits (9,446) (4,005)
Office Occupancy and Equipment Expense (1,534) (786)
Marketing and Advertising (568) (287)
Outside Services and Data Processing (1,826) (855)
State Franchise Tax (623) (268)
Other Expense (3,295) (1,396)
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Total Non-interest Expense (17,292) (7,597)
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Income Before Income Taxes 12,007 6,581
Income Taxes (4,004) (2,199)
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Net Income $8,003 $4,382
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(1) Earnings Per Share:
Basic $2.12 $1.09
Diluted $2.10 $1.08
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(1) Weighted average shares outstanding 3,779,931 4,034,570
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CONDENSED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands, except per share data)
December 31, December 31,
2003 2002
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Assets:
Cash and Cash Equivalents $48,030 $91,776
Investment Securities 34,938 18,575
Loans Held for Sale 1,021 3,676
Loans Receivable, net 549,132 524,859
Other Assets 43,214 31,842
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Total Assets $676,335 $670,728
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Liabilities and Stockholders' Equity:
Deposits $529,162 $521,121
Federal Home Loan Bank Advances 78,283 77,683
Subordinated Debentures 10,000 10,000
Other Liabilities 2,569 2,277
Stockholders' Equity 56,321 59,647
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Total Liabilities and Stockholders' Equity $676,335 $670,728
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(1) Book Value Per Share $15.20 $14.88
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(1) Reflects the impact of the 10% stock dividend paid on May 14, 2003.
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