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First Financial Service Corporation Reports Improved Credit Quality



     First Financial Service Corporation Reports Improved Credit Quality

Regulatory capital ratios continue to improve

PR Newswire

ELIZABETHTOWN, Ky., May 13, 2013

ELIZABETHTOWN, Ky., May 13, 2013 /PRNewswire/ -- First Financial Service
Corporation (the Company, NASDAQ: FFKY) today reported a net loss per diluted
common share available to common stockholders of $0.03 for the quarter ended
March 31, 2013, compared to a net loss per diluted common share available to
common stockholders of $0.12 for the quarter ended March 31, 2012.

"Our overall goals for 2013 are to return the Company to sustained
profitability, continue our progress towards problem asset resolution, and
restore capital," said President, Greg Schreacke. "We have come a long way
from the peak of our credit issues and anticipate continued improvement going
forward." 

FIRST QUARTER 2013 HIGHLIGHTS

  o Credit Quality Metrics

       o Classified assets were $69.1 million at March 31, 2013 compared to
         $75.2 million last quarter and $105.7 million for the same quarter
         last year. 
       o Non-performing assets were $40.4 million at March 31, 2013 compared
         to $43.8 million last quarter and $69.7 million for the same quarter
         last year.

            o Six larger relationships account for 55% of the total
              non-performing assets.  Four of these properties, totaling $12.9
              million are income producing properties.
            o Sales contracts have been executed on several properties with a
              total book value of $4.9 million expected to close prior to June
              30, 2013 and $3.8 million expected to close by September 30,
              2013. 
            o Costs related to problem assets have declined for four
              consecutive quarters.

       o Allowance for loan losses to total non-performing loans was 77% at
         March 31, 2013 compared to 45% for the same quarter last year.
       o Annualized net charge-offs were 0.32% at March 31, 2013 compared to
         0.49% for the same quarter last year. 
       o Real estate acquired through foreclosure was $19.7 million at March
         31, 2013 compared to $22.3 million last quarter and $30.1 million for
         the same quarter last year.
       o Improved credit quality resulted in a $1.0 million release of
         allowance reserves.

  o Bank Regulatory Capital

       o Total risk-based capital ratio for the bank improved to 12.33% at
         March 31, 2013 compared to 12.21% last quarter and 10.70% for the
         same quarter last year.
       o Tier 1 leverage ratio for the bank improved to 6.84% at March 31,
         2013 compared to 6.53% last quarter and 5.90% for the same quarter
         last year.

  o Revenue

       o Net interest income for the quarter ended March 31, 2013 was $5.9
         million compared to $8.2 million for the same quarter last year.  The
         decrease in net interest income is mainly attributed to a decline in
         loan interest income of $3.2 million and a decline of $1.0 million in
         investment securities interest income offset by a decline in deposit
         interest expense costs of $1.8 million. 

            + The decline in loan interest income is mainly attributed to the
              decline in the average balance in loans at March 31, 2013 of
              $522 million with a yield of 5.30% compared to $727 million and
              a yield of 5.56% for the same period last year. 
            + The decline in deposit interest expense is mainly attributed to
              the decline in the average balance in certificates of deposits
              at March 31, 2013 of $448 million with a cost of 1.70% compared
              to $638 million with a cost of 2.18% for the same period last
              year.
            + We anticipate further improvement to interest expenses related
              to certificates of deposits as we have approximately $135
              million of these deposits that are set to mature over the next
              three quarters.

"We experienced a decline in our net interest income primarily due to
decreases in average loan balances and loan yields offset by a decrease in
average interest bearing deposits combined with continued reductions in
funding costs," said Chief Financial Officer, Frank Perez.  "We anticipate
modest improvement to net interest income in 2013 as we continue an aggressive
push to favorably reprice or roll off maturing certificates of deposits over
the next three quarters."

First Financial Service Corporation is the parent bank holding company of
First Federal Savings Bank of Elizabethtown, which was chartered in 1923. The
Bank serves the needs and caters to the economic strengths of the local
communities in which it operates and strives to provide a high level of
personal and professional customer service. The Bank offers a variety of
financial services to its retail and commercial banking customers. These
services include personal and corporate banking services, and personal
investment financial counseling services. Currently, the Bank serves six
contiguous counties in central Kentucky through its 17 full-service banking
centers.

This press release contains forward-looking statements, including statements
about beliefs and expectations based on the information available to, and
assumptions and estimates made by, management as of the date made. These
forward-looking statements cover, among other things, anticipated future
revenue, expenses, capital ratios, and the future plans and prospects of First
Federal Savings Bank. For a discussion of the risks and uncertainties that may
cause actual results to differ from these expectations and our other
forward-looking statements, refer to First Financial Service Corporation's
2012 Annual Report on Form 10-K, including the "Risk Factors" section, and
other periodic reports filed with the Securities and Exchange Commission.
Forward-looking statements speak only as of the date they are made, and First
Financial Service Corporation undertakes no obligation to update them in light
of new information or future events.

First Financial Service Corporation's stock is traded on the Nasdaq Global
Market under the symbol "FFKY." Market makers for the stock are:

Keefe, Bruyette & Woods, Inc.              FTN Midwest Securities
J.J.B. Hilliard, W.L. Lyons Company, Inc.  Howe Barnes Investments, Inc.
Stifel Nicolaus & Company                  Knight Securities, LP

SOURCE First Financial Service Corporation

Contact: Frank Perez, Chief Financial Officer, First Financial Service
Corporation, (270) 765-2131
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