Losses at First Financial Services Corp. mounted in the second quarter after the Elizabethtown, Ky., company set aside an additional $13 million to deal with problem loans.
The $1.2 billion-asset company said Monday that it lost $12.2 million in the second quarter, or nearly 4,000% more than the $300,000 it lost in the same quarter of 2010. In a news release, First Financial's chief executive, B. Keith Johnson, said that reduced values on real estate appraisals forced the company to boost its loan-loss provision by $13 million and take another $4.9 million writedown on the value of foreclosed properties.
"The charges are a necessary step in working through this credit cycle," said Johnson. He noted that many of the problem loans were for high-end residential developments.
First Financial said that 6.87% of its loans were nonperforming as of June 30, up from 5.22% at Dec. 31, 2010 and 3.82% on Dec. 31, 2009.
First Financial is the parent company of First Federal Savings Bank of Elizabethtown, which has 22 branches in Kentucky and Indiana.
