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| 8-K - 8-K - FIRST FINANCIAL CORP /IN/ | thff2018-09x30er8xk.htm |
News Release | |
FIRST FINANCIAL CORPORATION
One First Financial Plaza, Terre Haute, Indiana 47807 (812) 238-6000
For more information contact: | |
October 23, 2018 | Rodger A. McHargue at (812) 238-6334 |
First Financial Corporation reports 3rd Quarter results
TERRE HAUTE, INDIANA - First Financial Corporation (NASDAQ:THFF) today announced results for the third quarter of 2018. Net income increased 28.64% to $11.3 million compared to $8.8 million for the same period of 2017. Diluted net income per common share increased 27.78% to $0.92 from $0.72 for the comparable period of 2017.
The Corporation also reported net income of $35.5 million for the nine months ended September 30, 2018 versus $26.5 million for the comparable period of 2017. Diluted net income per common share for the nine months ended September 30, 2018 was $2.90 versus $2.17 for the comparable period of 2017. The increase included a recovery of a security previously written down for other-than temporary impairment which contributed $2.4 million pre-tax to interest income and $4.5 million pre-tax to other income. The first quarter of 2017 included a similar pre-tax recovery of $3.1 million. Return on assets for the nine months ended September 30, 2018 was 1.59% compared to 1.18% for the nine months ended September 30, 2017.
Norman L. Lowery, President and Chief Executive Officer, commented, “We are pleased with our third quarter 2018 results. This makes our sixth consecutive quarter of reported loan growth, which contributed to the increase in our third quarter net interest income compared to the same period last year.”
Book value per share was $34.91 at September 30, 2018 compared to $36.29 at September 30, 2017. Shareholders’ equity was $427.8 million compared to $443.6 million on September 30, 2017.
Average total loans for the third quarter of 2018 were $1.93 billion versus $1.86 billion for the comparable period in 2017, an increase of $69.3 million or 3.73%. Total loans outstanding were $1.94 billion as of September 30, 2018 compared to $1.87 billion as of September 30, 2017, a $75.2 million or 4.03% increase.
Average total deposits for the quarter ended September 30, 2018 were $2.44 billion versus $2.41 billion as of September 30, 2017. Total deposits were $2.41 billion as of September 30, 2018 compared to $2.45 billion as of September 30, 2017.
The company’s tangible common equity to tangible asset ratio was 13.31% at September 30, 2018, compared to 13.83% at September 30, 2017.
Net interest income for the third quarter of 2018 was $28.8 million compared to the $27.1 million reported for the same period of 2017. The net interest margin for the nine months ended September 30, 2018 increased to 4.31% compared to 4.08% for the same period ending September 30, 2017.
The provision for loan losses for the three months ended September 30, 2018 was $1.5 million compared to $1.2 million for the third quarter of 2017. Net charge-offs were $1.2 million for the third quarter of
2018 compared to $1.1 million in the same period of 2017. The Corporation’s allowance for loan losses as of September 30, 2018 was $20.3 million compared to $19.8 million as of September 30, 2017. The allowance for loan losses as a percent of total loans was 1.05% as of September 30, 2018 compared to 1.06% as of September 30, 2017.
Nonperforming loans decreased 29.0% to $16.2 million as of September 30, 2018 versus $22.8 million as of September 30, 2017. The ratio of nonperforming loans to total loans and leases was .83% as of September 30, 2018 versus 1.22% as of September 30, 2017.
Non-interest income for the three months ended September 30, 2018 was $8.9 million compared to $8.5 million as of September 30, 2017.
Non-interest expense for the three months ended September 30, 2018 was $22.3 million compared to $22.3 million in 2017. The Corporation’s efficiency ratio was 57.54% for the quarter ending September 30, 2018 versus 59.85% for the same period in 2017.
First Financial Corporation is the holding company for First Financial Bank N.A. in Indiana and Illinois, and The Morris Plan Company of Terre Haute.
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | June 30, | September 30, | September 30, | September 30, | ||||||||||||
2018 | 2018 | 2017 | 2018 | 2017 | ||||||||||||
END OF PERIOD BALANCES | ||||||||||||||||
Assets | $ | 2,980,935 | $ | 2,968,048 | $ | 2,982,342 | $ | 2,980,935 | $ | 2,982,342 | ||||||
Deposits | $ | 2,407,061 | $ | 2,454,335 | $ | 2,453,411 | $ | 2,407,061 | $ | 2,453,411 | ||||||
Loans, including net deferred loan costs | $ | 1,941,780 | $ | 1,928,572 | $ | 1,866,564 | $ | 1,941,780 | $ | 1,866,564 | ||||||
Allowance for Loan Losses | $ | 20,301 | $ | 20,071 | $ | 19,802 | $ | 20,301 | $ | 19,802 | ||||||
Total Equity | $ | 427,774 | $ | 419,695 | $ | 443,558 | $ | 427,774 | $ | 443,558 | ||||||
Tangible Common Equity (a) | $ | 392,109 | $ | 383,916 | $ | 407,459 | $ | 392,109 | $ | 407,459 | ||||||
AVERAGE BALANCES | ||||||||||||||||
Total Assets | $ | 2,965,825 | $ | 2,973,295 | $ | 2,974,616 | $ | 2,972,907 | $ | 2,977,330 | ||||||
Earning Assets | $ | 2,785,582 | $ | 2,784,128 | $ | 2,775,366 | $ | 2,786,588 | $ | 2,773,906 | ||||||
Investments | $ | 857,624 | $ | 865,694 | $ | 912,439 | $ | 866,694 | $ | 917,497 | ||||||
Loans | $ | 1,926,051 | $ | 1,915,532 | $ | 1,856,726 | $ | 1,916,567 | $ | 1,848,534 | ||||||
Total Deposits | $ | 2,435,281 | $ | 2,467,426 | $ | 2,414,561 | $ | 2,450,865 | $ | 2,431,721 | ||||||
Interest-Bearing Deposits | $ | 2,010,467 | $ | 2,041,391 | $ | 1,993,839 | $ | 2,026,813 | $ | 1,991,873 | ||||||
Interest-Bearing Liabilities | $ | 49,808 | $ | 34,539 | $ | 58,755 | $ | 46,274 | $ | 53,557 | ||||||
Total Equity | $ | 427,530 | $ | 420,092 | $ | 440,998 | $ | 420,654 | $ | 432,882 | ||||||
INCOME STATEMENT DATA | ||||||||||||||||
Net Interest Income | $ | 28,827 | $ | 30,684 | $ | 27,108 | $ | 86,984 | $ | 80,175 | ||||||
Net Interest Income Fully Tax Equivalent (b) | $ | 29,841 | $ | 31,694 | $ | 28,691 | $ | 89,988 | $ | 84,859 | ||||||
Provision for Loan Losses | $ | 1,470 | $ | 1,355 | $ | 1,185 | $ | 4,298 | $ | 3,821 | ||||||
Non-interest Income | $ | 8,909 | $ | 12,961 | $ | 8,540 | $ | 29,973 | $ | 27,702 | ||||||
Non-interest Expense | $ | 22,297 | $ | 22,683 | $ | 22,284 | $ | 68,191 | $ | 66,949 | ||||||
Net Income | $ | 11,313 | $ | 15,261 | $ | 8,794 | $ | 35,527 | $ | 26,515 | ||||||
PER SHARE DATA | ||||||||||||||||
Basic and Diluted Net Income Per Common Share | $ | 0.92 | $ | 1.25 | $ | 0.72 | $ | 2.90 | $ | 2.17 | ||||||
Cash Dividends Declared Per Common Share | $ | — | $ | 0.51 | $ | — | $ | 0.51 | $ | 0.50 | ||||||
Book Value Per Common Share | $ | 34.91 | $ | 34.25 | $ | 36.29 | $ | 34.91 | $ | 36.29 | ||||||
Tangible Book Value Per Common Share (c) | $ | 31.98 | $ | 31.12 | $ | 33.12 | $ | 32.00 | $ | 33.33 | ||||||
Basic Weighted Average Common Shares Outstanding | 12,255 | 12,255 | 12,224 | 12,253 | 12,222 | |||||||||||
(a) Tangible common equity is a non-GAAP financial measure derived from GAAP-based amounts. We calculate tangible common equity by excluding goodwill and other intangible assets from shareholder's equity.
(b) Net interest income fully tax equivalent is a non-GAAP financial measure derived from GAAP-based amounts. We calculate net interest income fully tax equivalent by adding back the tax equivalent factor of tax exempt income to net interest income. We calculate the tax equivalent factor of tax exempt income by dividing tax exempt income by the net of tax rate of 75% for 2018 and 65% for prior years.
(c) Tangible book value per common share is a non-GAAP financial measure derived from GAAP-based amounts. We calculate the factor by dividing average tangible common equity by average shares outstanding. We calculate average tangible common equity by excluding average intangible assets from average shareholder's equity.
Key Ratios | Three Months Ended | Nine Months Ended | |||||||||
September 30, | June 30, | September 30, | September 30, | September 30, | |||||||
2018 | 2018 | 2017 | 2018 | 2017 | |||||||
Return on average assets | 1.53 | % | 2.05 | % | 1.18 | % | 1.59 | % | 1.18 | % | |
Return on average common shareholder's equity | 10.58 | % | 14.53 | % | 7.98 | % | 11.23 | % | 8.15 | % | |
Efficiency ratio | 57.54 | % | 50.80 | % | 59.85 | % | 56.84 | % | 59.48 | % | |
Average equity to average assets | 14.42 | % | 14.13 | % | 14.83 | % | 14.15 | % | 14.54 | % | |
Net interest margin (a) | 4.29 | % | 4.58 | % | 4.14 | % | 4.31 | % | 4.08 | % | |
Net charge-offs to average loans and leases | 0.26 | % | 0.32 | % | 0.23 | % | 0.27 | % | 0.20 | % | |
Loan and lease loss reserve to loans and leases | 1.05 | % | 1.04 | % | 1.06 | % | 1.05 | % | 1.06 | % | |
Loan and lease loss reserve to nonperforming loans | 125.35 | % | 106.39 | % | 86.93 | % | 125.35 | % | 86.93 | % | |
Nonperforming loans to loans and leases | 0.83 | % | 0.98 | % | 1.22 | % | 0.83 | % | 1.22 | % | |
Tier 1 leverage | 14.45 | % | 14.05 | % | 14.05 | % | 14.45 | % | 14.05 | % | |
Risk-based capital - Tier 1 | 18.36 | % | 18.09 | % | 18.04 | % | 18.36 | % | 18.04 | % | |
(a) Net interest margin is calculated on a tax equivalent basis.
Asset Quality | Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | June 30, | September 30, | September 30, | September 30, | ||||||||||||
2018 | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Accruing loans and leases past due 30-89 days | $ | 8,413 | $ | 7,741 | $ | 6,864 | $ | 8,413 | $ | 6,864 | ||||||
Accruing loans and leases past due 90 days or more | $ | 1,314 | $ | 1,273 | $ | 1,389 | $ | 1,314 | $ | 1,389 | ||||||
Nonaccrual loans and leases | $ | 10,035 | $ | 10,773 | $ | 13,965 | $ | 10,035 | $ | 13,965 | ||||||
Total troubled debt restructuring | $ | 4,847 | $ | 6,819 | $ | 7,424 | $ | 4,847 | $ | 7,424 | ||||||
Other real estate owned | $ | 520 | $ | 497 | $ | 1,866 | $ | 520 | $ | 1,866 | ||||||
Nonperforming loans and other real estate owned | $ | 16,716 | $ | 19,362 | $ | 24,644 | $ | 16,716 | $ | 24,644 | ||||||
Total nonperforming assets | $ | 20,139 | $ | 22,812 | $ | 38,336 | $ | 20,139 | $ | 38,336 | ||||||
Gross charge-offs | $ | 2,348 | $ | 2,270 | $ | 1,964 | $ | 6,692 | $ | 6,328 | ||||||
Recoveries | $ | 1,108 | $ | 745 | $ | 901 | $ | 2,786 | $ | 3,536 | ||||||
Net charge-offs/(recoveries) | $ | 1,240 | $ | 1,525 | $ | 1,063 | $ | 3,906 | $ | 2,792 | ||||||
CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands, except per share data)
September 30, 2018 | December 31, 2017 | ||||||
(unaudited) | |||||||
ASSETS | |||||||
Cash and due from banks | $ | 50,018 | $ | 74,107 | |||
Federal funds sold | 7,600 | — | |||||
Securities available-for-sale | 785,693 | 814,931 | |||||
Loans: | |||||||
Commercial | 1,150,536 | 1,139,490 | |||||
Residential | 443,264 | 436,143 | |||||
Consumer | 345,132 | 327,976 | |||||
1,938,932 | 1,903,609 | ||||||
(Less) plus: | |||||||
Net deferred loan costs | 2,848 | 3,152 | |||||
Allowance for loan losses | (20,301 | ) | (19,909 | ) | |||
1,921,479 | 1,886,852 | ||||||
Restricted stock | 10,390 | 10,379 | |||||
Accrued interest receivable | 14,630 | 12,913 | |||||
Premises and equipment, net | 46,985 | 48,272 | |||||
Bank-owned life insurance | 85,901 | 85,016 | |||||
Goodwill | 34,355 | 34,355 | |||||
Other intangible assets | 1,310 | 1,630 | |||||
Other real estate owned | 520 | 1,880 | |||||
Other assets | 22,054 | 30,333 | |||||
TOTAL ASSETS | $ | 2,980,935 | $ | 3,000,668 | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
Deposits: | |||||||
Non-interest-bearing | $ | 420,337 | $ | 425,001 | |||
Interest-bearing: | |||||||
Certificates of deposit exceeding the FDIC insurance limits | 40,904 | 43,178 | |||||
Other interest-bearing deposits | 1,945,820 | 1,990,474 | |||||
2,407,061 | 2,458,653 | ||||||
Short-term borrowings | 58,680 | 57,686 | |||||
FHLB advances | 35,000 | — | |||||
Other liabilities | 52,420 | 70,760 | |||||
TOTAL LIABILITIES | 2,553,161 | 2,587,099 | |||||
Shareholders’ equity | |||||||
Common stock, $.125 stated value per share; | |||||||
Authorized shares-40,000,000 | |||||||
Issued shares-14,612,540 in 2018 and 14,595,320 in 2017 | |||||||
Outstanding shares-12,255,045 in 2018 and 12,246,464 in 2017 | 1,824 | 1,822 | |||||
Additional paid-in capital | 76,181 | 75,624 | |||||
Retained earnings | 451,918 | 420,275 | |||||
Accumulated other comprehensive loss | (32,310 | ) | (14,704 | ) | |||
Less: Treasury shares at cost-2,357,495 in 2018 and 2,348,856 in 2017 | (69,839 | ) | (69,448 | ) | |||
TOTAL SHAREHOLDERS’ EQUITY | 427,774 | 413,569 | |||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 2,980,935 | $ | 3,000,668 | |||
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Dollar amounts in thousands, except per share data)
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
(unaudited) | (unaudited) | ||||||||||||||
INTEREST INCOME: | |||||||||||||||
Loans, including related fees | $ | 25,581 | $ | 23,119 | $ | 73,982 | $ | 67,385 | |||||||
Securities: | |||||||||||||||
Taxable | 3,601 | 3,500 | 13,141 | 10,887 | |||||||||||
Tax-exempt | 1,873 | 1,859 | 5,573 | 5,529 | |||||||||||
Other | 320 | 327 | 959 | 978 | |||||||||||
TOTAL INTEREST INCOME | 31,375 | 28,805 | 93,655 | 84,779 | |||||||||||
INTEREST EXPENSE: | |||||||||||||||
Deposits | 2,365 | 1,561 | 6,254 | 4,307 | |||||||||||
Short-term borrowings | 167 | 98 | 354 | 215 | |||||||||||
Other borrowings | 16 | 38 | 63 | 82 | |||||||||||
TOTAL INTEREST EXPENSE | 2,548 | 1,697 | 6,671 | 4,604 | |||||||||||
NET INTEREST INCOME | 28,827 | 27,108 | 86,984 | 80,175 | |||||||||||
Provision for loan losses | 1,470 | 1,185 | 4,298 | 3,821 | |||||||||||
NET INTEREST INCOME AFTER PROVISION | |||||||||||||||
FOR LOAN LOSSES | 27,357 | 25,923 | 82,686 | 76,354 | |||||||||||
NON-INTEREST INCOME: | |||||||||||||||
Trust and financial services | 1,133 | 1,194 | 3,888 | 3,660 | |||||||||||
Service charges and fees on deposit accounts | 3,002 | 3,048 | 8,733 | 8,829 | |||||||||||
Other service charges and fees | 3,256 | 3,070 | 9,747 | 9,369 | |||||||||||
Securities gains/(losses), net | 3 | 27 | 5 | 44 | |||||||||||
Gain on sales of mortgage loans | 618 | 535 | 1,458 | 1,255 | |||||||||||
Other | 897 | 666 | 6,142 | 4,545 | |||||||||||
TOTAL NON-INTEREST INCOME | 8,909 | 8,540 | 29,973 | 27,702 | |||||||||||
NON-INTEREST EXPENSE: | |||||||||||||||
Salaries and employee benefits | 12,485 | 12,489 | 38,028 | 37,780 | |||||||||||
Occupancy expense | 1,894 | 1,769 | 5,308 | 5,298 | |||||||||||
Equipment expense | 1,673 | 1,792 | 5,016 | 5,424 | |||||||||||
FDIC Expense | 223 | 228 | 673 | 689 | |||||||||||
Other | 6,022 | 6,006 | 19,166 | 17,758 | |||||||||||
TOTAL NON-INTEREST EXPENSE | 22,297 | 22,284 | 68,191 | 66,949 | |||||||||||
INCOME BEFORE INCOME TAXES | 13,969 | 12,179 | 44,468 | 37,107 | |||||||||||
Provision for income taxes | 2,656 | 3,385 | 8,941 | 10,592 | |||||||||||
NET INCOME | 11,313 | 8,794 | 35,527 | 26,515 | |||||||||||
OTHER COMPREHENSIVE INCOME | |||||||||||||||
Change in unrealized gains/losses on securities, net of reclassifications and taxes | (3,702 | ) | (51 | ) | (15,585 | ) | 8,182 | ||||||||
Change in funded status of post retirement benefits, net of taxes | 281 | 184 | (2,021 | ) | 551 | ||||||||||
COMPREHENSIVE INCOME | $ | 7,892 | $ | 8,927 | $ | 17,921 | $ | 35,248 | |||||||
PER SHARE DATA | |||||||||||||||
Basic and Diluted Earnings per Share | $ | 0.92 | $ | 0.72 | $ | 2.90 | $ | 2.17 | |||||||
Weighted average number of shares outstanding (in thousands) | 12,255 | 12,224 | 12,253 | 12,222 | |||||||||||