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| 8-K - 8-K - FIRST FINANCIAL CORP /IN/ | thff2018-12x31er8xk.htm |
News Release | |
FIRST FINANCIAL CORPORATION
One First Financial Plaza, Terre Haute, Indiana 47807 (812) 238-6000
For more information contact: | |
February 1, 2019 | Rodger A. McHargue at (812) 238-6334 |
First Financial Corporation reports 2018 results
TERRE HAUTE, INDIANA - First Financial Corporation (NASDAQ:THFF) today reported record net income of $46.6 million for the twelve months ended December 31, 2018 versus $29.1 million for the comparable period of 2017. Diluted net income per common share for the twelve months ended December 31, 2018 was $3.80 versus $2.38 for the comparable period of 2017. The increase in 2018 net income includes the 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. Return on assets for the twelve months ended December 31, 2018 was 1.57% compared to 0.98% for the twelve months ended December 31, 2017.
The Corporation also reported results for the fourth quarter of 2018. Net income increased to $11.1 million compared to $2.6 million for the same period of 2017. Diluted net income per common share increased to $0.90 from $0.21 for the comparable period of 2017 as 2017 results were impacted by the revaluation of the Corporation’s deferred tax assets resulting from the passage of the Tax Cuts and Jobs Act.
Average total loans for the fourth quarter of 2018 were $1.94 billion versus $1.87 billion for the comparable period in 2017, an increase of $65.9 million or 3.51%. Total loans outstanding were $1.95 billion as of December 31, 2018 compared to $1.91 billion as of December 31, 2017, a $47.2 million or 2.48% increase.
Average total deposits for the quarter ended December 31, 2018 were $2.45 billion versus $2.47 billion as of December 31, 2017. Total deposits were $2.44 billion as of December 31, 2018 compared to $2.46 billion as of December 31, 2017.
Net interest income for the fourth quarter of 2018 was $29.6 million compared to the $27.7 million reported for the same period of 2017. The net interest margin for the twelve months ended December 31, 2018 increased to 4.32% compared to 4.11% for the same period ending December 31, 2017.
The provision for loan losses for the three months ended December 31, 2018 was $1.5 million compared to $1.5 million for the fourth quarter of 2017. Net charge-offs were $1.3 million for the fourth quarter of 2018 compared to $1.4 million in the same period of 2017. The Corporation’s allowance for loan losses as of December 31, 2018 was $20.4 million compared to $19.9 million as of December 31, 2017. The allowance for loan losses as a percent of total loans was 1.05% as of December 31, 2018 compared to 1.04% as of December 31, 2017.
Nonperforming loans decreased 23.5% to $16.6 million as of December 31, 2018 versus $21.7 million as of December 31, 2017. The ratio of nonperforming loans to total loans and leases was 0.85% as of December 31, 2018 versus 1.14% as of December 31, 2017.
Non-interest income for the three months ended December 31, 2018 was $8.2 compared to $8.2 million for the period ending December 31, 2017. Non-interest income for the twelve months ending December 31, 2018 increased $2.3 million, or 6.31% to $38.2 million from $35.9 million for the same period of 2017.
Non-interest expense for the three months ended December 31, 2018 was $23.1 million compared to $21.8 million in 2017. The Corporation’s efficiency ratio was 59.49% for the quarter ending December 31, 2018 versus 58.05% for the same period in 2017. Non-interest expense for the twelve months ended December 31, 2018 was $91.3 million versus $88.7 million for the same period of 2017. The Corporation’s efficiency ratio for the twelve months ended December 31, 2018 was 57.49% versus 59.12% for same period 2017.
Book value per share was $36.06 at December 31, 2018 compared to $33.77 at December 31, 2017. Shareholders’ equity was $442.7 million compared to $413.6 million on December 31, 2017.
The company’s tangible common equity to tangible asset ratio was 13.69% at December 31, 2018, compared to 12.74% at December 31, 2017.
Norman L. Lowery, President and Chief Executive Officer, commented, “We are pleased with our record 2018 results. Our loan growth continues as has the growth in our net interest income. Asset quality remains strong.”
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 | Year Ended | |||||||||||||||
December 31, | September 30, | December 31, | December 31, | December 31, | ||||||||||||
2018 | 2018 | 2017 | 2018 | 2017 | ||||||||||||
END OF PERIOD BALANCES | ||||||||||||||||
Assets | $ | 3,008,718 | $ | 2,980,935 | $ | 3,000,668 | $ | 3,008,718 | $ | 3,000,668 | ||||||
Deposits | $ | 2,436,727 | $ | 2,407,061 | $ | 2,458,653 | $ | 2,436,727 | $ | 2,458,653 | ||||||
Loans, including net deferred loan costs | $ | 1,953,988 | $ | 1,941,780 | $ | 1,906,761 | $ | 1,953,988 | $ | 1,906,761 | ||||||
Allowance for Loan Losses | $ | 20,436 | $ | 20,301 | $ | 19,909 | $ | 20,436 | $ | 19,909 | ||||||
Total Equity | $ | 442,697 | $ | 427,774 | $ | 413,569 | $ | 442,697 | $ | 413,569 | ||||||
Tangible Common Equity (a) | $ | 407,145 | $ | 392,109 | $ | 377,584 | $ | 407,145 | $ | 377,584 | ||||||
AVERAGE BALANCES | ||||||||||||||||
Total Assets | $ | 2,976,724 | $ | 2,965,825 | $ | 3,006,198 | $ | 2,976,517 | $ | 2,984,547 | ||||||
Earning Assets | $ | 2,795,260 | $ | 2,785,582 | $ | 2,797,194 | $ | 2,788,756 | $ | 2,779,728 | ||||||
Investments | $ | 849,818 | $ | 857,624 | $ | 895,401 | $ | 862,475 | $ | 911,973 | ||||||
Loans | $ | 1,940,651 | $ | 1,926,051 | $ | 1,874,766 | $ | 1,922,588 | $ | 1,855,092 | ||||||
Total Deposits | $ | 2,448,301 | $ | 2,435,281 | $ | 2,473,385 | $ | 2,450,224 | $ | 2,442,137 | ||||||
Interest-Bearing Deposits | $ | 2,017,901 | $ | 2,010,467 | $ | 2,039,993 | $ | 2,024,585 | $ | 2,003,903 | ||||||
Interest-Bearing Liabilities | $ | 49,362 | $ | 49,808 | $ | 27,357 | $ | 47,046 | $ | 47,007 | ||||||
Total Equity | $ | 435,134 | $ | 427,530 | $ | 442,418 | $ | 424,274 | $ | 435,266 | ||||||
INCOME STATEMENT DATA | ||||||||||||||||
Net Interest Income | $ | 29,595 | $ | 28,827 | $ | 27,682 | $ | 116,579 | $ | 107,857 | ||||||
Net Interest Income Fully Tax Equivalent (b) | $ | 30,591 | $ | 29,841 | $ | 29,316 | $ | 120,579 | $ | 114,175 | ||||||
Provision for Loan Losses | $ | 1,470 | $ | 1,470 | $ | 1,474 | $ | 5,768 | $ | 5,295 | ||||||
Non-interest Income | $ | 8,233 | $ | 8,909 | $ | 8,236 | $ | 38,206 | $ | 35,938 | ||||||
Non-interest Expense | $ | 23,098 | $ | 22,297 | $ | 21,798 | $ | 91,289 | $ | 88,747 | ||||||
Net Income | $ | 11,056 | $ | 11,313 | $ | 2,616 | $ | 46,583 | $ | 29,131 | ||||||
PER SHARE DATA | ||||||||||||||||
Basic and Diluted Net Income Per Common Share | $ | 0.90 | $ | 0.92 | $ | 0.21 | $ | 3.80 | $ | 2.38 | ||||||
Cash Dividends Declared Per Common Share | $ | 0.51 | $ | — | $ | 2.01 | $ | 1.02 | $ | 2.51 | ||||||
Book Value Per Common Share | $ | 36.06 | $ | 34.91 | $ | 33.77 | $ | 36.06 | $ | 33.77 | ||||||
Tangible Book Value Per Common Share (c) | $ | 32.58 | $ | 31.98 | $ | 30.83 | $ | 33.16 | $ | 30.83 | ||||||
Basic Weighted Average Common Shares Outstanding | 12,265 | 12,255 | 12,234 | 12,256 | 12,225 | |||||||||||
(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 | Year Ended | |||||||||
December 31, | September 30, | December 31, | December 31, | December 31, | |||||||
2018 | 2018 | 2017 | 2018 | 2017 | |||||||
Return on average assets | 1.49 | % | 1.53 | % | 0.35 | % | 1.57 | % | 0.98 | % | |
Return on average common shareholder's equity | 9.93 | % | 10.58 | % | 2.37 | % | 10.98 | % | 6.69 | % | |
Efficiency ratio | 59.49 | % | 57.54 | % | 58.05 | % | 57.49 | % | 59.12 | % | |
Average equity to average assets | 14.96 | % | 14.42 | % | 14.72 | % | 14.25 | % | 14.58 | % | |
Net interest margin (a) | 4.35 | % | 4.29 | % | 4.20 | % | 4.32 | % | 4.11 | % | |
Net charge-offs to average loans and leases | 0.28 | % | 0.26 | % | 0.29 | % | 0.27 | % | 0.22 | % | |
Loan and lease loss reserve to loans and leases | 1.05 | % | 1.05 | % | 1.04 | % | 1.05 | % | 1.04 | % | |
Loan and lease loss reserve to nonperforming loans | 123.27 | % | 125.35 | % | 84.50 | % | 123.27 | % | 84.50 | % | |
Nonperforming loans to loans and leases | 0.85 | % | 0.83 | % | 1.14 | % | 0.85 | % | 1.14 | % | |
Tier 1 leverage | 14.59 | % | 14.45 | % | 13.31 | % | 14.59 | % | 13.31 | % | |
Risk-based capital - Tier 1 | 18.48 | % | 18.36 | % | 17.01 | % | 18.48 | % | 17.01 | % | |
(a) Net interest margin is calculated on a tax equivalent basis.
Asset Quality | Three Months Ended | Year Ended | ||||||||||||||
December 31, | September 30, | December 31, | December 31, | December 31, | ||||||||||||
2018 | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Accruing loans and leases past due 30-89 days | $ | 11,388 | $ | 8,413 | $ | 13,358 | $ | 11,388 | $ | 13,358 | ||||||
Accruing loans and leases past due 90 days or more | $ | 798 | $ | 1,314 | $ | 1,403 | $ | 798 | $ | 1,403 | ||||||
Nonaccrual loans and leases | $ | 10,974 | $ | 10,035 | $ | 13,245 | $ | 10,974 | $ | 13,245 | ||||||
Total troubled debt restructuring | $ | 4,806 | $ | 4,847 | $ | 7,034 | $ | 4,806 | $ | 7,034 | ||||||
Other real estate owned | $ | 603 | $ | 520 | $ | 1,880 | $ | 603 | $ | 1,880 | ||||||
Nonperforming loans and other real estate owned | $ | 17,181 | $ | 16,716 | $ | 23,562 | $ | 17,181 | $ | 23,562 | ||||||
Total nonperforming assets | $ | 20,439 | $ | 20,139 | $ | 38,167 | $ | 20,439 | $ | 38,167 | ||||||
Gross charge-offs | $ | 2,139 | $ | 2,348 | $ | 2,434 | $ | 8,831 | $ | 8,762 | ||||||
Recoveries | $ | 804 | $ | 1,108 | $ | 1,067 | $ | 3,590 | $ | 4,603 | ||||||
Net charge-offs/(recoveries) | $ | 1,335 | $ | 1,240 | $ | 1,367 | $ | 5,241 | $ | 4,159 | ||||||
CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands, except per share data)
December 31, 2018 | December 31, 2017 | ||||||
(unaudited) | |||||||
ASSETS | |||||||
Cash and due from banks | $ | 74,388 | $ | 74,107 | |||
Federal funds sold | — | — | |||||
Securities available-for-sale | 784,916 | 814,931 | |||||
Loans: | |||||||
Commercial | 1,166,352 | 1,139,490 | |||||
Residential | 443,670 | 436,143 | |||||
Consumer | 341,041 | 327,976 | |||||
1,951,063 | 1,903,609 | ||||||
(Less) plus: | |||||||
Net deferred loan costs | 2,925 | 3,152 | |||||
Allowance for loan losses | (20,436 | ) | (19,909 | ) | |||
1,933,552 | 1,886,852 | ||||||
Restricted stock | 10,390 | 10,379 | |||||
Accrued interest receivable | 13,970 | 12,913 | |||||
Premises and equipment, net | 46,554 | 48,272 | |||||
Bank-owned life insurance | 86,186 | 85,016 | |||||
Goodwill | 34,355 | 34,355 | |||||
Other intangible assets | 1,197 | 1,630 | |||||
Other real estate owned | 603 | 1,880 | |||||
Other assets | 22,607 | 30,333 | |||||
TOTAL ASSETS | $ | 3,008,718 | $ | 3,000,668 | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
Deposits: | |||||||
Non-interest-bearing | $ | 431,923 | $ | 425,001 | |||
Interest-bearing: | |||||||
Certificates of deposit exceeding the FDIC insurance limits | 42,284 | 43,178 | |||||
Other interest-bearing deposits | 1,962,520 | 1,990,474 | |||||
2,436,727 | 2,458,653 | ||||||
Short-term borrowings | 69,656 | 57,686 | |||||
FHLB advances | — | — | |||||
Other liabilities | 59,638 | 70,760 | |||||
TOTAL LIABILITIES | 2,566,021 | 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-12,278,295 in 2018 and 12,246,464 in 2017 | 1,824 | 1,822 | |||||
Additional paid-in capital | 76,774 | 75,624 | |||||
Retained earnings | 456,712 | 420,275 | |||||
Accumulated other comprehensive loss | (23,454 | ) | (14,704 | ) | |||
Less: Treasury shares at cost-2,334,245 in 2018 and 2,348,856 in 2017 | (69,159 | ) | (69,448 | ) | |||
TOTAL SHAREHOLDERS’ EQUITY | 442,697 | 413,569 | |||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 3,008,718 | $ | 3,000,668 | |||
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Dollar amounts in thousands, except per share data)
Years Ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
(unaudited) | |||||||||||
INTEREST INCOME: | |||||||||||
Loans, including related fees | $ | 100,541 | $ | 91,100 | $ | 86,128 | |||||
Securities: | |||||||||||
Taxable | 16,942 | 14,325 | 14,506 | ||||||||
Tax-exempt | 7,455 | 7,391 | 7,269 | ||||||||
Other | 1,286 | 1,379 | 1,477 | ||||||||
TOTAL INTEREST INCOME | 126,224 | 114,195 | 109,380 | ||||||||
INTEREST EXPENSE: | |||||||||||
Deposits | 9,032 | 6,011 | 4,159 | ||||||||
Short-term borrowings | 501 | 245 | 134 | ||||||||
Other borrowings | 112 | 82 | 114 | ||||||||
TOTAL INTEREST EXPENSE | 9,645 | 6,338 | 4,407 | ||||||||
NET INTEREST INCOME | 116,579 | 107,857 | 104,973 | ||||||||
Provision for loan losses | 5,768 | 5,295 | 3,300 | ||||||||
NET INTEREST INCOME AFTER PROVISION | |||||||||||
FOR LOAN LOSSES | 110,811 | 102,562 | 101,673 | ||||||||
NON-INTEREST INCOME: | |||||||||||
Trust and financial services | 5,286 | 5,001 | 5,208 | ||||||||
Service charges and fees on deposit accounts | 11,733 | 11,895 | 10,530 | ||||||||
Other service charges and fees | 13,012 | 12,499 | 12,307 | ||||||||
Securities gains, net | 2 | 59 | 34 | ||||||||
Insurance commissions | 144 | 74 | 2,346 | ||||||||
Gain on sale of certain assets and liabilities of insurance brokerage operation | — | — | 12,822 | ||||||||
Gain on sales of mortgage loans | 1,829 | 1,688 | 1,842 | ||||||||
Other | 6,200 | 4,722 | 1,842 | ||||||||
TOTAL NON-INTEREST INCOME | 38,206 | 35,938 | 46,931 | ||||||||
NON-INTEREST EXPENSE: | |||||||||||
Salaries and employee benefits | 50,658 | 50,116 | 50,091 | ||||||||
Occupancy expense | 7,030 | 6,897 | 6,865 | ||||||||
Equipment expense | 6,827 | 7,186 | 7,300 | ||||||||
FDIC Expense | 929 | 915 | 1,300 | ||||||||
Other | 25,845 | 23,633 | 24,752 | ||||||||
TOTAL NON-INTEREST EXPENSE | 91,289 | 88,747 | 90,308 | ||||||||
INCOME BEFORE INCOME TAXES | 57,728 | 49,753 | 58,296 | ||||||||
Provision for income taxes | 11,145 | 20,622 | 19,883 | ||||||||
NET INCOME | 46,583 | 29,131 | 38,413 | ||||||||
OTHER COMPREHENSIVE INCOME | |||||||||||
Change in unrealized gains/(losses) on securities, net of reclassifications and taxes | (8,363 | ) | 3,335 | (10,130 | ) | ||||||
Change in funded status of post retirement benefits, net of taxes | (387 | ) | (3,875 | ) | 5,367 | ||||||
COMPREHENSIVE INCOME | $ | 37,833 | $ | 28,591 | $ | 33,650 | |||||
PER SHARE DATA | |||||||||||
Basic and Diluted Earnings per Share | $ | 3.80 | $ | 2.38 | $ | 3.12 | |||||
Weighted average number of shares outstanding (in thousands) | 12,256 | 12,225 | 12,317 | ||||||||