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| 8-K - 8-K - FIRST FINANCIAL CORP /IN/ | thff2019-12x31er8xk.htm |
News Release | |
FIRST FINANCIAL CORPORATION
One First Financial Plaza, Terre Haute, Indiana 47807 (812) 238-6000
For more information contact: | |
February 6, 2020 | Rodger A. McHargue at (812) 238-6334 |
First Financial Corporation reports 2019 results
TERRE HAUTE, INDIANA - First Financial Corporation (NASDAQ:THFF) today announced results for the fourth quarter of 2019. Net income for the three months ending December 31, 2019 was $14.4 million compared to $11.0 million for the same period of 2018. Diluted net income per common share of $1.05 compared to $0.90 for the same period of 2018. Return on average assets for the three months ended December 31, 2019 was 1.42% compared to 1.49% for the three months ended December 31, 2018. These quarterly comparisons include the Corporation's acquisition of HopFed Bancorp, Hopkinsville, Kentucky, which occurred on July 27, 2019. Total assets acquired were $926 million, including $675 million in loans. The acquisition also included $736 million in deposits. Acquisition related expenses from the transaction are also included in the expenses in each quarterly comparison.
The Corporation further reported record net income for the second straight year of $48.9 million for the twelve months ended December 31, 2019 versus $46.6 million for the comparable period of 2018. The Corporation's 2018 results included a recovery of a security previously written down for other than temporary impairment which contributed $6.9 million to pre-tax income. Diluted net income per common share for the twelve months ended December 31, 2019 was $3.80 versus $3.80 for the comparable period of 2018. Return on average assets for the twelve months ended December 31, 2019 was 1.42% compared to 1.57% for the twelve months ended December 31, 2018.
Average total loans for the fourth quarter of 2019 were $2.66 billion versus $1.94 billion for the comparable period in 2018, an increase of $717 million or 37.1%. Total loans outstanding increased $702.4 million, or 35.95%, from $1.95 billion as of December 31, 2018 to $2.66 billion as of December 31, 2019. On a linked quarter basis, average total loans increased $187.2 million from the quarter ending September 30, 2019.
Average total deposits for the quarter ended December 31, 2019 were $3.28 billion versus $2.45 billion as of December 31, 2018. Total deposits were $3.28 billion as of December 31, 2019 compared to $2.44 billion as of December 31, 2018. On a linked quarter basis, average total deposits increased $262.8 million from the quarter ending September 30, 2019.
Book Value per share was $40.58 at December 31, 2019 compared to $36.06 at December 31, 2018. Shareholders equity at December 31, 2019 was $557.6 million compared to $442.7 million on December 31, 2018. The Corporation’s tangible common equity to tangible asset ratio was 11.91% at December 31, 2019, compared to 13.69% at December 31, 2018.
Net interest income for the fourth quarter of 2019 was $38.5 million compared to $29.6 million reported for the same period of 2018. The tax-equivalent net interest margin for the quarter ended December 31, 2019 was 4.37% compared to 4.35% reported at December 31, 2018.
Nonperforming loans as of December 31, 2019 were $15.3 million versus $16.6 million as of December 31, 2018. The ratio of nonperforming loans to total loans and leases was 0.58% as of December 31, 2019 versus 0.85% as of December 31, 2018.
Net charge-offs were $1.4 million for the fourth quarter of 2019 compared to $1.3 million in the same period of 2018. The Corporation’s allowance for loan losses as of December 31, 2019 was $19.9 million compared to $20.4 million as of December 31, 2018. The allowance for loan losses as a percent of total loans was 0.75% as of December 31, 2019 compared to 1.05% at December 31, 2018. The decrease is primarily due to acquired loans being recorded at fair value.
Non-interest income for the three months ended December 31, 2019 and 2018 was $11.3 million and $8.2 million, respectively. This includes a $257 thousand increase in other service fees, and a $421 thousand increase in gains on the sale of mortgages. Also included was a $1.8 million gain on bank owned life insurance.
Non-interest expense for the three months ended December 31, 2019 was $29.8 million compared to $23.1 million in 2018. This increase includes $4.9 million of expenses related to the acquisition and operations of the former Heritage Bank USA. The Corporation’s efficiency ratio was 58.43% for the quarter ending December 31, 2019 versus 59.49% for the same period in 2018.
Income tax expense for the three months ended December 31, 2019 was $4.2 million versus $2.2 million for the same period in 2018. The effective tax rate for 2019 was 19.95% compared to 19.31% for 2018.
Norman L. Lowery, President and Chief Executive Officer, commented “We are very pleased to have record net income for the second year in a row. We continue to grow our loans and deposits, and our asset quality remains good. We are excited about the growth opportunities in our new markets.”
First Financial Corporation is the holding company for First Financial Bank N.A. in Indiana, Illinois, Kentucky, and Tennessee, and The Morris Plan Company of Terre Haute in Indiana.
Three Months Ended | Year Ended | |||||||||||||||
December 31, | September 30, | December 31, | December 31, | December 31, | ||||||||||||
2019 | 2019 | 2018 | 2019 | 2018 | ||||||||||||
END OF PERIOD BALANCES | ||||||||||||||||
Assets | $ | 4,023,250 | $ | 3,988,119 | $ | 3,008,718 | $ | 4,023,250 | $ | 3,008,718 | ||||||
Deposits | $ | 3,275,357 | $ | 3,220,122 | $ | 2,436,727 | $ | 3,275,357 | $ | 2,436,727 | ||||||
Loans, including net deferred loan costs | $ | 2,656,390 | $ | 2,668,476 | $ | 1,953,988 | $ | 2,656,390 | $ | 1,953,988 | ||||||
Allowance for Loan Losses | $ | 19,943 | $ | 19,799 | $ | 20,436 | $ | 19,943 | $ | 20,436 | ||||||
Total Equity | $ | 557,608 | $ | 556,582 | $ | 442,697 | $ | 557,608 | $ | 442,697 | ||||||
Tangible Common Equity (a) | $ | 468,373 | $ | 469,904 | $ | 407,145 | $ | 468,373 | $ | 407,145 | ||||||
AVERAGE BALANCES | ||||||||||||||||
Total Assets | $ | 4,041,287 | $ | 3,680,041 | $ | 2,976,724 | $ | 3,439,793 | $ | 2,976,517 | ||||||
Earning Assets | $ | 3,662,390 | $ | 3,468,396 | $ | 2,795,260 | $ | 3,197,855 | $ | 2,788,756 | ||||||
Investments | $ | 1,000,488 | $ | 995,092 | $ | 849,818 | $ | 924,513 | $ | 862,475 | ||||||
Loans | $ | 2,658,582 | $ | 2,471,346 | $ | 1,940,651 | $ | 2,270,313 | $ | 1,922,588 | ||||||
Total Deposits | $ | 3,279,859 | $ | 3,017,085 | $ | 2,448,301 | $ | 2,797,330 | $ | 2,450,224 | ||||||
Interest-Bearing Deposits | $ | 3,072,566 | $ | 2,914,816 | $ | 2,017,901 | $ | 2,504,885 | $ | 2,024,585 | ||||||
Interest-Bearing Liabilities | $ | 118,605 | $ | 113,019 | $ | 49,362 | $ | 85,704 | $ | 47,046 | ||||||
Total Equity | $ | 575,908 | $ | 491,586 | $ | 435,134 | $ | 497,329 | $ | 424,274 | ||||||
INCOME STATEMENT DATA | ||||||||||||||||
Net Interest Income | $ | 38,475 | $ | 33,999 | $ | 29,595 | $ | 131,652 | $ | 116,579 | ||||||
Net Interest Income Fully Tax Equivalent (b) | $ | 39,594 | $ | 35,054 | $ | 30,591 | $ | 135,770 | $ | 120,579 | ||||||
Provision for Loan Losses | $ | 1,500 | $ | 1,500 | $ | 1,470 | $ | 4,700 | $ | 5,768 | ||||||
Non-interest Income | $ | 11,327 | $ | 9,746 | $ | 8,233 | $ | 38,452 | $ | 38,206 | ||||||
Non-interest Expense | $ | 29,754 | $ | 27,409 | $ | 23,098 | $ | 104,348 | $ | 91,289 | ||||||
Net Income | $ | 14,364 | $ | 12,257 | $ | 11,056 | $ | 48,872 | $ | 46,583 | ||||||
PER SHARE DATA | ||||||||||||||||
Basic and Diluted Net Income Per Common Share | $ | 1.05 | $ | 0.93 | $ | 0.90 | $ | 3.80 | $ | 3.80 | ||||||
Cash Dividends Declared Per Common Share | $ | — | $ | — | $ | 0.51 | $ | 1.04 | $ | 1.02 | ||||||
Book Value Per Common Share | $ | 40.58 | $ | 40.59 | $ | 36.06 | $ | 40.58 | $ | 36.06 | ||||||
Tangible Book Value Per Common Share (c) | $ | 35.46 | $ | 30.81 | $ | 32.58 | $ | 34.08 | $ | 33.16 | ||||||
Basic Weighted Average Common Shares Outstanding | 13,726 | 13,141 | 12,265 | 12,865 | 12,256 | |||||||||||
(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%.
(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, | |||||||
2019 | 2019 | 2018 | 2019 | 2018 | |||||||
Return on average assets | 1.42 | % | 1.33 | % | 1.49 | % | 1.42 | % | 1.57 | % | |
Return on average common shareholder's equity | 9.98 | % | 9.97 | % | 9.93 | % | 9.83 | % | 10.98 | % | |
Efficiency ratio | 58.43 | % | 61.18 | % | 59.49 | % | 59.89 | % | 57.49 | % | |
Average equity to average assets | 14.25 | % | 13.36 | % | 14.96 | % | 14.46 | % | 14.25 | % | |
Net interest margin (a) | 4.37 | % | 4.04 | % | 4.35 | % | 4.25 | % | 4.32 | % | |
Net charge-offs to average loans and leases | 0.20 | % | 0.32 | % | 0.28 | % | 0.23 | % | 0.27 | % | |
Loan and lease loss reserve to loans and leases | 0.75 | % | 0.74 | % | 1.05 | % | 0.75 | % | 1.05 | % | |
Loan and lease loss reserve to nonperforming loans | 130.01 | % | 137.45 | % | 123.27 | % | 130.01 | % | 123.27 | % | |
Nonperforming loans to loans and leases | 0.58 | % | 0.54 | % | 0.85 | % | 0.58 | % | 0.85 | % | |
Tier 1 leverage | 12.04 | % | 13.07 | % | 14.59 | % | 12.04 | % | 14.59 | % | |
Risk-based capital - Tier 1 | 15.51 | % | 15.09 | % | 18.48 | % | 15.51 | % | 18.48 | % | |
(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, | ||||||||||||
2019 | 2019 | 2018 | 2019 | 2018 | ||||||||||||
Accruing loans and leases past due 30-89 days | $ | 24,040 | $ | 10,462 | $ | 11,388 | $ | 24,040 | $ | 11,388 | ||||||
Accruing loans and leases past due 90 days or more | $ | 1,610 | $ | 744 | $ | 798 | $ | 1,610 | $ | 798 | ||||||
Nonaccrual loans and leases | $ | 9,535 | $ | 9,533 | $ | 10,974 | $ | 9,535 | $ | 10,974 | ||||||
Total troubled debt restructuring | $ | 4,194 | $ | 4,127 | $ | 4,806 | $ | 4,194 | $ | 4,806 | ||||||
Other real estate owned | $ | 3,625 | $ | 3,717 | $ | 603 | $ | 3,625 | $ | 603 | ||||||
Nonperforming loans and other real estate owned | $ | 18,964 | $ | 18,121 | $ | 17,181 | $ | 18,964 | $ | 17,181 | ||||||
Total nonperforming assets | $ | 22,583 | $ | 21,725 | $ | 20,439 | $ | 22,583 | $ | 20,439 | ||||||
Gross charge-offs | $ | 3,456 | $ | 2,926 | $ | 2,139 | $ | 10,673 | $ | 8,831 | ||||||
Recoveries | $ | 2,100 | $ | 975 | $ | 804 | $ | 5,480 | $ | 3,590 | ||||||
Net charge-offs/(recoveries) | $ | 1,356 | $ | 1,951 | $ | 1,335 | $ | 5,193 | $ | 5,241 | ||||||
CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands, except per share data)
December 31, 2019 | December 31, 2018 | ||||||
(unaudited) | |||||||
ASSETS | |||||||
Cash and due from banks | $ | 127,426 | $ | 74,388 | |||
Federal funds sold | 7,500 | — | |||||
Securities available-for-sale | 926,717 | 784,916 | |||||
Loans: | |||||||
Commercial | 1,584,447 | 1,166,352 | |||||
Residential | 682,077 | 443,670 | |||||
Consumer | 386,006 | 341,041 | |||||
2,652,530 | 1,951,063 | ||||||
(Less) plus: | |||||||
Net deferred loan costs | 3,860 | 2,925 | |||||
Allowance for loan losses | (19,943 | ) | (20,436 | ) | |||
2,636,447 | 1,933,552 | ||||||
Restricted stock | 15,394 | 10,390 | |||||
Accrued interest receivable | 18,523 | 13,970 | |||||
Premises and equipment, net | 62,576 | 46,554 | |||||
Bank-owned life insurance | 94,251 | 86,186 | |||||
Goodwill | 78,592 | 34,355 | |||||
Other intangible assets | 10,643 | 1,197 | |||||
Other real estate owned | 3,625 | 603 | |||||
Other assets | 41,556 | 22,607 | |||||
TOTAL ASSETS | $ | 4,023,250 | $ | 3,008,718 | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
Deposits: | |||||||
Non-interest-bearing | $ | 547,189 | $ | 431,923 | |||
Interest-bearing: | |||||||
Certificates of deposit exceeding the FDIC insurance limits | 126,738 | 42,284 | |||||
Other interest-bearing deposits | 2,601,430 | 1,962,520 | |||||
3,275,357 | 2,436,727 | ||||||
Short-term borrowings | 80,119 | 69,656 | |||||
Other liabilities | 79,193 | 59,634 | |||||
TOTAL LIABILITIES | 3,465,642 | 2,566,017 | |||||
Shareholders’ equity | |||||||
Common stock, $.125 stated value per share; | |||||||
Authorized shares-40,000,000 | |||||||
Issued shares-16,055,466 in 2019 and 14,612,540 in 2018 | |||||||
Outstanding shares-13,741,825 in 2019 and 12,278,295 in 2018 | 2,005 | 1,824 | |||||
Additional paid-in capital | 139,694 | 76,774 | |||||
Retained earnings | 492,055 | 456,716 | |||||
Accumulated other comprehensive income/(loss) | (7,501 | ) | (23,454 | ) | |||
Less: Treasury shares at cost-2,313,641 in 2019 and 2,334,245 in 2018 | (68,645 | ) | (69,159 | ) | |||
TOTAL SHAREHOLDERS’ EQUITY | 557,608 | 442,701 | |||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 4,023,250 | $ | 3,008,718 | |||
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Dollar amounts in thousands, except per share data)
Years Ended December 31, | |||||||||||
2019 | 2018 | 2017 | |||||||||
(unaudited) | |||||||||||
INTEREST INCOME: | |||||||||||
Loans, including related fees | $ | 124,788 | $ | 100,541 | $ | 91,100 | |||||
Securities: | |||||||||||
Taxable | 15,191 | 16,942 | 14,325 | ||||||||
Tax-exempt | 7,674 | 7,455 | 7,391 | ||||||||
Other | 1,468 | 1,286 | 1,379 | ||||||||
TOTAL INTEREST INCOME | 149,121 | 126,224 | 114,195 | ||||||||
INTEREST EXPENSE: | |||||||||||
Deposits | 15,711 | 9,032 | 6,011 | ||||||||
Short-term borrowings | 1,105 | 501 | 245 | ||||||||
Other borrowings | 653 | 112 | 82 | ||||||||
TOTAL INTEREST EXPENSE | 17,469 | 9,645 | 6,338 | ||||||||
NET INTEREST INCOME | 131,652 | 116,579 | 107,857 | ||||||||
Provision for loan losses | 4,700 | 5,768 | 5,295 | ||||||||
NET INTEREST INCOME AFTER PROVISION | |||||||||||
FOR LOAN LOSSES | 126,952 | 110,811 | 102,562 | ||||||||
NON-INTEREST INCOME: | |||||||||||
Trust and financial services | 5,036 | 5,286 | 5,001 | ||||||||
Service charges and fees on deposit accounts | 11,795 | 11,733 | 11,895 | ||||||||
Other service charges and fees | 14,012 | 13,012 | 12,499 | ||||||||
Securities gains, net | 44 | 2 | 59 | ||||||||
Gain on sales of mortgage loans | 2,573 | 1,829 | 1,688 | ||||||||
Other | 4,992 | 6,344 | 4,796 | ||||||||
TOTAL NON-INTEREST INCOME | 38,452 | 38,206 | 35,938 | ||||||||
NON-INTEREST EXPENSE: | |||||||||||
Salaries and employee benefits | 54,827 | 50,658 | 50,116 | ||||||||
Occupancy expense | 7,600 | 7,030 | 6,897 | ||||||||
Equipment expense | 8,244 | 6,827 | 7,186 | ||||||||
FDIC Expense | 693 | 929 | 915 | ||||||||
Other | 32,984 | 25,845 | 23,633 | ||||||||
TOTAL NON-INTEREST EXPENSE | 104,348 | 91,289 | 88,747 | ||||||||
INCOME BEFORE INCOME TAXES | 61,056 | 57,728 | 49,753 | ||||||||
Provision for income taxes | 12,184 | 11,145 | 20,622 | ||||||||
NET INCOME | 48,872 | 46,583 | 29,131 | ||||||||
OTHER COMPREHENSIVE INCOME | |||||||||||
Change in unrealized gains/(losses) on securities, net of reclassifications and taxes | 20,998 | (8,363 | ) | 3,335 | |||||||
Change in funded status of post retirement benefits, net of taxes | (5,045 | ) | (387 | ) | (3,875 | ) | |||||
COMPREHENSIVE INCOME | $ | 64,825 | $ | 37,833 | $ | 28,591 | |||||
PER SHARE DATA | |||||||||||
Basic and Diluted Earnings per Share | $ | 3.80 | $ | 3.80 | $ | 2.38 | |||||
Weighted average number of shares outstanding (in thousands) | 12,865 | 12,256 | 12,225 | ||||||||