THFF - First Financial Corporation reports 2018 results

February, 01 2019 10:00 AM First Financial Corporation Indiana

TERRE HAUTE, Ind., Feb. 01, 2019 (GLOBE NEWSWIRE) -- 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

Company Name:	First Financial Corporation Indiana
Stock Symbol:	THFF
Market:	NASDAQ
Website:	first-online.com

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