THFF - First Financial Corporation reports 2019 results

February, 06 2020 01:30 PM First Financial Corporation Indiana

TERRE HAUTE, Ind., Feb. 06, 2020 (GLOBE NEWSWIRE) -- 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

For more information contact:
Rodger A. McHargue at (812) 238-6334

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

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