THFF - First Financial Corporation reports 3rd Quarter results

October, 25 2019 01:30 PM First Financial Corporation Indiana

TERRE HAUTE, Ind., Oct. 25, 2019 (GLOBE NEWSWIRE) -- First Financial Corporation (NASDAQ:THFF) today announced results for the third quarter of 2019. Net income for the three months ending September 30, 2019 was $12.3 million compared to $11.3 million for the same period of 2018. Diluted net income per common share of $0.93 compared to $0.92 for the same period of 2018. Return on assets for the three months ended September 30, 2019 was 1.33% compared to 1.53% for the three months ended September 30, 2018. These quarterly comparisons include the Corporation's acquisition of HopFed Bancorp, Hopkinsville, Kentucky 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 net income of $34.5 million for the nine months ended September 30, 2019 versus $35.5 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 nine months ended September 30, 2019 was $2.74 versus $2.90 for the comparable period of 2018. Return on assets for the nine months ended September 30, 2019 was 1.42% compared to 1.59% for the nine months ended September 30, 2018.

Average total loans for the third quarter of 2019 were $2.47 billion versus $1.93 billion for the comparable period in 2018, an increase of $545.3 million or 28.3%, primarily due to the acquisition. Total loans outstanding increased $726.7 million, or 37.42%, from $1.94 billion as of September 30, 2018 to $2.67 billion as of September 30, 2019. On a linked quarter basis, average total loans increased $492.4 million from $1.98 billion for the quarter ending June 30, 2019.

Average total deposits for the quarter ended September 30, 2019 were $3.02 billion versus $2.44 billion as of September 30, 2018, primarily due to the acquisition. Total deposits were $3.22 billion as of September 30, 2019 compared to $2.41 billion as of September 30, 2018. On a linked quarter basis, average total deposits increased $552.9 million from $2.46 billion for the quarter ending June 30, 2019.

Book Value per share was $40.59 at September 30, 2019 compared to $34.91 at September 30, 2018. Shareholders equity at September 30, 2019 was $556.6 million compared to $427.8 million on September 30, 2018. The corporation’s tangible common equity to tangible asset ratio was 12.08% at September 30, 2019, compared to 13.31% at September 30, 2018.

Net interest income for the third quarter of 2019 was $34.0 million compared to $28.8 million reported for the same period of 2018. The net interest margin for the quarter ended September 30, 2019 was 4.04% compared to 4.29% reported at September 30, 2018.

Nonperforming loans as of September 30, 2019 were $14.4 million versus $16.2 million as of September 30, 2018. The ratio of nonperforming loans to total loans and leases was 0.54% as of September 30, 2019 versus 0.83% as of September 30, 2018.

Net charge-offs were $2.0 million for the third quarter of 2019 compared to $1.2 million in the same period of 2018. The Corporation’s allowance for loan losses as of September 30, 2019 was $19.8 million compared to $20.3 million as of September 30, 2018. The allowance for loan losses as a percent of total loans was 0.74% as of September 30, 2019 compared to 1.05% at September 30, 2018. Loans acquired from HopFed are recorded at fair value and therefore do not have an allowance recorded.

Non-interest income for the three months ended September 30, 2019 and 2018 was $9.7 million and $8.9 million, respectively. This included a $268 thousand increase in service charges on deposits, a $318 thousand increase in other service fees, and a $247 thousand increase in gains on the sale of mortgages.

Non-interest expense for the three months ended September 30, 2019 was $27.4 million compared to $22.3 million in 2018, which includes $1.6 million of expenses related to the acquisition of HopFed Bancorp. Also included is a $1.9 million increase in salaries, which is primarily attributed to the acquisition. The Corporation’s efficiency ratio was 61.18% for the quarter ending September 30, 2019 versus 57.54% for the same period in 2018.

Income tax expense for the three months ended September 30, 2019 was $2.6 million versus $2.7 million for the same period in 2018. The effective tax rate for 2019 was 18.82% compared to 20.11% for 2018.

Norman L. Lowery, President and Chief Executive Officer, commented, “During the third quarter, we completed our acquisition of HopFed Bancorp and Heritage Bank. We are extremely excited about the potential growth opportunities provided by these 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
Six Months Ended

September 30,
June 30,
September 30,
September 30,
September 30,

2019
2019
2018
2019
2018
END OF PERIOD BALANCES





Assets
$
3,988,119

$
3,064,212

$
2,980,935

$
3,988,119

$
2,980,935

Deposits
$
3,220,122

$
2,463,018

$
2,407,061

$
3,220,122

$
2,407,061

Loans, including net deferred loan costs
$
2,668,476

$
2,010,198

$
1,941,780

$
2,668,476

$
1,941,780

Allowance for Loan Losses
$
19,799

$
20,250

$
20,301

$
19,799

$
20,301

Total Equity
$
556,582

$
477,820

$
427,774

$
556,582

$
427,774

Tangible Common Equity ^(a)
$
469,904

$
442,496

$
392,109

$
469,904

$
392,109







AVERAGE BALANCES





Total Assets
$
3,680,041

$
3,033,788

$
2,965,825

$
3,239,295

$
2,972,907

Earning Assets
$
3,468,396

$
2,836,110

$
2,785,582

$
3,043,010

$
2,786,588

Investments
$
995,092

$
851,723

$
857,624

$
899,188

$
866,694

Loans
$
2,471,346

$
1,978,991

$
1,926,051

$
2,140,890

$
1,916,567

Total Deposits
$
3,017,085

$
2,464,212

$
2,435,281

$
2,636,487

$
2,450,865

Interest-Bearing Deposits
$
2,914,816

$
2,032,886

$
2,010,467

$
2,315,658

$
2,026,813

Interest-Bearing Liabilities
$
113,019

$
39,269

$
49,808

$
74,737

$
46,274

Total Equity
$
491,586

$
471,156

$
427,530

$
471,136

$
420,654







INCOME STATEMENT DATA





Net Interest Income
$
33,999

$
29,752

$
28,827

$
93,177

$
86,984

Net Interest Income Fully Tax Equivalent ^(b)
$
35,054

$
30,721

$
29,841

$
96,176

$
89,988

Provision for Loan Losses
$
1,500

$
230

$
1,470

$
3,200

$
4,298

Non-interest Income
$
9,746

$
9,743

$
8,909

$
27,125

$
29,973

Non-interest Expense
$
27,409

$
23,492

$
22,297

$
74,594

$
68,191

Net Income
$
12,257

$
12,569

$
11,313

$
34,508

$
35,527







PER SHARE DATA





Basic and Diluted Net Income Per Common Share
$
0.93

$
1.02

$
0.92

$
2.74

$
2.9

Cash Dividends Declared Per Common Share
$
—

$
0.52

$
—

$
0.52

$
0.51

Book Value Per Common Share
$
40.59

$
38.88

$
34.91

$
40.59

$
34.91

Tangible Book Value Per Common Share ^(c)
$
30.81

$
35.46

$
31.98

$
34.27

$
32.00

Basic Weighted Average Common Shares Outstanding
13,141

12,290

12,255

12,574

12,253

(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
Six Months Ended

September 30,
June 30,
September 30,
September 30,
September 30,

2019
2019
2018
2019
2018
Return on average assets
1.33
%
1.66
%
1.53
%
1.42
%
1.59
%
Return on average common shareholder's equity
9.97
%
10.67
%
10.58
%
9.74
%
11.23
%
Efficiency ratio
61.18
%
58.06
%
57.54
%
60.50
%
56.84
%
Average equity to average assets
13.36
%
15.53
%
14.42
%
14.54
%
14.15
%
Net interest margin ^(a)
4.04
%
4.33
%
4.29
%
4.21
%
4.31
%
Net charge-offs to average loans and leases
0.32
%
0.49
%
0.26
%
0.24
%
0.27
%
Loan and lease loss reserve to loans and leases
0.74
%
1.01
%
1.05
%
0.74
%
1.05
%
Loan and lease loss reserve to nonperforming loans
137.45
%
133.14
%
125.35
%
137.45
%
125.35
%
Nonperforming loans to loans and leases
0.54
%
0.76
%
0.83
%
0.54
%
0.83
%
Tier 1 leverage
13.07
%
14.83
%
14.45
%
13.07
%
14.45
%
Risk-based capital - Tier 1
15.09
%
18.65
%
18.36
%
15.09
%
18.36
%
(a) Net interest margin is calculated on a tax equivalent basis.




Asset Quality
Three Months Ended
Six Months Ended

September 30,
June 30,
September 30,
September 30,
September 30,

2019
2019
2018
2019
2018
Accruing loans and leases past due 30-89 days
$
10,462

$
8,296

$
8,413

$
10,462

$
8,413

Accruing loans and leases past due 90 days or more
$
744

$
683

$
1,314

$
744

$
1,314

Nonaccrual loans and leases
$
9,533

$
9,985

$
10,035

$
9,533

$
10,035

Total troubled debt restructuring
$
4,127

$
4,541

$
4,847

$
4,127

$
4,847

Other real estate owned
$
3,717

$
498

$
520

$
3,717

$
520

Nonperforming loans and other real estate owned
$
18,121

$
15,707

$
16,716

$
18,121

$
16,716

Total nonperforming assets
$
21,725

$
19,040

$
20,139

$
21,725

$
20,139

Gross charge-offs
$
2,926

$
1,906

$
2,348

$
6,941

$
6,692

Recoveries
$
975

$
966

$
1,108

$
3,104

$
2,786

Net charge-offs/(recoveries)
$
1,951

$
940

$
1,240

$
3,837

$
3,906

CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands, except per share data)


September 30, 2019

December 31, 2018





(unaudited)
ASSETS



Cash and due from banks
$
80,193


$
74,388

Securities available-for-sale
939,944


784,916

Loans:



Commercial
1,583,002


1,166,352

Residential
708,056


443,670

Consumer
373,747


341,041


2,664,805


1,951,063

(Less) plus:



Net deferred loan costs
3,671


2,925

Allowance for loan losses
(19,799
)

(20,436
)

2,648,677


1,933,552

Restricted stock
13,624


10,390

Accrued interest receivable
18,735


13,970

Premises and equipment, net
70,592


46,554

Bank-owned life insurance
97,810


86,186

Goodwill
75,417


34,355

Other intangible assets
11,261


1,197

Other real estate owned
3,717


603

Other assets
28,149


22,607

TOTAL ASSETS
$
3,988,119


$
3,008,718





LIABILITIES AND SHAREHOLDERS’ EQUITY



Deposits:



Non-interest-bearing
$
560,537


$
431,923

Interest-bearing:



Certificates of deposit exceeding the FDIC insurance limits
130,270


42,284

Other interest-bearing deposits
2,529,315


1,962,520


3,220,122


2,436,727

Short-term borrowings
90,852


69,656

Other liabilities
74,788


59,634

TOTAL LIABILITIES
3,431,537


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-13,713,355 in 2019 and 12,278,295 in 2018
2,004


1,824

Additional paid-in capital
139,073


76,774

Retained earnings
484,834


456,716

Accumulated other comprehensive income/(loss)
145


(23,454
)
Less: Treasury shares at cost-2,342,111 in 2019 and 2,334,245 in 2018
(69,474
)

(69,159
)
TOTAL SHAREHOLDERS’ EQUITY
556,582


442,701

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
$
3,988,119


$
3,008,718

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,

2019

2018

2019

2018









(unaudited)
INTEREST INCOME:















Loans, including related fees
$
33,363


$
25,581


$
87,650


$
73,982

Securities:







Taxable
3,907


3,601


11,104


13,141

Tax-exempt
1,959


1,873


5,699


5,573

Other
366


320


1,017


959

TOTAL INTEREST INCOME
39,595


31,375


105,470


93,655

INTEREST EXPENSE:







Deposits
5,069


2,365


11,202


6,254

Short-term borrowings
305


167


786


354

Other borrowings
222


16


305


63

TOTAL INTEREST EXPENSE
5,596


2,548


12,293


6,671

NET INTEREST INCOME
33,999


28,827


93,177


86,984

Provision for loan losses
1,500


1,470


3,200


4,298

NET INTEREST INCOME AFTER PROVISION







FOR LOAN LOSSES
32,499


27,357


89,977


82,686

NON-INTEREST INCOME:







Trust and financial services
1,329


1,133


3,657


3,888

Service charges and fees on deposit accounts
3,227


3,002


8,586


8,733

Other service charges and fees
3,720


3,256


10,242


9,747

Securities gains, net
6


3


18


5

Gain on sales of mortgage loans
865


618


1,781


1,458

Other
599


897


2,841


6,142

TOTAL NON-INTEREST INCOME
9,746


8,909


27,125


29,973

NON-INTEREST EXPENSE:







Salaries and employee benefits
14,031


12,485


39,332


38,028

Occupancy expense
1,804


1,894


5,432


5,308

Equipment expense
2,117


1,673


5,685


5,016

FDIC Expense
155


223


494


673

Other
9,302


6,022


23,651


19,166

TOTAL NON-INTEREST EXPENSE
27,409


22,297


74,594


68,191

INCOME BEFORE INCOME TAXES
14,836


13,969


42,508


44,468

Provision for income taxes
2,579


2,656


8,000


8,941

NET INCOME
12,257


11,313


34,508


35,527

OTHER COMPREHENSIVE INCOME







Change in unrealized gains/(losses) on securities, net of reclassifications and taxes
4,124


(3,702
)

22,689


(15,585
)
Change in funded status of post retirement benefits, net of taxes
303


281


910


(2,021
)
COMPREHENSIVE INCOME
$
16,684


$
7,892


$
58,107


$
17,921

PER SHARE DATA







Basic and Diluted Earnings per Share
$
0.93


$
0.92


$
2.74


$
2.90

Weighted average number of shares outstanding (in thousands)
13,141


12,255


12,574


12,253

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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