First Financial Corporation reports 2017 results
TERRE HAUTE, Ind., Feb. 06, 2018 (GLOBE NEWSWIRE) -- First Financial Corporation (NASDAQ:THFF) today announced results for the fourth quarter of 2017. Net income for the fourth quarter of 2017 was $2.6 million compared to $8.3 million for the same period of 2016 and diluted net income per common share was $0.21 compared to $0.68 for the same period of 2016. These decreases were primarily driven by the revaluation of the Corporation’s deferred tax assets as a result of the passage in the fourth quarter of the Tax Cuts and Jobs Act (“TCJA”) resulting in a non-cash tax expense of $6.3 million. Excluding the impact of the TCJA, adjusted net income, a non-GAAP measure, for the fourth quarter would have been $8.9 million.
The Corporation further reported net income of $29.1 million for the twelve months ended December 31, 2017 versus $38.4 million for the comparable period of 2016, which included an after-tax gain on the sale of the Corporation’s insurance subsidiary of $5.8 million. Diluted net income per common share was $2.38 for the twelve months ended December 31, 2017 versus $3.12 for the comparable period of 2016. Return on assets for the twelve months ended December 31, 2017 was .98% compared to 1.30% for the twelve months ended December 31, 2016. The TCJA also reduced 12-month net income by $6.3 million or $0.52 per share. Excluding the impact of the TCJA, a non-GAAP measure, full-year adjusted net income would have been $35.4 million and adjusted earnings per common share would have been $2.90.
Norman L. Lowery, President and Chief Executive Officer, commented, “We are pleased with our 2017 performance. During 2017 we continued to experience loan growth, which is driving increased interest income. Similar to others in our industry, our fourth quarter and year end results were negatively impacted by the Tax Cuts and Jobs Act, which was signed into law in late December.”
Book value per share was $33.77 at December 31, 2017 compared to $33.92 at December 31, 2016. Shareholders’ equity was $413.6 million compared to $414.4 million on December 31, 2016. Dividends paid during 2017 totaled $2.50 per share.
Average total loans for the fourth quarter of 2017 were $1.87 billion, an increase of $44.1 million or 2.41%, versus the $1.83 billion for the comparable period in 2016. Total loans outstanding increased $67.6 million, or 3.68% to $1.90 billion as of December 31, 2017 from $1.84 billion as of December 31, 2016.
Average total deposits for the quarter ended December 31, 2017 increased $9.1 million or .37% to $2.47 billion versus $2.46 billion as of December 31, 2016. Total deposits outstanding increased $30.1 million or 1.24% to $2.46 billion from the $2.43 billion as of December 31, 2016. On a linked quarter basis, average deposits increased $58.8 million from $2.41 billion for the quarter ending September 30, 2017.
The company’s tangible common equity to tangible asset ratio was 12.74% at December 31, 2017, compared to 12.80% at December 31, 2016.
Net interest income for the fourth quarter of 2017 increased $1.3 million or 4.83% to $27.7 million compared to the $26.4 million reported for the same period of 2016. The net interest margin for the twelve months ended December 31, 2017 increased to 4.11% compared to the 4.04% for the same period ending December 31, 2016.
The provision for loan losses for the three months ended December 31, 2017 was $1.5 million compared to $939 thousand for the fourth quarter of 2016. Net charge-offs were $1.4 million for the fourth quarter of 2017 compared to $1.2 million in the same period of 2016. The Corporation’s allowance for loan losses as of December 31, 2017 was $19.9 million compared to $18.8 million as of December 31, 2016. The allowance for loan losses as a percent of total loans was 1.04% as of December 31, 2017 compared to 1.02% as of December 31, 2016.
Nonperforming loans decreased 4.4% to $21.7 million as of December 31, 2017 versus $22.7 million as of December 31, 2016. The ratio of nonperforming loans to total loans and leases was 1.14% as of December 31, 2017 versus 1.23% as of December 31, 2016.
Non-interest income for the three months ended December 31, 2017 was $8.2 compared to $8.4 million as of December 31, 2016. On a year-over-year basis, service charges and fees on deposit accounts collected during the fourth quarter increased $406 thousand to $3.1 million.
Non-interest expense for the three months ended December 31, 2017 decreased $397 thousand to $21.8 million compared to $22.2 million for the same period of 2016. The Corporation’s efficiency ratio was 59.12% for the twelve months ending December 31, 2017 versus 57.13% for the same period in 2016.
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, | ||||||||||||
| 2017 | 2017 | 2016 | 2017 | 2016 | ||||||||||||
| END OF PERIOD BALANCES | ||||||||||||||||
| Assets | $ | 3,000,668 | $ | 2,982,342 | $ | 2,988,527 | $ | 3,000,668 | $ | 2,988,527 | ||||||
| Deposits | $ | 2,458,653 | $ | 2,453,411 | $ | 2,428,526 | $ | 2,458,653 | $ | 2,428,526 | ||||||
| Loans, including net deferred loan costs | $ | 1,906,761 | $ | 1,866,564 | $ | 1,839,180 | $ | 1,906,761 | $ | 1,839,180 | ||||||
| Allowance for Loan Losses | $ | 19,909 | $ | 19,802 | $ | 18,773 | $ | 19,909 | $ | 18,773 | ||||||
| Total Equity | $ | 413,569 | $ | 443,558 | $ | 414,395 | $ | 413,569 | $ | 414,395 | ||||||
| Tangible Common Equity (a) | $ | 377,584 | $ | 407,459 | $ | 377,931 | $ | 377,584 | $ | 377,931 | ||||||
| AVERAGE BALANCES | ||||||||||||||||
| Total Assets | $ | 3,006,198 | $ | 2,974,616 | $ | 2,970,031 | $ | 2,984,547 | $ | 2,963,380 | ||||||
| Earning Assets | $ | 2,797,194 | $ | 2,775,366 | $ | 2,778,369 | $ | 2,779,728 | $ | 2,748,165 | ||||||
| Investments | $ | 895,401 | $ | 912,439 | $ | 923,957 | $ | 911,973 | $ | 940,490 | ||||||
| Loans | $ | 1,874,766 | $ | 1,856,726 | $ | 1,830,628 | $ | 1,855,092 | $ | 1,792,609 | ||||||
| Total Deposits | $ | 2,473,385 | $ | 2,414,561 | $ | 2,464,246 | $ | 2,442,137 | $ | 2,426,203 | ||||||
| Interest-Bearing Deposits | $ | 2,039,993 | $ | 1,993,839 | $ | 1,895,665 | $ | 2,003,903 | $ | 1,875,226 | ||||||
| Interest-Bearing Liabilities | $ | 27,357 | $ | 58,755 | $ | 35,531 | $ | 47,007 | $ | 46,556 | ||||||
| Total Equity | $ | 442,418 | $ | 440,998 | $ | 405,261 | $ | 435,266 | $ | 415,032 | ||||||
| INCOME STATEMENT DATA | ||||||||||||||||
| Net Interest Income | $ | 27,682 | $ | 27,108 | $ | 26,406 | $ | 107,857 | $ | 104,973 | ||||||
| Net Interest Income Fully Tax Equivalent (b) | $ | 29,316 | $ | 28,691 | $ | 27,956 | $ | 114,175 | $ | 111,156 | ||||||
| Provision for Loan Losses | $ | 1,474 | $ | 1,185 | $ | 939 | $ | 5,295 | $ | 3,300 | ||||||
| Non-interest Income | $ | 8,236 | $ | 8,540 | $ | 8,428 | $ | 35,938 | $ | 46,931 | ||||||
| Non-interest Expense | $ | 21,798 | $ | 22,284 | $ | 22,195 | $ | 88,747 | $ | 90,308 | ||||||
| Net Income | $ | 2,616 | $ | 8,794 | $ | 8,344 | $ | 29,131 | $ | 38,413 | ||||||
| PER SHARE DATA | ||||||||||||||||
| Basic and Diluted Net Income Per Common Share | $ | 0.21 | $ | 0.72 | $ | 0.68 | $ | 2.38 | $ | 3.12 | ||||||
| Cash Dividends Declared Per Common Share | $ | 2.01 | $ | — | $ | 0.50 | $ | 2.51 | $ | 0.50 | ||||||
| Book Value Per Common Share | $ | 33.77 | $ | 36.29 | $ | 33.92 | $ | 33.77 | $ | 33.92 | ||||||
| Tangible Book Value Per Common Share (c) | $ | 30.83 | $ | 33.12 | $ | 30.94 | $ | 30.83 | $ | 30.94 | ||||||
| Basic Weighted Average Common Shares Outstanding | 12,234 | 12,224 | 12,201 | 12,225 | 12,317 | |||||||||||
(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 65%.
(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, | |||||||
| 2017 | 2017 | 2016 | 2017 | 2016 | |||||||
| Return on average assets | 0.35 | % | 1.18 | % | 1.12 | % | 0.98 | % | 1.30 | % | |
| Return on average common shareholder's equity | 2.37 | % | 7.98 | % | 8.24 | % | 6.69 | % | 9.26 | % | |
| Efficiency ratio | 58.05 | % | 59.85 | % | 61.00 | % | 59.12 | % | 57.13 | % | |
| Average equity to average assets | 14.72 | % | 14.83 | % | 13.65 | % | 14.58 | % | 14.01 | % | |
| Net interest margin | 4.20 | % | 4.14 | % | 4.01 | % | 4.11 | % | 4.04 | % | |
| Net charge-offs to average loans and leases | 0.29 | % | 0.23 | % | 0.27 | % | 0.22 | % | 0.25 | % | |
| Loan and lease loss reserve to loans and leases | 1.04 | % | 1.06 | % | 1.02 | % | 1.04 | % | 1.02 | % | |
| Loan and lease loss reserve to nonperforming loans and other real estate | 84.50 | % | 86.93 | % | 74.50 | % | 84.50 | % | 74.50 | % | |
| Nonperforming loans to loans and leases | 1.14 | % | 1.22 | % | 1.23 | % | 1.14 | % | 1.23 | % | |
| Tier 1 leverage | 13.31 | % | 14.05 | % | 13.39 | % | 13.31 | % | 13.39 | % | |
| Risk-based capital - Tier 1 | 17.01 | % | 18.04 | % | 17.43 | % | 17.01 | % | 17.43 | % | |
| Asset Quality | Three Months Ended | Year Ended | ||||||||||||||
| December 31, | September 30, | December 31, | December 31, | December 31, | ||||||||||||
| 2017 | 2017 | 2016 | 2017 | 2016 | ||||||||||||
| Accruing loans and leases past due 30-89 days | $ | 13,358 | $ | 6,864 | $ | 10,757 | $ | 13,358 | $ | 10,757 | ||||||
| Accruing loans and leases past due 90 days or more | $ | 1,403 | $ | 1,389 | $ | 610 | $ | 1,403 | $ | 610 | ||||||
| Nonaccrual loans and leases | $ | 13,245 | $ | 13,965 | $ | 13,492 | $ | 13,245 | $ | 13,492 | ||||||
| Total troubled debt restructuring | $ | 7,034 | $ | 7,424 | $ | 8,565 | $ | 7,034 | $ | 8,565 | ||||||
| Other real estate owned | $ | 1,880 | $ | 1,866 | $ | 2,531 | $ | 1,880 | $ | 2,531 | ||||||
| Nonperforming loans and other real estate owned | $ | 23,562 | $ | 24,644 | $ | 25,198 | $ | 23,562 | $ | 25,198 | ||||||
| Total nonperforming assets | $ | 38,167 | $ | 38,336 | $ | 37,567 | $ | 38,167 | $ | 37,567 | ||||||
| Gross charge-offs | $ | 2,434 | $ | 1,964 | $ | 2,743 | $ | 8,762 | $ | 8,949 | ||||||
| Recoveries | $ | 1,067 | $ | 901 | $ | 1,500 | $ | 4,603 | $ | 4,473 | ||||||
| Net charge-offs/(recoveries) | $ | 1,367 | $ | 1,063 | $ | 1,243 | $ | 4,159 | $ | 4,476 | ||||||
| CONSOLIDATED BALANCE SHEETS (Dollar amounts in thousands, except per share data) | |||||||
| December 31, 2017 |
December 31, 2016 |
||||||
| (unaudited) | |||||||
| ASSETS | |||||||
| Cash and due from banks | $ | 74,107 | $ | 75,012 | |||
| Federal funds sold | — | 6,952 | |||||
| Securities available-for-sale | 814,931 | 853,725 | |||||
| Loans: | |||||||
| Commercial | 1,139,490 | 1,106,182 | |||||
| Residential | 436,143 | 423,911 | |||||
| Consumer | 327,976 | 305,881 | |||||
| 1,903,609 | 1,835,974 | ||||||
| (Less) plus: | |||||||
| Net deferred loan costs | 3,152 | 3,206 | |||||
| Allowance for loan losses | (19,909 | ) | (18,773 | ) | |||
| 1,886,852 | 1,820,407 | ||||||
| Restricted stock | 10,379 | 10,359 | |||||
| Accrued interest receivable | 12,913 | 12,311 | |||||
| Premises and equipment, net | 48,272 | 49,240 | |||||
| Bank-owned life insurance | 85,016 | 83,737 | |||||
| Goodwill | 34,355 | 34,355 | |||||
| Other intangible assets | 1,630 | 2,109 | |||||
| Other real estate owned | 1,880 | 2,531 | |||||
| Other assets | 30,333 | 37,789 | |||||
| TOTAL ASSETS | $ | 3,000,668 | $ | 2,988,527 | |||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
| Deposits: | |||||||
| Non-interest-bearing | $ | 425,001 | $ | 564,092 | |||
| Interest-bearing: | |||||||
| Certificates of deposit exceeding the FDIC insurance limits | 43,178 | 43,759 | |||||
| Other interest-bearing deposits | 1,990,474 | 1,820,675 | |||||
| 2,458,653 | 2,428,526 | ||||||
| Short-term borrowings | 57,686 | 80,989 | |||||
| FHLB advances | — | 132 | |||||
| Other liabilities | 70,760 | 64,485 | |||||
| TOTAL LIABILITIES | 2,587,099 | 2,574,132 | |||||
| Shareholders’ equity | |||||||
| Common stock, $.125 stated value per share; | |||||||
| Authorized shares-40,000,000 | |||||||
| Issued shares-14,595,320 in 2017 and 14,578,758 in 2016 | |||||||
| Outstanding shares-12,246,464 in 2017 and 12,216,712 in 2016 | 1,822 | 1,820 | |||||
| Additional paid-in capital | 75,624 | 74,525 | |||||
| Retained earnings | 420,275 | 421,826 | |||||
| Accumulated other comprehensive loss | (14,704 | ) | (14,164 | ) | |||
| Less: Treasury shares at cost-2,348,856 in 2017 and 2,362,046 in 2016 | (69,448 | ) | (69,612 | ) | |||
| TOTAL SHAREHOLDERS’ EQUITY | 413,569 | 414,395 | |||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 3,000,668 | $ | 2,988,527 | |||
| CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (Dollar amounts in thousands, except per share data) | |||||||||||
| Years Ended December 31, | |||||||||||
| 2017 | 2016 | 2015 | |||||||||
| (unaudited) | |||||||||||
| INTEREST INCOME: | |||||||||||
| Loans, including related fees | $ | 91,100 | $ | 86,128 | $ | 84,022 | |||||
| Securities: | |||||||||||
| Taxable | 14,325 | 14,506 | 15,815 | ||||||||
| Tax-exempt | 7,391 | 7,269 | 7,194 | ||||||||
| Other | 1,379 | 1,477 | 1,645 | ||||||||
| TOTAL INTEREST INCOME | 114,195 | 109,380 | 108,676 | ||||||||
| INTEREST EXPENSE: | |||||||||||
| Deposits | 6,011 | 4,159 | 3,934 | ||||||||
| Short-term borrowings | 245 | 134 | 70 | ||||||||
| Other borrowings | 82 | 114 | 165 | ||||||||
| TOTAL INTEREST EXPENSE | 6,338 | 4,407 | 4,169 | ||||||||
| NET INTEREST INCOME | 107,857 | 104,973 | 104,507 | ||||||||
| Provision for loan losses | 5,295 | 3,300 | 4,700 | ||||||||
| NET INTEREST INCOME AFTER PROVISION | |||||||||||
| FOR LOAN LOSSES | 102,562 | 101,673 | 99,807 | ||||||||
| NON-INTEREST INCOME: | |||||||||||
| Trust and financial services | 5,001 | 5,208 | 5,586 | ||||||||
| Service charges and fees on deposit accounts | 11,895 | 10,530 | 10,145 | ||||||||
| Other service charges and fees | 12,499 | 12,307 | 11,798 | ||||||||
| Securities gains/(losses), net | 59 | 34 | 17 | ||||||||
| Insurance commissions | 74 | 2,346 | 6,945 | ||||||||
| Gain\(loss) on sale of certain assets and liabilities of insurance brokerage operation | — | 12,822 | — | ||||||||
| Gain on sales of mortgage loans | 1,688 | 1,842 | 1,998 | ||||||||
| Other | 4,722 | 1,842 | 2,690 | ||||||||
| TOTAL NON-INTEREST INCOME | 35,938 | 46,931 | 39,179 | ||||||||
| NON-INTEREST EXPENSE: | |||||||||||
| Salaries and employee benefits | 51,322 | 52,730 | 60,109 | ||||||||
| Occupancy expense | 6,897 | 6,865 | 6,978 | ||||||||
| Equipment expense | 7,186 | 7,300 | 6,991 | ||||||||
| FDIC Expense | 915 | 1,300 | 1,769 | ||||||||
| Other | 22,427 | 22,113 | 22,551 | ||||||||
| TOTAL NON-INTEREST EXPENSE | 88,747 | 90,308 | 98,398 | ||||||||
| INCOME BEFORE INCOME TAXES | 49,753 | 58,296 | 33,643 | ||||||||
| Provision for income taxes | 20,622 | 19,883 | 10,392 | ||||||||
| NET INCOME | 29,131 | 38,413 | 23,251 | ||||||||
| OTHER COMPREHENSIVE INCOME | |||||||||||
| Change in unrealized gains/losses on securities, net of reclassifications and taxes | 3,335 | (10,130 | ) | (1,225 | ) | ||||||
| Change in funded status of post retirement benefits, net of taxes | (3,875 | ) | 5,367 | 6,353 | |||||||
| COMPREHENSIVE INCOME | $ | 28,591 | $ | 33,650 | $ | 28,379 | |||||
| PER SHARE DATA | |||||||||||
| Basic and Diluted Earnings per Share | $ | 2.38 | $ | 3.12 | $ | 2.35 | |||||
| Weighted average number of shares outstanding (in thousands) | 12,225 | 12,317 | 12,836 | ||||||||
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