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First Financial Corporation reports 2019 results

/EIN News/ -- 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

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