First Financial Corporation reports 2019 results

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 EndedYear Ended
  December 31,September 30,December 31, December 31,December 31, 
  201920192018 20192018 
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 EndedYear Ended
  December 31,September 30,December 31,December 31,December 31,
  20192019201820192018
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, 
  201920192018 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 sold7,500   
Securities available-for-sale926,717  784,916 
Loans:   
Commercial1,584,447  1,166,352 
Residential682,077  443,670 
Consumer386,006  341,041 
 2,652,530  1,951,063 
(Less) plus:   
Net deferred loan costs3,860  2,925 
Allowance for loan losses(19,943) (20,436)
 2,636,447  1,933,552 
Restricted stock15,394  10,390 
Accrued interest receivable18,523  13,970 
Premises and equipment, net62,576  46,554 
Bank-owned life insurance94,251  86,186 
Goodwill78,592  34,355 
Other intangible assets10,643  1,197 
Other real estate owned3,625  603 
Other assets41,556  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 limits126,738  42,284 
Other interest-bearing deposits2,601,430  1,962,520 
 3,275,357  2,436,727 
Short-term borrowings80,119  69,656 
Other liabilities79,193  59,634 
TOTAL LIABILITIES3,465,642  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 20182,005  1,824 
Additional paid-in capital139,694  76,774 
Retained earnings492,055  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’ EQUITY557,608  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:     
Taxable15,191  16,942  14,325 
Tax-exempt7,674  7,455  7,391 
Other1,468  1,286  1,379 
TOTAL INTEREST INCOME149,121  126,224  114,195 
INTEREST EXPENSE:     
Deposits15,711  9,032  6,011 
Short-term borrowings1,105  501  245 
Other borrowings653  112  82 
TOTAL INTEREST EXPENSE17,469  9,645  6,338 
NET INTEREST INCOME131,652  116,579  107,857 
Provision for loan losses4,700  5,768  5,295 
NET INTEREST INCOME AFTER PROVISION     
FOR LOAN LOSSES126,952  110,811  102,562 
NON-INTEREST INCOME:     
Trust and financial services5,036  5,286  5,001 
Service charges and fees on deposit accounts11,795  11,733  11,895 
Other service charges and fees14,012  13,012  12,499 
Securities gains, net44  2  59 
Gain on sales of mortgage loans2,573  1,829  1,688 
Other4,992  6,344  4,796 
TOTAL NON-INTEREST INCOME38,452  38,206  35,938 
NON-INTEREST EXPENSE:     
Salaries and employee benefits54,827  50,658  50,116 
Occupancy expense7,600  7,030  6,897 
Equipment expense8,244  6,827  7,186 
FDIC Expense693  929  915 
Other32,984  25,845  23,633 
TOTAL NON-INTEREST EXPENSE104,348  91,289  88,747 
INCOME BEFORE INCOME TAXES61,056  57,728  49,753 
Provision for income taxes12,184  11,145  20,622 
NET INCOME48,872  46,583  29,131 
OTHER COMPREHENSIVE INCOME     
Change in unrealized gains/(losses) on securities, net of reclassifications and taxes20,998  (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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