-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QAmJTX/aPZaw+ryppAN3Sp2Blr1uOmUayVHanTJaCm9cRHRp98hYtBKdSWqeoZgf r1ER05QRxrKfzMtg40zdxw== 0000714562-96-000005.txt : 19960814 0000714562-96-000005.hdr.sgml : 19960814 ACCESSION NUMBER: 0000714562-96-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960813 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIRST FINANCIAL CORP /IN/ CENTRAL INDEX KEY: 0000714562 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 351546989 STATE OF INCORPORATION: IN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-16759 FILM NUMBER: 96609466 BUSINESS ADDRESS: STREET 1: ONE FIRST FINANCIAL PLZ CITY: TERRE HAUTE STATE: IN ZIP: 47807 BUSINESS PHONE: 8122386000 MAIL ADDRESS: STREET 1: ONE FIRST FINANCIAL PLAZA CITY: TERRE HAUTE STATE: IN ZIP: 47807 FORMER COMPANY: FORMER CONFORMED NAME: TERRE HAUTE FIRST CORP DATE OF NAME CHANGE: 19850808 10-Q 1 6/30/96 FORM 10-Q FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 QUARTERLY REPORT UNDER SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 FIRST FINANCIAL CORPORATION June 30, 1996 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 QUARTERLY REPORT UNDER SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended June 30, 1996 Commission File Number 0-16759 FIRST FINANCIAL CORPORATION (Exact name of registrant as specified in its charter) INDIANA 35-1546989 (State or other jurisdiction (I.R.S. Employer incorporation or organization) Identification No.) One First Financial Plaza, Terre Haute, IN 47807 (Address of principal executive office) (Zip Code) (812)-238-6000 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No . As of June 30, 1996 were outstanding 6,055,080 shares without par value, of the registrant. 1 FIRST FINANCIAL CORPORATION FORM 10-Q INDEX Page No. PART I. Financial Information Item 1. Financial Statements: Consolidated Statements of Condition............................3 Consolidated Statements of Income...............................4 Consolidated Statements of Cash Flows...........................5 Notes to Consolidated Financial Statements......................6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.............7 PART II. Other Information: Item 4. Submission of Matters to a Vote of Security Holders.........................................10 Signatures.................................................................11 2 FIRST FINANCIAL CORPORATION CONSOLIDATED STATEMENTS OF CONDITION
June 30, December 31, 1996 1995 (Dollar amounts in thousands) Cash and due from banks $48,022 $62,747 Federal funds sold and securities purchased under agreements to resell 1,050 - Investments: Available-For-Sale 521,186 515,409 Loans: Commercial, financial and agricultural 164,799 170,179 Real estate - construction 19,035 22,134 Real estate - mortgage 445,767 430,673 Installment 186,361 197,726 Lease financing 3,579 4,151 819,541 824,863 Less: Unearned income 1,019 1,196 Allowance for possible loan losses 10,086 10,087 808,436 813,580 Accrued interest receivable 13,164 12,597 Premises and equipment 25,090 23,927 Other assets 16,136 15,365 TOTAL ASSETS 1,433,084 1,443,625 LIABILITIES AND SHAREHOLDERS' EQUITY Deposit: Noninterest-bearing $114,858 $128,672 Interest-bearing: Certificates of deposit of $100,000 or more 180,947 143,009 Other interest-bearing deposits 783,048 801,867 1,078,853 1,073,548 Short-term borrowings: Federal funds purchased and securities sold under agreements to repurchase 33,827 68,778 Treasury tax and loan open-end note 7,032 3,872 Advances from Federal Home Loan Bank 119,124 95,296 159,983 167,946 Other liabilities 10,642 15,352 Long-term debt 6,644 6,651 Long-term advances from Federal Home Loan Bank 48,245 50,070 TOTAL LIABILITIES 1,304,367 1,313,567 Shareholders' equity: Common stock, $.125 stated value per share; authorized 10,000,000 shares; issued 6,103,762 shares for 1996 and 6,104,424 shares for 1995 763 727.00 including treasury shares of 48,682 for 1996 and 44,510 for 1995 Additional capital 42,327 33,150 Retained earnings 88,604 91,751 Unrealized gains(losses) on AFS securities, net of tax -1,508 6,368 Less treasury shares, at cost -1,469 -1,938 TOTAL SHAREHOLDERS' EQUITY 128,717 130,058 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,433,084 $1,443,625 The accompanying notes are an integral part of the consolidated financial statements.
3 FIRST FINANCIAL CORPORATION CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended Six Months ended June 30, June 30, 1996 1995 1996 1995 (Amounts in thousands, except per share amounts) INTEREST INCOME: Loans $17,947 $17,949 $36,073 $34,959 Investment securities: Taxable 7,102 4,401 13,756 8,867 Tax-exempt 1,559 1,789 3,181 3,549 8,661 6,190 16,937 12,416 Other interest income 46 173 115 364 TOTAL INTEREST INCOME 26,654 24,312 53,125 47,739 INTEREST EXPENSE: Deposits 10,589 10,624 21,024 20,556 Other 2,686 1,691 5,197 3,591 TOTAL INTEREST EXPENSE 13,275 12,315 26,221 24,147 NET INTEREST INCOME 13,379 11,997 26,904 23,592 Provision for possible loan losses 778 540 1,408 1,080 NET INTEREST INCOME AFTER PROVISION FOR POSSIBLE LOAN LOSSES 12,601 11,457 25,496 22,512 OTHER INCOME Trust department income 409 361 799 676 Service charges on deposit accounts 324 301 635 590 Other service charges and fees 708 784 1,523 1,562 Investment securities gains (losses) 148 -30 154 -24 Other 245 335 566 626 1,834 1,751 3,677 3,430 OTHER EXPENSES Salaries and employee benefits 4,903 4,532 9,708 8,860 Occupancy expense 751 646 1,558 1,279 Equipment expense 609 507 1,115 1,003 Data processing expense 152 489 673 1,024 FDIC insurance expense 10 544 15 1,087 Other 2,505 2,386 4,799 4,839 8,930 9,104 17,868 18,092 INCOME BEFORE INCOME TAXES 5,505 4,104 11,305 7,850 Income Tax Expense 1,609 1,117 3,407 2,143 NET INCOME 3,896 2,987 7,898 5,707 EARNINGS PER SHARE: $0.64 $0.49 $1.31 $0.94 Weighted average number of shares outstanding 6,055 6,060 6,051 6,068 The accompanying notes are an integral part of the consolidated financial statements.
4 FIRST FINANCIAL CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended June 30, 1996 1995 CASH FLOWS FROM OPERATING ACTIVITIERS: Net income $7,898 $5,707 Adjustment to reconcile net income to net cash provided by operating activities: Provision for possible loan losses 1,407 1,080 Provision for depreciation and amortization 1,036 1,169 Net increase in accrued interest receivable -567 -287 Other, net 1,680 -1,175 NET CASH PROVIDED BY OPERATING ACTIVITIES 8,094 6,494 CASH FLOWS FROM INVESTING ACTIVITIES: Sales and maturities of investment securities: Maturities of held-to-maturity securities 0 31,787 Sales and maturities of available-for-sale securities 68,909 20,466 Purchases of investment securities: Held-to-maturity security 0 -12,961 Available-for-sale security -86,814 -61,837 Loans made to customers, net of repayments 3,939 -29,109 Net decrease in federal funds sold -1,050 17,870 Additions to premises and equipment -2,171 -1,623 NET CASH USED BY INVESTING ACTIVITIES -17,187 -35,407 CASH FLOWS FROM FINANCING ACTIVITIES: Net increase from sales and redemptions of certificates of deposit 33,970 83,065 Net decrease in other deposits -28,665 -38,837 Net decrease in short-term borrowings -7,963 -13,494 Cash dividends -1,611 -1,546 Proceeds from reissuance of Treasury Stock 600 525 Purchase of treasury stock -131 -1,312 Net decrease from long-term debt -1,825 -2,801 Repayments of long-term debt -7 -6 NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES -5,632 25,594 NET DECREASE IN CASH AND CASH EQUIVALENTS -14,725 -3,319 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 62,747 51,947 CASH AND CASH EQUIVALENTS, END OF PERIOD $48,022 $48,628 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the period for interest $26,360 $22,498 Income taxes paid $3,782 $2,527 The accompanying notes are an integral part of the consolidated financial statements.
5 FIRST FINANCIAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. The accompanying June 30, 1996 and 1995 consolidated financial statements are unaudited. The December 31, 1995, consolidated statement of condition amounts are as reported in the Corporation's 1995 annual report. The significant accounting policies followed by First Financial Corporation and its subsidiaries for interim financial reporting are consistent with the accounting policies followed for annual financial reporting. All adjustments which are in the opinion of management necessary for a fair statement of the results for the periods reported have been included in the accompanying consolidated financial statements and are of a normal recurring nature. 2. The Statements of Financial Standards No's 114 and 118 (SFAS 114), "Accounting by Creditors for Impairment of a Loan" and "Accounting by Creditors for Impairment of a Loan-Income Recognition and Disclosures" requires that certain impaired loans be measured based either on the present value of expected future cash flows discounted at the loan's effective interest rate, or the loan's observable market price or the fair value of the collateral if the loan is collateral dependent. The adoption of SFAS 114 did not result in additional provisions for loan losses primarily because the majority of impaired loan valuations continue to be based on the fair value of collateral. The provision for loan and lease losses charged to expense is based upon each affiliate's past loan and lease loss experience and an evaluation of potential losses in the current loan and lease portfolio, including the evaluation of impaired loans under SFAS 114. A loan is considered to be impaired when based upon current information and events, it is probable that Corporation will be unable to collect all amounts due according to the contractual terms of the loan. Impairments are primarily measured based on the fair value of the loans' collateral. Impairment losses are included in the provision for loan and lease losses. SFAS 114 does not apply to large groups of smaller balance homogeneous loans that are collectively evaluated for impairment, except for those loans restructured under a troubled debt restructuring. Loans collectively evaluated for impairment include certain smaller balance commercial loans, consumer loans, residential real estate loans, and credit card loans, and are not included in the data that follows. The following table summarizes impaired loan information. $(thousands)...................................................... June 30 1996 Impaired loans........................................................$ 4,955 Impaired loans with related reserve for loan losses calculated under SFAS 114............................................................. 4,955 Impaired loans with no realized reserve for loan losses calculated under SFAS 114....................................................... 0 June 30 1996 Average impaired loans................................................$ 4,359 Interest income recognized on impaired loans.......................... 153 Cash basis interest income recognized on impaired loans............... 0 6 FIRST FINANCIAL CORPORATION ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations The purpose of the review is to point out key factors in First Financial's recent performance, compared with earlier periods. The review should be read in conjunction with the financial statements beginning on Page 3 of this report. All figures are for the consolidated entities. It is presumed the readers of these financial statements and the following narrative have previously read the Corporation's annual report for 1995. At the May 21, 1996 meeting, the Board of Directors approved a 5% stock dividend to shareholders of record June 18, 1996. This stock dividend is reflected in the accompanying financial statements. Earnings Analysis Summary of Operating Results The Corporation reported earnings of $7.9 million for the first six month which reflect a 38% increase above the same period for 1995, while the second quarter net income of $3.9 million reflects a 30% increase over the second quarter of 1995. Earnings per share results of $1.31 and $0.64 for the six and three month period respectively, reflect similar increases from the respective prior year's $0.94 and $0.49 per share. Net Interest Income First Financial Corporation's primary source of earnings is net interest income, which is the difference between the interest earned on loans and other investments and the interest incurred for deposits and other sources of funds. In the first six months of 1996 net interest income increased $3,312,000 or 14.0% as compared to the same period of 1995. This increase was the result of continued growth in earning assets and an increase in the net interest margin from 4.22% in 1995 to 4.33% in 1996. For the second quarter of 1996 a net interest income increased $1,382,000 or 11.5% as compared to the same period of 1995, the net interest margin decreased slightly from 4.27% in 1995 to 4.25% in 1996. This decrease was caused by a decreased second quarter earnings rate of 8.2% compared to 8.3% of the same quarter of 1995. Other Income Other income for the six months of 1996, as compared to the same period of 1995, increased $247,000 or 7.2%. The major contributing factor was the increase in investment securities gains of $154,000 in 1996 compared to $24,000 loss as in the same period of 1995. This also affected second quarter other income which increased $83,000 or 4.7% from same quarter of 1995. There were no other significant changes. 7 Other Expenses Other expenses for the first six months of 1996, as compared to the same period of 1995, decreased $224,000 or 1.2%. Although the employee benefits and occupancy expense increased by $848,000 and $279,000 respectively for the first six months of 1996 compared to the same period a year earlier, these increase were offset by the favorable FDIC insurance adjustment which decreased by $1,072,000 or 98.6% and data processing expense by $351,000 or 34.3%. The Corporation changed data processing service from a facilitics management firm to an in house operation which impacted data processing expenses favorably. Other expenses for the three months ended June 30, 1996 were down by $174,000 or 1.9%. These decreases are primarily the result of the favorable FDIC insurance adjustment and the changing data processing services. Allowance for Possible Loan Losses The Corporation's provision for possible loan losses totaled $1,408,000 for the first half of 1996 compared to $1,080,000 for the same period a year earlier. At June 30, 1996, the allowance for possible loan losses was 1.23% of total loans, net of unearned income. This compares with an allowance of 1.22% at December 31, 1995. Net charge-offs for the first six months of 1996 were $1,409,000 compared to $324,000 for the same period of 1995. The ratio of net charge-offs to average loans outstanding for the last five years ended December 31, 1995, was .34%. With this experience and based on management's review of the portfolio, management believes the allowance of $10,086,000 at June 30, 1996 is adequate. Underperforming Assets The following is a listing of all categories of non-performing assets which includes potential problem loans at June 30, 1996 and December 31, 1995. 6-30-96 12-31-95 Nonaccrual Loans $ 4,626 $2,782 Restructured Loans 0 185 $ 4,626 $2,967 Past due > 90 days $ 5,117 $5,809 Land sold on contract 1,322 1,218 Total non-performing asset $11,065 $9,994 8 The ratio of the allowance for loan losses as a percentage of non- performing loans was 104% at June 30, 1996 which represents a decrease of 10% from December 31, 1995. This decrease is the result of an increase in the amount of non-accrual loans amounting to $1,844,000 or 16%. This increase was offset by decreased past loans due 90 days or more by $692,000 or 11.9%. There was no one significant factor which affected this increase but on a consolidated basis each category of loans increased a small amount and also some of loans were reclassified from loans past due 90 days or more to the non-accrual category. The following loan categories comprise significant components of the non-performing loans at June 30, 1996: Non-Accrual Loans 1. 1-4 family residential: $500 thousand or 11% of non-accrual loans 2. Commercial loans: $1.7 million or 38% of non-accrual loans 3. Non farm nonresidential properties: $729 thousand or 16% of non-accrual loans Past due > 90 days 1. 1-4 family residential: $1.5 million or 30% of past due loans 2. Commercial loans: $1.7 million or 34% of past due loans 3. Non farm nonresidential properties: $703 thousand or 14% of past due loans There are no material industry concentrations within the non-performing loans. In addition to the above under-performing loans, certain loans are felt by management to be impaired for reasons other than the current repayment status. Such reasons may include but not be limited to previous payment history, bankruptcy proceedings, industry concerns, or information related to a specific borrower that may result in a negative future event to that borrower. The Corporation had $2.2 million of doubtful loans which are still in accrual status. Liquidity and Interest Rate Sensitivity The Corporation's objective in liquidity management is to manage the assets and liabilities to meet the needs of borrowers while allowing for the possibility of deposit withdrawals. Part of the strategy in maintaining a satisfactory level of liquidity is to structure a maturity schedule for the investment and loan portfolios that will allow for fluctuations in the availability of funds. Within the next twelve months $184,450,000 of investments will mature which represents 35.9% of the investment portfolio. Investments with maturities of one to five years comprise an additional 42.9% of the investment portfolio. The investment maturities along with the normal run-off of loans coupled with a large supply of unpledged securities for repurchase agreements, federal funds purchased, additional negotiable certificates of deposits, and other available borrowings affords the Corporation flexibility in funding loan growth and meeting other market opportunities as they present themselves. During the next twelve months the Corporation will either reprice or mature a total of $611,593,000 of assets. In this same period a total of $572,540,000 of liabilities will either be repriced or mature. Thus, the ratio of rate sensitive assets to rate sensitive liabilities as measured on a static basis, is 107% as June 30, 1996. The Corporation will continue to monitor this relationship to determine if it is appropriate to maintain a satisfactory level of net interest margin, while considering interest rate sensitivity. Capital Adequacy As of June 30, 1996, the Corporation's leverage ratio was 9.14% which compared 9.30% at December 31, 1995. At June 30, 1996, the Corporation's total capital which includes tier II capital was 16.34% compared to 15.58% at December 31, 1995. 9 FIRST FINANCIAL CORPORATION PART II OTHER INFORMATION ITEM 4. Submission of Matters to a Vote of Security Holders (a) The Annual meeting of the shareholders of the Corporation was held on April 17 1996. (b) The following were elected Directors of the Corporation: Walter A. Bledsoe, B. Guille Cox, Jr., Thomas T. Dinkel, Welby M. Frantz, Anton Hulman George, Mari Hulman George, Gregory L. Gibson, Max Gibson, Norman L. Lowery, William Niemeyer, Patrick O'Leary, John W. Ragle, Chapman J.Root II, Donald E. Smith, and Virginia Smith. (c) The shareholders unanimously approved the annual report of the Corporation and unanimously approved the actions of the Directors and Officers of the Corporation for the fiscal year ended December 31, 1995. No other information is required to be filed under Part II of this form. 10 FIRST FINANCIAL CORPORATION FORM 10-Q SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. FIRST FINANCIAL CORPORATION (Registrant) Date: August 12, 1996 By (Signature) Donald E. Smith, President Date: August 12, 1996 By (Signature) John W. Perry, Secretary Date: August 12, 1996 By (Signature) Michael A. Carty, Treasurer 11 EX-27 2 6/30/96 FDS SCHEDULE
9 1000 6-MOS DEC-31-1996 JUN-30-1996 48,022 0 1,050 0 521,186 521,186 521,186 818,522 10,086 1,433,084 1,078,853 159,983 10,642 54,889 0 0 763 127,954 1,433,084 36,073 16,937 115 53,125 21,024 26,221 26,904 1,408 154 17,868 11,305 11,305 0 0 7,898 1.31 1.31 4.25 4,626 5,117 0 2,200 10,087 1,805 396 10,086 10,086 0 0
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