EX-99.1 2 thff8k2014-6x30exx99x1.htm EXHIBIT THFF 8K 2014-6-30 EX- 99-1


 
News Release
 
FIRST FINANCIAL CORPORATION
One First Financial Plaza, Terre Haute, Indiana 47807 (812) 238-6000
 
 
For more information contact:
July 29, 2014
Rodger A. McHargue at (812) 238-6334
 
First Financial Corporation reports 2nd Quarter results
 
TERRE HAUTE, INDIANA - First Financial Corporation (NASDAQ:THFF) today announced results for the second quarter of 2014. Net income increased 31.68% to $8.5 million compared to $6.4 million for the same period of 2013. Diluted net income per common share increased 31.25% to $0.63 from $0.48 for the comparable period of 2013.

The Corporation further reported net income of $16.3 million for the six months ended June 30, 2014 versus $14.1 million for the comparable period of 2013, an increase of 15.42%. Diluted net income per common share also increased 15.09% to $1.22 for the six months ended June 30, 2014 versus $1.06 for the comparable period of 2013. Return on assets for the six months ended June 30, 2014 was 1.08% compared to 0.96% for the six months ended June 30, 2013.

Norman L. Lowery, President and Chief Executive Officer, commented, “We are pleased with the continued growth in our net interest income and our exceptional credit quality.”

Earnings for the six month period ended June 30, 2014 were negatively impacted by a non-cash provision for state income tax expense of $607,541, which resulted from the revaluation of the Corporation’s state deferred tax items. The tax rate, currently 8.0%, is scheduled to drop to 6.5% for 2017. The new legislation further reduces the rate to 4.9%, beginning in 2019. The lower tax rate going forward reduces the benefit provided by the Corporation’s existing deferred tax items.

Average total loans for the second quarter of 2014 were $1.79 billion, a decrease of $35.0 million or 1.92%, versus the $1.82 billion for the comparable period in 2013. Total loans outstanding decreased $6.7 million, or .37%, from $1.80 billion as of June 30, 2013 to $1.79 billion as of June 30, 2014. On a linked quarter basis, average total loans increased $2.7 million, or .15%, from $1.78 billion for the quarter ending March 31, 2014.

Average total deposits for the quarter ended June 30, 2014 were $2.48 billion versus $2.32 billion as of June 30, 2013, an increase of 6.76%.

The company’s tangible common equity to tangible asset ratio was 12.10% at June 30, 2014, compared to 11.22% at June 30, 2013.

Net interest income for the second quarter of 2014 was $26.6 million, an increase of 3.37% over the $25.7 million reported for the same period of 2013. The net interest margin at June 30, 2014 was unchanged from the 4.09% reported at June 30, 2013. Despite downward pressure on loan yields and the prolonged low interest rate environment, the Corporation’s net interest margin remained stable.

The provision for loan losses for the three months ended June 30, 2014 was a negative $356 thousand compared to the $2.96 million provision for the second quarter of 2013. Net charge-offs were $2.03 million for the second quarter of 2014 compared to $5.84 million in the same period of 2013. The Corporation’s allowance for loan losses as of June 30, 2014 was $18.3 million compared to $22.1 million as of June 30, 2013. The allowance for loan losses as a percent of total loans was 1.02% as of June 30, 2014 compared to 1.23% as of June 30, 2013.

Nonperforming assets decreased 32.7% to $39.1 million as of June 30, 2014 versus $58.1 million as of June 30, 2013. The ratio of nonperforming assets to total loans and leases was 2.18% as of June 30, 2014 versus 3.23% as of June 30, 2013.

Non-interest income for the three months ended June 30, 2014 and 2013 was $9.6 and $9.7 million, respectively, a 1.01% decrease. Gains from the sale of mortgage loans decreased $486 thousand, driven by lower production volumes. Service charges and fees on deposit accounts increased by $367 thousand, and other service fees increased by $263 thousand.





Non-interest expense for the three months ended June 30, 2014 increased $666 thousand to $24.0 million compared to $23.4 million in 2013. On a linked quarter basis, non-interest expense increased $344 thousand from $23.7 million for the quarter ended March 31, 2014. On a year-over-year basis, salaries and employee benefits increased $674 thousand driven by the branch expansion and normal merit increases. Occupancy expenses increased $213 thousand due to the branch expansion and weather related expenses. The Corporation’s efficiency ratio was 63.76% for the quarter ending June 30, 2014 versus 63.54% for the same period in 2013.
    
Book value per share was $30.38 at June 30, 2014, a 9.74% increase from the $27.68 at June 30, 2013. Shareholders’ equity increased 10.14% to $405.7 million from $368.4 million on June 30, 2013.

First Financial Corporation is the holding company for First Financial Bank N.A. in Indiana and Illinois, The Morris Plan Company of Terre Haute and Forrest Sherer Inc. in Indiana.

 


















































CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands, except per share data)
 
 
June 30,
2014
 
December 31,
2013
 
   (unaudited)
ASSETS
 

 
 

Cash and due from banks
$
84,774

 
$
71,033

Federal funds sold
9,370

 
4,276

Securities available-for-sale
912,495

 
914,560

Loans:
 

 
 

Commercial
1,046,883

 
1,042,138

Residential
477,265

 
482,377

Consumer
268,403

 
268,033

 
1,792,551

 
1,792,548

Less:
 

 
 

Unearned Income
111

 
(1,120
)
Allowance for loan losses
(18,255
)
 
(20,068
)
 
1,774,407

 
1,771,360

Restricted Stock
21,064

 
21,057

Accrued interest receivable
10,950

 
11,554

Premises and equipment, net
51,754

 
51,449

Bank-owned life insurance
79,863

 
79,035

Goodwill
39,489

 
39,489

Other intangible assets
4,388

 
4,935

Other real estate owned
5,190

 
5,291

FDIC Indemnification Asset
420

 
1,055

Other assets
39,759

 
43,624

TOTAL ASSETS
$
3,033,923

 
$
3,018,718

 
 
 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
 

 
 

Deposits:
 

 
 

Non-interest-bearing
$
505,846

 
$
506,815

Interest-bearing:
 

 
 

Certificates of deposit of $100 or more
168,799

 
179,177

Other interest-bearing deposits
1,758,438

 
1,772,799

 
2,433,083

 
2,458,791

Short-term borrowings
73,420

 
59,592

Other borrowings
63,140

 
58,288

Other liabilities
58,534

 
55,852

TOTAL LIABILITIES
2,628,177

 
2,632,523

 
 
 
 
Shareholders’ equity
 

 
 

Common stock, $.125 stated value per share;
 
 
 

Authorized shares-40,000,000
 

 
 

Issued shares-14,538,132 in 2014 and 14,516,113 in 2013
 

 
 

Outstanding shares-13,355,272 in 2014 and 13,343,029 in 2013
1,812

 
1,811

Additional paid-in capital
71,557

 
71,074

Retained earnings
366,858

 
357,083

Accumulated other comprehensive loss
(4,320
)
 
(13,969
)
Less: Treasury shares at cost-1,182,860 in 2014 and 1,173,084 in 2013
(30,161
)
 
(29,804
)
TOTAL SHAREHOLDERS’ EQUITY
405,746

 
386,195

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
$
3,033,923

 
$
3,018,718



 







CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Dollar amounts in thousands, except per share data)
 
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
2014
 
2013
 
2014
 
2013
 
(unaudited)
 
(unaudited)
 
(unaudited)
 
(unaudited)
INTEREST INCOME:
 

 
 

 
 

 
 

Loans, including related fees
$
21,625

 
$
22,576

 
$
43,843

 
$
46,030

Securities:
 

 
 

 
 

 
 

Taxable
4,298

 
3,479

 
8,742

 
6,694

Tax-exempt
1,766

 
1,761

 
3,512

 
3,531

Other
426

 
489

 
842

 
992

TOTAL INTEREST INCOME
28,115

 
28,305

 
56,939

 
57,247

INTEREST EXPENSE:
 

 
 

 
 

 
 

Deposits
1,233

 
1,534

 
2,523

 
3,276

Short-term borrowings
22

 
19

 
36

 
39

Other borrowings
254

 
1,014

 
632

 
2,021

TOTAL INTEREST EXPENSE
1,509

 
2,567

 
3,191

 
5,336

NET INTEREST INCOME
26,606

 
25,738

 
53,748

 
51,911

Provision for loan losses
(356
)
 
2,960

 
1,604

 
5,981

NET INTEREST INCOME AFTER PROVISION
 

 
 

 
 

 
 

FOR LOAN LOSSES
26,962

 
22,778

 
52,144

 
45,930

NON-INTEREST INCOME:
 

 
 

 
 

 
 

Trust and financial services
1,414

 
1,403

 
2,903

 
2,929

Service charges and fees on deposit accounts
2,761

 
2,394

 
5,245

 
4,648

Other service charges and fees
2,989

 
2,726

 
5,828

 
5,226

Securities gains/(losses), net
(1
)
 
3

 
(1
)
 
7

Insurance commissions
1,852

 
1,941

 
3,765

 
3,904

Gain on sales of mortgage loans
457

 
943

 
833

 
1,906

Other
93

 
253

 
1,103

 
920

TOTAL NON-INTEREST INCOME
9,565

 
9,663

 
19,676

 
19,540

NON-INTEREST EXPENSE:
 

 
 

 
 

 
 

Salaries and employee benefits
13,887

 
13,713

 
27,983

 
27,309

Occupancy expense
1,789

 
1,576

 
3,714

 
3,098

Equipment expense
1,904

 
1,537

 
3,562

 
3,038

FDIC Expense
473

 
502

 
960

 
1,059

Other
5,996

 
6,055

 
11,535

 
11,078

TOTAL NON-INTEREST EXPENSE
24,049

 
23,383

 
47,754

 
45,582

INCOME BEFORE INCOME TAXES
12,478

 
9,058

 
24,066

 
19,888

Provision for income taxes
3,990

 
2,612

 
7,747

 
5,749

NET INCOME
8,488

 
6,446

 
16,319

 
14,139

OTHER COMPREHENSIVE INCOME
 

 
 

 
 

 
 

Change in unrealized gains/losses on securities, net of reclassifications and taxes
4,116

 
(10,559
)
 
9,419

 
(12,226
)
Change in funded status of post retirement benefits, net of taxes
115

 
338

 
230

 
552

COMPREHENSIVE INCOME
$
12,719

 
$
(3,775
)
 
$
25,968

 
$
2,465

PER SHARE DATA
 
 
 
 
 
 
 
Basic and Diluted Earnings per Share
$
0.63

 
$
0.48

 
$
1.22

 
$
1.06

Dividends per Share
$
0.49

 
$
0.48

 
$
0.49

 
$
0.48

Weighted average number of shares outstanding (in thousands)
13,355

 
13,307

 
13,352

 
13,304








Key Ratios
 
For the Six Months Ended
 
 
June 30,
 
June 30,
 
 
2014
 
2013
Return on average assets
 
1.08%
 
0.96%
Return on average common shareholder's equity
 
8.15%
 
7.49%
Average common shareholder's equity to average assets
 
13.25%
 
12.86%
End of period tangible common equity to tangible assets
 
12.10%
 
11.22%
Book value per share
 
$30.38
 
$27.68
Tangible book value per share
 
$27.10
 
$24.61
Risk-based capital - Tier 1
 
16.75%
 
15.90%
Risk-based capital - Total
 
17.58%
 
16.92%
Net interest margin
 
4.09%
 
4.09%
Efficiency Ratio
 
62.43%
 
61.37%
Net charge-offs to average loans and leases
 
0.38%
 
0.53%
Loan and lease loss reserve to loans and leases
 
1.02%
 
1.23%
Nonperforming assets to loans and leases
 
2.18%
 
3.23%
 
Asset Quality
 
For the Six Months Ended
 
 
June 30,
 
June 30,
 
 
2014
 
2013
Accruing loans and leases past due 90 days or more
 
$
824

 
$
980

Nonaccrual loans and leases
 
18,406

 
27,554

Other real estate owned
 
5,190

 
9,336

Troubled debt restructurings
 
14,721

 
20,270

Total nonperforming assets
 
$
39,141

 
$
58,140