EX-99.1 2 thff8k2017-12x31exx99x1.htm EXHIBIT 99.1 Exhibit


 
News Release
 
FIRST FINANCIAL CORPORATION
One First Financial Plaza, Terre Haute, Indiana 47807 (812) 238-6000
 
 
For more information contact:
February 6, 2018
Rodger A. McHargue at (812) 238-6334
 
First Financial Corporation reports 2017 results

TERRE HAUTE, INDIANA - 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 twelve 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