EX-99.1 2 thff8k2019-12x31exx99x1.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, 2020
Rodger A. McHargue at (812) 238-6334
 
First Financial Corporation reports 2019 results

TERRE HAUTE, INDIANA - 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