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First Financial Corporation reports 3rd Quarter results

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TERRE HAUTE, Ind., Oct. 25, 2019 (GLOBE NEWSWIRE) -- First Financial Corporation (THFF) today announced results for the third quarter of 2019. Net income for the three months ending September 30, 2019 was $12.3 million compared to $11.3 million for the same period of 2018. Diluted net income per common share of $0.93 compared to $0.92 for the same period of 2018. Return on assets for the three months ended September 30, 2019 was 1.33% compared to 1.53% for the three months ended September 30, 2018. These quarterly comparisons include the Corporation's acquisition of HopFed Bancorp, Hopkinsville, Kentucky 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 net income of $34.5 million for the nine months ended September 30, 2019 versus $35.5 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 nine months ended September 30, 2019 was $2.74 versus $2.90 for the comparable period of 2018. Return on assets for the nine months ended September 30, 2019 was 1.42% compared to 1.59% for the nine months ended September 30, 2018.

Average total loans for the third quarter of 2019 were $2.47 billion versus $1.93 billion for the comparable period in 2018, an increase of $545.3 million or 28.3%, primarily due to the acquisition. Total loans outstanding increased $726.7 million, or 37.42%, from $1.94 billion as of September 30, 2018 to $2.67 billion as of September 30, 2019. On a linked quarter basis, average total loans increased $492.4 million from $1.98 billion for the quarter ending June 30, 2019.

Average total deposits for the quarter ended September 30, 2019 were $3.02 billion versus $2.44 billion as of September 30, 2018, primarily due to the acquisition. Total deposits were $3.22 billion as of September 30, 2019 compared to $2.41 billion as of September 30, 2018. On a linked quarter basis, average total deposits increased $552.9 million from $2.46 billion for the quarter ending June 30, 2019.

Book Value per share was $40.59 at September 30, 2019 compared to $34.91 at September 30, 2018. Shareholders equity at September 30, 2019 was $556.6 million compared to $427.8 million on September 30, 2018. The corporation’s tangible common equity to tangible asset ratio was 12.08% at September 30, 2019, compared to 13.31% at September 30, 2018.

Net interest income for the third quarter of 2019 was $34.0 million compared to $28.8 million reported for the same period of 2018. The net interest margin for the quarter ended September 30, 2019 was 4.04% compared to 4.29% reported at September 30, 2018.

Nonperforming loans as of September 30, 2019 were $14.4 million versus $16.2 million as of September 30, 2018. The ratio of nonperforming loans to total loans and leases was 0.54% as of September 30, 2019 versus 0.83% as of September 30, 2018.

Net charge-offs were $2.0 million for the third quarter of 2019 compared to $1.2 million in the same period of 2018. The Corporation’s allowance for loan losses as of September 30, 2019 was $19.8 million compared to $20.3 million as of September 30, 2018. The allowance for loan losses as a percent of total loans was 0.74% as of September 30, 2019 compared to 1.05% at September 30, 2018. Loans acquired from HopFed are recorded at fair value and therefore do not have an allowance recorded.

Non-interest income for the three months ended September 30, 2019 and 2018 was $9.7 million and $8.9 million, respectively. This included a $268 thousand increase in service charges on deposits, a $318 thousand increase in other service fees, and a $247 thousand increase in gains on the sale of mortgages.

Non-interest expense for the three months ended September 30, 2019 was $27.4 million compared to $22.3 million in 2018, which includes $1.6 million of expenses related to the acquisition of HopFed Bancorp. Also included is a $1.9 million increase in salaries, which is primarily attributed to the acquisition. The Corporation’s efficiency ratio was 61.18% for the quarter ending September 30, 2019 versus 57.54% for the same period in 2018.

Income tax expense for the three months ended September 30, 2019 was $2.6 million versus $2.7 million for the same period in 2018. The effective tax rate for 2019 was 18.82% compared to 20.11% for 2018.

Norman L. Lowery, President and Chief Executive Officer, commented, “During the third quarter, we completed our acquisition of HopFed Bancorp and Heritage Bank. We are extremely excited about the potential growth opportunities provided by these 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

Six Months Ended

September 30,

June 30,

September 30,

September 30,

September 30,

2019

2019

2018

2019

2018

END OF PERIOD BALANCES

Assets

$

3,988,119

$

3,064,212

$

2,980,935

$

3,988,119

$

2,980,935

Deposits

$

3,220,122

$

2,463,018

$

2,407,061

$

3,220,122

$

2,407,061

Loans, including net deferred loan costs

$

2,668,476

$

2,010,198

$

1,941,780

$

2,668,476

$

1,941,780

Allowance for Loan Losses

$

19,799

$

20,250

$

20,301

$

19,799

$

20,301

Total Equity

$

556,582

$

477,820

$

427,774

$

556,582

$

427,774

Tangible Common Equity (a)

$

469,904

$

442,496

$

392,109

$

469,904

$

392,109

AVERAGE BALANCES

Total Assets

$

3,680,041

$

3,033,788

$

2,965,825

$

3,239,295

$

2,972,907

Earning Assets

$

3,468,396

$

2,836,110

$

2,785,582

$

3,043,010

$

2,786,588

Investments

$

995,092

$

851,723

$

857,624

$

899,188

$

866,694

Loans

$

2,471,346

$

1,978,991

$

1,926,051

$

2,140,890

$

1,916,567

Total Deposits

$

3,017,085

$

2,464,212

$

2,435,281

$

2,636,487

$

2,450,865

Interest-Bearing Deposits

$

2,914,816

$

2,032,886

$

2,010,467

$

2,315,658

$

2,026,813

Interest-Bearing Liabilities

$

113,019

$

39,269

$

49,808

$

74,737

$

46,274

Total Equity

$

491,586

$

471,156

$

427,530

$

471,136

$

420,654

INCOME STATEMENT DATA

Net Interest Income

$

33,999

$

29,752

$

28,827

$

93,177

$

86,984

Net Interest Income Fully Tax Equivalent (b)

$

35,054

$

30,721

$

29,841

$

96,176

$

89,988

Provision for Loan Losses

$

1,500

$

230

$

1,470

$

3,200

$

4,298

Non-interest Income

$

9,746

$

9,743

$

8,909

$

27,125

$

29,973

Non-interest Expense

$

27,409

$

23,492

$

22,297

$

74,594

$

68,191

Net Income

$

12,257

$

12,569

$

11,313

$

34,508

$

35,527

PER SHARE DATA

Basic and Diluted Net Income Per Common Share

$

0.93

$

1.02

$

0.92

$

2.74

$

2.9

Cash Dividends Declared Per Common Share

$

$

0.52

$

$

0.52

$

0.51

Book Value Per Common Share

$

40.59

$

38.88

$

34.91

$

40.59

$

34.91

Tangible Book Value Per Common Share (c)

$

30.81

$

35.46

$

31.98

$

34.27

$

32.00

Basic Weighted Average Common Shares Outstanding

13,141

12,290

12,255

12,574

12,253

(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

Six Months Ended

September 30,

June 30,

September 30,

September 30,

September 30,

2019

2019

2018

2019

2018

Return on average assets

1.33

%

1.66

%

1.53

%

1.42

%

1.59

%

Return on average common shareholder's equity

9.97

%

10.67

%

10.58

%

9.74

%

11.23

%

Efficiency ratio

61.18

%

58.06

%

57.54

%

60.50

%

56.84

%

Average equity to average assets

13.36

%

15.53

%

14.42

%

14.54

%

14.15

%

Net interest margin (a)

4.04

%

4.33

%

4.29

%

4.21

%

4.31

%

Net charge-offs to average loans and leases

0.32

%

0.49

%

0.26

%

0.24

%

0.27

%

Loan and lease loss reserve to loans and leases

0.74

%

1.01

%

1.05

%

0.74

%

1.05

%

Loan and lease loss reserve to nonperforming loans

137.45

%

133.14

%

125.35

%

137.45

%

125.35

%

Nonperforming loans to loans and leases

0.54

%

0.76

%

0.83

%

0.54

%

0.83

%

Tier 1 leverage

13.07

%

14.83

%

14.45

%

13.07

%

14.45

%

Risk-based capital - Tier 1

15.09

%

18.65

%

18.36

%

15.09

%

18.36

%

(a) Net interest margin is calculated on a tax equivalent basis.


Asset Quality

Three Months Ended

Six Months Ended

September 30,

June 30,

September 30,

September 30,

September 30,

2019

2019

2018

2019

2018

Accruing loans and leases past due 30-89 days

$

10,462

$

8,296

$

8,413

$

10,462

$

8,413

Accruing loans and leases past due 90 days or more

$

744

$

683

$

1,314

$

744

$

1,314

Nonaccrual loans and leases

$

9,533

$

9,985

$

10,035

$

9,533

$

10,035

Total troubled debt restructuring

$

4,127

$

4,541

$

4,847

$

4,127

$

4,847

Other real estate owned

$

3,717

$

498

$

520

$

3,717

$

520

Nonperforming loans and other real estate owned

$

18,121

$

15,707

$

16,716

$

18,121

$

16,716

Total nonperforming assets

$

21,725

$

19,040

$

20,139

$

21,725

$

20,139

Gross charge-offs

$

2,926

$

1,906

$

2,348

$

6,941

$

6,692

Recoveries

$

975

$

966

$

1,108

$

3,104

$

2,786

Net charge-offs/(recoveries)

$

1,951

$

940

$

1,240

$

3,837

$

3,906

CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands, except per share data)

September 30,
2019

December 31,
2018

(unaudited)

ASSETS

Cash and due from banks

$

80,193

$

74,388

Securities available-for-sale

939,944

784,916

Loans:

Commercial

1,583,002

1,166,352

Residential

708,056

443,670

Consumer

373,747

341,041

2,664,805

1,951,063

(Less) plus:

Net deferred loan costs

3,671

2,925

Allowance for loan losses

(19,799

)

(20,436

)

2,648,677

1,933,552

Restricted stock

13,624

10,390

Accrued interest receivable

18,735

13,970

Premises and equipment, net

70,592

46,554

Bank-owned life insurance

97,810

86,186

Goodwill

75,417

34,355

Other intangible assets

11,261

1,197

Other real estate owned

3,717

603

Other assets

28,149

22,607

TOTAL ASSETS

$

3,988,119

$

3,008,718

LIABILITIES AND SHAREHOLDERS’ EQUITY

Deposits:

Non-interest-bearing

$

560,537

$

431,923

Interest-bearing:

Certificates of deposit exceeding the FDIC insurance limits

130,270

42,284

Other interest-bearing deposits

2,529,315

1,962,520

3,220,122

2,436,727

Short-term borrowings

90,852

69,656

Other liabilities

74,788

59,634

TOTAL LIABILITIES

3,431,537

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-13,713,355 in 2019 and 12,278,295 in 2018

2,004

1,824

Additional paid-in capital

139,073

76,774

Retained earnings

484,834

456,716

Accumulated other comprehensive income/(loss)

145

(23,454

)

Less: Treasury shares at cost-2,342,111 in 2019 and 2,334,245 in 2018

(69,474

)

(69,159

)

TOTAL SHAREHOLDERS’ EQUITY

556,582

442,701

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

$

3,988,119

$

3,008,718

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Dollar amounts in thousands, except per share data)

Three Months Ended
September 30,

Nine Months Ended
September 30,

2019

2018

2019

2018

(unaudited)

INTEREST INCOME:

Loans, including related fees

$

33,363

$

25,581

$

87,650

$

73,982

Securities:

Taxable

3,907

3,601

11,104

13,141

Tax-exempt

1,959

1,873

5,699

5,573

Other

366

320

1,017

959

TOTAL INTEREST INCOME

39,595

31,375

105,470

93,655

INTEREST EXPENSE:

Deposits

5,069

2,365

11,202

6,254

Short-term borrowings

305

167

786

354

Other borrowings

222

16

305

63

TOTAL INTEREST EXPENSE

5,596

2,548

12,293

6,671

NET INTEREST INCOME

33,999

28,827

93,177

86,984

Provision for loan losses

1,500

1,470

3,200

4,298

NET INTEREST INCOME AFTER PROVISION

FOR LOAN LOSSES

32,499

27,357

89,977

82,686

NON-INTEREST INCOME:

Trust and financial services

1,329

1,133

3,657

3,888

Service charges and fees on deposit accounts

3,227

3,002

8,586

8,733

Other service charges and fees

3,720

3,256

10,242

9,747

Securities gains, net

6

3

18

5

Gain on sales of mortgage loans

865

618

1,781

1,458

Other

599

897

2,841

6,142

TOTAL NON-INTEREST INCOME

9,746

8,909

27,125

29,973

NON-INTEREST EXPENSE:

Salaries and employee benefits

14,031

12,485

39,332

38,028

Occupancy expense

1,804

1,894

5,432

5,308

Equipment expense

2,117

1,673

5,685

5,016

FDIC Expense

155

223

494

673

Other

9,302

6,022

23,651

19,166

TOTAL NON-INTEREST EXPENSE

27,409

22,297

74,594

68,191

INCOME BEFORE INCOME TAXES

14,836

13,969

42,508

44,468

Provision for income taxes

2,579

2,656

8,000

8,941

NET INCOME

12,257

11,313

34,508

35,527

OTHER COMPREHENSIVE INCOME

Change in unrealized gains/(losses) on securities, net of reclassifications and taxes

4,124

(3,702

)

22,689

(15,585

)

Change in funded status of post retirement benefits, net of taxes

303

281

910

(2,021

)

COMPREHENSIVE INCOME

$

16,684

$

7,892

$

58,107

$

17,921

PER SHARE DATA

Basic and Diluted Earnings per Share

$

0.93

$

0.92

$

2.74

$

2.90

Weighted average number of shares outstanding (in thousands)

13,141

12,255

12,574

12,253


For more information contact:

Rodger A. McHargue at (812) 238-6334