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Section 1: 8-K (8-K)

Document


UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549
 
FORM 8-K
 
CURRENT REPORT

Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934


Date of Report (Date of earliest event reported) July 23, 2019
 
First Financial Corporation

(Exact name of registrant as specified in its charter)
 
 
Indiana
(State or other Jurisdiction
of Incorporation)
 
000-16759
(Commission
File Number)
 
35-1546989
(IRS Employer
Identification No.)
 
 
P. O. Box 540, Terre Haute, Indiana
(Address of Principal Executive Offices)
 
47808
(Zip Code)
 
Registrant's telephone number, including area code 812-238-6334
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 

¨ Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
¨ Pre-commencement communication pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
¨ Pre-commencement communication pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
 
Item 2.02. Results of Operations and Financial Condition
 
On July 23, 2019, the Registrant issued a press release reporting its financial results for the three and six months ended June 30, 2019. A copy of the press release is being furnished as an exhibit to this report and is incorporated herein by reference in its entirety.
 
The foregoing information, including the information contained in the press release, is being furnished pursuant to this Item 2.02 and shall not be deemed to be “filed” for purposes of section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended. In





addition, this information shall not be deemed to be incorporated by reference into any of the Registrant’s filings with the Securities and Exchange Commission, except as shall be expressly set forth by specific reference in any such filing.
 
Item 9.01. Financial Statements and Exhibits
 
The exhibit to this report is as follows:
Exhibit Number
 
 
 
 
 
 
Press Release, July 23, 2019 issued by First Financial Corporation
 
 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
First Financial Corporation
 
 
 
Dated   July 23, 2019
 
 
 
 
/s/Rodger A. McHargue
 
 
Rodger A. McHargue
 
 
Secretary/Treasurer and Chief Financial Officer
 



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Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit


 
News Release
 
FIRST FINANCIAL CORPORATION
One First Financial Plaza, Terre Haute, Indiana 47807 (812) 238-6000
 
 
For more information contact:
July 23, 2019
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 2019. Net income for the three months ending June 30, 2019 was $12.6 million compared to $15.3 million for the same period of 2018. Diluted net income per common share of $1.02 compared to $1.25 for the same 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. Return on assets for the three months ended June 30, 2019 was 1.66% compared to 2.05% for the three months ended June 30, 2018.

The Corporation further reported net income of $22.3 million for the six months ended June 30, 2019 versus $24.2 million for the comparable period of 2018. Diluted net income per common share for the six months ended June 30, 2019 was $1.81 versus $1.98 for the comparable period of 2018. Return on assets for the six months ended June 30, 2019 was 1.47% compared to 1.63% for the six months ended June 30, 2018.

Average total loans for the second quarter of 2019 were $1.98 billion versus $1.92 billion for the comparable period in 2018, an increase of $63.5 million or 3.31%. Total loans outstanding increased $81.6 million, or 4.23%, from $1.93 billion as of June 30, 2018 to $2.01 billion as of June 30, 2019. On a linked quarter basis, average total loans increased $6.7 million from $1.97 billion for the quarter ending March 31, 2019.

Average total deposits for the quarter ended June 30, 2019 were $2.46 billion versus $2.47 billion as of June 30, 2018. Total deposits were $2.46 billion as of June 30, 2019 compared to $2.45 billion as of June 30, 2018.

Book Value per share was $38.88 at June 30, 2019 compared to $34.25 at June 30, 2018. Shareholders equity at June 30, 2019 was $477.8 million compared to $419.7 million on June 30, 2018. The company’s tangible common equity to tangible asset ratio was 14.97% at June 30, 2019, compared to 14.05% at June 30, 2018.

Net interest income for the second quarter of 2019 was $29.8 million compared to $30.7 million reported for the same period of 2018, which included $2.4 million of pre-tax interest income from the previously mentioned recovery. The net interest margin for the quarter ended June 30, 2019 was 4.33% compared to 4.58% reported at June 30, 2018.

Nonperforming loans as of June 30, 2019 were $15.2 million versus $18.9 million as of June 30, 2018. The ratio of nonperforming loans to total loans and leases was 0.76% as of June 30, 2019 versus 0.98% as of June 30, 2018.






Net charge-offs were $940 thousand for the second quarter of 2019 compared to $1.5 million in the same period of 2018. The Corporation’s allowance for loan losses as of June 30, 2019 was $20.3 million compared to $20.1 million as of June 30, 2018. The allowance for loan losses as a percent of total loans was 1.01% as of June 30, 2019 compared to 1.04% at June 30, 2018.

Non-interest income for the three months ended June 30, 2019 and 2018 was $9.7 million and $13.0 million, respectively. Non-interest income included $4.5 million from the previously mentioned recovery.

Non-interest expense for the three months ended June 30, 2019 was $23.5 million compared to $22.7 million in 2018, which includes $276 thousand of expenses related to the acquisition of HopFed Bancorp. The Corporation’s efficiency ratio was 58.06% for the quarter ending June 30, 2019 versus 50.80% for the same period in 2018.

Income tax expense for the three months ended June 30, 2019 was $3.20 million versus $4.35 million for the same period in 2018. The effective tax rate for 2019 was 19.59% compared to 20.61% for 2018.
    
Norman L. Lowery, President and Chief Executive Officer, commented “We experienced a solid second quarter, which provided continued loan growth, an increase in net interest income, and improvement in asset quality.”

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 in Indiana.






























 
 
Three Months Ended
Six Months Ended
 
 
June 30,
March 31,
June 30,
June 30,
June 30,
 
 
2019
2019
2018
2019
2018
END OF PERIOD BALANCES
 
 
 
 
 
 
    Assets
 
$
3,064,212

$
3,025,565

$
2,968,048

$
3,064,212

$
2,968,048

    Deposits
 
$
2,463,018

$
2,419,556

$
2,454,335

$
2,463,018

$
2,454,335

    Loans, including net deferred loan costs
 
$
2,010,198

$
1,984,053

$
1,928,572

$
2,010,198

$
1,928,572

    Allowance for Loan Losses
 
$
20,250

$
20,960

$
20,071

$
20,250

$
20,071

    Total Equity
 
$
477,820

$
462,796

$
419,695

$
477,820

$
419,695

    Tangible Common Equity (a)
 
$
442,496

$
427,358

$
383,916

$
442,496

$
383,916

 
 
 
 
 
 
 
AVERAGE BALANCES
 
 
 
 
 
 
    Total Assets
 
$
3,033,788

$
3,004,056

$
2,973,295

$
3,018,922

$
2,976,448

    Earning Assets
 
$
2,836,110

$
2,824,524

$
2,784,128

$
2,830,317

$
2,787,091

    Investments
 
$
851,723

$
850,749

$
865,694

$
851,236

$
871,229

    Loans
 
$
1,978,991

$
1,972,333

$
1,915,532

$
1,975,662

$
1,911,825

    Total Deposits
 
$
2,464,212

$
2,428,164

$
2,467,426

$
2,446,188

$
2,458,657

    Interest-Bearing Deposits
 
$
2,032,886

$
1,999,272

$
2,041,391

$
2,016,079

$
2,034,986

    Interest-Bearing Liabilities
 
$
39,269

$
71,923

$
34,539

$
55,596

$
44,507

    Total Equity
 
$
471,156

$
450,666

$
420,092

$
460,911

$
417,216

 
 
 
 
 
 
 
INCOME STATEMENT DATA
 
 
 
 
 
 
    Net Interest Income
 
$
29,752

$
29,426

$
30,684

$
59,178

$
58,157

    Net Interest Income Fully Tax Equivalent (b)
 
$
30,721

$
30,401

$
31,694

$
61,122

$
60,147

    Provision for Loan Losses
 
$
230

$
1,470

$
1,355

$
1,700

$
2,828

    Non-interest Income
 
$
9,743

$
7,636

$
12,961

$
17,379

$
21,064

    Non-interest Expense
 
$
23,492

$
23,693

$
22,683

$
47,185

$
45,894

    Net Income
 
$
12,569

$
9,682

$
15,261

$
22,251

$
24,214

 
 
 
 
 
 
 
PER SHARE DATA
 
 
 
 
 
 
    Basic and Diluted Net Income Per Common Share
 
$
1.02

$
0.79

$
1.25

$
1.81

$
1.98

    Cash Dividends Declared Per Common Share
 
$
0.52

$

$
0.51

$
0.52

$
0.51

    Book Value Per Common Share
 
$
38.88

$
37.66

$
34.25

$
38.88

$
34.25

    Tangible Book Value Per Common Share (c)
 
$
35.46

$
34.77

$
31.12

$
36.00

$
31.33

    Basic Weighted Average Common Shares Outstanding
 
12,290

12,282

12,255

12,286

12,252


(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
 
 
June 30,
March 31,
June 30,
June 30,
June 30,
 
 
2019
2019
2018
2019
2018
Return on average assets
 
1.66
%
1.29
%
2.05
%
1.47
%
1.63
%
Return on average common shareholder's equity
 
10.67
%
8.59
%
14.53
%
9.66
%
11.61
%
Efficiency ratio
 
58.06
%
62.29
%
50.80
%
60.11
%
56.51
%
Average equity to average assets
 
15.53
%
15.00
%
14.13
%
15.27
%
14.02
%
Net interest margin (a)
 
4.33
%
4.31
%
4.58
%
4.32
%
4.32
%
Net charge-offs to average loans and leases
 
0.49
%
0.19
%
0.32
%
0.19
%
0.28
%
Loan and lease loss reserve to loans and leases
 
1.01
%
1.06
%
1.04
%
1.01
%
1.04
%
Loan and lease loss reserve to nonperforming loans
 
133.14
%
130.28
%
106.39
%
133.14
%
106.39
%
Nonperforming loans to loans and leases
 
0.76
%
0.81
%
0.98
%
0.76
%
0.98
%
Tier 1 leverage
 
14.83
%
14.83
%
14.05
%
14.83
%
14.05
%
Risk-based capital - Tier 1
 
18.65
%
18.65
%
18.09
%
18.65
%
18.09
%
(a) Net interest margin is calculated on a tax equivalent basis.



Asset Quality
 
Three Months Ended
Six Months Ended
 
 
June 30,
March 31,
June 30,
June 30,
June 30,
 
 
2019
2019
2018
2019
2018
Accruing loans and leases past due 30-89 days
 
$
8,296

$
11,402

$
7,741

$
8,296

$
7,741

Accruing loans and leases past due 90 days or more
 
$
683

$
507

$
1,273

$
683

$
1,273

Nonaccrual loans and leases
 
$
9,985

$
10,808

$
10,773

$
9,985

$
10,773

Total troubled debt restructuring
 
$
4,541

$
4,774

$
6,819

$
4,541

$
6,819

Other real estate owned
 
$
498

$
857

$
497

$
498

$
497

Nonperforming loans and other real estate owned
 
$
15,707

$
16,946

$
19,362

$
15,707

$
19,362

Total nonperforming assets
 
$
19,040

$
20,240

$
22,812

$
19,040

$
22,812

Gross charge-offs
 
$
1,906

$
2,109

$
2,270

$
4,015

$
4,344

Recoveries
 
$
966

$
1,163

$
745

$
2,129

$
1,678

Net charge-offs/(recoveries)
 
$
940

$
946

$
1,525

$
1,886

$
2,666





















CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands, except per share data)
 
June 30,
2019
 
December 31,
2018
 
   (unaudited)
ASSETS
 

 
 

Cash and due from banks
$
60,884

 
$
74,388

Federal funds sold
2,200

 

Securities available-for-sale
791,537

 
784,916

Loans:
 

 
 

Commercial
1,188,283

 
1,166,352

Residential
461,616

 
443,670

Consumer
357,012

 
341,041

 
2,006,911

 
1,951,063

(Less) plus:
 

 
 

Net deferred loan costs
3,287

 
2,925

Allowance for loan losses
(20,250
)
 
(20,436
)
 
1,989,948

 
1,933,552

Restricted stock
10,412

 
10,390

Accrued interest receivable
13,877

 
13,970

Premises and equipment, net
45,662

 
46,554

Bank-owned life insurance
86,757

 
86,186

Goodwill
34,355

 
34,355

Other intangible assets
969

 
1,197

Other real estate owned
498

 
603

Other assets
27,113

 
22,607

TOTAL ASSETS
$
3,064,212

 
$
3,008,718

 
 
 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
 

 
 

Deposits:
 

 
 

Non-interest-bearing
$
436,472

 
$
431,923

Interest-bearing:
 

 
 

Certificates of deposit exceeding the FDIC insurance limits
57,470

 
42,284

Other interest-bearing deposits
1,969,076

 
1,962,520

 
2,463,018

 
2,436,727

Short-term borrowings
60,492

 
69,656

Other liabilities
62,882

 
59,634

TOTAL LIABILITIES
2,586,392

 
2,566,017

 
 
 
 
Shareholders’ equity
 

 
 

Common stock, $.125 stated value per share;
 
 
 
Authorized shares-40,000,000
 
 
 
Issued shares-14,632,323 in 2019 and 14,612,540 in 2018
 
 
 
Outstanding shares-12,290,212 in 2019 and 12,278,295 in 2018
1,826

 
1,824

Additional paid-in capital
77,173

 
76,774

Retained earnings
472,577

 
456,716

Accumulated other comprehensive loss
(4,282
)
 
(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
477,820

 
442,701

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
$
3,064,212

 
$
3,008,718



 





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,
 
2019
 
2018
 
2019
 
2018
 
(unaudited)
INTEREST INCOME:
 

 
 

 
 

 
 

Loans, including related fees
$
27,533

 
$
24,778

 
$
54,287

 
$
48,401

Securities:
 

 
 

 
 

 
 

Taxable
3,516

 
5,947

 
7,197

 
9,540

Tax-exempt
1,873

 
1,860

 
3,740

 
3,700

Other
337

 
318

 
651

 
639

TOTAL INTEREST INCOME
33,259

 
32,903

 
65,875

 
62,280

INTEREST EXPENSE:
 

 
 

 
 

 
 

Deposits
3,316

 
2,125

 
6,133

 
3,889

Short-term borrowings
158

 
88

 
481

 
187

Other borrowings
33

 
6

 
83

 
47

TOTAL INTEREST EXPENSE
3,507

 
2,219

 
6,697

 
4,123

NET INTEREST INCOME
29,752

 
30,684

 
59,178

 
58,157

Provision for loan losses
230

 
1,355

 
1,700

 
2,828

NET INTEREST INCOME AFTER PROVISION
 

 
 

 
 

 
 

FOR LOAN LOSSES
29,522

 
29,329

 
57,478

 
55,329

NON-INTEREST INCOME:
 

 
 

 
 

 
 

Trust and financial services
1,124

 
1,340

 
2,328

 
2,755

Service charges and fees on deposit accounts
2,735

 
2,846

 
5,359

 
5,731

Other service charges and fees
3,408

 
3,347

 
6,522

 
6,491

Securities gains, net
16

 
2

 
12

 
2

Gain on sales of mortgage loans
496

 
500

 
916

 
840

Other
1,964

 
4,926

 
2,242

 
5,245

TOTAL NON-INTEREST INCOME
9,743

 
12,961

 
17,379

 
21,064

NON-INTEREST EXPENSE:
 

 
 

 
 

 
 

Salaries and employee benefits
12,546

 
12,578

 
25,301

 
25,543

Occupancy expense
1,813

 
1,633

 
3,628

 
3,414

Equipment expense
1,751

 
1,650

 
3,568

 
3,343

FDIC Expense
199

 
223

 
339

 
450

Other
7,183

 
6,599

 
14,349

 
13,144

TOTAL NON-INTEREST EXPENSE
23,492

 
22,683

 
47,185

 
45,894

INCOME BEFORE INCOME TAXES
15,773

 
19,607

 
27,672

 
30,499

Provision for income taxes
3,204

 
4,346

 
5,421

 
6,285

NET INCOME
12,569

 
15,261

 
22,251

 
24,214

OTHER COMPREHENSIVE INCOME
 

 
 

 
 

 
 

Change in unrealized gains/(losses) on securities, net of reclassifications and taxes
8,341

 
(4,682
)
 
18,565

 
(11,883
)
Change in funded status of post retirement benefits, net of taxes
304

 
281

 
607

 
(2,302
)
COMPREHENSIVE INCOME
$
21,214

 
$
10,860

 
$
41,423

 
$
10,029

PER SHARE DATA
 

 
 

 
 

 
 

Basic and Diluted Earnings per Share
$
1.02

 
$
1.25

 
$
1.81

 
$
1.98

Weighted average number of shares outstanding (in thousands)
12,290

 
12,255

 
12,286

 
12,252



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