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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) April 24, 2018
 
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 April 24, 2018, the Registrant issued a press release reporting its financial results for the three months ended March 31, 2018. 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, April 24, 2018 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   April 24, 2018
 
 
 
 
/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:
April 24, 2018
Rodger A. McHargue at (812) 238-6334
 
First Financial Corporation reports 1st Quarter results

TERRE HAUTE, INDIANA - First Financial Corporation (NASDAQ:THFF) today announced results for the first quarter of 2018. Net income for the three months ending March 31, 2018 was $8.95 million compared to $9.37 million for the same period of 2017 which included a $1.99 million, after-tax cash recovery of previous other-than-temporary impairment. Diluted net income per common share for the quarter was $0.73 compared to $.77 for the same period of 2017. Return on assets for the three months ended March 31, 2018 was 1.20% compared to 1.26% for the three months ended March 31, 2017.

Average total loans for the first quarter of 2018 were $1.91 billion versus $1.84 billion for the comparable period in 2017, an increase of $66.7 million or 3.64%. Total loans outstanding increased $72.5 million, or 3.95%, from $1.83 billion as of March 31, 2017 to $1.91 billion as of March 31, 2018. On a linked quarter basis, average total loans increased $33.4 million, or 1.78%, from $1.87 billion for the quarter ending December 31, 2017.

Average total deposits for the quarter ended March 31, 2018 were $2.45 billion versus $2.44 billion as of March 31, 2017. Total deposits increased $19.2 million from $2.44 billion as of March 31, 2017 to $2.46 billion as of March 31, 2018.

Book value per share was $33.86 at March 31, 2018 compared to $34.92 at March 31, 2017. Shareholders’ equity at March 31, 2018 was $414.9 million compared to $426.8 million on March 31, 2017. The company’s tangible common equity to tangible asset ratio was 12.98% at March 31, 2018, compared to 13.37% at March 31, 2017. The change in equity was a result of the $1.50 special dividend paid in December 2017 and the remeasurement of the deferred tax assets as a result of the Tax Cuts and Jobs Act signed into law on December 22, 2017.

Net interest income for the first quarter of 2018 was $27.5 million, an increase of 3.64% over the $26.5 million reported for the same period of 2017. The net interest margin for the quarter ended March 31, 2018 increased to 4.06% from the 4.05% reported at March 31, 2017.

Nonperforming loans as of March 31, 2018 were $20.7 million as of March 31, 2018 versus $19.7 million as of March 31, 2017. The ratio of nonperforming loans to total loans and leases was 1.09% as of March 31, 2018 versus 1.07% as of March 31, 2017.

The provision for loan losses for the three months ended March 31, 2018 was $1.47 million compared to the $1.60 million provision for the first quarter of 2017. Net charge-offs were $1.14 million for the first quarter of 2018 compared to $974 thousand in the same period of 2017. The Corporation’s allowance for loan losses as of March 31, 2018 was $20.2 million compared to $19.4 million as of March 31, 2017. The allowance for loan losses as a percent of total loans was 1.06% as of March 31, 2018 the same as March 31, 2017.






Non-interest income for the three months ended March 31, 2018 and 2017 was $8.10 and $11.0 million, respectively. The 2017 first quarter non-interest income included a $3.06 million cash recovery of previous other-than-temporary impairment.

Non-interest expense for the three months ended March 31, 2018 increased $633 thousand to $23.2 million compared to $22.6 million in 2017. The Corporation’s efficiency ratio was 63.49% for the quarter ending March 31, 2018 versus 57.77% for the same period in 2017.

Income tax expense for the three months ended March 31, 2018 was $1.94 million versus $4.01 million for the same period in 2017. The effective tax rate for 2018 was 17.80% compared to 29.99% for 2017.
    
Norman L. Lowery, President and Chief Executive Officer, commented “We are pleased with our first quarter 2018 results. We continue to grow loans, which when coupled with our asset sensitive balance sheet contributed to our strong net-interest income growth.”

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
 
 
March 31,
December 31,
March 31,
 
 
2018
2017
2017
END OF PERIOD BALANCES
 
 
 
 
    Assets
 
$
2,956,654

$
3,000,668

$
2,957,285

    Deposits
 
$
2,457,189

$
2,458,653

$
2,438,012

    Loans, including net deferred loan costs
 
$
1,907,445

$
1,906,761

$
1,834,893

    Allowance for Loan Losses
 
$
20,241

$
19,909

$
19,395

    Total Equity
 
$
414,901

$
413,569

$
426,808

    Tangible Common Equity (a)
 
$
379,019

$
377,584

$
390,470

 
 
 
 
 
AVERAGE BALANCES
 
 
 
 
    Total Assets
 
$
2,979,601

$
3,006,198

$
2,983,114

    Earning Assets
 
$
2,800,498

$
2,797,194

$
2,766,991

    Investments
 
$
876,764

$
895,401

$
919,599

    Loans
 
$
1,908,118

$
1,874,766

$
1,841,392

    Total Deposits
 
$
2,449,888

$
2,473,385

$
2,444,162

    Interest-Bearing Deposits
 
$
2,028,581

$
2,039,993

$
1,971,848

    Interest-Bearing Liabilities
 
$
54,475

$
27,357

$
50,164

    Total Equity
 
$
414,340

$
442,418

$
426,673

 
 
 
 
 
INCOME STATEMENT DATA
 
 
 
 
    Net Interest Income
 
$
27,473

$
27,682

$
26,507

    Net Interest Income Fully Tax Equivalent (b)
 
$
28,453

$
29,316

$
28,031

    Provision for Loan Losses
 
$
1,473

$
1,474

$
1,596

    Non-interest Income
 
$
8,103

$
8,236

$
11,049

    Non-interest Expense
 
$
23,210

$
21,798

$
22,577

    Net Income
 
$
8,954

$
2,616

$
9,369

 
 
 
 
 
PER SHARE DATA
 
 
 
 
    Basic and Diluted Net Income Per Common Share
 
$
0.73

$
0.21

$
0.77

    Cash Dividends Declared Per Common Share
 
$

$
2.01

$

    Book Value Per Common Share
 
$
33.86

$
33.77

$
34.92

    Tangible Book Value Per Common Share (c)
 
$
30.93

$
30.83

$
31.94

    Basic Weighted Average Common Shares Outstanding
 
12,248

12,234

12,217


(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% for 2018 and 65% for prior years.
(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
 
 
March 31,
December 31,
March 31,
 
 
2018
2017
2017
Return on average assets
 
1.20
%
0.35
%
1.26
%
Return on average common shareholder's equity
 
8.64
%
2.37
%
8.78
%
Efficiency ratio
 
63.49
%
58.05
%
57.77
%
Average equity to average assets
 
13.91
%
14.72
%
14.31
%
Net interest margin (a)
 
4.06
%
4.20
%
4.05
%
Net charge-offs to average loans and leases
 
0.24
%
0.29
%
0.21
%
Loan and lease loss reserve to loans and leases
 
1.06
%
1.04
%
1.06
%
Loan and lease loss reserve to nonperforming loans and other real estate
 
97.66
%
84.50
%
98.37
%
Nonperforming loans to loans and leases
 
1.09
%
1.14
%
1.07
%
Tier 1 leverage
 
13.71
%
13.31
%
13.63
%
Risk-based capital - Tier 1
 
17.57
%
17.01
%
17.78
%
(a) Net interest margin is calculated on a tax equivalent basis.



Asset Quality
 
Three Months Ended
 
 
March 31,
December 31,
March 31,
 
 
2018
2017
2017
Accruing loans and leases past due 30-89 days
 
$
9,758

$
13,358

$
7,713

Accruing loans and leases past due 90 days or more
 
$
602

$
1,403

$
453

Nonaccrual loans and leases
 
$
13,206

$
13,245

$
11,106

Total troubled debt restructuring
 
$
6,919

$
7,034

$
8,158

Other real estate owned
 
$
1,923

$
1,880

$
2,294

Nonperforming loans and other real estate owned
 
$
22,650

$
23,562

$
22,011

Total nonperforming assets
 
$
38,179

$
38,167

$
34,004

Gross charge-offs
 
$
2,074

$
2,434

$
2,274

Recoveries
 
$
933

$
1,067

$
1,300

Net charge-offs/(recoveries)
 
$
1,141

$
1,367

$
974





















CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands, except per share data)
 
March 31,
2018
 
December 31,
2017
 
   (unaudited)
ASSETS
 

 
 

Cash and due from banks
$
41,156

 
$
74,107

Federal funds sold
1,500

 

Securities available-for-sale
805,558

 
814,931

Loans:
 

 
 

Commercial
1,135,927

 
1,139,490

Residential
436,119

 
436,143

Consumer
332,115

 
327,976

 
1,904,161

 
1,903,609

(Less) plus:
 

 
 

Net deferred loan costs
3,284

 
3,152

Allowance for loan losses
(20,241
)
 
(19,909
)
 
1,887,204

 
1,886,852

Restricted stock
10,390

 
10,379

Accrued interest receivable
12,983

 
12,913

Premises and equipment, net
47,771

 
48,272

Bank-owned life insurance
85,306

 
85,016

Goodwill
34,355

 
34,355

Other intangible assets
1,527

 
1,630

Other real estate owned
1,923

 
1,880

Other assets
26,981

 
30,333

TOTAL ASSETS
$
2,956,654

 
$
3,000,668

 
 
 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
 

 
 

Deposits:
 

 
 

Non-interest-bearing
$
415,694

 
$
425,001

Interest-bearing:
 

 
 

Certificates of deposit exceeding the FDIC insurance limits
42,056

 
43,178

Other interest-bearing deposits
1,999,439

 
1,990,474

 
2,457,189

 
2,458,653

Short-term borrowings
29,078

 
57,686

FHLB advances

 

Other liabilities
55,486

 
70,760

TOTAL LIABILITIES
2,541,753

 
2,587,099

 
 
 
 
Shareholders’ equity
 

 
 

Common stock, $.125 stated value per share;
 
 
 
Authorized shares-40,000,000
 
 
 
Issued shares-14,612,540 in 2018 and 14,595,320 in 2017
 
 
 
Outstanding shares-12,255,045 in 2018 and 12,246,464 in 2017
1,823

 
1,822

Additional paid-in capital
75,810

 
75,624

Retained earnings
431,595

 
420,275

Accumulated other comprehensive loss
(24,488
)
 
(14,704
)
Less: Treasury shares at cost-2,357,495 in 2018 and 2,348,856 in 2017
(69,839
)
 
(69,448
)
TOTAL SHAREHOLDERS’ EQUITY
414,901

 
413,569

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
$
2,956,654

 
$
3,000,668



 






CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Dollar amounts in thousands, except per share data)
 
 
Three Months Ended March 31,
 
2018
 
2017
 
(unaudited)
INTEREST INCOME:
 

 
 

Loans, including related fees
$
23,623

 
$
21,941

Securities:
 

 
 

Taxable
3,593

 
3,757

Tax-exempt
1,840

 
1,827

Other
321

 
321

TOTAL INTEREST INCOME
29,377

 
27,846

INTEREST EXPENSE:
 

 
 

Deposits
1,764

 
1,275

Short-term borrowings
99

 
44

Other borrowings
41

 
20

TOTAL INTEREST EXPENSE
1,904

 
1,339

NET INTEREST INCOME
27,473

 
26,507

Provision for loan losses
1,473

 
1,596

NET INTEREST INCOME AFTER PROVISION
 

 
 

FOR LOAN LOSSES
26,000

 
24,911

NON-INTEREST INCOME:
 

 
 

Trust and financial services
1,415

 
1,317

Service charges and fees on deposit accounts
2,885

 
2,777

Other service charges and fees
3,144

 
3,185

Securities gains/(losses), net

 
2

Insurance commissions
32

 
22

Gain on sales of mortgage loans
340

 
327

Other
287

 
3,419

TOTAL NON-INTEREST INCOME
8,103

 
11,049

NON-INTEREST EXPENSE:
 

 
 

Salaries and employee benefits
12,965

 
13,376

Occupancy expense
1,781

 
1,768

Equipment expense
1,693

 
1,797

FDIC Expense
227

 
233

Other
6,544

 
5,403

TOTAL NON-INTEREST EXPENSE
23,210

 
22,577

INCOME BEFORE INCOME TAXES
10,893

 
13,383

Provision for income taxes
1,939

 
4,014

NET INCOME
8,954

 
9,369

OTHER COMPREHENSIVE INCOME
 

 
 

Change in unrealized gains/losses on securities, net of reclassifications and taxes
(7,201
)
 
3,188

Change in funded status of post retirement benefits, net of taxes
(2,583
)
 
183

COMPREHENSIVE INCOME (LOSS)
$
(830
)
 
$
12,740

PER SHARE DATA
 

 
 

Basic and Diluted Earnings per Share
$
0.73

 
$
0.77

Weighted average number of shares outstanding (in thousands)
12,248

 
12,217



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