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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 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 July 24, 2018, the Registrant issued a press release reporting its financial results for the three and six months ended June 30, 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, July 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   July 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:
July 24, 2018
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 2018. Net income increased 82.72% to $15.3 million compared to $8.4 million for the same period of 2017. The increase included a recovery of a security previously written down for other-than temporary impairment which contributed $2.4 million pre-tax to interest income and $4.5 million pre-tax to other income. Diluted net income per common share increased 83.82% to $1.25 from $0.68 for the comparable period of 2017.

The Corporation further reported net income of $24.2 million for the six months ended June 30, 2018 versus $17.7 million for the comparable period of 2017. Diluted net income per common share for the six months ended June 30, 2018 was $1.98 versus $1.45 for the comparable period of 2017. The first quarter of 2017 included a similar pre-tax recovery of $3.1 million. Return on assets for the six months ended June 30, 2018 was 1.63% compared to 1.19% for the six months ended June 30, 2017.

Norman L. Lowery, President and Chief Executive Officer, commented, “We are pleased with our second quarter 2018 results as we experienced another quarter of loan growth which contributed to our increased interest income. Excluding the recovery on the security our core fee income increased as well. It was a very solid quarter.”

Book value per share was $34.25 at June 30, 2018 compared to $35.54 at June 30, 2017. Shareholders’ equity was $419.7 million compared to $434.5 million on June 30, 2017.

Average total loans for the second quarter of 2018 were $1.92 billion versus $1.85 billion for the comparable period in 2017, an increase of $68.0 million or 3.68%. Total loans outstanding increased $71.5 million, or 3.85% to $1.93 billion as of June 30, 2018 from $1.86 billion as of June 30, 2017. On a linked quarter basis, average total loans increased $7.4 million, from $1.91 billion for the quarter ending March 31, 2018.

Average total deposits for the quarter ended June 30, 2018 were $2.47 billion versus $2.44 billion as of June 30, 2017. Total deposits increased $26.6 million or 1.10% to $2.45 billion as of June 30, 2018 from $2.43 billion as of June 30, 2017. On a linked quarter basis, average deposits increased $17.5 million from $2.45 billion for the quarter ending March 31, 2018.

The company’s tangible common equity to tangible asset ratio was 14.05% at June 30, 2018, compared to 13.73% at June 30, 2017.

Net interest income for the second quarter of 2018 was $30.7 million compared to the $26.6 million reported for the same period of 2017. The net interest margin for the six months ended June 30, 2018 increased to 4.32% compared to 4.05% for the same period ending June 30, 2017.






The provision for loan losses for the three months ended June 30, 2018 was $1.4 million compared to $1.0 million for the second quarter of 2017. Net charge-offs were $1.5 million for the second quarter of 2018 compared to $755 thousand in the same period of 2017. The Corporation’s allowance for loan losses as of June 30, 2018 was $20.1 million compared to $19.7 million as of June 30, 2017. The allowance for loan losses as a percent of total loans was 1.04% as of June 30, 2018 compared to 1.06% as of June 30, 2017.

Nonperforming loans decreased 7.3% to $18.9 million as of June 30, 2018 versus $20.4 million as of June 30, 2017. The ratio of nonperforming loans to total loans and leases was .98% as of June 30, 2018 versus 1.10% as of June 30, 2017.

Non-interest income for the three months ended June 30, 2018 was $13.0 compared to $8.1 million as of June 30, 2017. The $4.8 million increase included a $4.5 million recovery on a security discussed earlier.

Non-interest expense for the three months ended June 30, 2018 was $22.7 million compared to $22.1 million in 2017. The Corporation’s efficiency ratio was 50.80% for the quarter ending June 30, 2018 versus 60.93% for the same period in 2017.
    
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
Six Months Ended
 
 
June 30,
March 31,
June 30,
June 30,
June 30,
 
 
2018
2018
2017
2018
2017
END OF PERIOD BALANCES
 
 
 
 
 
 
    Assets
 
$
2,968,048

$
2,956,654

$
2,974,688

$
2,968,048

$
2,974,688

    Deposits
 
$
2,454,335

$
2,457,189

$
2,427,723

$
2,454,335

$
2,427,723

    Loans, including net deferred loan costs
 
$
1,928,572

$
1,907,445

$
1,857,030

$
1,928,572

$
1,857,030

    Allowance for Loan Losses
 
$
20,071

$
20,241

$
19,680

$
20,071

$
19,680

    Total Equity
 
$
419,695

$
414,901

$
434,454

$
419,695

$
434,454

    Tangible Common Equity (a)
 
$
383,916

$
379,019

$
398,242

$
383,916

$
398,242

 
 
 
 
 
 
 
AVERAGE BALANCES
 
 
 
 
 
 
    Total Assets
 
$
2,973,295

$
2,979,601

$
2,974,260

$
2,976,448

$
2,978,687

    Earning Assets
 
$
2,784,128

$
2,800,498

$
2,779,361

$
2,787,091

$
2,773,176

    Investments
 
$
865,694

$
876,764

$
920,453

$
871,229

$
920,026

    Loans
 
$
1,915,532

$
1,908,118

$
1,847,484

$
1,911,825

$
1,844,438

    Total Deposits
 
$
2,467,426

$
2,449,888

$
2,436,440

$
2,458,657

$
2,440,301

    Interest-Bearing Deposits
 
$
2,041,391

$
2,028,581

$
2,009,932

$
2,034,986

$
1,990,890

    Interest-Bearing Liabilities
 
$
34,539

$
54,475

$
51,752

$
44,507

$
50,958

    Total Equity
 
$
420,092

$
414,340

$
430,975

$
417,216

$
428,824

 
 
 
 
 
 
 
INCOME STATEMENT DATA
 
 
 
 
 
 
    Net Interest Income
 
$
30,684

$
27,473

$
26,560

$
58,157

$
53,067

    Net Interest Income Fully Tax Equivalent (b)
 
$
31,694

$
28,453

$
28,137

$
60,147

$
56,168

    Provision for Loan Losses
 
$
1,355

$
1,473

$
1,040

$
2,828

$
2,636

    Non-interest Income
 
$
12,961

$
8,103

$
8,113

$
21,064

$
19,162

    Non-interest Expense
 
$
22,683

$
23,210

$
22,088

$
45,894

$
44,665

    Net Income
 
$
15,261

$
8,954

$
8,352

$
24,214

$
17,721

 
 
 
 
 
 
 
PER SHARE DATA
 
 
 
 
 
 
    Basic and Diluted Net Income Per Common Share
 
$
1.25

$
0.73

$
0.68

$
1.98

$
1.45

    Cash Dividends Declared Per Common Share
 
$
0.51

$

$
0.50

$
0.51

$
0.50

    Book Value Per Common Share
 
$
34.25

$
33.86

$
35.54

$
34.25

$
35.54

    Tangible Book Value Per Common Share (c)
 
$
31.12

$
30.93

$
32.12

$
31.33

$
32.58

    Basic Weighted Average Common Shares Outstanding
 
12,255

12,248

12,224

12,252

12,221


(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
Six Months Ended
 
 
June 30,
March 31,
June 30,
June 30,
June 30,
 
 
2018
2018
2017
2018
2017
Return on average assets
 
2.05
%
1.20
%
1.12
%
1.63
%
1.19
%
Return on average common shareholder's equity
 
14.53
%
8.64
%
7.75
%
11.61
%
8.26
%
Efficiency ratio
 
50.80
%
63.49
%
60.93
%
56.51
%
59.29
%
Average equity to average assets
 
14.13
%
13.91
%
14.49
%
14.02
%
14.40
%
Net interest margin (a)
 
4.58
%
4.06
%
4.05
%
4.32
%
4.05
%
Net charge-offs to average loans and leases
 
0.32
%
0.24
%
0.19
%
0.28
%
0.19
%
Loan and lease loss reserve to loans and leases
 
1.04
%
1.06
%
1.06
%
1.04
%
1.06
%
Loan and lease loss reserve to nonperforming loans
 
106.39
%
97.66
%
89.05
%
106.39
%
89.05
%
Nonperforming loans to loans and leases
 
0.98
%
1.09
%
1.10
%
0.98
%
1.10
%
Tier 1 leverage
 
14.05
%
13.71
%
13.73
%
14.05
%
13.73
%
Risk-based capital - Tier 1
 
18.09
%
17.57
%
17.80
%
18.09
%
17.80
%
(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,
 
 
2018
2018
2017
2018
2017
Accruing loans and leases past due 30-89 days
 
$
7,741

$
9,758

$
8,846

$
7,741

$
8,846

Accruing loans and leases past due 90 days or more
 
$
1,273

$
602

$
1,117

$
1,273

$
1,117

Nonaccrual loans and leases
 
$
10,773

$
13,206

$
11,255

$
10,773

$
11,255

Total troubled debt restructuring
 
$
6,819

$
6,919

$
7,984

$
6,819

$
7,984

Other real estate owned
 
$
497

$
1,923

$
2,384

$
497

$
2,384

Nonperforming loans and other real estate owned
 
$
19,362

$
22,650

$
22,740

$
19,362

$
22,740

Total nonperforming assets
 
$
22,812

$
38,179

$
35,024

$
22,812

$
35,024

Gross charge-offs
 
$
2,270

$
2,074

$
2,090

$
4,344

$
4,364

Recoveries
 
$
745

$
933

$
1,335

$
1,678

$
2,635

Net charge-offs/(recoveries)
 
$
1,525

$
1,141

$
755

$
2,666

$
1,729
















CONSOLIDATED BALANCE SHEETS





(Dollar amounts in thousands, except per share data)
 
June 30,
2018
 
December 31,
2017
 
   (unaudited)
ASSETS
 

 
 

Cash and due from banks
$
50,081

 
$
74,107

Securities available-for-sale
782,609

 
814,931

Loans:
 

 
 

Commercial
1,138,255

 
1,139,490

Residential
442,163

 
436,143

Consumer
345,404

 
327,976

 
1,925,822

 
1,903,609

(Less) plus:
 

 
 

Net deferred loan costs
2,750

 
3,152

Allowance for loan losses
(20,071
)
 
(19,909
)
 
1,908,501

 
1,886,852

Restricted stock
10,390

 
10,379

Accrued interest receivable
12,345

 
12,913

Premises and equipment, net
47,372

 
48,272

Bank-owned life insurance
85,606

 
85,016

Goodwill
34,355

 
34,355

Other intangible assets
1,424

 
1,630

Other real estate owned
497

 
1,880

Other assets
34,868

 
30,333

TOTAL ASSETS
$
2,968,048

 
$
3,000,668

 
 
 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
 

 
 

Deposits:
 

 
 

Non-interest-bearing
$
430,382

 
$
425,001

Interest-bearing:
 

 
 

Certificates of deposit exceeding the FDIC insurance limits
40,279

 
43,178

Other interest-bearing deposits
1,983,674

 
1,990,474

 
2,454,335

 
2,458,653

Short-term borrowings
32,589

 
57,686

FHLB advances
1,400

 

Other liabilities
60,029

 
70,760

TOTAL LIABILITIES
2,548,353

 
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
75,995

 
75,624

Retained earnings
440,605

 
420,275

Accumulated other comprehensive loss
(28,889
)
 
(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
419,695

 
413,569

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
$
2,968,048

 
$
3,000,668



 

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,
 
2018
 
2017
 
2018
 
2017
 
(unaudited)
 
(unaudited)
INTEREST INCOME:
 

 
 

 
 

 
 

Loans, including related fees
$
24,778

 
$
22,325

 
$
48,401

 
$
44,266

Securities:
 

 
 

 
 

 
 

Taxable
5,947

 
3,630

 
9,540

 
7,387

Tax-exempt
1,860

 
1,843

 
3,700

 
3,670

Other
318

 
330

 
639

 
651

TOTAL INTEREST INCOME
32,903

 
28,128

 
62,280

 
55,974

INTEREST EXPENSE:
 

 
 

 
 

 
 

Deposits
2,125

 
1,471

 
3,889

 
2,746

Short-term borrowings
88

 
73

 
187

 
117

Other borrowings
6

 
24

 
47

 
44

TOTAL INTEREST EXPENSE
2,219

 
1,568

 
4,123

 
2,907

NET INTEREST INCOME
30,684

 
26,560

 
58,157

 
53,067

Provision for loan losses
1,355

 
1,040

 
2,828

 
2,636

NET INTEREST INCOME AFTER PROVISION
 

 
 

 
 

 
 

FOR LOAN LOSSES
29,329

 
25,520

 
55,329

 
50,431

NON-INTEREST INCOME:
 

 
 

 
 

 
 

Trust and financial services
1,340

 
1,149

 
2,755

 
2,466

Service charges and fees on deposit accounts
2,846

 
3,004

 
5,731

 
5,781

Other service charges and fees
3,347

 
3,114

 
6,491

 
6,299

Securities gains/(losses), net
2

 
15

 
2

 
17

Gain on sales of mortgage loans
500

 
393

 
840

 
720

Other
4,926

 
438

 
5,245

 
3,879

TOTAL NON-INTEREST INCOME
12,961

 
8,113

 
21,064

 
19,162

NON-INTEREST EXPENSE:
 

 
 

 
 

 
 

Salaries and employee benefits
12,578

 
12,218

 
25,543

 
25,293

Occupancy expense
1,633

 
1,761

 
3,414

 
3,529

Equipment expense
1,650

 
1,835

 
3,343

 
3,632

FDIC Expense
223

 
228

 
450

 
461

Other
6,599

 
6,046

 
13,144

 
11,750

TOTAL NON-INTEREST EXPENSE
22,683

 
22,088

 
45,894

 
44,665

INCOME BEFORE INCOME TAXES
19,607

 
11,545

 
30,499

 
24,928

Provision for income taxes
4,346

 
3,193

 
6,285

 
7,207

NET INCOME
15,261

 
8,352

 
24,214

 
17,721

OTHER COMPREHENSIVE INCOME
 

 
 

 
 

 
 

Change in unrealized gains/losses on securities, net of reclassifications and taxes
(4,682
)
 
5,045

 
(11,883
)
 
8,233

Change in funded status of post retirement benefits, net of taxes
281

 
184

 
(2,302
)
 
367

COMPREHENSIVE INCOME
$
10,860

 
$
13,581

 
$
10,029

 
$
26,321

PER SHARE DATA
 

 
 

 
 

 
 

Basic and Diluted Earnings per Share
$
1.25

 
$
0.68

 
$
1.98

 
$
1.45

Weighted average number of shares outstanding (in thousands)
12,255

 
12,224

 
12,252

 
12,221



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