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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) October 23, 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 October 23, 2018, the Registrant issued a press release reporting its financial results for the three and nine months ended September 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, October 23, 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   October 23, 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:
October 23, 2018
Rodger A. McHargue at (812) 238-6334
 
First Financial Corporation reports 3rd Quarter results

TERRE HAUTE, INDIANA - First Financial Corporation (NASDAQ:THFF) today announced results for the third quarter of 2018. Net income increased 28.64% to $11.3 million compared to $8.8 million for the same period of 2017. Diluted net income per common share increased 27.78% to $0.92 from $0.72 for the comparable period of 2017.

The Corporation also reported net income of $35.5 million for the nine months ended September 30, 2018 versus $26.5 million for the comparable period of 2017. Diluted net income per common share for the nine months ended September 30, 2018 was $2.90 versus $2.17 for the comparable 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. The first quarter of 2017 included a similar pre-tax recovery of $3.1 million. Return on assets for the nine months ended September 30, 2018 was 1.59% compared to 1.18% for the nine months ended September 30, 2017.

Norman L. Lowery, President and Chief Executive Officer, commented, “We are pleased with our third quarter 2018 results. This makes our sixth consecutive quarter of reported loan growth, which contributed to the increase in our third quarter net interest income compared to the same period last year.”

Book value per share was $34.91 at September 30, 2018 compared to $36.29 at September 30, 2017. Shareholders’ equity was $427.8 million compared to $443.6 million on September 30, 2017.

Average total loans for the third quarter of 2018 were $1.93 billion versus $1.86 billion for the comparable period in 2017, an increase of $69.3 million or 3.73%. Total loans outstanding were $1.94 billion as of September 30, 2018 compared to $1.87 billion as of September 30, 2017, a $75.2 million or 4.03% increase.

Average total deposits for the quarter ended September 30, 2018 were $2.44 billion versus $2.41 billion as of September 30, 2017. Total deposits were $2.41 billion as of September 30, 2018 compared to $2.45 billion as of September 30, 2017.

The company’s tangible common equity to tangible asset ratio was 13.31% at September 30, 2018, compared to 13.83% at September 30, 2017.

Net interest income for the third quarter of 2018 was $28.8 million compared to the $27.1 million reported for the same period of 2017. The net interest margin for the nine months ended September 30, 2018 increased to 4.31% compared to 4.08% for the same period ending September 30, 2017.

The provision for loan losses for the three months ended September 30, 2018 was $1.5 million compared to $1.2 million for the third quarter of 2017. Net charge-offs were $1.2 million for the third quarter of





2018 compared to $1.1 million in the same period of 2017. The Corporation’s allowance for loan losses as of September 30, 2018 was $20.3 million compared to $19.8 million as of September 30, 2017. The allowance for loan losses as a percent of total loans was 1.05% as of September 30, 2018 compared to 1.06% as of September 30, 2017.

Nonperforming loans decreased 29.0% to $16.2 million as of September 30, 2018 versus $22.8 million as of September 30, 2017. The ratio of nonperforming loans to total loans and leases was .83% as of September 30, 2018 versus 1.22% as of September 30, 2017.

Non-interest income for the three months ended September 30, 2018 was $8.9 million compared to $8.5 million as of September 30, 2017.

Non-interest expense for the three months ended September 30, 2018 was $22.3 million compared to $22.3 million in 2017. The Corporation’s efficiency ratio was 57.54% for the quarter ending September 30, 2018 versus 59.85% 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
Nine Months Ended
 
 
September 30,
June 30,
September 30,
September 30,
September 30,
 
 
2018
2018
2017
2018
2017
END OF PERIOD BALANCES
 
 
 
 
 
 
    Assets
 
$
2,980,935

$
2,968,048

$
2,982,342

$
2,980,935

$
2,982,342

    Deposits
 
$
2,407,061

$
2,454,335

$
2,453,411

$
2,407,061

$
2,453,411

    Loans, including net deferred loan costs
 
$
1,941,780

$
1,928,572

$
1,866,564

$
1,941,780

$
1,866,564

    Allowance for Loan Losses
 
$
20,301

$
20,071

$
19,802

$
20,301

$
19,802

    Total Equity
 
$
427,774

$
419,695

$
443,558

$
427,774

$
443,558

    Tangible Common Equity (a)
 
$
392,109

$
383,916

$
407,459

$
392,109

$
407,459

 
 
 
 
 
 
 
AVERAGE BALANCES
 
 
 
 
 
 
    Total Assets
 
$
2,965,825

$
2,973,295

$
2,974,616

$
2,972,907

$
2,977,330

    Earning Assets
 
$
2,785,582

$
2,784,128

$
2,775,366

$
2,786,588

$
2,773,906

    Investments
 
$
857,624

$
865,694

$
912,439

$
866,694

$
917,497

    Loans
 
$
1,926,051

$
1,915,532

$
1,856,726

$
1,916,567

$
1,848,534

    Total Deposits
 
$
2,435,281

$
2,467,426

$
2,414,561

$
2,450,865

$
2,431,721

    Interest-Bearing Deposits
 
$
2,010,467

$
2,041,391

$
1,993,839

$
2,026,813

$
1,991,873

    Interest-Bearing Liabilities
 
$
49,808

$
34,539

$
58,755

$
46,274

$
53,557

    Total Equity
 
$
427,530

$
420,092

$
440,998

$
420,654

$
432,882

 
 
 
 
 
 
 
INCOME STATEMENT DATA
 
 
 
 
 
 
    Net Interest Income
 
$
28,827

$
30,684

$
27,108

$
86,984

$
80,175

    Net Interest Income Fully Tax Equivalent (b)
 
$
29,841

$
31,694

$
28,691

$
89,988

$
84,859

    Provision for Loan Losses
 
$
1,470

$
1,355

$
1,185

$
4,298

$
3,821

    Non-interest Income
 
$
8,909

$
12,961

$
8,540

$
29,973

$
27,702

    Non-interest Expense
 
$
22,297

$
22,683

$
22,284

$
68,191

$
66,949

    Net Income
 
$
11,313

$
15,261

$
8,794

$
35,527

$
26,515

 
 
 
 
 
 
 
PER SHARE DATA
 
 
 
 
 
 
    Basic and Diluted Net Income Per Common Share
 
$
0.92

$
1.25

$
0.72

$
2.90

$
2.17

    Cash Dividends Declared Per Common Share
 
$

$
0.51

$

$
0.51

$
0.50

    Book Value Per Common Share
 
$
34.91

$
34.25

$
36.29

$
34.91

$
36.29

    Tangible Book Value Per Common Share (c)
 
$
31.98

$
31.12

$
33.12

$
32.00

$
33.33

    Basic Weighted Average Common Shares Outstanding
 
12,255

12,255

12,224

12,253

12,222


(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
Nine Months Ended
 
 
September 30,
June 30,
September 30,
September 30,
September 30,
 
 
2018
2018
2017
2018
2017
Return on average assets
 
1.53
%
2.05
%
1.18
%
1.59
%
1.18
%
Return on average common shareholder's equity
 
10.58
%
14.53
%
7.98
%
11.23
%
8.15
%
Efficiency ratio
 
57.54
%
50.80
%
59.85
%
56.84
%
59.48
%
Average equity to average assets
 
14.42
%
14.13
%
14.83
%
14.15
%
14.54
%
Net interest margin (a)
 
4.29
%
4.58
%
4.14
%
4.31
%
4.08
%
Net charge-offs to average loans and leases
 
0.26
%
0.32
%
0.23
%
0.27
%
0.20
%
Loan and lease loss reserve to loans and leases
 
1.05
%
1.04
%
1.06
%
1.05
%
1.06
%
Loan and lease loss reserve to nonperforming loans
 
125.35
%
106.39
%
86.93
%
125.35
%
86.93
%
Nonperforming loans to loans and leases
 
0.83
%
0.98
%
1.22
%
0.83
%
1.22
%
Tier 1 leverage
 
14.45
%
14.05
%
14.05
%
14.45
%
14.05
%
Risk-based capital - Tier 1
 
18.36
%
18.09
%
18.04
%
18.36
%
18.04
%
(a) Net interest margin is calculated on a tax equivalent basis.



Asset Quality
 
Three Months Ended
Nine Months Ended
 
 
September 30,
June 30,
September 30,
September 30,
September 30,
 
 
2018
2018
2017
2018
2017
Accruing loans and leases past due 30-89 days
 
$
8,413

$
7,741

$
6,864

$
8,413

$
6,864

Accruing loans and leases past due 90 days or more
 
$
1,314

$
1,273

$
1,389

$
1,314

$
1,389

Nonaccrual loans and leases
 
$
10,035

$
10,773

$
13,965

$
10,035

$
13,965

Total troubled debt restructuring
 
$
4,847

$
6,819

$
7,424

$
4,847

$
7,424

Other real estate owned
 
$
520

$
497

$
1,866

$
520

$
1,866

Nonperforming loans and other real estate owned
 
$
16,716

$
19,362

$
24,644

$
16,716

$
24,644

Total nonperforming assets
 
$
20,139

$
22,812

$
38,336

$
20,139

$
38,336

Gross charge-offs
 
$
2,348

$
2,270

$
1,964

$
6,692

$
6,328

Recoveries
 
$
1,108

$
745

$
901

$
2,786

$
3,536

Net charge-offs/(recoveries)
 
$
1,240

$
1,525

$
1,063

$
3,906

$
2,792





















CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands, except per share data)
 
September 30,
2018
 
December 31,
2017
 
   (unaudited)
ASSETS
 

 
 

Cash and due from banks
$
50,018

 
$
74,107

Federal funds sold
7,600

 

Securities available-for-sale
785,693

 
814,931

Loans:
 

 
 

Commercial
1,150,536

 
1,139,490

Residential
443,264

 
436,143

Consumer
345,132

 
327,976

 
1,938,932

 
1,903,609

(Less) plus:
 

 
 

Net deferred loan costs
2,848

 
3,152

Allowance for loan losses
(20,301
)
 
(19,909
)
 
1,921,479

 
1,886,852

Restricted stock
10,390

 
10,379

Accrued interest receivable
14,630

 
12,913

Premises and equipment, net
46,985

 
48,272

Bank-owned life insurance
85,901

 
85,016

Goodwill
34,355

 
34,355

Other intangible assets
1,310

 
1,630

Other real estate owned
520

 
1,880

Other assets
22,054

 
30,333

TOTAL ASSETS
$
2,980,935

 
$
3,000,668

 
 
 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
 

 
 

Deposits:
 

 
 

Non-interest-bearing
$
420,337

 
$
425,001

Interest-bearing:
 

 
 

Certificates of deposit exceeding the FDIC insurance limits
40,904

 
43,178

Other interest-bearing deposits
1,945,820

 
1,990,474

 
2,407,061

 
2,458,653

Short-term borrowings
58,680

 
57,686

FHLB advances
35,000

 

Other liabilities
52,420

 
70,760

TOTAL LIABILITIES
2,553,161

 
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
1,824

 
1,822

Additional paid-in capital
76,181

 
75,624

Retained earnings
451,918

 
420,275

Accumulated other comprehensive loss
(32,310
)
 
(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
427,774

 
413,569

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
$
2,980,935

 
$
3,000,668



 






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

 
 

 
 

 
 

Loans, including related fees
$
25,581

 
$
23,119

 
$
73,982

 
$
67,385

Securities:
 

 
 

 
 

 
 

Taxable
3,601

 
3,500

 
13,141

 
10,887

Tax-exempt
1,873

 
1,859

 
5,573

 
5,529

Other
320

 
327

 
959

 
978

TOTAL INTEREST INCOME
31,375

 
28,805

 
93,655

 
84,779

INTEREST EXPENSE:
 

 
 

 
 

 
 

Deposits
2,365

 
1,561

 
6,254

 
4,307

Short-term borrowings
167

 
98

 
354

 
215

Other borrowings
16

 
38

 
63

 
82

TOTAL INTEREST EXPENSE
2,548

 
1,697

 
6,671

 
4,604

NET INTEREST INCOME
28,827

 
27,108

 
86,984

 
80,175

Provision for loan losses
1,470

 
1,185

 
4,298

 
3,821

NET INTEREST INCOME AFTER PROVISION
 

 
 

 
 

 
 

FOR LOAN LOSSES
27,357

 
25,923

 
82,686

 
76,354

NON-INTEREST INCOME:
 

 
 

 
 

 
 

Trust and financial services
1,133

 
1,194

 
3,888

 
3,660

Service charges and fees on deposit accounts
3,002

 
3,048

 
8,733

 
8,829

Other service charges and fees
3,256

 
3,070

 
9,747

 
9,369

Securities gains/(losses), net
3

 
27

 
5

 
44

Gain on sales of mortgage loans
618

 
535

 
1,458

 
1,255

Other
897

 
666

 
6,142

 
4,545

TOTAL NON-INTEREST INCOME
8,909

 
8,540

 
29,973

 
27,702

NON-INTEREST EXPENSE:
 

 
 

 
 

 
 

Salaries and employee benefits
12,485

 
12,489

 
38,028

 
37,780

Occupancy expense
1,894

 
1,769

 
5,308

 
5,298

Equipment expense
1,673

 
1,792

 
5,016

 
5,424

FDIC Expense
223

 
228

 
673

 
689

Other
6,022

 
6,006

 
19,166

 
17,758

TOTAL NON-INTEREST EXPENSE
22,297

 
22,284

 
68,191

 
66,949

INCOME BEFORE INCOME TAXES
13,969

 
12,179

 
44,468

 
37,107

Provision for income taxes
2,656

 
3,385

 
8,941

 
10,592

NET INCOME
11,313

 
8,794

 
35,527

 
26,515

OTHER COMPREHENSIVE INCOME
 

 
 

 
 

 
 

Change in unrealized gains/losses on securities, net of reclassifications and taxes
(3,702
)
 
(51
)
 
(15,585
)
 
8,182

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

 
184

 
(2,021
)
 
551

COMPREHENSIVE INCOME
$
7,892

 
$
8,927

 
$
17,921

 
$
35,248

PER SHARE DATA
 

 
 

 
 

 
 

Basic and Diluted Earnings per Share
$
0.92

 
$
0.72

 
$
2.90

 
$
2.17

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

 
12,224

 
12,253

 
12,222



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