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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) February 1, 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 February 1, 2019, the Registrant issued a press release reporting its financial results for the three and twelve months ended December 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, February 1, 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   February 1, 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:
February 1, 2019
Rodger A. McHargue at (812) 238-6334
 
First Financial Corporation reports 2018 results

TERRE HAUTE, INDIANA - First Financial Corporation (NASDAQ:THFF) today reported record net income of $46.6 million for the twelve months ended December 31, 2018 versus $29.1 million for the comparable period of 2017. Diluted net income per common share for the twelve months ended December 31, 2018 was $3.80 versus $2.38 for the comparable period of 2017. The increase in 2018 net income includes the 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. Return on assets for the twelve months ended December 31, 2018 was 1.57% compared to 0.98% for the twelve months ended December 31, 2017.

The Corporation also reported results for the fourth quarter of 2018. Net income increased to $11.1 million compared to $2.6 million for the same period of 2017. Diluted net income per common share increased to $0.90 from $0.21 for the comparable period of 2017 as 2017 results were impacted by the revaluation of the Corporation’s deferred tax assets resulting from the passage of the Tax Cuts and Jobs Act.

Average total loans for the fourth quarter of 2018 were $1.94 billion versus $1.87 billion for the comparable period in 2017, an increase of $65.9 million or 3.51%. Total loans outstanding were $1.95 billion as of December 31, 2018 compared to $1.91 billion as of December 31, 2017, a $47.2 million or 2.48% increase.

Average total deposits for the quarter ended December 31, 2018 were $2.45 billion versus $2.47 billion as of December 31, 2017. Total deposits were $2.44 billion as of December 31, 2018 compared to $2.46 billion as of December 31, 2017.

Net interest income for the fourth quarter of 2018 was $29.6 million compared to the $27.7 million reported for the same period of 2017. The net interest margin for the twelve months ended December 31, 2018 increased to 4.32% compared to 4.11% for the same period ending December 31, 2017.

The provision for loan losses for the three months ended December 31, 2018 was $1.5 million compared to $1.5 million for the fourth quarter of 2017. Net charge-offs were $1.3 million for the fourth quarter of 2018 compared to $1.4 million in the same period of 2017. The Corporation’s allowance for loan losses as of December 31, 2018 was $20.4 million compared to $19.9 million as of December 31, 2017. The allowance for loan losses as a percent of total loans was 1.05% as of December 31, 2018 compared to 1.04% as of December 31, 2017.

Nonperforming loans decreased 23.5% to $16.6 million as of December 31, 2018 versus $21.7 million as of December 31, 2017. The ratio of nonperforming loans to total loans and leases was 0.85% as of December 31, 2018 versus 1.14% as of December 31, 2017.






Non-interest income for the three months ended December 31, 2018 was $8.2 compared to $8.2 million for the period ending December 31, 2017. Non-interest income for the twelve months ending December 31, 2018 increased $2.3 million, or 6.31% to $38.2 million from $35.9 million for the same period of 2017.

Non-interest expense for the three months ended December 31, 2018 was $23.1 million compared to $21.8 million in 2017. The Corporation’s efficiency ratio was 59.49% for the quarter ending December 31, 2018 versus 58.05% for the same period in 2017. Non-interest expense for the twelve months ended December 31, 2018 was $91.3 million versus $88.7 million for the same period of 2017. The Corporation’s efficiency ratio for the twelve months ended December 31, 2018 was 57.49% versus 59.12% for same period 2017.

Book value per share was $36.06 at December 31, 2018 compared to $33.77 at December 31, 2017. Shareholders’ equity was $442.7 million compared to $413.6 million on December 31, 2017.

The company’s tangible common equity to tangible asset ratio was 13.69% at December 31, 2018, compared to 12.74% at December 31, 2017.

Norman L. Lowery, President and Chief Executive Officer, commented, “We are pleased with our record 2018 results. Our loan growth continues as has the growth in our net interest income. Asset quality remains strong.”
    
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
Year Ended
 
 
December 31,
September 30,
December 31,
December 31,
December 31,
 
 
2018
2018
2017
2018
2017
END OF PERIOD BALANCES
 
 
 
 
 
 
    Assets
 
$
3,008,718

$
2,980,935

$
3,000,668

$
3,008,718

$
3,000,668

    Deposits
 
$
2,436,727

$
2,407,061

$
2,458,653

$
2,436,727

$
2,458,653

    Loans, including net deferred loan costs
 
$
1,953,988

$
1,941,780

$
1,906,761

$
1,953,988

$
1,906,761

    Allowance for Loan Losses
 
$
20,436

$
20,301

$
19,909

$
20,436

$
19,909

    Total Equity
 
$
442,697

$
427,774

$
413,569

$
442,697

$
413,569

    Tangible Common Equity (a)
 
$
407,145

$
392,109

$
377,584

$
407,145

$
377,584

 
 
 
 
 
 
 
AVERAGE BALANCES
 
 
 
 
 
 
    Total Assets
 
$
2,976,724

$
2,965,825

$
3,006,198

$
2,976,517

$
2,984,547

    Earning Assets
 
$
2,795,260

$
2,785,582

$
2,797,194

$
2,788,756

$
2,779,728

    Investments
 
$
849,818

$
857,624

$
895,401

$
862,475

$
911,973

    Loans
 
$
1,940,651

$
1,926,051

$
1,874,766

$
1,922,588

$
1,855,092

    Total Deposits
 
$
2,448,301

$
2,435,281

$
2,473,385

$
2,450,224

$
2,442,137

    Interest-Bearing Deposits
 
$
2,017,901

$
2,010,467

$
2,039,993

$
2,024,585

$
2,003,903

    Interest-Bearing Liabilities
 
$
49,362

$
49,808

$
27,357

$
47,046

$
47,007

    Total Equity
 
$
435,134

$
427,530

$
442,418

$
424,274

$
435,266

 
 
 
 
 
 
 
INCOME STATEMENT DATA
 
 
 
 
 
 
    Net Interest Income
 
$
29,595

$
28,827

$
27,682

$
116,579

$
107,857

    Net Interest Income Fully Tax Equivalent (b)
 
$
30,591

$
29,841

$
29,316

$
120,579

$
114,175

    Provision for Loan Losses
 
$
1,470

$
1,470

$
1,474

$
5,768

$
5,295

    Non-interest Income
 
$
8,233

$
8,909

$
8,236

$
38,206

$
35,938

    Non-interest Expense
 
$
23,098

$
22,297

$
21,798

$
91,289

$
88,747

    Net Income
 
$
11,056

$
11,313

$
2,616

$
46,583

$
29,131

 
 
 
 
 
 
 
PER SHARE DATA
 
 
 
 
 
 
    Basic and Diluted Net Income Per Common Share
 
$
0.90

$
0.92

$
0.21

$
3.80

$
2.38

    Cash Dividends Declared Per Common Share
 
$
0.51

$

$
2.01

$
1.02

$
2.51

    Book Value Per Common Share
 
$
36.06

$
34.91

$
33.77

$
36.06

$
33.77

    Tangible Book Value Per Common Share (c)
 
$
32.58

$
31.98

$
30.83

$
33.16

$
30.83

    Basic Weighted Average Common Shares Outstanding
 
12,265

12,255

12,234

12,256

12,225


(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
Year Ended
 
 
December 31,
September 30,
December 31,
December 31,
December 31,
 
 
2018
2018
2017
2018
2017
Return on average assets
 
1.49
%
1.53
%
0.35
%
1.57
%
0.98
%
Return on average common shareholder's equity
 
9.93
%
10.58
%
2.37
%
10.98
%
6.69
%
Efficiency ratio
 
59.49
%
57.54
%
58.05
%
57.49
%
59.12
%
Average equity to average assets
 
14.96
%
14.42
%
14.72
%
14.25
%
14.58
%
Net interest margin (a)
 
4.35
%
4.29
%
4.20
%
4.32
%
4.11
%
Net charge-offs to average loans and leases
 
0.28
%
0.26
%
0.29
%
0.27
%
0.22
%
Loan and lease loss reserve to loans and leases
 
1.05
%
1.05
%
1.04
%
1.05
%
1.04
%
Loan and lease loss reserve to nonperforming loans
 
123.27
%
125.35
%
84.50
%
123.27
%
84.50
%
Nonperforming loans to loans and leases
 
0.85
%
0.83
%
1.14
%
0.85
%
1.14
%
Tier 1 leverage
 
14.59
%
14.45
%
13.31
%
14.59
%
13.31
%
Risk-based capital - Tier 1
 
18.48
%
18.36
%
17.01
%
18.48
%
17.01
%
(a) Net interest margin is calculated on a tax equivalent basis.



Asset Quality
 
Three Months Ended
Year Ended
 
 
December 31,
September 30,
December 31,
December 31,
December 31,
 
 
2018
2018
2017
2018
2017
Accruing loans and leases past due 30-89 days
 
$
11,388

$
8,413

$
13,358

$
11,388

$
13,358

Accruing loans and leases past due 90 days or more
 
$
798

$
1,314

$
1,403

$
798

$
1,403

Nonaccrual loans and leases
 
$
10,974

$
10,035

$
13,245

$
10,974

$
13,245

Total troubled debt restructuring
 
$
4,806

$
4,847

$
7,034

$
4,806

$
7,034

Other real estate owned
 
$
603

$
520

$
1,880

$
603

$
1,880

Nonperforming loans and other real estate owned
 
$
17,181

$
16,716

$
23,562

$
17,181

$
23,562

Total nonperforming assets
 
$
20,439

$
20,139

$
38,167

$
20,439

$
38,167

Gross charge-offs
 
$
2,139

$
2,348

$
2,434

$
8,831

$
8,762

Recoveries
 
$
804

$
1,108

$
1,067

$
3,590

$
4,603

Net charge-offs/(recoveries)
 
$
1,335

$
1,240

$
1,367

$
5,241

$
4,159





















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

 
 

Cash and due from banks
$
74,388

 
$
74,107

Federal funds sold

 

Securities available-for-sale
784,916

 
814,931

Loans:
 

 
 

Commercial
1,166,352

 
1,139,490

Residential
443,670

 
436,143

Consumer
341,041

 
327,976

 
1,951,063

 
1,903,609

(Less) plus:
 

 
 

Net deferred loan costs
2,925

 
3,152

Allowance for loan losses
(20,436
)
 
(19,909
)
 
1,933,552

 
1,886,852

Restricted stock
10,390

 
10,379

Accrued interest receivable
13,970

 
12,913

Premises and equipment, net
46,554

 
48,272

Bank-owned life insurance
86,186

 
85,016

Goodwill
34,355

 
34,355

Other intangible assets
1,197

 
1,630

Other real estate owned
603

 
1,880

Other assets
22,607

 
30,333

TOTAL ASSETS
$
3,008,718

 
$
3,000,668

 
 
 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
 

 
 

Deposits:
 

 
 

Non-interest-bearing
$
431,923

 
$
425,001

Interest-bearing:
 

 
 

Certificates of deposit exceeding the FDIC insurance limits
42,284

 
43,178

Other interest-bearing deposits
1,962,520

 
1,990,474

 
2,436,727

 
2,458,653

Short-term borrowings
69,656

 
57,686

FHLB advances

 

Other liabilities
59,638

 
70,760

TOTAL LIABILITIES
2,566,021

 
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-12,278,295 in 2018 and 12,246,464 in 2017
1,824

 
1,822

Additional paid-in capital
76,774

 
75,624

Retained earnings
456,712

 
420,275

Accumulated other comprehensive loss
(23,454
)
 
(14,704
)
Less: Treasury shares at cost-2,334,245 in 2018 and 2,348,856 in 2017
(69,159
)
 
(69,448
)
TOTAL SHAREHOLDERS’ EQUITY
442,697

 
413,569

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
$
3,008,718

 
$
3,000,668



 






CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Dollar amounts in thousands, except per share data)
 
 
Years Ended December 31,
 
2018
 
2017
 
2016
 
(unaudited)
INTEREST INCOME:
 

 
 

 
 

Loans, including related fees
$
100,541

 
$
91,100

 
$
86,128

Securities:
 

 
 

 
 

Taxable
16,942

 
14,325

 
14,506

Tax-exempt
7,455

 
7,391

 
7,269

Other
1,286

 
1,379

 
1,477

TOTAL INTEREST INCOME
126,224

 
114,195

 
109,380

INTEREST EXPENSE:
 

 
 

 
 

Deposits
9,032

 
6,011

 
4,159

Short-term borrowings
501

 
245

 
134

Other borrowings
112

 
82

 
114

TOTAL INTEREST EXPENSE
9,645

 
6,338

 
4,407

NET INTEREST INCOME
116,579

 
107,857

 
104,973

Provision for loan losses
5,768

 
5,295

 
3,300

NET INTEREST INCOME AFTER PROVISION
 

 
 

 
 

FOR LOAN LOSSES
110,811

 
102,562

 
101,673

NON-INTEREST INCOME:
 

 
 

 
 

Trust and financial services
5,286

 
5,001

 
5,208

Service charges and fees on deposit accounts
11,733

 
11,895

 
10,530

Other service charges and fees
13,012

 
12,499

 
12,307

Securities gains, net
2

 
59

 
34

Insurance commissions
144

 
74

 
2,346

Gain on sale of certain assets and liabilities of insurance brokerage operation

 

 
12,822

Gain on sales of mortgage loans
1,829

 
1,688

 
1,842

Other
6,200

 
4,722

 
1,842

TOTAL NON-INTEREST INCOME
38,206

 
35,938

 
46,931

NON-INTEREST EXPENSE:
 

 
 

 
 

Salaries and employee benefits
50,658

 
50,116

 
50,091

Occupancy expense
7,030

 
6,897

 
6,865

Equipment expense
6,827

 
7,186

 
7,300

FDIC Expense
929

 
915

 
1,300

Other
25,845

 
23,633

 
24,752

TOTAL NON-INTEREST EXPENSE
91,289

 
88,747

 
90,308

INCOME BEFORE INCOME TAXES
57,728

 
49,753

 
58,296

Provision for income taxes
11,145

 
20,622

 
19,883

NET INCOME
46,583

 
29,131

 
38,413

OTHER COMPREHENSIVE INCOME
 

 
 

 
 

Change in unrealized gains/(losses) on securities, net of reclassifications and taxes
(8,363
)
 
3,335

 
(10,130
)
Change in funded status of post retirement benefits, net of taxes
(387
)
 
(3,875
)
 
5,367

COMPREHENSIVE INCOME
$
37,833

 
$
28,591

 
$
33,650

PER SHARE DATA
 

 
 

 
 

Basic and Diluted Earnings per Share
$
3.80

 
$
2.38

 
$
3.12

Weighted average number of shares outstanding (in thousands)
12,256

 
12,225

 
12,317



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