8-K
First Financial Corp /In/ (THFF)
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 29, 2020
First Financial Corporation
(Exact name of registrant as specified in its charter)
| Indiana<br><br>(State or other Jurisdiction<br><br>of Incorporation) | 000-16759<br><br>(Commission<br><br>File Number) | 35-1546989<br><br>(IRS Employer<br><br>Identification No.) |
|---|---|---|
| P. O. Box 540, Terre Haute, Indiana<br><br>(Address of Principal Executive Offices) | 47808<br><br>(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 29, 2020, the Registrant issued a press release reporting its financial results for the three months ended March 31, 2020. 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 | |
|---|---|
| 99.1 | Press Release, April 29, 2020 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 29, 2020 | |
| /s/Rodger A. McHargue | |
| Rodger A. McHargue | |
| Secretary/Treasurer and Chief Financial Officer |
Exhibit
| News Release |
|---|
FIRST FINANCIAL CORPORATION
One First Financial Plaza, Terre Haute, Indiana 47807 (812) 238-6000
First Financial Corporation reports First Quarter results
Terre Haute, Indiana, April 29, 2020 - First Financial Corporation (NASDAQ:THFF) today announced results for the first quarter of 2020. For the three months ending March 31, 2020:
| • | Net income was $12.2 million compared to $9.68 million for the same period of 2019; |
|---|---|
| • | Diluted net income per common share was $0.89 compared to $0.79 for the same period of 2019; and |
| --- | --- |
| • | Return on average assets was 1.21% compared to 1.29% for the three months ended March 31, 2019. |
| --- | --- |
“We came off of a record year in 2019 and we were able to sustain our momentum through the first quarter.” said Norman L. Lowery, Chairman and Chief Executive Officer. “We are now faced with challenges unlike those we have ever seen before. In response to the spread of COVID-19, we implemented our pandemic response plan. In doing so, we have, among other things, shifted to drive-up and appointment only banking, restricted travel, facilitated remote working arrangements when possible, practiced social distancing and encouraged all of our associates to follow the Center for Disease Control guidelines. Protecting the health and safety of our associates, customers, their families and the communities we serve is our priority.”
Average Total Loans
Average total loans for the first quarter of 2020 were $2.64 billion versus $1.97 billion for the comparable period in 2019, an increase of $664.7 million or 33.70%.
Total Loans Outstanding
Total loans outstanding increased $638.6 million, or 32.19%, from $1.98 billion as of March 31, 2019 to $2.62 billion as of March 31, 2020.
“Each of the four states in which we do business have restricted the activities of non-essential businesses. These necessary restrictions have led to wide-spread furloughs, layoffs and reduced spending across our footprint.” stated Lowery. “In response, First Financial has sought to meet the needs of our customers by working tirelessly to implement the Small Business Administration’s Paycheck Protection Program enacted by the Coronavirus Aid, Relief and Economic Security (CARES) Act and by assisting our customers with reasonable loan accommodations. To date, we have approved and processed loan modifications totaling $246 million across all portfolios. Commercial loan requests have totaled $233 million with an additional $13 million to assist consumers.
Average Total Deposits
Average total deposits for the quarter ended March 31, 2020, were $3.27 billion versus $2.43 billion as of March 31, 2019.
Total Deposits
Total deposits were $3.29 billion as of March 31, 2020, compared to $2.42 billion as of March 31, 2019, an increase of $871.7 million or 36.03%.
Book Value Per Share
Book Value per share was $42.42 at March 31, 2020, compared to $37.66 at March 31, 2019.
Shareholder Equity
Shareholder equity at March 31, 2020, was $581.8 million compared to $462.8 million on March 31, 2019.
Tangible Common Equity to Tangible Asset Ratio
The Corporation’s tangible common equity to tangible asset ratio was 12.41% at March 31, 2020, compared to 14.29% at March 31, 2019.
Net Interest Income
Net interest income for the first quarter of 2020 was $36.4 million, an increase of 23.53% over the $29.4 million reported for the same period of 2019.
Net Interest Margin
The tax-equivalent net interest margin for the quarter ended March 31, 2020, was 4.13% compared to the 4.31% reported at March 31, 2019.
Nonperforming Loans
Nonperforming loans as of March 31, 2020, were $17.6 million versus $16.1 million as of March 31, 2019. The ratio of nonperforming loans to total loans and leases was 0.67% as of March 31, 2020, versus 0.81% as of March 31, 2019.
Loan Loss Provision
The provision for loan losses for the three months ended March 31, 2020, was $2.69 million compared to the $1.47 million provision for the first quarter of 2019. The Corporation established a $1.0 million allowance for loan and lease losses in the first quarter of 2020 directly related to the initial estimate of losses resulting from the COVID-19 pandemic.
Net Charge-Offs
Net charge-offs were $1.57 million for the first quarter of 2020 compared to $946 thousand in the same period of 2019.
Allowance for Loan Losses
The Corporation’s allowance for loan losses as of March 31, 2020, was $21.1 million compared to $21.0 million as of March 31, 2019. The allowance for loan losses as a percent of total loans was 0.80% as of March 31, 2020, compared to 1.06% as of March 31, 2019.
Current Expected Credit Losses
As provided in the Coronavirus Aid, Relief, and Economic Security (CARES) Act the Corporation has elected to defer the implementation of the Current Expected Credit Loss accounting standard.
Non-Interest Income
Non-interest income for the three months ended March 31, 2020 and 2019 was $9.1 million and $7.6 million, respectively.
Non-Interest Expense
Non-interest expense for the three months ended March 31, 2020, was $27.6 million compared to $23.7 million in 2019.
Efficiency Ratio
The Corporation’s efficiency ratio was 59.25% for the quarter ending March 31, 2020, versus 62.29% for the same period in 2019.
Income Taxes
Income tax expense for the three months ended March 31, 2020, was $3.02 million versus $2.22 million for the same period in 2019. The effective tax rate for 2020 was 19.87% compared to 18.63% for 2019.
“For the last 186 years, First Financial has strived to meet the financial needs of our customers,” Lowery stated. “I am particularly proud of our associates’ resilience and steadfast commitment during these unprecedented times. No matter what the circumstance, the First team always rises to the challenge”.
About First Financial Corporation
First Financial Corporation (NASDAQ:THFF) is the holding company for First Financial Bank N.A. and The Morris Plan Company of Terre Haute, Inc. First Financial Bank N.A. is the fifth oldest national bank in the United States, operating 81 banking centers in Illinois, Indiana, Kentucky and Tennessee. The Morris Plan Company of Terre Haute, Inc. is a state industrial chartered financial institution operating one office in Terre Haute, Indiana. Additional information is available at www.first-online.bank.
Investor Contact:
Rodger A. McHargue
Chief Financial Officer
P: 812-238-6334
E: rmchargue@first-online.com
| Three Months Ended | ||||||
|---|---|---|---|---|---|---|
| March 31, | December 31, | March 31, | ||||
| 2020 | 2019 | 2019 | ||||
| END OF PERIOD BALANCES | ||||||
| Assets | $ | 4,062,414 | $ | 4,023,250 | $ | 3,025,565 |
| Deposits | $ | 3,291,231 | $ | 3,275,357 | $ | 2,419,556 |
| Loans, including net deferred loan costs | $ | 2,622,637 | $ | 2,656,390 | $ | 1,984,053 |
| Allowance for Loan Losses | $ | 21,063 | $ | 19,943 | $ | 20,960 |
| Total Equity | $ | 581,771 | $ | 557,608 | $ | 462,796 |
| Tangible Common Equity ^(a)^ | $ | 492,943 | $ | 468,373 | $ | 427,358 |
| AVERAGE BALANCES | ||||||
| Total Assets | $ | 4,022,789 | $ | 4,041,287 | $ | 3,004,056 |
| Earning Assets | $ | 3,625,679 | $ | 3,662,390 | $ | 2,824,524 |
| Investments | $ | 988,523 | $ | 1,000,488 | $ | 850,749 |
| Loans | $ | 2,637,036 | $ | 2,658,582 | $ | 1,972,333 |
| Total Deposits | $ | 3,270,627 | $ | 3,279,859 | $ | 2,428,164 |
| Interest-Bearing Deposits | $ | 2,739,394 | $ | 3,072,566 | $ | 1,999,272 |
| Interest-Bearing Liabilities | $ | 106,843 | $ | 118,605 | $ | 71,923 |
| Total Equity | $ | 569,696 | $ | 575,908 | $ | 450,666 |
| INCOME STATEMENT DATA | ||||||
| Net Interest Income | $ | 36,350 | $ | 38,475 | $ | 29,426 |
| Net Interest Income Fully Tax Equivalent ^(b)^ | $ | 37,409 | $ | 39,594 | $ | 30,401 |
| Provision for Loan Losses | $ | 2,690 | $ | 1,500 | $ | 1,470 |
| Non-interest Income | $ | 9,095 | $ | 11,327 | $ | 7,636 |
| Non-interest Expense | $ | 27,554 | $ | 29,754 | $ | 23,693 |
| Net Income | $ | 12,181 | $ | 14,364 | $ | 9,682 |
| PER SHARE DATA | ||||||
| Basic and Diluted Net Income Per Common Share | $ | 0.89 | $ | 1.05 | $ | 0.79 |
| Cash Dividends Declared Per Common Share | $ | — | $ | 0.52 | $ | — |
| Book Value Per Common Share | $ | 42.42 | $ | 40.58 | $ | 37.66 |
| Tangible Book Value Per Common Share ^(c)^ | $ | 35.94 | $ | 35.46 | $ | 34.77 |
| Basic Weighted Average Common Shares Outstanding | 13,740 | 13,726 | 12,282 |
(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 | |||||
|---|---|---|---|---|---|---|
| March 31, | December 31, | March 31, | ||||
| 2020 | 2019 | 2019 | ||||
| Return on average assets | 1.21 | % | 1.42 | % | 1.29 | % |
| Return on average common shareholder's equity | 8.55 | % | 9.98 | % | 8.59 | % |
| Efficiency ratio | 59.25 | % | 58.43 | % | 62.29 | % |
| Average equity to average assets | 14.16 | % | 14.25 | % | 15.00 | % |
| Net interest margin ^(a)^ | 4.13 | % | 4.37 | % | 4.31 | % |
| Net charge-offs to average loans and leases | 0.24 | % | 0.20 | % | 0.19 | % |
| Loan and lease loss reserve to loans and leases | 0.80 | % | 0.75 | % | 1.06 | % |
| Loan and lease loss reserve to nonperforming loans | 119.70 | % | 130.01 | % | 130.28 | % |
| Nonperforming loans to loans and leases | 0.67 | % | 0.58 | % | 0.81 | % |
| Tier 1 leverage | 12.38 | % | 12.04 | % | 14.83 | % |
| Risk-based capital - Tier 1 | 16.19 | % | 15.51 | % | 18.65 | % |
(a) Net interest margin is calculated on a tax equivalent basis.
| Asset Quality | Three Months Ended | |||||
|---|---|---|---|---|---|---|
| March 31, | December 31, | March 31, | ||||
| 2020 | 2019 | 2019 | ||||
| Accruing loans and leases past due 30-89 days | $ | 27,037 | $ | 24,040 | $ | 11,402 |
| Accruing loans and leases past due 90 days or more | $ | 1,430 | $ | 1,610 | $ | 507 |
| Nonaccrual loans and leases | $ | 12,011 | $ | 9,535 | $ | 10,808 |
| Total troubled debt restructuring | $ | 4,156 | $ | 4,194 | $ | 4,774 |
| Other real estate owned | $ | 3,894 | $ | 3,625 | $ | 857 |
| Nonperforming loans and other real estate owned | $ | 21,491 | $ | 18,964 | $ | 16,946 |
| Total nonperforming assets | $ | 24,724 | $ | 22,583 | $ | 20,240 |
| Gross charge-offs | $ | 2,904 | $ | 3,456 | $ | 2,109 |
| Recoveries | $ | 1,334 | $ | 2,100 | $ | 1,163 |
| Net charge-offs/(recoveries) | $ | 1,570 | $ | 1,356 | $ | 946 |
CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands, except per share data)
| December 31, <br>2019 | |||||
|---|---|---|---|---|---|
| ASSETS | |||||
| Cash and due from banks | 211,034 | $ | 127,426 | ||
| Federal funds sold | 7,500 | ||||
| Securities available-for-sale | 926,717 | ||||
| Loans: | |||||
| Commercial | 1,584,447 | ||||
| Residential | 682,077 | ||||
| Consumer | 386,006 | ||||
| 2,652,530 | |||||
| (Less) plus: | |||||
| Net deferred loan costs | 3,860 | ||||
| Allowance for loan losses | ) | (19,943 | ) | ||
| 2,636,447 | |||||
| Restricted stock | 15,394 | ||||
| Accrued interest receivable | 18,523 | ||||
| Premises and equipment, net | 62,576 | ||||
| Bank-owned life insurance | 94,251 | ||||
| Goodwill | 78,592 | ||||
| Other intangible assets | 10,643 | ||||
| Other real estate owned | 3,625 | ||||
| Other assets | 41,556 | ||||
| TOTAL ASSETS | 4,062,414 | $ | 4,023,250 | ||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||
| Deposits: | |||||
| Non-interest-bearing | 531,758 | $ | 547,189 | ||
| Interest-bearing: | |||||
| Certificates of deposit exceeding the FDIC insurance limits | 126,738 | ||||
| Other interest-bearing deposits | 2,601,430 | ||||
| 3,275,357 | |||||
| Short-term borrowings | 80,119 | ||||
| Other liabilities | 79,193 | ||||
| TOTAL LIABILITIES | 3,465,642 | ||||
| Shareholders’ equity | |||||
| Common stock, .125 stated value per share; | |||||
| Authorized shares-40,000,000 | |||||
| Issued shares-16,075,154 in 2020 and 16,055,466 in 2019 | |||||
| Outstanding shares-13,714,524 in 2020 and 13,741,825 in 2019 | 2,005 | ||||
| Additional paid-in capital | 139,694 | ||||
| Retained earnings | 492,055 | ||||
| Accumulated other comprehensive income/(loss) | (7,501 | ) | |||
| Less: Treasury shares at cost-2,360,630 in 2020 and 2,313,641 in 2019 | ) | (68,645 | ) | ||
| TOTAL SHAREHOLDERS’ EQUITY | 557,608 | ||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | 4,062,414 | $ | 4,023,250 |
All values are in US Dollars.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Dollar amounts in thousands, except per share data)
| Three Months Ended March 31, | ||||||
|---|---|---|---|---|---|---|
| 2020 | 2019 | |||||
| (unaudited) | ||||||
| INTEREST INCOME: | ||||||
| Loans, including related fees | $ | 35,034 | $ | 26,754 | ||
| Securities: | ||||||
| Taxable | 4,029 | 3,681 | ||||
| Tax-exempt | 1,938 | 1,867 | ||||
| Other | 402 | 314 | ||||
| TOTAL INTEREST INCOME | 41,403 | 32,616 | ||||
| INTEREST EXPENSE: | ||||||
| Deposits | 4,530 | 2,817 | ||||
| Short-term borrowings | 267 | 323 | ||||
| Other borrowings | 256 | 50 | ||||
| TOTAL INTEREST EXPENSE | 5,053 | 3,190 | ||||
| NET INTEREST INCOME | 36,350 | 29,426 | ||||
| Provision for loan losses | 2,690 | 1,470 | ||||
| NET INTEREST INCOME AFTER PROVISION | ||||||
| FOR LOAN LOSSES | 33,660 | 27,956 | ||||
| NON-INTEREST INCOME: | ||||||
| Trust and financial services | 1,534 | 1,204 | ||||
| Service charges and fees on deposit accounts | 2,998 | 2,624 | ||||
| Other service charges and fees | 3,330 | 3,114 | ||||
| Securities gains (losses), net | 194 | (4 | ) | |||
| Gain on sales of mortgage loans | 698 | 420 | ||||
| Other | 341 | 278 | ||||
| TOTAL NON-INTEREST INCOME | 9,095 | 7,636 | ||||
| NON-INTEREST EXPENSE: | ||||||
| Salaries and employee benefits | 15,972 | 12,755 | ||||
| Occupancy expense | 1,929 | 1,815 | ||||
| Equipment expense | 2,461 | 1,817 | ||||
| FDIC Expense | (230 | ) | 140 | |||
| Other | 7,422 | 7,166 | ||||
| TOTAL NON-INTEREST EXPENSE | 27,554 | 23,693 | ||||
| INCOME BEFORE INCOME TAXES | 15,201 | 11,899 | ||||
| Provision for income taxes | 3,020 | 2,217 | ||||
| NET INCOME | 12,181 | 9,682 | ||||
| OTHER COMPREHENSIVE INCOME | ||||||
| Change in unrealized gains/(losses) on securities, net of reclassifications and taxes | 13,098 | 10,224 | ||||
| Change in funded status of post retirement benefits, net of taxes | 404 | 303 | ||||
| COMPREHENSIVE INCOME | $ | 25,683 | $ | 20,209 | ||
| PER SHARE DATA | ||||||
| Basic and Diluted Earnings per Share | $ | 0.89 | $ | 0.79 | ||
| Weighted average number of shares outstanding (in thousands) | 13,740 | 12,282 |