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) October 28, 2020
FIRST FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
Commission File Number: 0-16759
| Indiana | 35-1546989 | |
|---|---|---|
| (State or other jurisdiction | (I.R.S. Employer | |
| incorporation or organization) | Identification No.) | |
| One First Financial Plaza, Terre Haute, IN | 47807 | |
| (Address of principal executive office) | (Zip Code) | |
| (812) | 238-6000 | |
| (Registrant's telephone number, including area code) |
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))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered |
|---|---|---|
| Common Stock, par value $0.125 per share | THFF | The NASDAQ Stock Market LLC |
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 28, 2020, the Registrant issued a press release reporting its financial results for the three and nine months ended September 30, 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, October 28, 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 October 28, 2020 | |
| /s/Rodger A. McHargue | |
| Rodger A. McHargue | |
| Secretary/Treasurer and Chief Financial Officer |
Document
| News Release |
|---|
FIRST FINANCIAL CORPORATION
One First Financial Plaza, Terre Haute, Indiana 47807 (812) 238-6000
First Financial Corporation Reports Third Quarter Results
Terre Haute, Indiana, October 28, 2020 – First Financial Corporation (NASDAQ:THFF) today announced results for the third quarter of 2020. For the three months ending September 30, 2020:
•Net income was $14.0 million compared to $12.3 million for the same period of 2019;
•Diluted net income per common share of $1.02 compared to $0.93 for the same period of 2019; and
•Return on average assets was 1.28% compared to 1.33% for the three months ended September 30, 2019.
The Corporation further reported results for the nine months ending September 30, 2020:
•Net income was $38.1 million compared to $34.5 million for the same period of 2019;
•Diluted net income per common share of $2.78 compared to $2.74 for the same period of 2019; and
•Return on average assets was 1.20% compared to 1.42% for the nine months ended September 30, 2019.
“We are pleased with our third quarter results” said Norman L. Lowery, Chairman and Chief Executive Officer. “In light of COVID-19 and the continuing restrictions in the four states in which we operate, we had a very solid quarter. During the quarter we focused on helping our clients who participated in the Small Business Administration’s Paycheck Protection Program enacted by the Coronavirus Aid, Relief and Economic Security (CARES) Act apply for loan forgiveness.” Separately, we approved and processed loan modifications totaling $351 million across all portfolios. As of September 30, 2020 all but $122.4 million have returned to principal and interest payments.
Average Total Loans
Average total loans for the third quarter of 2020 were $2.77 billion versus $2.47 billion for the comparable period in 2019, an increase of $297.0 million or 12.00%.
Total Loans Outstanding
Total loans outstanding increased $85.0 million, or 3.19%, from $2.67 billion as of September 30, 2019 to $2.75 billion as of September 30, 2020.
Mr. Lowery added “We also devoted considerable effort to assisting customers refinance their existing mortgages or obtain new mortgages. This resulted in a very successful quarter for our mortgage banking department.”
Average Total Deposits
Average total deposits for the quarter ended September 30, 2020, were $3.59 billion versus $3.02 billion as of September 30, 2019, an increase of $576 million or 19.08%.
Total Deposits
Total deposits were $3.60 billion as of September 30, 2020, compared to $3.22 billion as of September 30, 2019, an increase of $384 million or 11.93%. On a linked quarter basis, total deposits increased $34.5 million from $3.57 billion for the quarter ending June 30, 2020.
Book Value Per Share
Book Value per share was $44.27 at September 30, 2020, compared to $40.59 at September 30, 2019.
Shareholder Equity
Shareholder equity at September 30, 2020, was $607.1 million compared to $556.6 million on September 30, 2019.
Tangible Common Equity to Tangible Asset Ratio
The Corporation’s tangible common equity to tangible asset ratio was 12.07% at September 30, 2020, compared to 12.04% at September 30, 2019.
Net Interest Income
Net interest income for the third quarter of 2020 was $36.5 million, an increase of 7.45% over the $34.0 million reported for the same period of 2019.
Net Interest Margin
The net interest margin for the quarter ended September 30, 2020, was 3.99% compared to the 4.00% reported at September 30, 2019.
Nonperforming Loans
Nonperforming loans as of September 30, 2020, were $23.7 million versus $14.4 million as of September 30, 2019. The ratio of nonperforming loans to total loans and leases was 0.86% as of September 30, 2020, versus 0.54% as of September 30, 2019.
Loan Loss Provision
The provision for loan losses for the three months ended September 30, 2020, was $4.43 million compared to the $1.50 million provision for the third quarter of 2019. The Corporation provided $1.0 million for loan and lease losses in the third quarter of 2020, increasing the year-to-date total to $3.0 million directly related to the estimate of losses resulting from the COVID-19 pandemic.
“Each of the four states in which we do business continue to restrict activities affecting both our business and that of our customers, which may in turn affect loan performance,” stated Lowery.
Net Charge-Offs
Net charge-offs were $750 thousand for the third quarter of 2020 compared to $1.95 million in the same period of 2019.
Allowance for Loan Losses
The Corporation’s allowance for loan losses as of September 30, 2020, was $27.0 million compared to $19.8 million as of September 30, 2019. The allowance for loan losses as a percent of total loans was 0.98% as of September 30, 2020, compared to 0.74% as of September 30, 2019. The Corporation's fair value adjustment due to purchase credit impaired loans was $5.6 million as of September 30, 2020.
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 September 30, 2020 and 2019 was $11.7 million and $9.7 million, respectively.
Non-Interest Expense
Non-interest expense for the three months ended September 30, 2020, was $27.1 million compared to $27.4 million in 2019.
Efficiency Ratio
The Corporation’s efficiency ratio was 54.97% for the quarter ending September 30, 2020, versus 61.18% for the same period in 2019.
Income Taxes
Income tax expense for the nine months ended September 30, 2020, was $8.6 million versus $8.0 million for the same period in 2019. The effective tax rate for 2020 was 18.47% compared to 18.82% for 2019.
“Despite the challenges presented by the pandemic, First Financial has continued to meet the financial needs of our customers,” Lowery stated. “I am very proud of our associates and of their unwavering commitment to serve our customers in these challenging times.”
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 | Year Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| September 30, | June 30, | September 30, | September 30, | September 30, | ||||||
| 2020 | 2020 | 2019 | 2020 | 2019 | ||||||
| END OF PERIOD BALANCES | ||||||||||
| Assets | $ | 4,389,996 | $ | 4,368,112 | $ | 3,988,119 | $ | 4,389,996 | $ | 3,988,119 |
| Deposits | $ | 3,604,353 | $ | 3,569,893 | $ | 3,220,122 | $ | 3,604,353 | $ | 3,220,122 |
| Loans, including net deferred loan costs | $ | 2,753,493 | $ | 2,777,083 | $ | 2,668,476 | $ | 2,753,493 | $ | 2,668,476 |
| Allowance for Loan Losses | $ | 26,960 | $ | 23,285 | $ | 19,799 | $ | 26,960 | $ | 19,799 |
| Total Equity | $ | 607,095 | $ | 590,284 | $ | 556,582 | $ | 607,095 | $ | 556,582 |
| Tangible Common Equity (a) | $ | 519,098 | $ | 501,863 | $ | 469,904 | $ | 519,098 | $ | 469,904 |
| AVERAGE BALANCES | ||||||||||
| Total Assets | $ | 4,379,798 | $ | 4,317,011 | $ | 3,680,041 | $ | 4,239,866 | $ | 3,239,295 |
| Earning Assets | $ | 3,776,803 | $ | 3,720,477 | $ | 3,468,396 | $ | 3,707,653 | $ | 3,043,010 |
| Investments | $ | 1,008,303 | $ | 989,545 | $ | 995,092 | $ | 995,457 | $ | 899,188 |
| Loans | $ | 2,768,003 | $ | 2,727,820 | $ | 2,471,346 | $ | 2,710,953 | $ | 2,140,890 |
| Total Deposits | $ | 3,592,633 | $ | 3,526,529 | $ | 3,017,085 | $ | 3,463,263 | $ | 2,636,487 |
| Interest-Bearing Deposits | $ | 2,887,575 | $ | 2,858,594 | $ | 2,914,816 | $ | 2,828,521 | $ | 2,315,658 |
| Interest-Bearing Liabilities | $ | 108,236 | $ | 121,791 | $ | 113,019 | $ | 112,290 | $ | 74,737 |
| Total Equity | $ | 603,067 | $ | 591,522 | $ | 491,586 | $ | 588,095 | $ | 471,136 |
| INCOME STATEMENT DATA | ||||||||||
| Net Interest Income | $ | 36,531 | $ | 35,895 | $ | 33,999 | $ | 108,776 | $ | 93,177 |
| Net Interest Income Fully Tax Equivalent (b) | $ | 37,612 | $ | 36,962 | $ | 35,054 | $ | 111,983 | $ | 96,176 |
| Provision for Loan Losses | $ | 4,425 | $ | 2,965 | $ | 1,500 | $ | 10,080 | $ | 3,200 |
| Non-interest Income | $ | 11,739 | $ | 8,776 | $ | 9,746 | $ | 29,610 | $ | 27,125 |
| Non-interest Expense | $ | 27,130 | $ | 26,883 | $ | 27,409 | $ | 81,567 | $ | 74,594 |
| Net Income | $ | 14,000 | $ | 11,924 | $ | 12,257 | $ | 38,105 | $ | 34,508 |
| PER SHARE DATA | ||||||||||
| Basic and Diluted Net Income Per Common Share | $ | 1.02 | $ | 0.87 | $ | 0.93 | $ | 2.78 | $ | 2.74 |
| Cash Dividends Declared Per Common Share | $ | — | $ | 0.52 | $ | — | $ | 0.52 | $ | 0.52 |
| Book Value Per Common Share | $ | 44.27 | $ | 43.04 | $ | 40.59 | $ | 44.27 | $ | 40.59 |
| Tangible Book Value Per Common Share (c) | $ | 37.56 | $ | 36.68 | $ | 30.81 | $ | 37.85 | $ | 34.27 |
| Basic Weighted Average Common Shares Outstanding | 13,715 | 13,715 | 13,141 | 13,723 | 12,574 |
(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 | Nine Months Ended | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| September 30, | June 30, | September 30, | September 30, | September 30, | ||||||
| 2020 | 2020 | 2019 | 2020 | 2019 | ||||||
| Return on average assets | 1.28 | % | 1.10 | % | 1.33 | % | 1.20 | % | 1.42 | % |
| Return on average common shareholder's equity | 9.29 | % | 8.06 | % | 9.97 | % | 8.62 | % | 9.74 | % |
| Efficiency ratio | 54.97 | % | 58.78 | % | 61.18 | % | 57.61 | % | 60.50 | % |
| Average equity to average assets | 13.77 | % | 13.70 | % | 13.36 | % | 13.87 | % | 14.54 | % |
| Net interest margin (a) | 3.99 | % | 3.97 | % | 4.00 | % | 4.03 | % | 4.21 | % |
| Net charge-offs to average loans and leases | 0.11 | % | 0.11 | % | 0.32 | % | 0.15 | % | 0.24 | % |
| Loan and lease loss reserve to loans and leases | 0.98 | % | 0.84 | % | 0.74 | % | 0.98 | % | 0.74 | % |
| Loan and lease loss reserve to nonperforming loans | 113.89 | % | 101.12 | % | 137.45 | % | 113.89 | % | 137.45 | % |
| Nonperforming loans to loans and leases | 0.86 | % | 0.83 | % | 0.54 | % | 0.86 | % | 0.54 | % |
| Tier 1 leverage | 11.81 | % | 11.64 | % | 13.07 | % | 11.81 | % | 13.07 | % |
| Risk-based capital - Tier 1 | 15.70 | % | 15.44 | % | 15.09 | % | 15.70 | % | 15.09 | % |
(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, | ||||||
| 2020 | 2020 | 2019 | 2020 | 2019 | ||||||
| Accruing loans and leases past due 30-89 days | $ | 13,490 | $ | 15,358 | $ | 10,462 | $ | 13,490 | $ | 10,462 |
| Accruing loans and leases past due 90 days or more | $ | 2,948 | $ | 4,438 | $ | 744 | $ | 2,948 | $ | 744 |
| Nonaccrual loans and leases | $ | 16,628 | $ | 14,634 | $ | 9,533 | $ | 16,628 | $ | 9,533 |
| Total troubled debt restructuring | $ | 4,097 | $ | 3,899 | $ | 4,127 | $ | 4,097 | $ | 4,127 |
| Other real estate owned | $ | 3,577 | $ | 3,577 | $ | 3,717 | $ | 3,577 | $ | 3,717 |
| Nonperforming loans and other real estate owned | $ | 27,138 | $ | 26,548 | $ | 18,121 | $ | 27,138 | $ | 18,121 |
| Total nonperforming assets | $ | 30,174 | $ | 29,493 | $ | 21,725 | $ | 30,174 | $ | 21,725 |
| Gross charge-offs | $ | 1,998 | $ | 1,540 | $ | 2,926 | $ | 6,442 | $ | 6,941 |
| Recoveries | $ | 1,248 | $ | 797 | $ | 975 | $ | 3,379 | $ | 3,104 |
| Net charge-offs/(recoveries) | $ | 750 | $ | 743 | $ | 1,951 | $ | 3,063 | $ | 3,837 |
CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands, except per share data)
| December 31,<br>2019 | |||
|---|---|---|---|
| ASSETS | |||
| Cash and due from banks | 388,440 | $ | 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 | 4,389,996 | $ | 4,023,250 |
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |||
| Deposits: | |||
| Non-interest-bearing | 709,591 | $ | 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 | 4,389,996 | $ | 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 September 30, | Nine Months Ended September 30, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | |||||
| (unaudited) | ||||||||
| INTEREST INCOME: | ||||||||
| Loans, including related fees | $ | 34,077 | $ | 33,363 | $ | 102,335 | $ | 87,650 |
| Securities: | ||||||||
| Taxable | 3,005 | 3,907 | 10,658 | 11,104 | ||||
| Tax-exempt | 1,994 | 1,959 | 5,940 | 5,699 | ||||
| Other | 463 | 366 | 1,265 | 1,017 | ||||
| TOTAL INTEREST INCOME | 39,539 | 39,595 | 120,198 | 105,470 | ||||
| INTEREST EXPENSE: | ||||||||
| Deposits | 2,689 | 5,069 | 10,238 | 11,202 | ||||
| Short-term borrowings | 107 | 305 | 475 | 786 | ||||
| Other borrowings | 212 | 222 | 709 | 305 | ||||
| TOTAL INTEREST EXPENSE | 3,008 | 5,596 | 11,422 | 12,293 | ||||
| NET INTEREST INCOME | 36,531 | 33,999 | 108,776 | 93,177 | ||||
| Provision for loan losses | 4,425 | 1,500 | 10,080 | 3,200 | ||||
| NET INTEREST INCOME AFTER PROVISION | ||||||||
| FOR LOAN LOSSES | 32,106 | 32,499 | 98,696 | 89,977 | ||||
| NON-INTEREST INCOME: | ||||||||
| Trust and financial services | 1,210 | 1,329 | 4,032 | 3,657 | ||||
| Service charges and fees on deposit accounts | 2,516 | 3,227 | 7,616 | 8,586 | ||||
| Other service charges and fees | 4,269 | 3,720 | 11,468 | 10,242 | ||||
| Securities gains (losses), net | 5 | 6 | 230 | 18 | ||||
| Gain on sales of mortgage loans | 2,910 | 865 | 4,813 | 1,781 | ||||
| Other | 829 | 599 | 1,451 | 2,841 | ||||
| TOTAL NON-INTEREST INCOME | 11,739 | 9,746 | 29,610 | 27,125 | ||||
| NON-INTEREST EXPENSE: | ||||||||
| Salaries and employee benefits | 15,474 | 14,031 | 45,769 | 39,332 | ||||
| Occupancy expense | 2,003 | 1,804 | 6,094 | 5,432 | ||||
| Equipment expense | 2,739 | 2,117 | 7,873 | 5,685 | ||||
| FDIC Expense | 135 | 155 | (46) | 494 | ||||
| Other | 6,779 | 9,302 | 21,877 | 23,651 | ||||
| TOTAL NON-INTEREST EXPENSE | 27,130 | 27,409 | 81,567 | 74,594 | ||||
| INCOME BEFORE INCOME TAXES | 16,715 | 14,836 | 46,739 | 42,508 | ||||
| Provision for income taxes | 2,715 | 2,579 | 8,634 | 8,000 | ||||
| NET INCOME | 14,000 | 12,257 | 38,105 | 34,508 | ||||
| OTHER COMPREHENSIVE INCOME | ||||||||
| Change in unrealized gains/(losses) on securities, net of reclassifications and taxes | 2,223 | 4,124 | 18,451 | 22,689 | ||||
| Change in funded status of post retirement benefits, net of taxes | 383 | 303 | 1,171 | 910 | ||||
| COMPREHENSIVE INCOME | $ | 16,606 | $ | 16,684 | $ | 57,727 | $ | 58,107 |
| PER SHARE DATA | ||||||||
| Basic and Diluted Earnings per Share | $ | 1.02 | $ | 0.93 | $ | 2.78 | $ | 2.74 |
| Weighted average number of shares outstanding (in thousands) | 13,715 | 13,141 | 13,723 | 12,574 |