8-K
First Financial Corp /In/ (THFF)
View as plain text
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 31, 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 July 31, 2020, the Registrant issued a press release reporting its financial results for the three months ended June 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 | |
|---|---|
| 99.1.1 | Press Release, July 31, 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 July 31, 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 Second Quarter Results
Terre Haute, Indiana, July 31, 2020 – First Financial Corporation (NASDAQ:THFF) today announced results for the second quarter of 2020. For the three months ending June 30, 2020:
•Net income was $11.9 million compared to $12.6 million for the same period of 2019;
•Diluted net income per common share of $0.87 compared to $1.02 for the same period of 2019; and
•Return on average assets was 1.10% compared to 1.66% for the three months ended June 30, 2019.
The Corporation further reported results for the six months ending June 30, 2020:
•Net income was $24.1 million compared to $22.3 million for the same period of 2019;
•Diluted net income per common share of $1.76 compared to $1.81 for the same period of 2019; and
•Return on average assets was 1.16% compared to 1.47% for the six months ended June 30, 2019.
“In light of COVID-19 and the stay at home orders in the four states we do business in we are pleased with our second quarter results” said Norman L. Lowery, Chairman and Chief Executive Officer. “While eager to get back to normal operations, we have been cautious in the steps we have taken as the number of COVID 19 cases continue to increase across our footprint. Protecting the health of our associates, customers and their families has been, and will continue to be, our number one priority. During the second quarter much of our attention was devoted to the Small Business Administration’s Paycheck Protection Program enacted by the Coronavirus Aid, Relief and Economics Security Act (CARES). We are pleased we were able to fund 1,734 loans totaling $170 million to secure twenty-four thousand jobs which are so important to our customers, their families and the economy of the communities we serve. We are also pleased that during this challenging quarter we were able to assist many of our customers to take advantage of the current low interest rates by refinancing their home mortgages, lowering their payments or allowing them to purchase a new home.”
Average Total Loans
Average total loans for the second quarter of 2020 were $2.73 billion versus $1.98 billion for the comparable period in 2019, an increase of $748.8 million or 37.84%.
Total Loans Outstanding
Total loans outstanding increased $770.7 million, or 38.40%, from $2.01 billion as of June 30, 2019 to $2.78 billion as of June 30, 2020. On a linked quarter basis, total loans increased $159.3 million from $2.62 billion for the quarter ending March 31, 2020.
“Because of COVID 19 each of the four states in which we do business have imposed restrictions which affect our operations and the business of our customers” stated Lowery. “While we have not experienced a significant increase in charge-offs, we have continued to increase reserves in response to the effect of the pandemic on asset quality. We have also sought to meet the needs of our customers by assisting them with reasonable loan accommodations. To date, we have approved and processed requests totaling $343 million across all portfolios. Commercial loan requests comprise $321 million of this total."
Average Total Deposits
Average total deposits for the quarter ended June 30, 2020, were $3.53 billion versus $2.46 billion as of June 30, 2019, an increase of $1.06 billion or 43.11%.
Total Deposits
Total deposits were $3.57 billion as of June 30, 2020, compared to $2.46 billion as of June 30, 2019, an increase of $1.11 billion or 44.94%. On a linked quarter basis, total deposits increased $278.7 million from $3.29 billion for the quarter ending March 31, 2020.
Book Value Per Share
Book Value per share was $43.04 at June 30, 2020, compared to $38.88 at June 30, 2019.
Shareholder Equity
Shareholder equity at June 30, 2020, was $590.3 million compared to $477.8 million on June 30, 2019.
Tangible Common Equity to Tangible Asset Ratio
The Corporation’s tangible common equity to tangible asset ratio was 11.73% at June 30, 2020, compared to 14.61% at June 30, 2019.
Net Interest Income
Net interest income for the second quarter of 2020 was $35.9 million, an increase of 20.65% over the $29.8 million reported for the same period of 2019.
Net Interest Margin
The net interest margin for the quarter ended June 30, 2020, was 3.97% compared to the 4.33% reported at June 30, 2019.
Nonperforming Loans
Nonperforming loans as of June 30, 2020, were $23.0 million versus $15.2 million as of June 30, 2019. The ratio of nonperforming loans to total loans and leases was 0.83% as of June 30, 2020, versus 0.76% as of June 30, 2019.
Loan Loss Provision
The provision for loan losses for the three months ended June 30, 2020, was $2.97 million compared to the $230 thousand provision for the second quarter of 2019. The Corporation increased the allowance for loan and lease losses by $1.0 million in the second quarter of 2020 directly related to the estimate of losses resulting from the COVID-19 pandemic.
Net Charge-Offs
Net charge-offs were $743 thousand for the second quarter of 2020 compared to $940 thousand in the same period of 2019.
Allowance for Loan Losses
The Corporation’s allowance for loan losses as of June 30, 2020, was $23.3 million compared to $20.3 million as of June 30, 2019. The allowance for loan losses as a percent of total loans was 0.84% as of June 30, 2020, compared to 1.01% as of June 30, 2019. The decrease is primarily due to acquired loans being recorded at fair value. The Corporation's fair value adjustment due to purchased credit impaired loans was $5.9 million as of June 30, 2020.
Current Expected Credit Losses
As provided in the Coronavirus Aid, Relief, and Economic Security Act (CARES) 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 June 30, 2020 and 2019 was $8.8 and $9.7 million, respectively. In the second quarter 2019, we recorded a $1.5 million incentive received from a third-party vendor.
Non-Interest Expense
Non-interest expense for the three months ended June 30, 2020, was $26.9 million compared to $23.5 million in 2019.
Efficiency Ratio
The Corporation’s efficiency ratio was 58.78% for the quarter ending June 30, 2020, versus 58.06% for the same period in 2019.
Income Taxes
Income tax expense for the six months ended June 30, 2020, was $5.92 million versus $5.42 million for the same period in 2019. The effective tax rate for 2020 was 19.71% compared to 19.59% for 2019.
“In these unprecedented times, we are proud we continue to meet the financial needs of our customers and the communities we serve. I am proud of our associates and their unwavering commitment.” Lowery stated.
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 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30, | March 31, | June 30, | June 30, | June 30, | |||||||
| 2020 | 2020 | 2019 | 2020 | 2019 | |||||||
| END OF PERIOD BALANCES | |||||||||||
| Assets | $ | 4,368,112 | $ | 4,062,414 | $ | 3,064,212 | $ | 4,368,112 | $ | 3,064,212 | |
| Deposits | $ | 3,569,893 | $ | 3,291,231 | $ | 2,463,018 | $ | 3,569,893 | $ | 2,463,018 | |
| Loans, including net deferred loan costs | $ | 2,777,083 | $ | 2,622,637 | $ | 2,010,198 | $ | 2,777,083 | $ | 2,010,198 | |
| Allowance for Loan Losses | $ | 23,285 | $ | 21,063 | $ | 20,250 | $ | 23,285 | $ | 20,250 | |
| Total Equity | $ | 590,284 | $ | 581,771 | $ | 477,820 | $ | 590,284 | $ | 477,820 | |
| Tangible Common Equity ^(a)^ | $ | 501,863 | $ | 492,943 | $ | 442,496 | $ | 501,863 | $ | 442,496 | |
| AVERAGE BALANCES | |||||||||||
| Total Assets | $ | 4,317,011 | $ | 4,022,789 | $ | 3,033,788 | $ | 4,169,900 | $ | 3,018,922 | |
| Earning Assets | $ | 3,720,477 | $ | 3,625,679 | $ | 2,836,110 | $ | 3,673,078 | $ | 2,830,317 | |
| Investments | $ | 989,545 | $ | 988,523 | $ | 851,723 | $ | 989,034 | $ | 851,236 | |
| Loans | $ | 2,727,820 | $ | 2,637,036 | $ | 1,978,991 | $ | 2,682,428 | $ | 1,975,662 | |
| Total Deposits | $ | 3,526,529 | $ | 3,270,627 | $ | 2,464,212 | $ | 3,398,578 | $ | 2,446,188 | |
| Interest-Bearing Deposits | $ | 2,858,594 | $ | 2,739,394 | $ | 2,032,886 | $ | 2,798,994 | $ | 2,016,079 | |
| Interest-Bearing Liabilities | $ | 121,791 | $ | 106,843 | $ | 39,269 | $ | 114,317 | $ | 55,596 | |
| Total Equity | $ | 591,522 | $ | 569,696 | $ | 471,156 | $ | 580,609 | $ | 460,911 | |
| INCOME STATEMENT DATA | |||||||||||
| Net Interest Income | $ | 35,895 | $ | 36,350 | $ | 29,752 | $ | 72,245 | $ | 59,178 | |
| Net Interest Income Fully Tax Equivalent ^(b)^ | $ | 36,962 | $ | 37,409 | $ | 30,721 | $ | 74,371 | $ | 61,122 | |
| Provision for Loan Losses | $ | 2,965 | $ | 2,690 | $ | 230 | $ | 5,655 | $ | 1,700 | |
| Non-interest Income | $ | 8,776 | $ | 9,095 | $ | 9,743 | $ | 17,871 | $ | 17,379 | |
| Non-interest Expense | $ | 26,883 | $ | 27,554 | $ | 23,492 | $ | 54,437 | $ | 47,185 | |
| Net Income | $ | 11,924 | $ | 12,181 | $ | 12,569 | $ | 24,105 | $ | 22,251 | |
| PER SHARE DATA | |||||||||||
| Basic and Diluted Net Income Per Common Share | $ | 0.87 | $ | 0.89 | $ | 1.02 | $ | 1.76 | $ | 1.81 | |
| Cash Dividends Declared Per Common Share | $ | 0.52 | $ | — | $ | 0.52 | $ | 0.52 | $ | 0.52 | |
| Book Value Per Common Share | $ | 43.04 | $ | 42.42 | $ | 38.88 | $ | 43.04 | $ | 38.88 | |
| Tangible Book Value Per Common Share ^(c)^ | $ | 36.68 | $ | 35.94 | $ | 35.46 | $ | 36.59 | $ | 36.00 | |
| Basic Weighted Average Common Shares Outstanding | 13,715 | 13,740 | 12,290 | 13,727 | 12,286 |
(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 | Six Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30, | March 31, | June 30, | June 30, | June 30, | |||||||
| 2020 | 2020 | 2019 | 2020 | 2019 | |||||||
| Return on average assets | 1.10 | % | 1.21 | % | 1.66 | % | 1.16 | % | 1.47 | % | |
| Return on average common shareholder's equity | 8.06 | % | 8.55 | % | 10.67 | % | 8.30 | % | 9.66 | % | |
| Efficiency ratio | 58.78 | % | 59.25 | % | 58.06 | % | 59.02 | % | 60.11 | % | |
| Average equity to average assets | 13.70 | % | 14.16 | % | 15.53 | % | 13.92 | % | 15.27 | % | |
| Net interest margin ^(a)^ | 3.97 | % | 4.13 | % | 4.33 | % | 4.05 | % | 4.32 | % | |
| Net charge-offs to average loans and leases | 0.11 | % | 0.24 | % | 0.49 | % | 0.17 | % | 0.19 | % | |
| Loan and lease loss reserve to loans and leases | 0.84 | % | 0.80 | % | 1.01 | % | 0.84 | % | 1.01 | % | |
| Loan and lease loss reserve to nonperforming loans | 101.12 | % | 119.70 | % | 133.14 | % | 101.12 | % | 133.14 | % | |
| Nonperforming loans to loans and leases | 0.83 | % | 0.67 | % | 0.76 | % | 0.83 | % | 0.76 | % | |
| Tier 1 leverage | 11.64 | % | 12.38 | % | 14.83 | % | 11.64 | % | 14.83 | % | |
| Risk-based capital - Tier 1 | 15.44 | % | 16.19 | % | 18.65 | % | 15.44 | % | 18.65 | % |
(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, | |||||||
| 2020 | 2020 | 2019 | 2020 | 2019 | |||||||
| Accruing loans and leases past due 30-89 days | $ | 15,358 | $ | 27,037 | $ | 8,296 | $ | 15,358 | $ | 8,296 | |
| Accruing loans and leases past due 90 days or more | $ | 4,438 | $ | 1,430 | $ | 683 | $ | 4,438 | $ | 683 | |
| Nonaccrual loans and leases | $ | 14,634 | $ | 12,011 | $ | 9,985 | $ | 14,634 | $ | 9,985 | |
| Total troubled debt restructuring | $ | 3,899 | $ | 4,156 | $ | 4,541 | $ | 3,899 | $ | 4,541 | |
| Other real estate owned | $ | 3,577 | $ | 3,894 | $ | 498 | $ | 3,577 | $ | 498 | |
| Nonperforming loans and other real estate owned | $ | 26,548 | $ | 21,491 | $ | 15,707 | $ | 26,548 | $ | 15,707 | |
| Total nonperforming assets | $ | 29,493 | $ | 24,724 | $ | 19,040 | $ | 29,493 | $ | 19,040 | |
| Gross charge-offs | $ | 1,540 | $ | 2,904 | $ | 1,906 | $ | 4,444 | $ | 4,015 | |
| Recoveries | $ | 797 | $ | 1,334 | $ | 966 | $ | 2,131 | $ | 2,129 | |
| Net charge-offs/(recoveries) | $ | 743 | $ | 1,570 | $ | 940 | $ | 2,313 | $ | 1,886 |
CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands, except per share data)
| December 31,<br>2019 | |||
|---|---|---|---|
| ASSETS | |||
| Cash and due from banks | 386,507 | $ | 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 | 4,368,112 | $ | 4,023,250 |
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |||
| Deposits: | |||
| Non-interest-bearing | 681,155 | $ | 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 | 4,368,112 | $ | 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 June 30, | Six Months Ended June 30, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | |||||
| (unaudited) | ||||||||
| INTEREST INCOME: | ||||||||
| Loans, including related fees | $ | 33,224 | $ | 27,533 | $ | 68,258 | $ | 54,287 |
| Securities: | ||||||||
| Taxable | 3,624 | 3,516 | 7,653 | 7,197 | ||||
| Tax-exempt | 2,008 | 1,873 | 3,946 | 3,740 | ||||
| Other | 400 | 337 | 802 | 651 | ||||
| TOTAL INTEREST INCOME | 39,256 | 33,259 | 80,659 | 65,875 | ||||
| INTEREST EXPENSE: | ||||||||
| Deposits | 3,019 | 3,316 | 7,549 | 6,133 | ||||
| Short-term borrowings | 101 | 158 | 368 | 481 | ||||
| Other borrowings | 241 | 33 | 497 | 83 | ||||
| TOTAL INTEREST EXPENSE | 3,361 | 3,507 | 8,414 | 6,697 | ||||
| NET INTEREST INCOME | 35,895 | 29,752 | 72,245 | 59,178 | ||||
| Provision for loan losses | 2,965 | 230 | 5,655 | 1,700 | ||||
| NET INTEREST INCOME AFTER PROVISION | ||||||||
| FOR LOAN LOSSES | 32,930 | 29,522 | 66,590 | 57,478 | ||||
| NON-INTEREST INCOME: | ||||||||
| Trust and financial services | 1,288 | 1,124 | 2,822 | 2,328 | ||||
| Service charges and fees on deposit accounts | 2,102 | 2,735 | 5,100 | 5,359 | ||||
| Other service charges and fees | 3,869 | 3,408 | 7,199 | 6,522 | ||||
| Securities gains (losses), net | 31 | 16 | 225 | 12 | ||||
| Gain on sales of mortgage loans | 1,205 | 496 | 1,903 | 916 | ||||
| Other | 281 | 1,964 | 622 | 2,242 | ||||
| TOTAL NON-INTEREST INCOME | 8,776 | 9,743 | 17,871 | 17,379 | ||||
| NON-INTEREST EXPENSE: | ||||||||
| Salaries and employee benefits | 14,323 | 12,546 | 30,295 | 25,301 | ||||
| Occupancy expense | 2,162 | 1,813 | 4,091 | 3,628 | ||||
| Equipment expense | 2,673 | 1,751 | 5,134 | 3,568 | ||||
| FDIC Expense | 49 | 199 | (181) | 339 | ||||
| Other | 7,676 | 7,183 | 15,098 | 14,349 | ||||
| TOTAL NON-INTEREST EXPENSE | 26,883 | 23,492 | 54,437 | 47,185 | ||||
| INCOME BEFORE INCOME TAXES | 14,823 | 15,773 | 30,024 | 27,672 | ||||
| Provision for income taxes | 2,899 | 3,204 | 5,919 | 5,421 | ||||
| NET INCOME | 11,924 | 12,569 | 24,105 | 22,251 | ||||
| OTHER COMPREHENSIVE INCOME | ||||||||
| Change in unrealized gains/(losses) on securities, net of reclassifications and taxes | 3,130 | 8,341 | 16,228 | 18,565 | ||||
| Change in funded status of post retirement benefits, net of taxes | 384 | 304 | 788 | 607 | ||||
| COMPREHENSIVE INCOME | $ | 15,438 | $ | 21,214 | $ | 41,121 | $ | 41,423 |
| PER SHARE DATA | ||||||||
| Basic and Diluted Earnings per Share | $ | 0.87 | $ | 1.02 | $ | 1.76 | $ | 1.81 |
| Weighted average number of shares outstanding (in thousands) | 13,715 | 12,290 | 13,727 | 12,286 |