News Release |
FIRST FINANCIAL CORPORATION
One First Financial Plaza, Terre Haute, Indiana 47807 (812) 238-6000
For more information contact: | |
July 29, 2014 | Rodger A. McHargue at (812) 238-6334 |
First Financial Corporation reports 2nd Quarter results
TERRE HAUTE, INDIANA - First Financial Corporation (NASDAQ:THFF) today announced results for the second quarter of 2014. Net income increased 31.68% to $8.5 million compared to $6.4 million for the same period of 2013. Diluted net income per common share increased 31.25% to $0.63 from $0.48 for the comparable period of 2013.
The Corporation further reported net income of $16.3 million for the six months ended June 30, 2014 versus $14.1 million for the comparable period of 2013, an increase of 15.42%. Diluted net income per common share also increased 15.09% to $1.22 for the six months ended June 30, 2014 versus $1.06 for the comparable period of 2013. Return on assets for the six months ended June 30, 2014 was 1.08% compared to 0.96% for the six months ended June 30, 2013.
Norman L. Lowery, President and Chief Executive Officer, commented, “We are pleased with the continued growth in our net interest income and our exceptional credit quality.”
Earnings for the six month period ended June 30, 2014 were negatively impacted by a non-cash provision for state income tax expense of $607,541, which resulted from the revaluation of the Corporation’s state deferred tax items. The tax rate, currently 8.0%, is scheduled to drop to 6.5% for 2017. The new legislation further reduces the rate to 4.9%, beginning in 2019. The lower tax rate going forward reduces the benefit provided by the Corporation’s existing deferred tax items.
Average total loans for the second quarter of 2014 were $1.79 billion, a decrease of $35.0 million or 1.92%, versus the $1.82 billion for the comparable period in 2013. Total loans outstanding decreased $6.7 million, or .37%, from $1.80 billion as of June 30, 2013 to $1.79 billion as of June 30, 2014. On a linked quarter basis, average total loans increased $2.7 million, or .15%, from $1.78 billion for the quarter ending March 31, 2014.
Average total deposits for the quarter ended June 30, 2014 were $2.48 billion versus $2.32 billion as of June 30, 2013, an increase of 6.76%.
The company’s tangible common equity to tangible asset ratio was 12.10% at June 30, 2014, compared to 11.22% at June 30, 2013.
Net interest income for the second quarter of 2014 was $26.6 million, an increase of 3.37% over the $25.7 million reported for the same period of 2013. The net interest margin at June 30, 2014 was unchanged from the 4.09% reported at June 30, 2013. Despite downward pressure on loan yields and the prolonged low interest rate environment, the Corporation’s net interest margin remained stable.
The provision for loan losses for the three months ended June 30, 2014 was a negative $356 thousand compared to the $2.96 million provision for the second quarter of 2013. Net charge-offs were $2.03 million for the second quarter of 2014 compared to $5.84 million in the same period of 2013. The Corporation’s allowance for loan losses as of June 30, 2014 was $18.3 million compared to $22.1 million as of June 30, 2013. The allowance for loan losses as a percent of total loans was 1.02% as of June 30, 2014 compared to 1.23% as of June 30, 2013.
Nonperforming assets decreased 32.7% to $39.1 million as of June 30, 2014 versus $58.1 million as of June 30, 2013. The ratio of nonperforming assets to total loans and leases was 2.18% as of June 30, 2014 versus 3.23% as of June 30, 2013.
Non-interest income for the three months ended June 30, 2014 and 2013 was $9.6 and $9.7 million, respectively, a 1.01% decrease. Gains from the sale of mortgage loans decreased $486 thousand, driven by lower production volumes. Service charges and fees on deposit accounts increased by $367 thousand, and other service fees increased by $263 thousand.
Non-interest expense for the three months ended June 30, 2014 increased $666 thousand to $24.0 million compared to $23.4 million in 2013. On a linked quarter basis, non-interest expense increased $344 thousand from $23.7 million for the quarter ended March 31, 2014. On a year-over-year basis, salaries and employee benefits increased $674 thousand driven by the branch expansion and normal merit increases. Occupancy expenses increased $213 thousand due to the branch expansion and weather related expenses. The Corporation’s efficiency ratio was 63.76% for the quarter ending June 30, 2014 versus 63.54% for the same period in 2013.
Book value per share was $30.38 at June 30, 2014, a 9.74% increase from the $27.68 at June 30, 2013. Shareholders’ equity increased 10.14% to $405.7 million from $368.4 million on June 30, 2013.
First Financial Corporation is the holding company for First Financial Bank N.A. in Indiana and Illinois, The Morris Plan Company of Terre Haute and Forrest Sherer Inc. in Indiana.
CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands, except per share data)
June 30, 2014 | December 31, 2013 | ||||||
(unaudited) | |||||||
ASSETS | |||||||
Cash and due from banks | $ | 84,774 | $ | 71,033 | |||
Federal funds sold | 9,370 | 4,276 | |||||
Securities available-for-sale | 912,495 | 914,560 | |||||
Loans: | |||||||
Commercial | 1,046,883 | 1,042,138 | |||||
Residential | 477,265 | 482,377 | |||||
Consumer | 268,403 | 268,033 | |||||
1,792,551 | 1,792,548 | ||||||
Less: | |||||||
Unearned Income | 111 | (1,120 | ) | ||||
Allowance for loan losses | (18,255 | ) | (20,068 | ) | |||
1,774,407 | 1,771,360 | ||||||
Restricted Stock | 21,064 | 21,057 | |||||
Accrued interest receivable | 10,950 | 11,554 | |||||
Premises and equipment, net | 51,754 | 51,449 | |||||
Bank-owned life insurance | 79,863 | 79,035 | |||||
Goodwill | 39,489 | 39,489 | |||||
Other intangible assets | 4,388 | 4,935 | |||||
Other real estate owned | 5,190 | 5,291 | |||||
FDIC Indemnification Asset | 420 | 1,055 | |||||
Other assets | 39,759 | 43,624 | |||||
TOTAL ASSETS | $ | 3,033,923 | $ | 3,018,718 | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
Deposits: | |||||||
Non-interest-bearing | $ | 505,846 | $ | 506,815 | |||
Interest-bearing: | |||||||
Certificates of deposit of $100 or more | 168,799 | 179,177 | |||||
Other interest-bearing deposits | 1,758,438 | 1,772,799 | |||||
2,433,083 | 2,458,791 | ||||||
Short-term borrowings | 73,420 | 59,592 | |||||
Other borrowings | 63,140 | 58,288 | |||||
Other liabilities | 58,534 | 55,852 | |||||
TOTAL LIABILITIES | 2,628,177 | 2,632,523 | |||||
Shareholders’ equity | |||||||
Common stock, $.125 stated value per share; | |||||||
Authorized shares-40,000,000 | |||||||
Issued shares-14,538,132 in 2014 and 14,516,113 in 2013 | |||||||
Outstanding shares-13,355,272 in 2014 and 13,343,029 in 2013 | 1,812 | 1,811 | |||||
Additional paid-in capital | 71,557 | 71,074 | |||||
Retained earnings | 366,858 | 357,083 | |||||
Accumulated other comprehensive loss | (4,320 | ) | (13,969 | ) | |||
Less: Treasury shares at cost-1,182,860 in 2014 and 1,173,084 in 2013 | (30,161 | ) | (29,804 | ) | |||
TOTAL SHAREHOLDERS’ EQUITY | 405,746 | 386,195 | |||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 3,033,923 | $ | 3,018,718 |
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, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||||||||
INTEREST INCOME: | |||||||||||||||
Loans, including related fees | $ | 21,625 | $ | 22,576 | $ | 43,843 | $ | 46,030 | |||||||
Securities: | |||||||||||||||
Taxable | 4,298 | 3,479 | 8,742 | 6,694 | |||||||||||
Tax-exempt | 1,766 | 1,761 | 3,512 | 3,531 | |||||||||||
Other | 426 | 489 | 842 | 992 | |||||||||||
TOTAL INTEREST INCOME | 28,115 | 28,305 | 56,939 | 57,247 | |||||||||||
INTEREST EXPENSE: | |||||||||||||||
Deposits | 1,233 | 1,534 | 2,523 | 3,276 | |||||||||||
Short-term borrowings | 22 | 19 | 36 | 39 | |||||||||||
Other borrowings | 254 | 1,014 | 632 | 2,021 | |||||||||||
TOTAL INTEREST EXPENSE | 1,509 | 2,567 | 3,191 | 5,336 | |||||||||||
NET INTEREST INCOME | 26,606 | 25,738 | 53,748 | 51,911 | |||||||||||
Provision for loan losses | (356 | ) | 2,960 | 1,604 | 5,981 | ||||||||||
NET INTEREST INCOME AFTER PROVISION | |||||||||||||||
FOR LOAN LOSSES | 26,962 | 22,778 | 52,144 | 45,930 | |||||||||||
NON-INTEREST INCOME: | |||||||||||||||
Trust and financial services | 1,414 | 1,403 | 2,903 | 2,929 | |||||||||||
Service charges and fees on deposit accounts | 2,761 | 2,394 | 5,245 | 4,648 | |||||||||||
Other service charges and fees | 2,989 | 2,726 | 5,828 | 5,226 | |||||||||||
Securities gains/(losses), net | (1 | ) | 3 | (1 | ) | 7 | |||||||||
Insurance commissions | 1,852 | 1,941 | 3,765 | 3,904 | |||||||||||
Gain on sales of mortgage loans | 457 | 943 | 833 | 1,906 | |||||||||||
Other | 93 | 253 | 1,103 | 920 | |||||||||||
TOTAL NON-INTEREST INCOME | 9,565 | 9,663 | 19,676 | 19,540 | |||||||||||
NON-INTEREST EXPENSE: | |||||||||||||||
Salaries and employee benefits | 13,887 | 13,713 | 27,983 | 27,309 | |||||||||||
Occupancy expense | 1,789 | 1,576 | 3,714 | 3,098 | |||||||||||
Equipment expense | 1,904 | 1,537 | 3,562 | 3,038 | |||||||||||
FDIC Expense | 473 | 502 | 960 | 1,059 | |||||||||||
Other | 5,996 | 6,055 | 11,535 | 11,078 | |||||||||||
TOTAL NON-INTEREST EXPENSE | 24,049 | 23,383 | 47,754 | 45,582 | |||||||||||
INCOME BEFORE INCOME TAXES | 12,478 | 9,058 | 24,066 | 19,888 | |||||||||||
Provision for income taxes | 3,990 | 2,612 | 7,747 | 5,749 | |||||||||||
NET INCOME | 8,488 | 6,446 | 16,319 | 14,139 | |||||||||||
OTHER COMPREHENSIVE INCOME | |||||||||||||||
Change in unrealized gains/losses on securities, net of reclassifications and taxes | 4,116 | (10,559 | ) | 9,419 | (12,226 | ) | |||||||||
Change in funded status of post retirement benefits, net of taxes | 115 | 338 | 230 | 552 | |||||||||||
COMPREHENSIVE INCOME | $ | 12,719 | $ | (3,775 | ) | $ | 25,968 | $ | 2,465 | ||||||
PER SHARE DATA | |||||||||||||||
Basic and Diluted Earnings per Share | $ | 0.63 | $ | 0.48 | $ | 1.22 | $ | 1.06 | |||||||
Dividends per Share | $ | 0.49 | $ | 0.48 | $ | 0.49 | $ | 0.48 | |||||||
Weighted average number of shares outstanding (in thousands) | 13,355 | 13,307 | 13,352 | 13,304 |
Key Ratios | For the Six Months Ended | |||
June 30, | June 30, | |||
2014 | 2013 | |||
Return on average assets | 1.08% | 0.96% | ||
Return on average common shareholder's equity | 8.15% | 7.49% | ||
Average common shareholder's equity to average assets | 13.25% | 12.86% | ||
End of period tangible common equity to tangible assets | 12.10% | 11.22% | ||
Book value per share | $30.38 | $27.68 | ||
Tangible book value per share | $27.10 | $24.61 | ||
Risk-based capital - Tier 1 | 16.75% | 15.90% | ||
Risk-based capital - Total | 17.58% | 16.92% | ||
Net interest margin | 4.09% | 4.09% | ||
Efficiency Ratio | 62.43% | 61.37% | ||
Net charge-offs to average loans and leases | 0.38% | 0.53% | ||
Loan and lease loss reserve to loans and leases | 1.02% | 1.23% | ||
Nonperforming assets to loans and leases | 2.18% | 3.23% |
Asset Quality | For the Six Months Ended | |||||||
June 30, | June 30, | |||||||
2014 | 2013 | |||||||
Accruing loans and leases past due 90 days or more | $ | 824 | $ | 980 | ||||
Nonaccrual loans and leases | 18,406 | 27,554 | ||||||
Other real estate owned | 5,190 | 9,336 | ||||||
Troubled debt restructurings | 14,721 | 20,270 | ||||||
Total nonperforming assets | $ | 39,141 | $ | 58,140 |