FIRST FINANCIAL CORPORATION
One First Financial Plaza, Terre Haute, Indiana 47807 (812) 238-6000
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| | For more information contact: |
| October 30, 2014 | Rodger A. McHargue at (812) 238-6334 |
First Financial Corporation reports 3rd Quarter results
TERRE HAUTE, INDIANA - First Financial Corporation (NASDAQ:THFF) today reported net income of $24.6 million for the nine months ended September 30, 2014 compared to $22.6 million for the comparable period of 2013, an increase of 8.76%. Diluted net income per common share also increased 8.82% to $1.85 for the nine months ended September 30, 2014 versus $1.70 for the comparable period of 2013. Return on assets for the nine months ended September 30, 2014 was 1.08% compared to 1.02% for the nine months ended September 30, 2013. The Corporation further reported that net income for the third quarter of 2014 decreased 2.36% to $8.3 million compared to $8.5 million for the same period of 2013. Diluted net income per common share decreased 3.13% to $0.62 from $0.64 for the comparable period of 2013.
Earnings for the nine month period ended September 30, 2014 were impacted by a non-cash provision for state income tax expense. 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. The revaluation of the Corporation’s state deferred tax items resulted in a one-time expense of $608 thousand.
Average total loans for the third quarter of 2014 were $1.81 billion in 2013, an increase of $138 million, versus the $1.80 billion for the comparable period in 2013. Total loans outstanding increased $7.2 million, to $1.79 billion as of September 30, 2014. On a linked quarter basis, average total loans increased $8.1 million, from $1.78 billion for the quarter ending June 30, 2014.
Average total deposits for the quarter ended September 30, 2014 were $2.40 billion versus $2.35 billion as of September 30, 2013, an increase of 2.36%.
The company’s tangible common equity to tangible asset ratio was 11.96% at September 30, 2014, compared to 11.11% at September 30, 2013.
Net interest income for the third quarter of 2014 was $27.1 million, a decrease of 2.35% over the $27.8 million reported for the same period of 2013. The net interest margin for the nine months ended September 30, 2014 was 4.11%, a decrease compared to the 4.16% reported for the same period of 2013. The net interest margin has been impacted by the effects of the low interest rate environment on loans and investments.
Nonperforming assets decreased 25.4% to $38.2 million as of September 30, 2014 versus $51.6 million as of September 30, 2013. The ratio of nonperforming assets to total loans and leases was 2.18% as of September 30, 2014 versus 2.85% as of September 30, 2013.
The provision for loan losses for the three months ended September 30, 2014 was $1.5 million compared to the $495 thousand provision for the third quarter of 2013. Net charge-offs were $2.3 million for the third quarter of 2014 compared to $429 thousand in the same period of 2013. The Corporation’s allowance for loan losses as of September 30, 2014 was $17.5 million compared to $20.1 million as of September 30, 2013. The allowance for loan losses as a percent of total loans was .97% as of September 30, 2014 compared to 1.22% as of September 30, 2013.
Non-interest income for the three months ended September 30, 2014 increased 9.38% to $10.5 million compared to the $9.6 million for the same period of 2013. Service charges and fees on deposit accounts increased by $120 thousand, while other service fees increased by $294 thousand, and insurance commissions increased by $195 thousand.
Non-interest expense for the three months ended September 30, 2014 decreased $114 thousand to $24.7 million compared to $24.8 million in 2013. On a linked quarter basis, non-interest expense increased $656 thousand from $24.0 million for the quarter ended June 30, 2014. On a year-over-year basis, salaries and employee benefits increased $982 thousand driven by the acquisition of nine branches in the third quarter 2013 and normal merit increases. Occupancy expenses increased $848
thousand due to the branch acquisition and this winter's uncharacteristic weather related expenses. The Corporation’s efficiency ratio was 62.55% for the quarter ending September 30, 2014 versus 62.43% for the same period in 2013.
Book value per share was $31.16 at September 30, 2014, a 10.54% increase from $28.19 at September 30, 2013. Shareholders’ equity increased 7.68% to $403.9 million from $375.1 million on September 30, 2013.
On August 25, 2014 the Corporation announced a stock repurchase plan to acquire 5% of the Corporation's outstanding common stock. During the third quarter of 2014 the Corporation repurchased 388,340 shares as part of the repurchase plan. The Corporation has since acquired an additional 56,800 shares as part of the repurchase plan.
Norman L. Lowery, President and Chief Executive Officer, commented, “We are pleased with our third quarter results. Our net interest income and non-interest income both increased on a quarter over quarter basis.”
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)
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| | | | | | | |
| | September 30, 2014 | | December 31, 2013 |
| | (unaudited) |
| ASSETS | |
| | |
|
| Cash and due from banks | $ | 96,998 |
| | $ | 71,033 |
|
| Federal funds sold | 14,980 |
| | 4,276 |
|
| Securities available-for-sale | 900,110 |
| | 914,560 |
|
| Loans: | |
| | |
|
| Commercial | 1,064,375 |
| | 1,042,138 |
|
| Residential | 477,021 |
| | 482,377 |
|
| Consumer | 269,291 |
| | 268,033 |
|
| | 1,810,687 |
| | 1,792,548 |
|
| Less: | |
| | |
|
| Unearned Income | 638 |
| | (1,120 | ) |
| Allowance for loan losses | (17,507 | ) | | (20,068 | ) |
| | 1,793,818 |
| | 1,771,360 |
|
| Restricted Stock | 21,075 |
| | 21,057 |
|
| Accrued interest receivable | 12,100 |
| | 11,554 |
|
| Premises and equipment, net | 52,573 |
| | 51,449 |
|
| Bank-owned life insurance | 80,311 |
| | 79,035 |
|
| Goodwill | 39,489 |
| | 39,489 |
|
| Other intangible assets | 4,145 |
| | 4,935 |
|
| Other real estate owned | 4,012 |
| | 5,291 |
|
| FDIC Indemnification Asset | 375 |
| | 1,055 |
|
| Other assets | 36,781 |
| | 43,624 |
|
| TOTAL ASSETS | $ | 3,056,767 |
| | $ | 3,018,718 |
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| | | | |
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |
| | |
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| Deposits: | |
| | |
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| Non-interest-bearing | $ | 539,322 |
| | $ | 506,815 |
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| Interest-bearing: | | | |
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| Certificates of deposit of $100 or more | 166,544 |
| | 179,177 |
|
| Other interest-bearing deposits | 1,746,086 |
| | 1,772,799 |
|
| | 2,451,952 |
| | 2,458,791 |
|
| Short-term borrowings | 59,031 |
| | 59,592 |
|
| Other borrowings | 87,961 |
| | 58,288 |
|
| Other liabilities | 53,950 |
| | 55,852 |
|
| TOTAL LIABILITIES | 2,652,894 |
| | 2,632,523 |
|
| | | | |
| Shareholders’ equity | |
| | |
|
| Common stock, $.125 stated value per share; | |
| | |
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| Authorized shares-40,000,000 | |
| | |
|
| Issued shares-14,538,132 in 2014 and 14,516,113 in 2013 | |
| | |
|
| Outstanding shares-12,962,207 in 2014 and 13,343,029 in 2013 | 1,814 |
| | 1,811 |
|
| Additional paid-in capital | 71,914 |
| | 71,074 |
|
| Retained earnings | 375,130 |
| | 357,083 |
|
| Accumulated other comprehensive loss | (2,325 | ) | | (13,969 | ) |
| Less: Treasury shares at cost-1,575,525 in 2014 and 1,173,084 in 2013 | (42,660 | ) | | (29,804 | ) |
| TOTAL SHAREHOLDERS’ EQUITY | 403,873 |
| | 386,195 |
|
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 3,056,767 |
| | $ | 3,018,718 |
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| | | | |
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Dollar amounts in thousands, except per share data)
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| | | | | | | | | | | | | | | |
| | Three Months Ended September 30, | | Nine Months Ended September 30, |
| | 2014 | | 2013 | | 2014 | | 2013 |
| | (unaudited) | | (unaudited) | | (unaudited) | | (unaudited) |
| INTEREST INCOME: | |
| | |
| | |
| | |
|
| Loans, including related fees | $ | 21,939 |
| | $ | 22,510 |
| | $ | 65,782 |
| | $ | 68,540 |
|
| Securities: | |
| | |
| | |
| | |
|
| Taxable | 4,196 |
| | 5,038 |
| | 12,938 |
| | 11,732 |
|
| Tax-exempt | 1,782 |
| | 1,750 |
| | 5,294 |
| | 5,281 |
|
| Other | 459 |
| | 421 |
| | 1,301 |
| | 1,413 |
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| TOTAL INTEREST INCOME | 28,376 |
| | 29,719 |
| | 85,315 |
| | 86,966 |
|
| INTEREST EXPENSE: | |
| | |
| | |
| | |
|
| Deposits | 1,088 |
| | 1,349 |
| | 3,611 |
| | 4,625 |
|
| Short-term borrowings | 49 |
| | 23 |
| | 85 |
| | 62 |
|
| Other borrowings | 94 |
| | 549 |
| | 726 |
| | 2,570 |
|
| TOTAL INTEREST EXPENSE | 1,231 |
| | 1,921 |
| | 4,422 |
| | 7,257 |
|
| NET INTEREST INCOME | 27,145 |
| | 27,798 |
| | 80,893 |
| | 79,709 |
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| Provision for loan losses | 1,506 |
| | 495 |
| | 3,110 |
| | 6,476 |
|
| NET INTEREST INCOME AFTER PROVISION | |
| | |
| | |
| | |
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| FOR LOAN LOSSES | 25,639 |
| | 27,303 |
| | 77,783 |
| | 73,233 |
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| NON-INTEREST INCOME: | |
| | |
| | |
| | |
|
| Trust and financial services | 1,386 |
| | 1,402 |
| | 4,289 |
| | 4,331 |
|
| Service charges and fees on deposit accounts | 2,813 |
| | 2,693 |
| | 8,058 |
| | 7,341 |
|
| Other service charges and fees | 3,112 |
| | 2,818 |
| | 8,940 |
| | 8,044 |
|
| Securities gains/(losses), net | — |
| | — |
| | (1 | ) | | 7 |
|
| Insurance commissions | 2,091 |
| | 1,896 |
| | 5,620 |
| | 5,800 |
|
| Gain on sales of mortgage loans | 519 |
| | 583 |
| | 1,352 |
| | 2,489 |
|
| Other | 573 |
| | 245 |
| | 1,676 |
| | 1,165 |
|
| TOTAL NON-INTEREST INCOME | 10,494 |
| | 9,637 |
| | 29,934 |
| | 29,177 |
|
| NON-INTEREST EXPENSE: | |
| | |
| | |
| | |
|
| Salaries and employee benefits | 14,081 |
| | 13,773 |
| | 42,064 |
| | 41,082 |
|
| Occupancy expense | 1,776 |
| | 1,544 |
| | 5,490 |
| | 4,642 |
|
| Equipment expense | 1,905 |
| | 1,686 |
| | 5,467 |
| | 4,724 |
|
| FDIC Expense | 536 |
| | 500 |
| | 1,496 |
| | 1,559 |
|
| Other | 6,407 |
| | 7,316 |
| | 17,706 |
| | 18,394 |
|
| TOTAL NON-INTEREST EXPENSE | 24,705 |
| | 24,819 |
| | 72,223 |
| | 70,401 |
|
| INCOME BEFORE INCOME TAXES | 11,428 |
| | 12,121 |
| | 35,494 |
| | 32,009 |
|
| Provision for income taxes | 3,156 |
| | 3,649 |
| | 10,903 |
| | 9,398 |
|
| NET INCOME | 8,272 |
| | 8,472 |
| | 24,591 |
| | 22,611 |
|
| OTHER COMPREHENSIVE INCOME | |
| | |
| | |
| | |
|
| Change in unrealized gains/losses on securities, net of reclassifications and taxes | 1,879 |
| | (2,322 | ) | | 11,298 |
| | (14,548 | ) |
| Change in funded status of post retirement benefits, net of taxes | 116 |
| | 340 |
| | 346 |
| | 892 |
|
| COMPREHENSIVE INCOME | $ | 10,267 |
| | $ | 6,490 |
| | $ | 36,235 |
| | $ | 8,955 |
|
| PER SHARE DATA | |
| | |
| | |
| | |
|
| Basic and Diluted Earnings per Share | $ | 0.62 |
| | $ | 0.64 |
| | $ | 1.85 |
| | $ | 1.70 |
|
| Dividends per Share | $ | — |
| | $ | — |
| | $ | 0.49 |
| | $ | 0.48 |
|
| Weighted average number of shares outstanding (in thousands) | 13,269 |
| | 13,307 |
| | 13,325 |
| | 13,305 |
|
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| | | | |
| Key Ratios | | For the Nine Months Ended |
| | | September 30, | | September 30, |
| | | 2014 | | 2013 |
| Return on average assets | | 1.08% | | 1.02% |
| Return on average common shareholder's equity | | 8.17% | | 8.01% |
| Average common shareholder's equity to average assets | | 13.27% | | 12.78% |
| End of period tangible common equity to tangible assets | | 11.96% | | 11.11% |
| Book value per share | | $31.16 | | $28.19 |
| Tangible book value per share | | $27.79 | | $24.82 |
| Risk-based capital - Tier 1 | | 16.53% | | 15.94% |
| Risk-based capital - Total | | 17.33% | | 16.94% |
| Net interest margin | | 4.11% | | 4.16% |
| Efficiency Ratio | | 62.55% | | 62.25% |
| Net charge-offs to average loans and leases | | 0.42% | | 0.38% |
| Loan and lease loss reserve to loans and leases | | 0.97% | | 1.22% |
| Nonperforming assets to loans and leases | | 2.18% | | 2.85% |
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| | | | | | | | |
| Asset Quality | | For the Nine Months Ended |
| | | September 30, | | September 30, |
| | | 2014 | | 2013 |
| Accruing loans and leases past due 90 days or more | | $ | 787 |
| | $ | 1,025 |
|
| Nonaccrual loans and leases | | 18,673 |
| | 21,800 |
|
| Other real estate owned | | 4,012 |
| | 9,249 |
|
| Troubled debt restructurings | | 14,758 |
| | 19,500 |
|
| Total nonperforming assets | | $ | 38,230 |
| | $ | 51,574 |
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