FIRST FINANCIAL CORPORATION
One First Financial Plaza, Terre Haute, Indiana 47807 (812) 238-6000
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| | For more information contact: |
| February 3, 2015 | Rodger A. McHargue at (812) 238-6334 |
First Financial Corporation reports 2014 results
TERRE HAUTE, INDIANA - First Financial Corporation (NASDAQ:THFF) today announced results for the fourth quarter of 2014 and the year ended December 31, 2014. Net income for the three months ending December 31, 2014 increased 2.89% to $9.2 million compared to $8.9 million for the same period of 2013. Diluted net income per common share increased 5.97% to $0.71 from $0.67 for the comparable period of 2013.
The Corporation further reported net income of $33.8 million for the twelve months ended December 31, 2014 versus $31.5 million for the comparable period of 2013, an increase of 7.10%. Diluted net income per common share also increased 7.59% to $2.55 for the twelve months ended December 31, 2014 versus $2.37 for the comparable period of 2013. Return on assets for the twelve months ended December 31, 2014 was 1.12% compared to 1.06% for the twelve months ended December 31, 2013.
Earnings for the twelve-month period ended December 31, 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 fourth quarter of 2014 were $1.80 billion versus $1.79 billion for the comparable period in 2013, an increase of $6.7 million or .37%. Total loans outstanding however decreased $10.0 million, or .56%, from $1.79 billion as of December 31, 2013 to $1.78 billion as of December 31, 2014 primarily due to payoffs in the 4th quarter related to the sale of businesses. On a linked quarter basis, average total loans decreased $9.0 million, or .50%, from $1.81 billion for the quarter ending September 30, 2014.
Average total deposits for the quarter ended December 31, 2014 were $2.47 billion versus $2.54 billion as of December 31, 2013, a decrease of 2.73%. Non-interest bearing deposits, however, increased 7.50% while interest earning deposits decreased 2.02%.
The company’s tangible common equity to tangible asset ratio was 12.40% at December 31, 2014, compared to 11.49% at December 31, 2013, a 7.92% increase.
Due to the prolonged low interest rate environment net interest income for the fourth quarter of 2014 was $26.9 million, a decrease of 2.22% over the $27.6 million reported for the same period of 2013. The net interest margin for the quarter ended December 31, 2014 decreased to 3.99% from the 4.04% reported at December 31, 2013.
Asset quality remains strong with nonperforming loans decreasing 20.1% to $31.29 million as of December 31, 2014 versus $39.15 million as of December 31, 2013. The ratio of nonperforming loans to total loans and leases also decreased to 1.76% as of December 31, 2014 versus 2.19% as of December 31, 2013.
The provision for loan losses for the three months ended December 31, 2014 was $1.96 million compared to the $1.38 million provision for the fourth quarter of 2013. Net charge-offs were $618 thousand for the fourth quarter of 2014 compared to $3.14 million in the same period of 2013. The Corporation’s allowance for loan losses as of December 31, 2014 was $18.8 million compared to $20.1 million as of December 31, 2013. The allowance for loan losses as a percent of total loans was 1.06% as of December 31, 2014 compared to 1.12% as of December 31, 2013.
Non-interest income for the three months ended December 31, 2014 and 2013 was $10.6 and $11.3 million, respectively, a 5.88% decrease. Non-interest income for the years ended December 31, 2014 and 2013 was $40.8 and $40.5 million. Increased income from electronic banking fees and deposit account charges effectively offset the reduced gains from the sale of mortgage loans.
Non-interest expense for the three months ended December 31, 2014 decreased $1.03 million to $23.1 million compared to $24.2 million in 2013. On a linked quarter basis, non-interest expense decreased $1.58 million from $24.7 million for the quarter ended September 30, 2014. On a year-over-year basis, salaries and employee benefits increased $839 thousand driven by the branch expansion and normal merit increases. Occupancy expenses increased $1.1million due to the branch expansion and weather-related expenses. The Corporation’s efficiency ratio was 59.11% for the quarter ending December 31, 2014 versus 61.39% for the same period in 2013.
Book value per share was $31.61 at December 31, 2014, a 9.22% increase from the $28.94 at December 31, 2013. Shareholders’ equity increased 2.08% to $394.2 million from $386.2 million on December 31, 2013.
Norman L. Lowery, President and Chief Executive Officer, commented, “We are pleased with our 2014 results as First Financial delivered another year of solid performance. 2014 net income was the second highest in the history of the Corporation and allowed us to increase our dividend for the 26th consecutive year.”
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.
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| | | | | | | | | | | | | | | | |
| | | Three Months Ended | Year Ended |
| | | December 31, | September 30, | December 31, | December 31, |
| | | 2014 | 2014 | 2013 | 2014 | 2013 |
| END OF PERIOD BALANCES | | | | | | |
| Assets | | $ | 3,002,485 |
| $ | 3,056,767 |
| $ | 3,018,718 |
| $ | 3,002,485 |
| $ | 3,018,718 |
|
| Deposits | | 2,457,197 |
| 2,451,952 |
| 2,458,791 |
| 2,457,197 |
| 2,458,791 |
|
| Loans | | 1,781,428 |
| 1,811,325 |
| 1,791,428 |
| 1,781,428 |
| 1,791,428 |
|
| Allowance for Loan Losses | | 18,839 |
| 17,507 |
| 20,068 |
| 18,839 |
| 20,068 |
|
| Total Equity | | 394,214 |
| 403,873 |
| 386,195 |
| 394,214 |
| 386,195 |
|
| Tangible Common Equity | | 350,824 |
| 360,239 |
| 341,771 |
| 350,824 |
| 341,771 |
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| | | | | | | |
| AVERAGE BALANCES | | | | | | |
| Total Assets | | 3,027,478 |
| 3,004,862 |
| 3,085,186 |
| 3,020,068 |
| 2,976,100 |
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| Earning Assets | | 2,792,506 |
| 2,794,572 |
| 2,793,686 |
| 2,793,424 |
| 2,733,926 |
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| Investments | | 992,441 |
| 978,435 |
| 962,785 |
| 998,189 |
| 926,327 |
|
| Loans | | 1,800,065 |
| 1,809,077 |
| 1,793,349 |
| 1,795,235 |
| 1,807,599 |
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| Total Deposits | | 2,469,170 |
| 2,403,368 |
| 2,538,492 |
| 2,461,253 |
| 2,381,322 |
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| Interest-Bearing Deposits | | 1,917,728 |
| 1,886,628 |
| 2,029,229 |
| 1,934,597 |
| 1,901,663 |
|
| Interest-Bearing Liablities | | 83,577 |
| 148,997 |
| 85,748 |
| 100,512 |
| 143,129 |
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| Total Equity | | 412,296 |
| 400,142 |
| 384,022 |
| 403,413 |
| 377,686 |
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| | | | | | | |
| INCOME STATEMENT DATA | | | | | | |
| Net Interest Income | | 26,939 |
| 27,145 |
| 27,551 |
| 107,832 |
| 107,260 |
|
| Net Interest Income Fully Tax Equivalent | | 27,279 |
| 29,880 |
| 29,034 |
| 114,039 |
| 112,958 |
|
| Provision for Loan Losses | | 1,962 |
| 1,506 |
| 1,384 |
| 5,072 |
| 7,860 |
|
| Non-interest Income | | 10,615 |
| 10,494 |
| 11,278 |
| 40,785 |
| 40,455 |
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| Non-interest Expense | | 23,125 |
| 24,705 |
| 24,153 |
| 95,584 |
| 94,554 |
|
| Net Income | | 9,181 |
| 8,272 |
| 8,923 |
| 33,772 |
| 31,534 |
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| | | | | | | |
| PER SHARE DATA | | | | | | |
| Basic and Diluted Net Income Per Common Share | | 0.71 |
| 0.62 |
| 0.67 |
| 2.55 |
| 2.37 |
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| Cash Dividends Declared Per Common Share | | 0.49 |
| — |
| 0.48 |
| 0.98 |
| 0.96 |
|
| Book Value Per Common Share | | 31.61 |
| 31.16 |
| 28.94 |
| 30.46 |
| 28.94 |
|
| Tangible Book Value Per Common Share | | 27.11 |
| 27.79 |
| 25.61 |
| 27.11 |
| 25.61 |
|
| Basic Weighted Average Common Shares Outstanding | | 12,932,240 |
| 13,269,826 |
| 13,323,719 |
| 13,225,846 |
| 13,309,726 |
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| | | | | | | | | | | |
| Key Ratios | | Three Months Ended | Year Ended |
| | | December 31, | September 30, | December 31, | December 31, |
| | | 2014 | 2014 | 2013 | 2014 | 2013 |
| Return on average assets | | 1.21 | % | 1.10 | % | 1.16 | % | 1.12 | % | 1.06 | % |
| Return on average common shareholder's equity | | 8.91 | % | 8.27 | % | 9.29 | % | 8.37 | % | 8.35 | % |
| Efficiency ratio | | 59.11 | % | 63.00 | % | 61.39 | % | 61.74 | % | 62.02 | % |
| Average equity to average assets | | 13.62 | % | 13.32 | % | 12.45 | % | 13.36 | % | 12.69 | % |
| Net interest margin | | 3.99 | % | 4.15 | % | 4.04 | % | 4.08 | % | 4.13 | % |
| Net charge-offs to average loans and leases | | 0.14 | % | 0.50 | % | 0.70 | % | 0.31 | % | 0.46 | % |
| Loan and lease loss reserve to loans and leases | | 1.06 | % | 0.97 | % | 1.12 | % | 1.06 | % | 1.12 | % |
| Loan and lease loss reserve to nonperforming loans | | 0.60 | % | 0.51 | % | 0.51 | % | 0.60 | % | 0.51 | % |
| Nonperforming loans to loans | | 1.76 | % | 1.89 | % | 2.19 | % | 1.76 | % | 2.19 | % |
| Tier 1 leverage | | 12.33 | % | 12.19 | % | 11.69 | % | 12.33 | % | 11.69 | % |
| Risk-based capital - Tier 1 | | 16.99 | % | 16.53 | % | 16.22 | % | 16.99 | % | 16.22 | % |
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| | | | | | | | | | | | | | | | |
| Asset Quality | | Three Months Ended | Year Ended |
| | | December 31, | September 30, | December 31, | December 31, |
| | | 2014 | 2014 | 2013 | 2014 | 2013 |
| Accruing loans and leases past due 30-89 days | | $ | 13,444 |
| $ | 8,597 |
| $ | 12,756 |
| $ | 13,444 |
| $ | 12,756 |
|
| Accruing loans and leases past due 90 days or more | | $ | 780 |
| $ | 787 |
| $ | 2,073,000 |
| $ | 780 |
| $ | 2,073 |
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| Nonaccrual loans and leases | | $ | 15,754 |
| $ | 18,673 |
| $ | 19,779 |
| $ | 15,754 |
| $ | 19,779 |
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| Nonperforming loans | | $ | 31,292 |
| $ | 34,218 |
| $ | 39,153 |
| $ | 31,292 |
| $ | 39,153 |
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| Other real estate owned | | $ | 3,965 |
| $ | 4,012 |
| $ | 5,291 |
| $ | 3,965 |
| $ | 5,291 |
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| Total nonperforming assets | | $ | 46,394 |
| $ | 50,102 |
| $ | 47,649 |
| $ | 46,394 |
| $ | 47,649 |
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| Total troubled debt restructurings | | $ | 14,758 |
| $ | 14,758 |
| $ | 17,301 |
| $ | 14,758 |
| $ | 17,301 |
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| Gross charge-offs | | $ | 2,308 |
| $ | 2,656 |
| $ | 3,754 |
| $ | 9,450 |
| $ | 13,387 |
|
| Recoveries | | $ | 1,690 |
| $ | 378 |
| $ | 618 |
| $ | 3,836 |
| $ | 5,022 |
|
| Net charge-offs/(recoveries) | | $ | 618 |
| $ | 2,278 |
| $ | 3,136 |
| $ | 5,614 |
| $ | 8,365 |
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CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands, except per share data)
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| | | | | | | | |
| | | December 31, |
| (Dollar amounts in thousands, except per share data) | | 2014 | | 2013 |
| | | (unaudited) | | |
| ASSETS | | |
| | |
|
| Cash and due from banks | | $ | 78,102 |
| | $ | 71,033 |
|
| Federal funds sold | | 8,000 |
| | 4,276 |
|
| Securities available-for-sale | | 897,053 |
| | 914,560 |
|
| Loans, net of allowance of $18,839 in 2014 and $20,068 in 2013 | | 1,762,589 |
| | 1,771,360 |
|
| Restricted stock | | 16,404 |
| | 21,057 |
|
| Accrued interest receivable | | 11,593 |
| | 11,554 |
|
| Premises and equipment, net | | 51,802 |
| | 51,449 |
|
| Bank-owned life insurance | | 80,730 |
| | 79,035 |
|
| Goodwill | | 39,489 |
| | 39,489 |
|
| Other intangible assets | | 3,901 |
| | 4,935 |
|
| Other real estate owned | | 3,965 |
| | 5,291 |
|
| FDIC indemnification asset | | (74 | ) | | 1,055 |
|
| Other assets | | 48,931 |
| | 43,624 |
|
| TOTAL ASSETS | | $ | 3,002,485 |
| | $ | 3,018,718 |
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| LIABILITIES AND SHAREHOLDERS’ EQUITY | | |
| | |
|
| Deposits: | | |
| | |
|
| Non-interest-bearing | | $ | 556,389 |
| | $ | 506,815 |
|
| Interest-bearing: | | | | |
| Certificates of deposit of $100 or more | | 155,274 |
| | 179,177 |
|
| Other interest-bearing deposits | | 1,745,534 |
| | 1,772,799 |
|
| | | 2,457,197 |
| | 2,458,791 |
|
| Short-term borrowings | | 48,015 |
| | 59,592 |
|
| Other borrowings | | 12,886 |
| | 58,288 |
|
| Other liabilities | | 90,173 |
| | 55,852 |
|
| TOTAL LIABILITIES | | 2,608,271 |
| | 2,632,523 |
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| 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-12,942,175 in 2014 and 13,343,029 in 2013 | | 1,815 |
| | 1,811 |
|
| Additional paid-in capital | | 72,405 |
| | 71,074 |
|
| Retained earnings | | 377,970 |
| | 357,083 |
|
| Accumulated other comprehensive income (loss) | | (14,529 | ) | | (13,969 | ) |
| Less: Treasury shares at cost-1,595,957 in 2014 and 1,173,084 in 2013 | | (43,447 | ) | | (29,804 | ) |
| TOTAL SHAREHOLDERS’ EQUITY | | 394,214 |
| | 386,195 |
|
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | | $ | 3,002,485 |
| | $ | 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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| | | | | | | | | | | | |
| | | Years Ended December 31, |
| (Dollar amounts in thousands, except per share data) | | 2014 | | 2013 | | 2012 |
| | | (unaudited) | | | | |
| INTEREST AND DIVIDEND INCOME: | | |
| | |
| | |
|
| Loans, including related fees | | $ | 87,530 |
| | $ | 91,242 |
| | $ | 99,196 |
|
| Securities: | | | | | | |
|
| Taxable | | 17,015 |
| | 16,157 |
| | 13,542 |
|
| Tax-exempt | | 7,084 |
| | 7,046 |
| | 7,246 |
|
| Other | | 1,729 |
| | 1,776 |
| | 2,321 |
|
| TOTAL INTEREST AND DIVIDEND INCOME | | 113,358 |
| | 116,221 |
| | 122,305 |
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| INTEREST EXPENSE: | | |
| | |
| | |
|
| Deposits | | 4,624 |
| | 5,886 |
| | 8,520 |
|
| Short-term borrowings | | 99 |
| | 78 |
| | 140 |
|
| Other borrowings | | 803 |
| | 2,997 |
| | 4,733 |
|
| TOTAL INTEREST EXPENSE | | 5,526 |
| | 8,961 |
| | 13,393 |
|
| NET INTEREST INCOME | | 107,832 |
| | 107,260 |
| | 108,912 |
|
| Net provision for loan losses | | 5,072 |
| | 7,860 |
| | 8,773 |
|
| NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES | | 102,760 |
| | 99,400 |
| | 100,139 |
|
| NON-INTEREST INCOME: | | |
| | |
| | |
|
| Trust and financial services | | 5,860 |
| | 6,035 |
| | 5,804 |
|
| Service charges and fees on deposit accounts | | 10,772 |
| | 10,162 |
| | 9,742 |
|
| Other service charges and fees | | 11,697 |
| | 11,081 |
| | 9,710 |
|
| Securities gain, net | | (3 | ) | | 423 |
| | 886 |
|
| Other-than-temporary loss | | |
| | |
| | |
|
| Total impairment loss | | — |
| | — |
| | (11 | ) |
| Loss recognized in other comprehensive income | | — |
| | — |
| | — |
|
| Net impairment loss recognized in earnings | | — |
| | — |
| | (11 | ) |
| Insurance commissions | | 7,646 |
| | 7,750 |
| | 7,422 |
|
| Gain on sale of mortgage loans | | 1,849 |
| | 3,052 |
| | 4,590 |
|
| Other | | 2,964 |
| | 1,952 |
| | 1,404 |
|
| TOTAL NON-INTEREST INCOME | | 40,785 |
| | 40,455 |
| | 39,547 |
|
| NON-INTEREST EXPENSES: | | |
| | |
| | |
|
| Salaries and employee benefits | | 55,936 |
| | 55,097 |
| | 56,211 |
|
| Occupancy expense | | 7,218 |
| | 6,102 |
| | 5,746 |
|
| Equipment expense | | 7,269 |
| | 6,348 |
| | 5,489 |
|
| Federal Deposit Insurance | | 1,931 |
| | 2,052 |
| | 1,949 |
|
| Other | | 23,230 |
| | 24,955 |
| | 23,661 |
|
| TOTAL NON-INTEREST EXPENSE | | 95,584 |
| | 94,554 |
| | 93,056 |
|
| INCOME BEFORE INCOME TAXES | | 47,961 |
| | 45,301 |
| | 46,630 |
|
| Provision for income taxes | | 14,189 |
| | 13,767 |
| | 13,818 |
|
| NET INCOME | | $ | 33,772 |
| | $ | 31,534 |
| | $ | 32,812 |
|
| OTHER COMPREHENSIVE INCOME | | |
| | |
| | |
|
| Change in unrealized gains/losses on securities, net of reclassifications and taxes | | $ | 13,913 |
| | $ | (17,066 | ) | | $ | 691 |
|
| Change in funded status of post-retirement benefits, net of taxes | | $ | (14,473 | ) | | $ | 10,569 |
| | $ | 2,331 |
|
| COMPREHENSIVE INCOME | | $ | 33,212 |
| | $ | 25,037 |
| | $ | 35,834 |
|
| EARNINGS PER SHARE: | | |
| | |
| | |
|
| BASIC AND DILUTED | | $ | 2.55 |
| | $ | 2.37 |
| | $ | 2.48 |
|
| Weighted average number of shares outstanding (in thousands) | | 13,226 |
| | 13,310 |
| | 13,240 |
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