• First Financial Corporation Reports Second Quarter Results

    Source: Nasdaq GlobeNewswire / 25 Jul 2023 10:00:00   America/New_York

    TERRE HAUTE, Ind., July 25, 2023 (GLOBE NEWSWIRE) -- First Financial Corporation (NASDAQ:THFF) today announced results for the second quarter of 2023.

    • Net income was $16.0 million compared to the $15.6 million reported for the same period of 2022;
    • Diluted net income per common share of $1.33 compared to $1.27 for the same period of 2022;
    • Return on average assets was 1.34% compared to 1.24% for the three months ended June 30, 2022;
    • Credit loss provision was $1.8 million compared to provision of $750 thousand for the second quarter 2022; and
    • Pre-tax, pre-provision net income was $21.2 million compared to $19.7 million for the same period in 2022.1

    The Corporation further reported results for the six months ending June 30, 2023:

    • Net income was $32.0 million compared to the $36.5 million reported for the same period of 2022, which included the proceeds of a legal settlement and pandemic related reserve releases, both of which were non-recurring events;
    • Diluted net income per common share of $2.66 compared to $2.95 for the same period of 2022;
    • Return on average assets was 1.33% compared to 1.43% for the six months ended June 30, 2022;
    • Credit loss provision was $3.6 million compared to negative provision of $5.8 million for the six months ended June 30, 2022; and
    • Pre-tax, pre-provision net income was $42.6 million compared to $39.4 million for the same period in 2022.1

    1 Non-GAAP financial measure that Management believes is useful for investors and management to understand pre-tax profitability before giving effect to credit loss expense and to provide additional perspective on the Corporation’s performance over time as well as comparison to the Corporation’s peers and evaluating the financial results of the Corporation – please refer to the Non GAAP reconciliations contained in this release.

    Average Total Loans

    Average total loans for the second quarter of 2023 were $3.10 billion versus $2.83 billion for the comparable period in 2022, an increase of $272 million or 9.63%. On a linked quarter basis, average loans increased $29 million or 2.26% from $3.07 billion as of March 31, 2023.

    Total Loans Outstanding

    Total loans outstanding as of June 30, 2023, were $3.13 billion compared to $2.89 billion as of June 30, 2022, an increase of $239 million or 8.28%, primarily driven by increases in Commercial Construction and Development, Commercial Real Estate, and Consumer Auto loans. On a linked quarter basis, total loans increased $46.6 million or 1.51% from $3.08 billion as of March 31, 2023.

    “We are pleased with our second quarter results, as we experienced another quarter of loan growth in an increasingly challenging environment. Credit quality remains stable, and our disciplined approach to expense management is constant,” said Norman L. Lowery, Chairman and Chief Executive Officer. “Notwithstanding the turbulent environment that arose in the financial services industry towards the end of the first quarter, liquidity is stable, and our balance sheet and capital levels remain strong.”

    Average Total Deposits

    Average total deposits for the quarter ended June 30, 2023, were $4.12 billion versus $4.42 billion as of June 30, 2022.

    Total Deposits

    Total deposits were $4.06 billion as of June 30, 2023, compared to $4.38 billion as of June 30, 2022.

    Shareholder Equity

    Shareholder equity at June 30, 2023, was $496.9 million compared to $461.5 million on June 30, 2022. The Corporation repurchased 82,903 shares of its stock during the quarter and declared a $0.54 per share semi-annual dividend. An additional 747,317 shares remains under the current authorization. Shareholder’s equity was impacted by the downturn in the markets which affected the accumulated other comprehensive income/(loss) (“AOCI”) on investments available for sale. AOCI decreased $14.6 million in comparison to June 30, 2022, and decreased $15.8 million in comparison to March 31, 2023.

    Book Value Per Share

    Book Value per share was $41.47 at June 30, 2023, compared to $38.36 at June 30, 2022, an increase of 8.09%.

    Tangible Common Equity to Tangible Asset Ratio

    The Corporation’s tangible common equity to tangible asset ratio was 8.44% at June 30, 2023, compared to 7.48% at June 30, 2022, partially driven by the aforementioned share repurchases.

    Net Interest Income

    Net interest income for the second quarter of 2023 was $42.2 million, compared to $40.5 million reported for the same period of 2022, an increase of $1.7 million or 4.25%.

    Net Interest Margin

    The net interest margin for the quarter ended June 30, 2023, was 3.81% compared to the 3.46% reported at June 30, 2022, an increase of 35 basis points or 9.94%.

    Nonperforming Loans

    Nonperforming loans as of June 30, 2023, were $13.3 million versus $9.4 million as of June 30, 2022. The ratio of nonperforming loans to total loans and leases was 0.43% as of June 30, 2023, versus 0.32% as of June 30, 2022.

    Credit Loss Provision

    The provision for credit losses for the three months ended June 30, 2023, was $1.8 million, compared to provision of $750 thousand for the second quarter 2022.

    Net Charge-Offs

    In the second quarter of 2023 net charge-offs were $1.5 million compared to net recoveries of $202 thousand in the same period of 2022.

    Allowance for Credit Losses

    The Corporation’s allowance for credit losses as of June 30, 2023, was $39.9 million compared to $41.5 million as of June 30, 2022. The allowance for credit losses as a percent of total loans was 1.28% as of June 30, 2023, compared to 1.44% as of June 30, 2022. On a linked quarter basis, the allowance for credit losses as a percent of total loans decreased 1 basis point from 1.29% as of March 31, 2023.

    Non-Interest Income

    Non-interest income for the three months ended June 30, 2023 and 2022 was $10.5 million and $10.3 million, respectively.

    Non-Interest Expense

    Non-interest expense for the three months ended June 30, 2023, was $31.3 million compared to $30.7 million in 2022.

    Efficiency Ratio

    The Corporation’s efficiency ratio was 58.01% for the quarter ending June 30, 2023, versus 59.06% for the same period in 2022.

    Income Taxes

    Income tax expense for the three months ended June 30, 2023, was $3.5 million versus $3.7 million for the same period in 2022. The effective tax rate for 2023 was 17.99% compared to 19.17% for 2022.

    About First Financial Corporation

    First Financial Corporation (NASDAQ:THFF) is the holding company for First Financial Bank N.A. First Financial Bank N.A., the fifth oldest national bank in the United States, operates 71 banking centers in Illinois, Indiana, Kentucky and Tennessee. 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 Six Months Ended
     June 30, March 31, June 30, June 30, June 30,
      2023   2023   2022   2023   2022 
    END OF PERIOD BALANCES                  
    Assets$4,877,231  $4,866,821  $5,006,648  $4,877,231  $5,006,648 
    Deposits$4,063,155  $4,165,398  $4,383,257  $4,063,155  $4,383,257 
    Loans, including net deferred loan costs$3,126,676  $3,080,044  $2,887,527  $3,126,676  $2,887,527 
    Allowance for Credit Losses$39,907  $39,620  $41,468  $39,907  $41,468 
    Total Equity$496,888  $505,499  $461,531  $496,888  $461,531 
    Tangible Common Equity(a)$403,824  $412,118  $367,210  $403,824  $367,210 
                       
    AVERAGE BALANCES                  
    Total Assets$4,818,760  $4,851,484  $5,046,846  $4,835,122  $5,098,244 
    Earning Assets$4,581,652  $4,613,126  $4,809,570  $4,597,389  $4,868,625 
    Investments$1,395,446  $1,407,944  $1,432,321  $1,401,695  $1,450,396 
    Loans$3,097,836  $3,068,716  $2,825,684  $3,083,276  $2,801,426 
    Total Deposits$4,121,097  $4,252,161  $4,416,542  $4,186,629  $4,422,174 
    Interest-Bearing Deposits$3,297,110  $3,407,590  $3,519,122  $3,352,350  $3,522,444 
    Interest-Bearing Liabilities$185,318  $96,160  $103,223  $140,739  $104,614 
    Total Equity$501,686  $487,834  $494,233  $494,760  $529,678 
                       
    INCOME STATEMENT DATA                  
    Net Interest Income$42,187  $44,335  $40,469  $86,522  $78,280 
    Net Interest Income Fully Tax Equivalent(b)$43,581  $45,654  $41,665  $89,235  $80,573 
    Provision for Credit Losses$1,800  $1,800  $750  $3,600  $(5,800)
    Non-interest Income$10,453  $9,375  $10,270  $19,828  $24,008 
    Non-interest Expense$31,346  $32,321  $30,674  $63,667  $62,018 
    Net Income$15,987  $15,980  $15,613  $31,967  $36,537 
                       
    PER SHARE DATA                  
    Basic and Diluted Net Income Per Common Share$1.33  $1.33  $1.27  $2.66  $2.95 
    Cash Dividends Declared Per Common Share$—  $—  $0.54  $0.54  $0.54 
    Book Value Per Common Share$41.47  $41.89  $38.36  $41.47  $38.36 
    Tangible Book Value Per Common Share(c)$33.99  $34.16  $32.65  $33.70  $30.52 
    Basic Weighted Average Common Shares Outstanding 12,022   12,058   12,248   12,040   12,393 


    (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 RatiosThree Months Ended  Six Months Ended 
      June 30,   March 31,  June 30,   June 30,   June 30, 
      2023   2023  2022   2023   2022 
    Return on average assets 1.34%  1.32%  1.24%  1.33%  1.43%
    Return on average common shareholder's equity 12.75%  13.10%  12.64%  12.92%  13.80%
    Efficiency ratio 58.01%  58.73%  59.06%  58.38%  59.30%
    Average equity to average assets 10.48%  10.06%  9.79%  10.27%  10.39%
    Net interest margin(a) 3.81%  3.96%  3.46%  3.88%  3.31%
    Net charge-offs to average loans and leases 0.20%  0.26%  (0.03)%  0.23%  0.07%
    Credit loss reserve to loans and leases 1.28%  1.29%  1.44%  1.28%  1.44%
    Credit loss reserve to nonperforming loans 300.10%  328.06%  442.89%  300.10%  442.89%
    Nonperforming loans to loans and leases 0.43%  0.39%  0.32%  0.43%  0.32%
    Tier 1 leverage 11.49%  11.30%  9.97%  11.49%  9.97%
    Risk-based capital - Tier 1 14.44%  14.27%  13.51%  14.44%  13.51%


    (a) Net interest margin is calculated on a tax equivalent basis.


                       
    Asset QualityThree Months Ended Six Months Ended
     June 30, March 31, June 30, June 30, June 30,
     2023 2023 2022  2023 2022
    Accruing loans and leases past due 30-89 days$15,583  $18,934  $20,273  $15,583  $20,273 
    Accruing loans and leases past due 90 days or more$682  $1,157  $980  $682  $980 
    Nonaccrual loans and leases$12,616  $10,920  $8,383  $12,616  $8,383 
    Other real estate owned$90  $336  $170  $90  $170 
    Nonperforming loans and other real estate owned$13,388  $12,413  $9,533  $13,388  $9,533 
    Total nonperforming assets$16,302  $15,327  $12,620  $16,302  $12,620 
    Gross charge-offs$3,543  $4,376  $2,411  $7,919  $5,665 
    Recoveries$2,030  $2,417  $2,613  $4,447  $4,628 
    Net charge-offs/(recoveries)$1,513  $1,959  $(202) $3,472  $1,037 


    Non-GAAP ReconciliationsThree Months Ended June 30,
      2023   2022 
    ($in thousands, except EPS)     
    Income before Income Taxes$19,494  $19,315 
    Provision for credit losses 1,800   750 
    Provision for unfunded commitments (100)  (350)
    Pre-tax, Pre-provision Income$21,194  $19,715 


    Non-GAAP ReconciliationsSix Months Ended June 30,
      2023   2022 
    ($ in thousands, except EPS)     
    Income before Income Taxes$39,083  $46,070 
    Provision for credit losses 3,600   (5,800)
    Provision for unfunded commitments (100)  (850)
    Pre-tax, Pre-provision Income$42,583  $39,420 




    CONSOLIDATED BALANCE SHEETS
    (Dollar amounts in thousands, except per share data)
          
     June 30, December 31,
      2023   2022 
     (unaudited)
    ASSETS     
    Cash and due from banks$82,095  $222,517 
    Federal funds sold 363   9,374 
    Securities available-for-sale 1,299,226   1,330,481 
    Loans:     
    Commercial 1,812,035   1,798,260 
    Residential 689,199   673,464 
    Consumer 625,442   588,539 
      3,126,676   3,060,263 
    (Less) plus:     
    Net deferred loan costs 7,962   7,175 
    Allowance for credit losses (39,907)  (39,779)
      3,094,731   3,027,659 
    Restricted stock 15,391   15,378 
    Accrued interest receivable 21,311   21,288 
    Premises and equipment, net 67,127   66,147 
    Bank-owned life insurance 116,613   115,704 
    Goodwill 86,985   86,985 
    Other intangible assets 6,079   6,714 
    Other real estate owned 90   337 
    Other assets 87,220   86,697 
    TOTAL ASSETS$4,877,231  $4,989,281 
          
    LIABILITIES AND SHAREHOLDERS’ EQUITY     
    Deposits:     
    Non-interest-bearing$817,380  $857,920 
    Interest-bearing:     
    Certificates of deposit exceeding the FDIC insurance limits 60,541   50,608 
    Other interest-bearing deposits 3,185,234   3,460,343 
      4,063,155   4,368,871 
    Short-term borrowings 128,859   70,875 
    FHLB advances 134,582   9,589 
    Other liabilities 53,747   64,653 
    TOTAL LIABILITIES 4,380,343   4,513,988 
          
    Shareholders’ equity     
    Common stock, $.125 stated value per share;     
    Authorized shares-40,000,000     
    Issued shares-16,137,220 in 2023 and 16,114,992 in 2022     
    Outstanding shares-11,982,985 in 2023 and 12,051,964 in 2022 2,013   2,012 
    Additional paid-in capital 143,632   143,185 
    Retained earnings 640,325   614,829 
    Accumulated other comprehensive income/(loss) (141,250)  (139,974)
    Less: Treasury shares at cost-4,154,235 in 2023 and 4,063,028 in 2022 (147,832)  (144,759)
    TOTAL SHAREHOLDERS’ EQUITY 496,888   475,293 
    TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY$4,877,231  $4,989,281 




    CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
    (Dollar amounts in thousands, except per share data)
                
     Three Months Ended Six Months Ended
     June 30, June 30,
      2023   2022   2023   2022 
           (unaudited)
    INTEREST INCOME:           
    Loans, including related fees$46,479  $34,305  $91,074  $66,662 
    Securities:           
    Taxable 6,231   6,048   12,467   10,631 
    Tax-exempt 2,678   2,492   5,276   4,840 
    Other 841   358   2,112   723 
    TOTAL INTEREST INCOME 56,229   43,203   110,929   82,856 
    INTEREST EXPENSE:           
    Deposits 11,957   2,473   21,484   4,149 
    Short-term borrowings 1,294   176   2,102   258 
    Other borrowings 791   85   821   169 
    TOTAL INTEREST EXPENSE 14,042   2,734   24,407   4,576 
    NET INTEREST INCOME 42,187   40,469   86,522   78,280 
    Provision for credit losses 1,800   750   3,600   (5,800)
    NET INTEREST INCOME AFTER PROVISION           
    FOR LOAN LOSSES 40,387   39,719   82,922   84,080 
    NON-INTEREST INCOME:           
    Trust and financial services 1,185   1,300   2,502   2,672 
    Service charges and fees on deposit accounts 7,054   7,079   13,872   13,733 
    Other service charges and fees 196   222   400   328 
    Securities gains (losses), net —   —   —   5 
    Interchange income —   151   47   269 
    Loan servicing fees 264   368   549   727 
    Gain on sales of mortgage loans 311   603   490   1,265 
    Other 1,443   547   1,968   5,009 
    TOTAL NON-INTEREST INCOME 10,453   10,270   19,828   24,008 
    NON-INTEREST EXPENSE:           
    Salaries and employee benefits 16,946   15,668   34,104   33,010 
    Occupancy expense 2,132   2,372   4,731   4,894 
    Equipment expense 3,525   2,959   6,824   5,866 
    FDIC Expense 577   542   1,364   970 
    Other 8,166   9,133   16,644   17,278 
    TOTAL NON-INTEREST EXPENSE 31,346   30,674   63,667   62,018 
    INCOME BEFORE INCOME TAXES 19,494   19,315   39,083   46,070 
    Provision for income taxes 3,507   3,702   7,116   9,533 
    NET INCOME 15,987   15,613   31,967   36,537 
    OTHER COMPREHENSIVE INCOME (LOSS)           
    Change in unrealized gains/(losses) on securities, net of reclassifications and taxes (15,808)  (55,919)  (1,570)  (124,833)
    Change in funded status of post retirement benefits, net of taxes 147   314   294   629 
    COMPREHENSIVE INCOME (LOSS)$326  $(39,992) $30,691  $(87,667)
    PER SHARE DATA           
    Basic and Diluted Earnings per Share$1.33  $1.27  $2.66  $2.95 
    Weighted average number of shares outstanding (in thousands) 12,022   12,248   12,040   12,393 


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