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First Financial Corporation Reports Second Quarter Results

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TERRE HAUTE, Ind., July 27, 2021 (GLOBE NEWSWIRE) -- First Financial Corporation (NASDAQ:THFF) today announced results for the second quarter of 2021. For the three months ending June 30, 2021:

For the quarter:

  • Net income was $16.6 million compared to $11.9 million for the same period of 2020;

  • Diluted net income per common share of $1.24 compared to $0.87 for the same period of 2020; and

  • Return on average assets was 1.40% compared to 1.10% for the three months ended June 30, 2020.

The Corporation further reported results for the six months ending June 30, 2021:

  • Net income was $29.5 million compared to $24.1 million for the same period of 2020;

  • Diluted net income per common share of $2.19 compared to $1.76 for the same period of 2020; and

  • Return on average assets was 1.26% compared to 1.16% for the six months ended June 30, 2020.

“We are pleased with our second quarter results,” said Norman L. Lowery, Chairman and Chief Executive Officer. “Our asset quality remains strong which allows us to release some of the credit loss reserves established during the pandemic. Our focus continues to be on our customers and assisting them as they navigate these unusual times.”

Average Total Loans
Average total loans for the second quarter of 2021 were $2.62 billion versus $2.73 billion for the comparable period in 2020.

Total Loans Outstanding
Total loans outstanding as of June 30, 2021 were $2.57 billion compared to $2.78 billion as of June 30, 2020.

Average Total Deposits
Average total deposits for the quarter ended June 30, 2021, were $3.98 billion versus $3.53 billion as of June 30, 2020, an increase of $455 million or 12.90%.

Total Deposits
Total deposits were $3.99 billion as of June 30, 2021, compared to $3.57 billion as of June 30, 2020, an increase of $419 million or 11.73%. On a linked quarter basis, total deposits increased $83 million from $3.91 billion for the quarter ending March 31, 2021.

Book Value Per Share
Book Value per share was $45.08 at June 30, 2021, compared to $43.04 at June 30, 2020 an increase of 4.73%.

Shareholder Equity
Shareholder equity at June 30, 2021, was $588.2 million compared to $590.3 million on June 30, 2020. In the quarter the Corporation repurchased 497,000 shares of its common stock.

Tangible Common Equity to Tangible Asset Ratio
The Corporation’s tangible common equity to tangible asset ratio was 10.75% at June 30, 2021, compared to 11.73% at June 30, 2020.

Net Interest Income
Net interest income for the second quarter of 2021 was $35.6 million, compared to $35.9 million reported for the same period of 2020.

Net Interest Margin
The net interest margin for the quarter ended June 30, 2021, was 3.23% compared to the 3.97% reported at June 30, 2020.

Nonperforming Loans
Nonperforming loans as of June 30, 2021, were $20.0 million versus $23.0 million as of June 30, 2020. The ratio of nonperforming loans to total loans and leases was 0.78% as of June 30, 2021, versus 0.83% as of June 30, 2020.

Credit Loss Provision
The provision for credit losses for the three months ended June 30, 2021, was $(2.20) million compared to the $2.97 million provision for the second quarter of 2020. In the first three quarters of 2020 the provision was calculated using the incurred loss basis. Beginning in the fourth quarter 2020, the provision was calculated using the current expected credit loss accounting standard.

Net Charge-Offs/Recoveries
In the second quarter of 2021 net recoveries were $152 thousand compared to net charge-offs of $743 thousand in the same period of 2020.

Allowance for Credit Losses
In March 2020 due to the uncertainty surrounding the global pandemic and as provided by the Coronavirus Aid Relief and Economic Security Act the Corporation elected to delay the implementation of the Current Expected Credit Loss accounting standard. On December 31, 2020 the Corporation adopted ASU 2016-13 (topic 326), “Measurement of Credit Losses on Financial Instruments” commonly referenced as the Current Expected Credit Loss (“CECL”) model. CECL was retrospectively adopted on January 1, 2020.

The Corporation’s allowance for credit losses as of June 30, 2021, was $44.7 million compared to $23.3 million as of June 30, 2020. The increase is primarily related to the adoption of CECL. The allowance for credit losses as a percent of total loans was 1.74% as of June 30, 2021, compared to 0.84% as of June 30, 2020. The allowance as of June 30, 2021 was calculated using CECL. The allowance as of June 30, 2020 was calculated using the incurred loss method.

Non-Interest Income
Non-interest income for the three months ended June 30, 2021 and 2020 was $10.9 and $8.8 million, respectively.

Non-Interest Expense
Non-interest expense for the three months ended June 30, 2021, was $28.0 million compared to $26.9 million in 2020.

Efficiency Ratio
The Corporation’s efficiency ratio was 58.75% for the quarter ending June 30, 2021, versus 58.78% for the same period in 2020.

Income Taxes
Income tax expense for the six months ended June 30, 2021, was $7.38 million versus $5.92 million for the same period in 2020. The effective tax rate for the second quarter of 2021 was 20.02% compared to 19.71% for same period of 2020.

“I am proud of the dedication of our associates in providing sound advice and financial solutions to our customers, as we continue to navigate through COVID-19 and its related issues,” 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 80 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

Six Months Ended

June 30,

March 31,

June 30,

June 30,

June 30,

2021

2021

2020

2021

2020

END OF PERIOD BALANCES

Assets

$

4,753,308

$

4,681,216

$

4,368,112

$

4,753,308

$

4,368,112

Deposits

$

3,988,751

$

3,905,348

$

3,569,893

$

3,988,751

$

3,569,893

Loans, including net deferred loan costs

$

2,568,713

$

2,646,937

$

2,777,083

$

2,568,713

$

2,777,083

Allowance for Credit Losses

$

44,732

$

46,776

$

23,285

$

44,732

$

23,285

Total Equity

$

588,163

$

598,112

$

590,284

$

588,163

$

590,284

Tangible Common Equity (a)

$

501,459

$

510,981

$

501,863

$

501,459

$

501,863

AVERAGE BALANCES

Total Assets

$

4,751,068

$

4,600,750

$

4,317,011

$

4,675,909

$

4,169,900

Earning Assets

$

4,552,581

$

4,404,109

$

3,720,477

$

4,478,345

$

3,673,078

Investments

$

1,244,551

$

1,133,439

$

989,545

$

1,188,995

$

989,034

Loans

$

2,619,887

$

2,640,291

$

2,727,820

$

2,630,089

$

2,682,428

Total Deposits

$

3,981,243

$

3,816,705

$

3,526,529

$

3,898,974

$

3,398,578

Interest-Bearing Deposits

$

3,173,782

$

3,059,290

$

2,858,594

$

3,116,536

$

2,798,994

Interest-Bearing Liabilities

$

101,594

$

110,448

$

121,791

$

106,021

$

114,317

Total Equity

$

600,599

$

600,669

$

591,522

$

600,634

$

580,609

INCOME STATEMENT DATA

Net Interest Income

$

35,628

$

34,913

$

35,895

$

70,541

$

72,245

Net Interest Income Fully Tax Equivalent (b)

$

36,719

$

35,959

$

36,962

$

72,678

$

74,371

Provision for Credit Losses

$

(2,196

)

$

452

$

2,965

$

(1,744

)

$

5,655

Non-interest Income

$

10,931

$

9,294

$

8,776

$

20,225

$

17,871

Non-interest Expense

$

27,996

$

27,639

$

26,883

$

55,635

$

54,437

Net Income

$

16,614

$

12,877

$

11,924

$

29,491

$

24,105

PER SHARE DATA

Basic and Diluted Net Income Per Common Share

$

1.24

$

0.95

$

0.87

$

2.19

$

1.76

Cash Dividends Declared Per Common Share

$

0.53

$

$

0.52

$

0.53

$

0.52

Book Value Per Common Share

$

45.08

$

44.2

$

43.04

$

45.08

$

43.04

Tangible Book Value Per Common Share (c)

$

38.31

$

37.76

$

36.68

$

38.43

$

36.59

Basic Weighted Average Common Shares Outstanding

13,414

13,533

13,715

13,473

13,727

(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,

2021

2021

2020

2021

2020

Return on average assets

1.40

%

1.12

%

1.10

%

1.26

%

1.16

%

Return on average common shareholder's equity

11.06

%

8.58

%

8.06

%

9.82

%

8.30

%

Efficiency ratio

58.75

%

61.08

%

58.78

%

59.89

%

59.02

%

Average equity to average assets

12.64

%

13.06

%

13.70

%

12.85

%

13.92

%

Net interest margin (a)

3.23

%

3.27

%

3.97

%

3.25

%

4.05

%

Net charge-offs to average loans and leases

(0.02

)

%

0.11

%

0.11

%

0.04

%

0.17

%

Credit loss reserve to loans and leases

1.74

%

1.77

%

0.84

%

1.74

%

0.84

%

Credit loss reserve to nonperforming loans

223.46

%

222.64

%

101.12

%

223.46

%

101.12

%

Nonperforming loans to loans and leases

0.78

%

0.79

%

0.83

%

0.78

%

0.83

%

Tier 1 leverage

10.72

%

11.34

%

11.64

%

10.72

%

11.64

%

Risk-based capital - Tier 1

17.15

%

16.17

%

15.44

%

17.15

%

15.44

%

(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,

2021

2021

2020

2021

2020

Accruing loans and leases past due 30-89 days

$

9,430

$

8,373

$

15,358

$

9,430

$

15,358

Accruing loans and leases past due 90 days or more

$

1,202

$

2,001

$

4,438

$

1,202

$

4,438

Nonaccrual loans and leases

$

14,356

$

14,545

$

14,634

$

14,356

$

14,634

Total troubled debt restructuring

$

4,460

$

4,464

$

3,899

$

4,460

$

3,899

Other real estate owned

$

989

$

942

$

3,577

$

989

$

3,577

Nonperforming loans and other real estate owned

$

21,007

$

21,952

$

26,548

$

21,007

$

26,548

Total nonperforming assets

$

24,272

$

25,280

$

29,493

$

24,272

$

29,493

Gross charge-offs

$

1,151

$

2,338

$

1,540

$

3,489

$

4,444

Recoveries

$

1,303

$

1,610

$

797

$

2,913

$

2,131

Net charge-offs/(recoveries)

$

(152

)

$

728

$

743

$

576

$

2,313


CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands, except per share data)

June 30,
2021

December 31,
2020

(unaudited)

ASSETS

Cash and due from banks

$

677,862

$

657,470

Federal funds sold

516

301

Securities available-for-sale

1,219,625

1,020,744

Loans:

Commercial

1,521,707

1,521,711

Residential

564,859

604,652

Consumer

482,147

479,750

2,568,713

2,606,113

(Less) plus:

Net deferred loan costs

2,241

4,181

Allowance for credit losses

(44,732

)

(47,052

)

2,526,222

2,563,242

Restricted stock

14,825

14,812

Accrued interest receivable

15,103

16,957

Premises and equipment, net

63,895

62,063

Bank-owned life insurance

106,560

95,849

Goodwill

78,592

78,592

Other intangible assets

8,112

8,972

Other real estate owned

989

1,012

Other assets

41,007

37,530

TOTAL ASSETS

$

4,753,308

$

4,557,544

LIABILITIES AND SHAREHOLDERS’ EQUITY

Deposits:

Non-interest-bearing

$

780,528

$

732,694

Interest-bearing:

Certificates of deposit exceeding the FDIC insurance limits

77,647

107,764

Other interest-bearing deposits

3,130,576

2,915,487

3,988,751

3,755,945

Short-term borrowings

98,525

116,061

FHLB advances

5,888

5,859

Other liabilities

71,981

82,687

TOTAL LIABILITIES

4,165,145

3,960,552

Shareholders’ equity

Common stock, $.125 stated value per share;

Authorized shares-40,000,000

Issued shares-16,096,313 in 2021 and 16,075,154 in 2020

Outstanding shares-13,048,229 in 2021 and 13,558,511 in 2020

2,008

2,007

Additional paid-in capital

141,240

140,820

Retained earnings

543,595

521,103

Accumulated other comprehensive income/(loss)

1,412

9,764

Less: Treasury shares at cost-3,048,084 in 2021 and 2,516,643 in 2020

(100,092

)

(76,702

)

TOTAL SHAREHOLDERS’ EQUITY

588,163

596,992

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

$

4,753,308

$

4,557,544


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,

2021

2020

2021

2020

(unaudited)

INTEREST INCOME:

Loans, including related fees

$

31,966

$

33,224

$

63,823

$

68,258

Securities:

Taxable

3,355

3,624

6,434

7,653

Tax-exempt

2,163

2,008

4,237

3,946

Other

387

400

733

802

TOTAL INTEREST INCOME

37,871

39,256

75,227

80,659

INTEREST EXPENSE:

Deposits

2,090

3,019

4,376

7,549

Short-term borrowings

94

101

192

368

Other borrowings

59

241

118

497

TOTAL INTEREST EXPENSE

2,243

3,361

4,686

8,414

NET INTEREST INCOME

35,628

35,895

70,541

72,245

Provision for credit losses

(2,196

)

2,965

(1,744

)

5,655

NET INTEREST INCOME AFTER PROVISION

FOR LOAN LOSSES

37,824

32,930

72,285

66,590

NON-INTEREST INCOME:

Trust and financial services

1,313

1,288

2,618

2,822

Service charges and fees on deposit accounts

2,327

2,102

4,570

5,100

Other service charges and fees

5,039

3,869

9,281

7,199

Securities gains (losses), net

258

31

106

225

Gain on sales of mortgage loans

1,450

1,205

2,843

1,903

Other

544

281

807

622

TOTAL NON-INTEREST INCOME

10,931

8,776

20,225

17,871

NON-INTEREST EXPENSE:

Salaries and employee benefits

16,031

14,323

31,708

30,295

Occupancy expense

2,002

2,162

4,151

4,091

Equipment expense

2,440

2,673

5,018

5,134

FDIC Expense

287

49

585

(181

)

Other

7,236

7,676

14,173

15,098

TOTAL NON-INTEREST EXPENSE

27,996

26,883

55,635

54,437

INCOME BEFORE INCOME TAXES

20,759

14,823

36,875

30,024

Provision for income taxes

4,145

2,899

7,384

5,919

NET INCOME

16,614

11,924

29,491

24,105

OTHER COMPREHENSIVE INCOME

Change in unrealized gains/(losses) on securities, net of reclassifications and taxes

1,772

3,130

(9,296

)

16,228

Change in funded status of post retirement benefits, net of taxes

472

384

944

788

COMPREHENSIVE INCOME

$

18,858

$

15,438

$

21,139

$

41,121

PER SHARE DATA

Basic and Diluted Earnings per Share

$

1.24

$

0.87

$

2.19

$

1.76

Weighted average number of shares outstanding (in thousands)

13,414

13,715

13,473

13,727