First Financial Corporation Reports Second Quarter Results

TERRE HAUTE, Ind., July 31, 2020 (GLOBE NEWSWIRE) -- First Financial Corporation (NASDAQ:THFF) today announced results for the second quarter of 2020. For the three months ending June 30, 2020:

  • Net income was $11.9 million compared to $12.6 million for the same period of 2019;
     
  • Diluted net income per common share of $0.87 compared to $1.02 for the same period of 2019; and
     
  • Return on average assets was 1.10% compared to 1.66% for the three months ended June 30, 2019.

The Corporation further reported results for the six months ending June 30, 2020:

  • Net income was $24.1 million compared to $22.3 million for the same period of 2019;
     
  • Diluted net income per common share of $1.76 compared to $1.81 for the same period of 2019; and
     
  • Return on average assets was 1.16% compared to 1.47% for the six months ended June 30, 2019.

“In light of COVID-19 and the stay at home orders in the four states we do business in we are pleased with our second quarter results” said Norman L. Lowery, Chairman and Chief Executive Officer.  “While eager to get back to normal operations, we have been cautious in the steps we have taken as the number of COVID 19 cases continue to increase across our footprint.  Protecting the health of our associates, customers and their families has been, and will continue to be, our number one priority.  During the second quarter much of our attention was devoted to the Small Business Administration’s Paycheck Protection Program enacted by the Coronavirus Aid, Relief and Economics Security Act (CARES).  We are pleased we were able to fund 1,734 loans totaling $170 million to secure twenty-four thousand jobs which are so important to our customers, their families and the economy of the communities we serve.  We are also pleased that during this challenging quarter we were able to assist many of our customers to take advantage of the current low interest rates by refinancing their home mortgages, lowering their payments or allowing them to purchase a new home.”

Average Total Loans
Average total loans for the second quarter of 2020 were $2.73 billion versus $1.98 billion for the comparable period in 2019, an increase of $748.8 million or 37.84%.

Total Loans Outstanding
Total loans outstanding increased $770.7 million, or 38.40%, from $2.01 billion as of June 30, 2019 to $2.78 billion as of June 30, 2020. On a linked quarter basis, total loans increased $159.3 million from $2.62 billion for the quarter ending March 31, 2020.

“Because of COVID 19 each of the four states in which we do business have imposed restrictions which affect our operations and the business of our customers,” stated Lowery. "While we have not experienced a significant increase in charge-offs, we have continued to increase reserves in response to the effect of the pandemic on asset quality. We have also sought to meet the needs of our customers by assisting them with reasonable loan accommodations. To date, we have approved and processed requests totaling $343 million across all portfolios. Commercial loan requests comprise $321 million of this total."

Average Total Deposits
Average total deposits for the quarter ended June 30, 2020, were $3.53 billion versus $2.46 billion as of June 30, 2019, an increase of $1.06 billion or 43.11%.

Total Deposits
Total deposits were $3.57 billion as of June 30, 2020, compared to $2.46 billion as of June 30, 2019, an increase of $1.11 billion or 44.94%. On a linked quarter basis, total deposits increased $278.7 million from $3.29 billion for the quarter ending March 31, 2020.

Book Value Per Share
Book Value per share was $43.04 at June 30, 2020, compared to $38.88 at June 30, 2019.

Shareholder Equity
Shareholder equity at June 30, 2020, was $590.3 million compared to $477.8 million on June 30, 2019.

Tangible Common Equity to Tangible Asset Ratio
The Corporation’s tangible common equity to tangible asset ratio was 11.73% at June 30, 2020, compared to 14.61% at June 30, 2019.

Net Interest Income
Net interest income for the second quarter of 2020 was $35.9 million, an increase of 20.65% over the $29.8 million reported for the same period of 2019.

Net Interest Margin
The net interest margin for the quarter ended June 30, 2020, was 3.97% compared to the 4.33% reported at June 30, 2019.

Nonperforming Loans
Nonperforming loans as of June 30, 2020, were $23.0 million versus $15.2 million as of June 30, 2019. The ratio of nonperforming loans to total loans and leases was 0.83% as of June 30, 2020, versus 0.76% as of June 30, 2019.

Loan Loss Provision
The provision for loan losses for the three months ended June 30, 2020, was $2.97 million compared to the $230 thousand provision for the second quarter of 2019. The Corporation increased the allowance for loan and lease losses by $1.0 million in the second quarter of 2020 directly related to the estimate of losses resulting from the COVID-19 pandemic.

Net Charge-Offs
Net charge-offs were $743 thousand for the second quarter of 2020 compared to $940 thousand in the same period of 2019.

Allowance for Loan Losses
The Corporation’s allowance for loan losses as of June 30, 2020, was $23.3 million compared to $20.3 million as of June 30, 2019. The allowance for loan losses as a percent of total loans was 0.84% as of June 30, 2020, compared to 1.01% as of June 30, 2019. The decrease is primarily due to acquired loans being recorded at fair value. The Corporation's fair value adjustment due to purchased credit impaired loans was $5.9 million as of June 30, 2020.

Current Expected Credit Losses
As provided in the Coronavirus Aid, Relief, and Economic Security Act (CARES) the Corporation has elected to defer the implementation of the Current Expected Credit Loss accounting standard.

Non-Interest Income
Non-interest income for the three months ended June 30, 2020 and 2019 was $8.8 and $9.7 million, respectively. In the second quarter 2019, we recorded a $1.5 million incentive received from a third-party vendor.

Non-Interest Expense
Non-interest expense for the three months ended June 30, 2020, was $26.9 million compared to $23.5 million in 2019.

Efficiency Ratio
The Corporation’s efficiency ratio was 58.78% for the quarter ending June 30, 2020, versus 58.06% for the same period in 2019.

Income Taxes
Income tax expense for the six months ended June 30, 2020, was $5.92 million versus $5.42 million for the same period in 2019. The effective tax rate for 2020 was 19.71% compared to 19.59% for 2019.

“In these unprecedented times, we are proud we continue to meet the financial needs of our customers and the communities we serve.  I am proud of our associates and their unwavering commitment,” 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 81 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 EndedYear Ended
  June 30,March 31,June 30,June 30,June 30,
  20202020201920202019
END OF PERIOD BALANCES      
Assets $4,368,112  $4,062,414  $3,064,212  $4,368,112  $3,064,212  
Deposits $3,569,893  $3,291,231  $2,463,018  $3,569,893  $2,463,018  
Loans, including net deferred loan costs $2,777,083  $2,622,637  $2,010,198  $2,777,083  $2,010,198  
Allowance for Loan Losses $23,285  $21,063  $20,250  $23,285  $20,250  
Total Equity $590,284  $581,771  $477,820  $590,284  $477,820  
Tangible Common Equity (a) $501,863  $492,943  $442,496  $501,863  $442,496  
       
AVERAGE BALANCES      
Total Assets $4,317,011  $4,022,789  $3,033,788  $4,169,900  $3,018,922  
Earning Assets $3,720,477  $3,625,679  $2,836,110  $3,673,078  $2,830,317  
Investments $989,545  $988,523  $851,723  $989,034  $851,236  
Loans $2,727,820  $2,637,036  $1,978,991  $2,682,428  $1,975,662  
Total Deposits $3,526,529  $3,270,627  $2,464,212  $3,398,578  $2,446,188  
Interest-Bearing Deposits $2,858,594  $2,739,394  $2,032,886  $2,798,994  $2,016,079  
Interest-Bearing Liabilities $121,791  $106,843  $39,269  $114,317  $55,596  
Total Equity $591,522  $569,696  $471,156  $580,609  $460,911  
       
INCOME STATEMENT DATA      
Net Interest Income $35,895  $36,350  $29,752  $72,245  $59,178  
Net Interest Income Fully Tax Equivalent (b) $36,962  $37,409  $30,721  $74,371  $61,122  
Provision for Loan Losses $2,965  $2,690  $230  $5,655  $1,700  
Non-interest Income $8,776  $9,095  $9,743  $17,871  $17,379  
Non-interest Expense $26,883  $27,554  $23,492  $54,437  $47,185  
Net Income $11,924  $12,181  $12,569  $24,105  $22,251  
       
PER SHARE DATA      
Basic and Diluted Net Income Per Common Share $0.87  $0.89  $1.02  $1.76  $1.81  
Cash Dividends Declared Per Common Share $0.52  $—  $0.52  $0.52  $0.52  
Book Value Per Common Share $43.04  $42.42  $38.88  $43.04  $38.88  
Tangible Book Value Per Common Share (c) $36.68  $35.94  $35.46  $36.59  $36.00  
Basic Weighted Average Common Shares Outstanding 13,715  13,740  12,290  13,727  12,286  

(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 EndedSix Months Ended
  June 30,March 31,June 30,June 30,June 30,
  20202020201920202019
Return on average assets 1.10 %1.21 %1.66 %1.16 %1.47 %
Return on average common shareholder's equity 8.06 %8.55 %10.67 %8.30 %9.66 %
Efficiency ratio 58.78 %59.25 %58.06 %59.02 %60.11 %
Average equity to average assets 13.70 %14.16 %15.53 %13.92 %15.27 %
Net interest margin (a) 3.97 %4.13 %4.33 %4.05 %4.32 %
Net charge-offs to average loans and leases 0.11 %0.24 %0.49 %0.17 %0.19 %
Loan and lease loss reserve to loans and leases 0.84 %0.80 %1.01 %0.84 %1.01 %
Loan and lease loss reserve to nonperforming loans 101.12 %119.70 %133.14 %101.12 %133.14 %
Nonperforming loans to loans and leases 0.83 %0.67 %0.76 %0.83 %0.76 %
Tier 1 leverage 11.64 %12.38 %14.83 %11.64 %14.83 %
Risk-based capital - Tier 1 15.44 %16.19 %18.65 %15.44 %18.65 %

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

Asset Quality Three Months EndedSix Months Ended
  June 30,March 31,June 30,June 30,June 30,
  20202020201920202019
Accruing loans and leases past due 30-89 days $15,358  $27,037  $8,296  $15,358  $8,296  
Accruing loans and leases past due 90 days or more $4,438  $1,430  $683  $4,438  $683  
Nonaccrual loans and leases $14,634  $12,011  $9,985  $14,634  $9,985  
Total troubled debt restructuring $3,899  $4,156  $4,541  $3,899  $4,541  
Other real estate owned $3,577  $3,894  $498  $3,577  $498  
Nonperforming loans and other real estate owned $26,548  $21,491  $15,707  $26,548  $15,707  
Total nonperforming assets $29,493  $24,724  $19,040  $29,493  $19,040  
Gross charge-offs $1,540  $2,904  $1,906  $4,444  $4,015  
Recoveries $797  $1,334  $966  $2,131  $2,129  
Net charge-offs/(recoveries) $743  $1,570  $940  $2,313  $1,886  

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

 June 30,
2020
 December 31,
2019
   (unaudited)
ASSETS   
Cash and due from banks$386,507  $127,426 
Federal funds sold  7,500 
Securities available-for-sale907,433  926,717 
Loans:   
Commercial1,694,376  1,584,447 
Residential657,657  682,077 
Consumer425,601  386,006 
 2,777,634  2,652,530 
(Less) plus:   
Net deferred loan costs(551) 3,860 
Allowance for loan losses(23,285) (19,943)
 2,753,798  2,636,447 
Restricted stock15,200  15,394 
Accrued interest receivable17,205  18,523 
Premises and equipment, net63,270  62,576 
Bank-owned life insurance95,013  94,251 
Goodwill78,592  78,592 
Other intangible assets9,829  10,643 
Other real estate owned3,577  3,625 
Other assets37,688  41,556 
TOTAL ASSETS$4,368,112  $4,023,250 
    
LIABILITIES AND SHAREHOLDERS’ EQUITY   
Deposits:   
Non-interest-bearing$681,155  $547,189 
Interest-bearing:   
Certificates of deposit exceeding the FDIC insurance limits109,548  126,738 
Other interest-bearing deposits2,779,190  2,601,430 
 3,569,893  3,275,357 
Short-term borrowings100,096  80,119 
Other liabilities79,722  79,193 
TOTAL LIABILITIES3,777,828  3,465,642 
    
Shareholders’ equity   
Common stock, $.125 stated value per share;   
Authorized shares-40,000,000   
Issued shares-16,075,154 in 2020 and 16,055,466 in 2019   
Outstanding shares-13,714,524 in 2020 and 13,741,825 in 20192,006  2,005 
Additional paid-in capital140,103  139,694 
Retained earnings509,029  492,055 
Accumulated other comprehensive income/(loss)9,515  (7,501)
Less: Treasury shares at cost-2,360,630 in 2020 and 2,313,641 in 2019(70,369) (68,645)
TOTAL SHAREHOLDERS’ EQUITY590,284  557,608 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY$4,368,112  $4,023,250 

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,
 2020 2019 2020 2019
 (unaudited)
INTEREST INCOME:       
Loans, including related fees$33,224   $27,533   $68,258    $54,287  
Securities:       
Taxable3,624   3,516   7,653    7,197  
Tax-exempt2,008   1,873   3,946    3,740  
Other400   337   802    651  
TOTAL INTEREST INCOME39,256   33,259   80,659    65,875  
INTEREST EXPENSE:       
Deposits3,019   3,316   7,549    6,133  
Short-term borrowings101   158   368    481  
Other borrowings241   33   497    83  
TOTAL INTEREST EXPENSE3,361   3,507   8,414    6,697  
NET INTEREST INCOME35,895   29,752   72,245    59,178  
Provision for loan losses2,965   230   5,655    1,700  
NET INTEREST INCOME AFTER PROVISION       
FOR LOAN LOSSES32,930   29,522   66,590    57,478  
NON-INTEREST INCOME:       
Trust and financial services1,288   1,124   2,822    2,328  
Service charges and fees on deposit accounts2,102   2,735   5,100    5,359  
Other service charges and fees3,869   3,408   7,199    6,522  
Securities gains (losses), net31   16   225    12  
Gain on sales of mortgage loans1,205   496   1,903    916  
Other281   1,964   622    2,242  
TOTAL NON-INTEREST INCOME8,776   9,743   17,871    17,379  
NON-INTEREST EXPENSE:       
Salaries and employee benefits14,323   12,546   30,295    25,301  
Occupancy expense2,162   1,813   4,091    3,628  
Equipment expense2,673   1,751   5,134    3,568  
FDIC Expense49   199   (181)  339  
Other7,676   7,183   15,098    14,349  
TOTAL NON-INTEREST EXPENSE26,883   23,492   54,437    47,185  
INCOME BEFORE INCOME TAXES14,823   15,773   30,024    27,672  
Provision for income taxes2,899   3,204   5,919    5,421  
NET INCOME11,924   12,569   24,105    22,251  
OTHER COMPREHENSIVE INCOME       
Change in unrealized gains/(losses) on securities, net of reclassifications and taxes3,130   8,341   16,228    18,565  
Change in funded status of post retirement benefits, net of taxes384   304   788    607  
COMPREHENSIVE INCOME$15,438   $21,214   $41,121    $41,423  
PER SHARE DATA       
Basic and Diluted Earnings per Share$0.87   $1.02   $1.76    $1.81  
Weighted average number of shares outstanding (in thousands)13,715   12,290   13,727    12,286  

 

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