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First Financial Corporation Reports Third Quarter Results

Company Release - 10/28/2020 10:32 AM ET

TERRE HAUTE, Ind., Oct. 28, 2020 (GLOBE NEWSWIRE) -- First Financial Corporation (NASDAQ:THFF) today announced results for the third quarter of 2020. For the three months ending September 30, 2020:

  • Net income was $14.0 million compared to $12.3 million for the same period of 2019;
     
  • Diluted net income per common share of $1.02 compared to $0.93 for the same period of 2019; and
     
  • Return on average assets was 1.28% compared to 1.33% for the three months ended September 30, 2019.

The Corporation further reported results for the nine months ending September 30, 2020:

  • Net income was $38.1 million compared to $34.5 million for the same period of 2019;
     
  • Diluted net income per common share of $2.78 compared to $2.74 for the same period of 2019; and
     
  • Return on average assets was 1.20% compared to 1.42% for the nine months ended September 30, 2019.

“We are pleased with our third quarter results,” said Norman L. Lowery, Chairman and Chief Executive Officer. “In light of COVID-19 and the continuing restrictions in the four states in which we operate, we had a very solid quarter. During the quarter we focused on helping our clients who participated in the Small Business Administration’s Paycheck Protection Program enacted by the Coronavirus Aid, Relief and Economic Security (CARES) Act apply for loan forgiveness.” Separately, we approved and processed loan modifications totaling $351 million across all portfolios. As of September 30, 2020 all but $122.4 million have returned to principal and interest payments.

Average Total Loans
Average total loans for the third quarter of 2020 were $2.77 billion versus $2.47 billion for the comparable period in 2019, an increase of $297.0 million or 12.00%.

Total Loans Outstanding
Total loans outstanding increased $85.0 million, or 3.19%, from $2.67 billion as of September 30, 2019 to $2.75 billion as of September 30, 2020.

Mr. Lowery added “We also devoted considerable effort to assisting customers refinance their existing mortgages or obtain new mortgages. This resulted in a very successful quarter for our mortgage banking department.”

Average Total Deposits
Average total deposits for the quarter ended September 30, 2020, were $3.59 billion versus $3.02 billion as of September 30, 2019, an increase of $576 million or 19.08%.

Total Deposits
Total deposits were $3.60 billion as of September 30, 2020, compared to $3.22 billion as of September 30, 2019, an increase of $384 million or 11.93%. On a linked quarter basis, total deposits increased $34.5 million from $3.57 billion for the quarter ending June 30, 2020.

Book Value Per Share
Book Value per share was $44.27 at September 30, 2020, compared to $40.59 at September 30, 2019.

Shareholder Equity
Shareholder equity at September 30, 2020, was $607.1 million compared to $556.6 million on September 30, 2019.

Tangible Common Equity to Tangible Asset Ratio
The Corporation’s tangible common equity to tangible asset ratio was 12.07% at September 30, 2020, compared to 12.04% at September 30, 2019.

Net Interest Income
Net interest income for the third quarter of 2020 was $36.5 million, an increase of 7.45% over the $34.0 million reported for the same period of 2019.

Net Interest Margin
The net interest margin for the quarter ended September 30, 2020, was 3.99% compared to the 4.00% reported at September 30, 2019.

Nonperforming Loans
Nonperforming loans as of September 30, 2020, were $23.7 million versus $14.4 million as of September 30, 2019. The ratio of nonperforming loans to total loans and leases was 0.86% as of September 30, 2020, versus 0.54% as of September 30, 2019.

Loan Loss Provision
The provision for loan losses for the three months ended September 30, 2020, was $4.43 million compared to the $1.50 million provision for the third quarter of 2019. The Corporation provided $1.0 million for loan and lease losses in the third quarter of 2020, increasing the year-to-date total to $3.0 million directly related to the estimate of losses resulting from the COVID-19 pandemic.

“Each of the four states in which we do business continue to restrict activities affecting both our business and that of our customers, which may in turn affect loan performance,” stated Lowery.

Net Charge-Offs
Net charge-offs were $750 thousand for the third quarter of 2020 compared to $1.95 million in the same period of 2019.

Allowance for Loan Losses
The Corporation’s allowance for loan losses as of September 30, 2020, was $27.0 million compared to $19.8 million as of September 30, 2019. The allowance for loan losses as a percent of total loans was 0.98% as of September 30, 2020, compared to 0.74% as of September 30, 2019. The Corporation's fair value adjustment due to purchase credit impaired loans was $5.6 million as of September 30, 2020.

Current Expected Credit Losses
As provided in the Coronavirus Aid, Relief, and Economic Security (CARES) Act 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 September 30, 2020 and 2019 was $11.7 million and $9.7 million, respectively.

Non-Interest Expense
Non-interest expense for the three months ended September 30, 2020, was $27.1 million compared to $27.4 million in 2019.

Efficiency Ratio
The Corporation’s efficiency ratio was 54.97% for the quarter ending September 30, 2020, versus 61.18% for the same period in 2019.

Income Taxes
Income tax expense for the nine months ended September 30, 2020, was $8.6 million versus $8.0 million for the same period in 2019. The effective tax rate for 2020 was 18.47% compared to 18.82% for 2019.

“Despite the challenges presented by the pandemic, First Financial has continued to meet the financial needs of our customers,” Lowery stated. “I am very proud of our associates and of their unwavering commitment to serve our customers in these challenging times.”

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
  September 30,June 30,September 30,September 30,September 30,
  20202020201920202019
END OF PERIOD BALANCES      
Assets $4,389,996 $4,368,112 $3,988,119 $4,389,996 $3,988,119 
Deposits $3,604,353 $3,569,893 $3,220,122 $3,604,353 $3,220,122 
Loans, including net deferred loan costs $2,753,493 $2,777,083 $2,668,476 $2,753,493 $2,668,476 
Allowance for Loan Losses $26,960 $23,285 $19,799 $26,960 $19,799 
Total Equity $607,095 $590,284 $556,582 $607,095 $556,582 
Tangible Common Equity (a) $519,098 $501,863 $469,904 $519,098 $469,904 
       
AVERAGE BALANCES      
Total Assets $4,379,798 $4,317,011 $3,680,041 $4,239,866 $3,239,295 
Earning Assets $3,776,803 $3,720,477 $3,468,396 $3,707,653 $3,043,010 
Investments $1,008,303 $989,545 $995,092 $995,457 $899,188 
Loans $2,768,003 $2,727,820 $2,471,346 $2,710,953 $2,140,890 
Total Deposits $3,592,633 $3,526,529 $3,017,085 $3,463,263 $2,636,487 
Interest-Bearing Deposits $2,887,575 $2,858,594 $2,914,816 $2,828,521 $2,315,658 
Interest-Bearing Liabilities $108,236 $121,791 $113,019 $112,290 $74,737 
Total Equity $603,067 $591,522 $491,586 $588,095 $471,136 
       
INCOME STATEMENT DATA      
Net Interest Income $36,531 $35,895 $33,999 $108,776 $93,177 
Net Interest Income Fully Tax Equivalent (b) $37,612 $36,962 $35,054 $111,983 $96,176 
Provision for Loan Losses $4,425 $2,965 $1,500 $10,080 $3,200 
Non-interest Income $11,739 $8,776 $9,746 $29,610 $27,125 
Non-interest Expense $27,130 $26,883 $27,409 $81,567 $74,594 
Net Income $14,000 $11,924 $12,257 $38,105 $34,508 
       
PER SHARE DATA      
Basic and Diluted Net Income Per Common Share $1.02 $0.87 $0.93 $2.78 $2.74 
Cash Dividends Declared Per Common Share $ $0.52 $ $0.52 $0.52 
Book Value Per Common Share $44.27 $43.04 $40.59 $44.27 $40.59 
Tangible Book Value Per Common Share (c) $37.56 $36.68 $30.81 $37.85 $34.27 
Basic Weighted Average Common Shares Outstanding 13,715 13,715 13,141 13,723 12,574 
            
(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 EndedNine Months Ended
 September 30,June 30,September 30,September 30,September 30,
 20202020201920202019
Return on average assets1.28%1.10%1.33%1.20%1.42%
Return on average common shareholder's equity9.29%8.06%9.97%8.62%9.74%
Efficiency ratio54.97%58.78%61.18%57.61%60.50%
Average equity to average assets13.77%13.70%13.36%13.87%14.54%
Net interest margin (a)3.99%3.97%4.00%4.03%4.21%
Net charge-offs to average loans and leases0.11%0.11%0.32%0.15%0.24%
Loan and lease loss reserve to loans and leases0.98%0.84%0.74%0.98%0.74%
Loan and lease loss reserve to nonperforming loans113.89%101.12%137.45%113.89%137.45%
Nonperforming loans to loans and leases0.86%0.83%0.54%0.86%0.54%
Tier 1 leverage11.81%11.64%13.07%11.81%13.07%
Risk-based capital - Tier 115.70%15.44%15.09%15.70%15.09%
 
(a) Net interest margin is calculated on a tax equivalent basis.
           

  

Asset Quality Three Months EndedNine Months Ended
  September 30,June 30,September 30,September 30,September 30,
  20202020201920202019
Accruing loans and leases past due 30-89 days $13,490 $15,358 $10,462 $13,490 $10,462 
Accruing loans and leases past due 90 days or more $2,948 $4,438 $744 $2,948 $744 
Nonaccrual loans and leases $16,628 $14,634 $9,533 $16,628 $9,533 
Total troubled debt restructuring $4,097 $3,899 $4,127 $4,097 $4,127 
Other real estate owned $3,577 $3,577 $3,717 $3,577 $3,717 
Nonperforming loans and other real estate owned $27,138 $26,548 $18,121 $27,138 $18,121 
Total nonperforming assets $30,174 $29,493 $21,725 $30,174 $21,725 
Gross charge-offs $1,998 $1,540 $2,926 $6,442 $6,941 
Recoveries $1,248 $797 $975 $3,379 $3,104 
Net charge-offs/(recoveries) $750 $743 $1,951 $3,063 $3,837 
                 

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

 September 30,
2020
 December 31,
2019
 (unaudited)
ASSETS   
Cash and due from banks$388,440  $127,426 
Federal funds sold659  7,500 
Securities available-for-sale956,239  926,717 
Loans:   
Commercial1,657,083  1,584,447 
Residential626,441  682,077 
Consumer468,684  386,006 
 2,752,208  2,652,530 
(Less) plus:   
Net deferred loan costs1,285  3,860 
Allowance for loan losses(26,960) (19,943)
 2,726,533  2,636,447 
Restricted stock15,012  15,394 
Accrued interest receivable18,482  18,523 
Premises and equipment, net62,968  62,576 
Bank-owned life insurance95,459  94,251 
Goodwill78,592  78,592 
Other intangible assets9,405  10,643 
Other real estate owned3,465  3,625 
Other assets34,742  41,556 
TOTAL ASSETS$4,389,996  $4,023,250 
    
LIABILITIES AND SHAREHOLDERS’ EQUITY   
Deposits:   
Non-interest-bearing$709,591  $547,189 
Interest-bearing:   
Certificates of deposit exceeding the FDIC insurance limits109,830  126,738 
Other interest-bearing deposits2,784,932  2,601,430 
 3,604,353  3,275,357 
Short-term borrowings95,249  80,119 
Other liabilities72,454  79,193 
TOTAL LIABILITIES3,782,901  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 capital140,308  139,694 
Retained earnings523,029  492,055 
Accumulated other comprehensive income/(loss)12,121  (7,501)
Less: Treasury shares at cost-2,360,630 in 2020 and 2,313,641 in 2019(70,369) (68,645)
TOTAL SHAREHOLDERS’ EQUITY607,095  557,608 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY$4,389,996  $4,023,250 
        

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Dollar amounts in thousands, except per share data)

 Three Months Ended September 30, Nine Months Ended September 30,
 2020 2019 2020 2019
 (unaudited)
INTEREST INCOME:       
Loans, including related fees$34,077  $33,363  $102,335  $87,650 
Securities:       
Taxable3,005  3,907  10,658  11,104 
Tax-exempt1,994  1,959  5,940  5,699 
Other463  366  1,265  1,017 
TOTAL INTEREST INCOME39,539  39,595  120,198  105,470 
INTEREST EXPENSE:       
Deposits2,689  5,069  10,238  11,202 
Short-term borrowings107  305  475  786 
Other borrowings212  222  709  305 
TOTAL INTEREST EXPENSE3,008  5,596  11,422  12,293 
NET INTEREST INCOME36,531  33,999  108,776  93,177 
Provision for loan losses4,425  1,500  10,080  3,200 
NET INTEREST INCOME AFTER PROVISION       
FOR LOAN LOSSES32,106  32,499  98,696  89,977 
NON-INTEREST INCOME:       
Trust and financial services1,210  1,329  4,032  3,657 
Service charges and fees on deposit accounts2,516  3,227  7,616  8,586 
Other service charges and fees4,269  3,720  11,468  10,242 
Securities gains (losses), net5  6  230  18 
Gain on sales of mortgage loans2,910  865  4,813  1,781 
Other829  599  1,451  2,841 
TOTAL NON-INTEREST INCOME11,739  9,746  29,610  27,125 
NON-INTEREST EXPENSE:       
Salaries and employee benefits15,474  14,031  45,769  39,332 
Occupancy expense2,003  1,804  6,094  5,432 
Equipment expense2,739  2,117  7,873  5,685 
FDIC Expense135  155  (46) 494 
Other6,779  9,302  21,877  23,651 
TOTAL NON-INTEREST EXPENSE27,130  27,409  81,567  74,594 
INCOME BEFORE INCOME TAXES16,715  14,836  46,739  42,508 
Provision for income taxes2,715  2,579  8,634  8,000 
NET INCOME14,000  12,257  38,105  34,508 
OTHER COMPREHENSIVE INCOME       
Change in unrealized gains/(losses) on securities, net of reclassifications and taxes2,223  4,124  18,451  22,689 
Change in funded status of post retirement benefits, net of taxes383  303  1,171  910 
COMPREHENSIVE INCOME$16,606  $16,684  $57,727  $58,107 
PER SHARE DATA       
Basic and Diluted Earnings per Share$1.02  $0.93  $2.78  $2.74 
Weighted average number of shares outstanding (in thousands)13,715  13,141  13,723  12,574 
            

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Source: First Financial Corporation Indiana
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