THFF - First Financial Corporation Reports Second Quarter Results

July, 31 2020 10:00 AM First Financial Corporation Indiana

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 Ended
Year Ended


June 30,
March 31,
June 30,
June 30,
June 30,


2020
2020
2019
2020
2019
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 Ended
Six Months Ended


June 30,
March 31,
June 30,
June 30,
June 30,


2020
2020
2019
2020
2019
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 Ended
Six Months Ended


June 30,
March 31,
June 30,
June 30,
June 30,


2020
2020
2019
2020
2019
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-sale
907,433


926,717

Loans:



Commercial
1,694,376


1,584,447

Residential
657,657


682,077

Consumer
425,601


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 stock
15,200


15,394

Accrued interest receivable
17,205


18,523

Premises and equipment, net
63,270


62,576

Bank-owned life insurance
95,013


94,251

Goodwill
78,592


78,592

Other intangible assets
9,829


10,643

Other real estate owned
3,577


3,625

Other assets
37,688


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 limits
109,548


126,738

Other interest-bearing deposits
2,779,190


2,601,430


3,569,893


3,275,357

Short-term borrowings
100,096


80,119

Other liabilities
79,722


79,193

TOTAL LIABILITIES
3,777,828


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 2019
2,006


2,005

Additional paid-in capital
140,103


139,694

Retained earnings
509,029


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’ EQUITY
590,284


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:







Taxable
3,624


3,516


7,653



7,197

Tax-exempt
2,008


1,873


3,946



3,740

Other
400


337


802



651

TOTAL INTEREST INCOME
39,256


33,259


80,659



65,875

INTEREST EXPENSE:







Deposits
3,019


3,316


7,549



6,133

Short-term borrowings
101


158


368



481

Other borrowings
241


33


497



83

TOTAL INTEREST EXPENSE
3,361


3,507


8,414



6,697

NET INTEREST INCOME
35,895


29,752


72,245



59,178

Provision for loan losses
2,965


230


5,655



1,700

NET INTEREST INCOME AFTER PROVISION







FOR LOAN LOSSES
32,930


29,522


66,590



57,478

NON-INTEREST INCOME:







Trust and financial services
1,288


1,124


2,822



2,328

Service charges and fees on deposit accounts
2,102


2,735


5,100



5,359

Other service charges and fees
3,869


3,408


7,199



6,522

Securities gains (losses), net
31


16


225



12

Gain on sales of mortgage loans
1,205


496


1,903



916

Other
281


1,964


622



2,242

TOTAL NON-INTEREST INCOME
8,776


9,743


17,871



17,379

NON-INTEREST EXPENSE:







Salaries and employee benefits
14,323


12,546


30,295



25,301

Occupancy expense
2,162


1,813


4,091



3,628

Equipment expense
2,673


1,751


5,134



3,568

FDIC Expense
49


199


(181
)


339

Other
7,676


7,183


15,098



14,349

TOTAL NON-INTEREST EXPENSE
26,883


23,492


54,437



47,185

INCOME BEFORE INCOME TAXES
14,823


15,773


30,024



27,672

Provision for income taxes
2,899


3,204


5,919



5,421

NET INCOME
11,924


12,569


24,105



22,251

OTHER COMPREHENSIVE INCOME







Change in unrealized gains/(losses) on securities, net of reclassifications and taxes
3,130


8,341


16,228



18,565

Change in funded status of post retirement benefits, net of taxes
384


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

Company Name:	First Financial Corporation Indiana
Stock Symbol:	THFF
Market:	NASDAQ
Website:	first-online.com

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