• First Financial Corporation Reports 2020 Results

    Source: Nasdaq GlobeNewswire / 02 Feb 2021 13:30:00   America/New_York

    TERRE HAUTE, Ind., Feb. 02, 2021 (GLOBE NEWSWIRE) -- First Financial Corporation (NASDAQ:THFF) today announced results for the three months ending December 31, 2020:

    For the quarter:

    • Net income was $15.7 million compared to $14.4 million for the same period of 2019;
    • Diluted net income per common share of $1.15 compared to $1.05 for the same period of 2019; and
    • Return on average assets was 1.39% compared to 1.42% for the three months ended December 31, 2019.

    The Corporation further reported results for the twelve months ending December 31, 2020:

    • Net income was $53.8 million compared to $48.9 million for the same period of 2019;
    • Diluted net income per common share of $3.93 compared to $3.80 for the same period of 2019; and
    • Return on average assets was 1.25% compared to 1.42% for the twelve months ended December 31, 2019.

    “Despite the headwinds of the global pandemic and the varied restrictions of the four states in which we do business, we were able to deliver our third consecutive year of record earnings,” said Norman L. Lowery, Chairman and Chief Executive Officer. “We are proud that during the fourth quarter we were able to assist many of our clients who participated in the Paycheck Protection Program apply for and receive forgiveness of the loans which have enabled them to keep their employees working and doors open.”

    Average Total Loans
    Average total loans for the fourth quarter of 2020 were $2.68 billion versus $2.66 billion for the comparable period in 2019, an increase of $18.0 million or 0.68%.

    Total Loans Outstanding
    Total loans outstanding decreased $46.0 million, from $2.66 billion as of December 31, 2019 to $2.61 billion as of December 31, 2020.

    "On December 27, 2020 a second stimulus bill was signed into law providing an additional $285 billion in the form of PPP loans. We look forward to continuing to assist our clients whose businesses have suffered the brunt of the economic slowdown caused by the pandemic to help them realize the benefits of this program.”

    Average Total Deposits
    Average total deposits for the quarter ended December 31, 2020, were $3.74 billion versus $3.28 billion as of December 31, 2019, an increase of $461 million or 14.06%.

    Total Deposits
    Total deposits were $3.76 billion as of December 31, 2020, compared to $3.28 billion as of December 31, 2019, an increase of $481 million or 14.67%. On a linked quarter basis, total deposits increased $151.6 million from $3.60 billion for the quarter ending September 30, 2020.

    Book Value Per Share
    Book Value per share was $44.03 at December 31, 2020, compared to $40.58 at December 31, 2019, a 9.28% increase.

    Shareholder Equity
    Shareholder equity at December 31, 2020, was $597.0 million compared to $557.6 million on December 31, 2019. During the quarter the Corporation repurchased 195,042 shares of its common stock.

    Tangible Common Equity to Tangible Asset Ratio
    The Corporation’s tangible common equity to tangible asset ratio was 11.40% at December 31, 2020, compared to 11.91% at December 31, 2019.

    Net Interest Income
    Net interest income for the fourth quarter of 2020 was $37.6 million, compared to $38.5 million reported for the same period of 2019. The decrease was primarily driven by the 150 basis point interest rate reduction by the Federal Reserve in response to the pandemic.

    Net Interest Margin
    The net interest margin for the quarter ended December 31, 2020, was 4.11% compared to the 4.37% reported at December 31, 2019.

    Nonperforming Loans
    Nonperforming loans as of December 31, 2020, were $21.9 million versus $15.3 million as of December 31, 2019. The ratio of nonperforming loans to total loans and leases was 0.84% as of December 31, 2020, versus 0.58% as of December 31, 2019.

    Loan Loss Provision
    In 2019 provision was calculated using the incurred loss basis. In the fourth quarter 2020, provision was calculated using the expected loss basis. The provision for loan losses for the three months ended December 31, 2020, was $448 thousand compared to the $1.50 million provision for the fourth quarter of 2019.

    Net Charge-Offs
    Net charge-offs were $416 thousand for the fourth quarter of 2020 compared to $1.4 million in the same period of 2019.

    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. Upon adoption, the Corporation recognized a $20.0 million increase in its allowance for credit losses, which includes $6.1 million in the remaining loan fair value marks on prior acquisitions and $1.0 million in its reserve for unfunded commitments. These one-time increases, net of tax, were $10.4 million and recorded as an adjustment to beginning retained earnings.

    The Corporation’s allowance for credit losses as of December 31, 2020, was $47.1 million compared to $19.9 million as of December 31, 2019. The variance is directly related to the adoption of CECL. The allowance for credit losses as a percent of total loans was 1.80% as of December 31, 2020, compared to 0.75% as of December 31, 2019. For the quarter ended December 31, 2019 and the first three quarters of 2020, provision for loan loss was calculated using the incurred loss model.

    Non-Interest Income
    Non-interest income for the three months ended December 31, 2020 and 2019 was $12.9 and $11.3 million, respectively. During the quarter, the Corporation sold its merchant card processing portfolio and recorded a $1.0 million gain on the sale. The company has entered into an agent relationship to continue to provide these services to our customers.

    Non-Interest Expense
    Non-interest expense for the three months ended December 31, 2020, was $31.2 million compared to $29.8 million in 2019.

    Efficiency Ratio
    The Corporation’s efficiency ratio was 60.60% for the quarter ending December 31, 2020, versus 58.43% for the same period in 2019.

    Income Taxes
    Income tax expense for the three months ended December 31, 2020, was $3.1 million versus $4.2 million for the same period in 2019. The effective tax rate for 2020 was 17.84% compared to 19.95% 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
      December 31,September 30,December 31,December 31,December 31,
      20202020201920202019
    END OF PERIOD BALANCES      
    Assets $4,557,544 $4,389,996 $4,023,250 $4,557,544 $4,023,250 
    Deposits $3,755,945 $3,604,353 $3,275,357 $3,755,945 $3,275,357 
    Loans, including net deferred loan costs $2,610,294 $2,753,493 $2,656,390 $2,610,294 $2,656,390 
    Allowance for Credit Losses $47,052 $26,960 $19,943 $47,052 $19,943 
    Total Equity $596,992 $607,095 $557,608 $596,992 $557,608 
    Tangible Common Equity (a) $509,428 $519,098 $468,373 $509,428 $468,373 
           
    AVERAGE BALANCES      
    Total Assets $4,532,078 $4,379,798 $4,041,287 $4,312,919 $3,439,793 
    Earning Assets $3,736,217 $3,776,803 $3,662,390 $3,714,794 $3,197,855 
    Investments $1,058,925 $1,008,303 $1,000,488 $1,011,324 $924,513 
    Loans $2,676,041 $2,768,003 $2,658,582 $2,702,225 $2,270,313 
    Total Deposits $3,741,155 $3,592,633 $3,279,859 $3,532,736 $2,797,330 
    Interest-Bearing Deposits $3,005,337 $2,887,575 $3,072,566 $2,872,725 $2,504,885 
    Interest-Bearing Liabilities $98,922 $108,236 $118,605 $108,948 $85,704 
    Total Equity $610,879 $603,067 $575,908 $593,791 $497,329 
           
    INCOME STATEMENT DATA      
    Net Interest Income $37,570 $36,531 $38,475 $146,346 $131,652 
    Net Interest Income Fully Tax Equivalent (b) $38,606 $37,612 $39,594 $150,590 $135,770 
    Provision for Loan Losses $448 $4,425 $1,500 $10,528 $4,700 
    Non-interest Income $12,866 $11,739 $11,327 $42,476 $38,452 
    Non-interest Expense $31,191 $27,130 $29,754 $112,758 $104,348 
    Net Income $15,739 $14,000 $14,364 $53,844 $48,872 
           
    PER SHARE DATA      
    Basic and Diluted Net Income Per Common Share $1.15 $1.02 $1.05 $3.93 $3.80 
    Cash Dividends Declared Per Common Share $0.53 $— $0.52 $1.05 $1.04 
    Book Value Per Common Share $44.03 $44.27 $40.58 $44.03 $40.58 
    Tangible Book Value Per Common Share (c) $37.64 $37.56 $35.46 $37.57 $34.08 
    Basic Weighted Average Common Shares Outstanding 13,695 13,715 13,726 13,716 12,865 

    (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 EndedYear Ended
      December 31,September 30,December 31,December 31,December 31,
      20202020201920202019
    Return on average assets 1.39%1.28%1.42%1.25%1.42%
    Return on average common shareholder's equity 10.31%9.29%9.98%9.07%9.83%
    Efficiency ratio 60.60%54.97%58.43%58.40%59.89%
    Average equity to average assets 13.48%13.77%14.25%13.77%14.46%
    Net interest margin (a) 4.11%3.99%4.37%4.05%4.25%
    Net charge-offs to average loans and leases 0.05%0.11%0.20%0.13%0.23%
    Loan and lease loss reserve to loans and leases 1.80%0.98%0.75%1.80%0.75%
    Loan and lease loss reserve to nonperforming loans 214.88%113.89%130.01%214.88%130.01%
    Nonperforming loans to loans and leases 0.84%0.86%0.58%0.84%0.58%
    Tier 1 leverage 11.24%11.81%12.04%11.24%12.04%
    Risk-based capital - Tier 1 16.11%15.70%15.51%16.11%15.51%

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

        
    Asset Quality Three Months EndedYear Ended
      December 31,September 30,December 31,December 31,December 31,
      20202020201920202019
    Accruing loans and leases past due 30-89 days $17,309 $13,490 $24,040 $17,309 $24,040 
    Accruing loans and leases past due 90 days or more $2,324 $2,948 $1,610 $2,324 $1,610 
    Nonaccrual loans and leases $15,367 $16,628 $9,535 $15,367 $9,535 
    Total troubled debt restructuring $4,206 $4,097 $4,194 $4,206 $4,194 
    Other real estate owned $1,012 $3,577 $3,625 $1,012 $3,625 
    Nonperforming loans and other real estate owned $22,909 $27,138 $18,964 $22,909 $18,964 
    Total nonperforming assets $26,045 $30,174 $22,583 $26,045 $22,583 
    Gross charge-offs $1,954 $1,998 $3,456 $8,396 $10,673 
    Recoveries $1,538 $1,248 $2,100 $4,917 $5,480 
    Net charge-offs/(recoveries) $416 $750 $1,356 $3,479 $5,193 
                     


     
    CONSOLIDATED BALANCE SHEETS
    (Dollar amounts in thousands, except per share data)
        
     December 31,
    2020    		 December 31,
    2019
        
     (unaudited)
    ASSETS   
    Cash and due from banks$657,470  $127,426 
    Federal funds sold301  7,500 
    Securities available-for-sale1,020,744  926,717 
    Loans:   
    Commercial1,521,711  1,584,447 
    Residential604,652  682,077 
    Consumer479,750  386,006 
     2,606,113  2,652,530 
    (Less) plus:   
    Net deferred loan costs4,181  3,860 
    Allowance for credit losses(47,052) (19,943)
     2,563,242  2,636,447 
    Restricted stock14,812  15,394 
    Accrued interest receivable16,957  18,523 
    Premises and equipment, net62,063  62,576 
    Bank-owned life insurance95,849  94,251 
    Goodwill78,592  78,592 
    Other intangible assets8,972  10,643 
    Other real estate owned1,012  3,625 
    Other assets37,530  41,556 
    TOTAL ASSETS$4,557,544  $4,023,250 
        
    LIABILITIES AND SHAREHOLDERS’ EQUITY   
    Deposits:   
    Non-interest-bearing$732,694  $547,189 
    Interest-bearing:   
    Certificates of deposit exceeding the FDIC insurance limits107,764  126,738 
    Other interest-bearing deposits2,915,487  2,601,430 
     3,755,945  3,275,357 
    Short-term borrowings116,061  80,119 
    Other liabilities82,687  79,193 
    TOTAL LIABILITIES3,960,552  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-13,558,511 in 2020 and 13,741,825 in 20192,007  2,005 
    Additional paid-in capital140,820  139,694 
    Retained earnings521,103  492,055 
    Accumulated other comprehensive income/(loss)9,764  (7,501)
    Less: Treasury shares at cost-2,516,643 in 2020 and 2,313,641 in 2019(76,702) (68,645)
    TOTAL SHAREHOLDERS’ EQUITY596,992  557,608 
    TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY$4,557,544  $4,023,250 
            


     
    CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
    (Dollar amounts in thousands, except per share data)
      
     Years Ended December 31,
     2020 2019 2018
          
     (unaudited)
    INTEREST INCOME:     
    Loans, including related fees$137,241  $124,788  $100,541 
    Securities:     
    Taxable13,625  15,191  16,942 
    Tax-exempt7,952  7,674  7,455 
    Other1,667  1,468  1,286 
    TOTAL INTEREST INCOME160,485  149,121  126,224 
    INTEREST EXPENSE:     
    Deposits12,801  15,711  9,032 
    Short-term borrowings568  1,105  501 
    Other borrowings770  653  112 
    TOTAL INTEREST EXPENSE14,139  17,469  9,645 
    NET INTEREST INCOME146,346  131,652  116,579 
    Provision for loan losses10,528  4,700  5,768 
    NET INTEREST INCOME AFTER PROVISION     
    FOR LOAN LOSSES135,818  126,952  110,811 
    NON-INTEREST INCOME:     
    Trust and financial services5,423  5,036  5,286 
    Service charges and fees on deposit accounts10,256  11,795  11,733 
    Other service charges and fees15,644  14,012  13,012 
    Securities gains (losses), net233  44  2 
    Gain on sales of mortgage loans6,626  2,573  1,829 
    Other4,294  4,992  6,344 
    TOTAL NON-INTEREST INCOME42,476  38,452  38,206 
    NON-INTEREST EXPENSE:     
    Salaries and employee benefits61,931  54,827  50,658 
    Occupancy expense8,202  7,600  7,030 
    Equipment expense10,568  8,244  6,827 
    FDIC Expense316  693  929 
    Other31,741  32,984  25,845 
    TOTAL NON-INTEREST EXPENSE112,758  104,348  91,289 
    INCOME BEFORE INCOME TAXES65,536  61,056  57,728 
    Provision for income taxes11,692  12,184  11,145 
    NET INCOME53,844  48,872  46,583 
    OTHER COMPREHENSIVE INCOME     
    Change in unrealized gains/(losses) on securities, net of reclassifications and taxes19,269  20,998  (8,363)
    Change in funded status of post retirement benefits, net of taxes(2,004) (5,045) (387)
    COMPREHENSIVE INCOME$71,109  $64,825  $37,833 
    PER SHARE DATA     
    Basic and Diluted Earnings per Share$3.93  $3.80  $3.80 
    Weighted average number of shares outstanding (in thousands)13,716  12,865  12,256 
             


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