• First Financial Corporation Reports First Quarter Results

    Source: Nasdaq GlobeNewswire / 25 Apr 2023 13:00:00   America/Chicago

    TERRE HAUTE, Ind., April 25, 2023 (GLOBE NEWSWIRE) -- First Financial Corporation (NASDAQ:THFF) today announced results for the first quarter of 2023.

    • Net income was $16.0 million compared to the $20.9 million reported for the same period of 2022, which included the proceeds of a legal settlement and pandemic related reserve releases, both of which were non-recurring events;
    • Diluted net income per common share of $1.33 compared to $1.67 for the same period of 2022;
    • Return on average assets was 1.32% compared to 1.63% for the three months ended March 31, 2022;
    • Credit loss provision was $1.8 million compared to negative provision of $6.6 million for the first quarter 2022; and
    • Pre-tax, pre-provision net income was $21.4 million compared to $19.7 million for the same period in 2022.1

    1 Non-GAAP financial measure that Management believes is useful for investors and management to understand pre-tax profitability before giving effect to credit loss expense and to provide additional perspective on the Corporation’s performance over time as well as comparison to the Corporation’s peers and evaluating the financial results of the Corporation – please refer to the Non GAAP reconciliations contained in this release.

    Average Total Loans

    Average total loans for the first quarter of 2023 were $3.07 billion versus $2.78 billion for the comparable period in 2022, an increase of $292 million or 10.5%. On a linked quarter basis, average loans increased $53 million or 1.76% from $3.02 billion as of December 31, 2022.

    Total Loans Outstanding

    Total loans outstanding as of March 31, 2023, were $3.08 billion compared to $2.80 billion as of March 31, 2022, an increase of $275 million or 9.82%, primarily driven by increases in Commercial Construction and Development, Commercial Real Estate, and Consumer Auto loans. On a linked quarter basis, total loans increased $12.6 million or 0.41% from $3.07 billion as of December 31, 2022.

    “We are pleased with our first quarter results, as we experienced another quarter of loan growth and expansion of our net interest margin, contributing to our eighth consecutive quarter of net interest income growth. Our pre-tax, pre-provision net income was at near record levels and expenses were well controlled,” said Norman L. Lowery, Chairman and Chief Executive Officer. “With the turbulent environment that arose in the financial services industry towards the end of the quarter, our balance sheet remains strong, our liquidity is stable, and our capital levels remain strong.”

    Average Total Deposits

    Average total deposits for the quarter ended March 31, 2023, were $4.25 billion versus $4.43 billion as of March 31, 2022.

    Total Deposits

    Total deposits were $4.17 billion as of March 31, 2023, compared to $4.40 billion as of March 31, 2022. On a linked quarter basis, total deposits decreased $203.5 million, or 4.66% from $4.37 billion.

    Shareholder Equity

    Shareholder equity at March 31, 2023, was $505.5 million compared to $525.4 million on March 31, 2022. The decrease resulted in part from the return of $18.0 million of capital to shareholders through the repurchase of 413,311 shares of the Corporation’s common stock, as well as a $0.54 semi-annual dividend and a $0.20 special dividend paid in the first quarter of 2023. The possible repurchase of an additional 830,220 shares remain under the current authorization. The decrease in equity is also reflective of higher interest rates which affected the accumulated other comprehensive income (“AOCI”) on investments available for sale. AOCI decreased $55 million in comparison to March 31, 2022, but increased $14 million in comparison to December 31, 2022.

    Book Value Per Share

    Book Value per share was $41.89 at March 31, 2023, compared to $42.25 at March 31, 2022, partially driven by the aforementioned return of capital to our shareholders. On a linked quarter basis, the March 31, 2023 book value per share is a 6.21% increase over the December 31, 2022 book value per share of $39.44.

    Tangible Common Equity to Tangible Asset Ratio

    The Corporation’s tangible common equity to tangible asset ratio was 8.63% at March 31, 2023, compared to 8.65% at March 31, 2022, partially driven by the aforementioned share repurchases.

    Net Interest Income

    Net interest income for the first quarter of 2023 was $44.3 million, compared to $37.8 million reported for the same period of 2022, an increase of $6.5 million or 17.25%. Notwithstanding increased funding costs and two fewer days in the quarter, on a linked quarter basis net interest income increased $677 thousand or 1.55% from the quarter ended December 31, 2022.

    Net Interest Margin

    The net interest margin for the quarter ended March 31, 2023, was 3.96% compared to the 3.16% reported at March 31, 2022, an increase of 80 basis points or 25.32%. On a linked quarter basis, the net interest margin increased 15 basis points from 3.81% as of December 31, 2022. Loan yield increased 29 basis points quarter over quarter, while the cost of interest-bearing deposits increased 21 basis points.

    Nonperforming Loans

    Nonperforming loans as of March 31, 2023, were $12.1 million versus $8.4 million as of March 31, 2022. The ratio of nonperforming loans to total loans and leases was 0.39% as of March 31, 2023, versus 0.30% as of March 31, 2022.

    Credit Loss Provision

    The provision for credit losses for the three months ended March 31, 2023, was $1.8 million, compared to negative provision of $6.6 million for the first quarter 2022, which took into account revised assumptions resulting in reserve releases following pandemic period increases.

    Net Charge-Offs

    In the first quarter of 2023 net charge-offs were $2.0 million compared to $1.2 million in the same period of 2022.

    Allowance for Credit Losses

    The Corporation’s allowance for credit losses as of March 31, 2023, was $39.6 million compared to $40.5 million as of March 31, 2022. The allowance for credit losses as a percent of total loans was 1.29% as of March 31, 2023, compared to 1.44% as of March 31, 2022. On a linked quarter basis, the allowance for credit losses as a percent of total loans decreased 1 basis point from 1.30% as of December 31, 2022.

    Non-Interest Income

    Non-interest income for the three months ended March 31, 2023 and 2022 was $9.4 million and $13.7 million, respectively. Non-interest income for the first quarter of 2022 included the aforementioned legal settlement of $4.0 million.

    Non-Interest Expense

    Non-interest expense for the three months ended March 31, 2023, was $32.3 million compared to $31.3 million in 2022, reflecting strong expense control. This increase is inclusive of an 83.88% increase in FDIC assessments from $428 thousand in the first quarter of 2022 to $787 thousand for the same period in 2023. Salaries increased $118 thousand or 0.91% to $13.1 million in the first quarter of 2023 versus the same period in 2022 and includes a $15 minimum hourly wage adopted in September 2022 as well as a 4.2% merit increase for 2023.

    Efficiency Ratio

    The Corporation’s efficiency ratio was 58.73% for the quarter ending March 31, 2023, versus 59.54% for the same period in 2022.

    Income Taxes

    Income tax expense for the three months ended March 31, 2023, was $3.6 million versus $5.8 million for the same period in 2022. The effective tax rate for 2023 was 18.42% compared to 21.79% for 2022. Pretax income for the first quarter 2022 was significantly higher than pretax income for first quarter 2023. Since our permanent differences remained similar, income was the driving factor for the decrease in effective tax rate.

    About First Financial Corporation

    First Financial Corporation (NASDAQ:THFF) is the holding company for First Financial Bank N.A. First Financial Bank N.A., the fifth oldest national bank in the United States, operates 71 banking centers in Illinois, Indiana, Kentucky and Tennessee. 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
      March 31, December 31, March 31,
      2023 2022 2022
    END OF PERIOD BALANCES           
    Assets $4,866,821  $4,989,281  $5,081,794 
    Deposits $4,165,398  $4,368,871  $4,395,190 
    Loans, including net deferred loan costs $3,080,044  $3,067,438  $2,804,650 
    Allowance for Credit Losses $39,620  $39,779  $40,516 
    Total Equity $505,499  $475,284  $525,444 
    Tangible Common Equity(a) $412,118  $381,585  $431,629 
                
    AVERAGE BALANCES           
    Total Assets $4,851,484  $4,930,611  $5,149,642 
    Earning Assets $4,613,126  $4,690,594  $4,927,680 
    Investments $1,407,944  $1,393,753  $1,468,471 
    Loans $3,068,716  $3,015,903  $2,777,168 
    Total Deposits $4,252,161  $4,383,505  $4,427,806 
    Interest-Bearing Deposits $3,407,590  $3,509,416  $3,525,766 
    Interest-Bearing Liabilities $96,160  $84,210  $106,005 
    Total Equity $487,834  $438,767  $565,123 
                
    INCOME STATEMENT DATA           
    Net Interest Income $44,335  $43,658  $37,811 
    Net Interest Income Fully Tax Equivalent(b) $45,654  $44,724  $38,908 
    Provision for Credit Losses $1,800  $2,725  $(6,550)
    Non-interest Income $9,375  $10,568  $13,738 
    Non-interest Expense $32,321  $32,501  $31,344 
    Net Income $15,980  $16,521  $20,924 
                
    PER SHARE DATA           
    Basic and Diluted Net Income Per Common Share $1.33  $1.37  $1.67 
    Cash Dividends Declared Per Common Share $—  $0.74  $— 
    Book Value Per Common Share $41.89  $39.44  $42.25 
    Tangible Book Value Per Common Share(c) $34.16  $28.67  $34.71 
    Basic Weighted Average Common Shares Outstanding  12,058   12,037   12,538 

    _______________________________
    (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 
      March 31,  December 31,  March 31, 
      2023  2022  2022 
    Return on average assets 1.32% 1.34% 1.63%
    Return on average common shareholder's equity 13.10% 15.06% 14.81%
    Efficiency ratio 58.73% 58.78% 59.54%
    Average equity to average assets 10.06% 8.90% 10.97%
    Net interest margin(a) 3.96% 3.81% 3.16%
    Net charge-offs to average loans and leases 0.26% 0.32% 0.18%
    Credit loss reserve to loans and leases 1.29% 1.30% 1.44%
    Credit loss reserve to nonperforming loans 328.06% 414.36% 481.24%
    Nonperforming loans to loans and leases 0.39% 0.31% 0.30%
    Tier 1 leverage 11.30% 10.78% 9.94%
    Risk-based capital - Tier 1 14.27% 13.58% 14.46%

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


    Asset Quality Three Months Ended
      March 31, December 31, March 31,
      2023 2022 2022
    Accruing loans and leases past due 30-89 days $18,934  $28,875  $13,698 
    Accruing loans and leases past due 90 days or more $1,157  $1,119  $707 
    Nonaccrual loans and leases $10,920  $8,481  $7,712 
    Other real estate owned $336  $337  $236 
    Nonperforming loans and other real estate owned $12,413  $9,937  $13,197 
    Total nonperforming assets $15,327  $12,923  $16,728 
    Gross charge-offs $4,376  $4,388  $3,254 
    Recoveries $2,417  $1,947  $2,015 
    Net charge-offs/(recoveries) $1,959  $2,441  $1,239 


    Non-GAAP Reconciliations Three Months Ended March 31,
      2023 2022
    ($in thousands, except EPS)       
    Income before Income Taxes $19,589  $26,755 
    Provision for credit losses  1,800   (6,550)
    Provision for unfunded commitments  —   (500)
    Pre-tax, Pre-provision Income $21,389  $19,705 
             


    CONSOLIDATED BALANCE SHEETS
    (Dollar amounts in thousands, except per share data)
           
      March 31, December 31,
      2023
    		 2022
      (unaudited)
    ASSETS      
    Cash and due from banks $82,621  $222,517 
    Federal funds sold  12,931   9,374 
    Securities available-for-sale  1,340,781   1,330,481 
    Loans:      
    Commercial  1,798,240   1,798,260 
    Residential  675,978   673,464 
    Consumer  598,299   588,539 
       3,072,517   3,060,263 
    (Less) plus:      
    Net deferred loan costs  7,527   7,175 
    Allowance for credit losses  (39,620)  (39,779)
       3,040,424   3,027,659 
    Restricted stock  15,384   15,378 
    Accrued interest receivable  20,402   21,288 
    Premises and equipment, net  68,158   66,147 
    Bank-owned life insurance  116,117   115,704 
    Goodwill  86,985   86,985 
    Other intangible assets  6,396   6,714 
    Other real estate owned  336   337 
    Other assets  76,286   86,697 
    TOTAL ASSETS $4,866,821  $4,989,281 
           
    LIABILITIES AND SHAREHOLDERS’ EQUITY      
    Deposits:      
    Non-interest-bearing $830,233  $857,920 
    Interest-bearing:      
    Certificates of deposit exceeding the FDIC insurance limits  58,476   50,608 
    Other interest-bearing deposits  3,276,689   3,460,343 
       4,165,398   4,368,871 
    Short-term borrowings  108,584   70,875 
    FHLB advances  34,585   9,589 
    Other liabilities  52,755   64,653 
    TOTAL LIABILITIES  4,361,322   4,513,988 
           
    Shareholders’ equity      
    Common stock, $.125 stated value per share;      
    Authorized shares-40,000,000      
    Issued shares-16,137,220 in 2023 and 16,114,992 in 2022      
    Outstanding shares-12,065,888 in 2023 and 12,051,964 in 2022  2,012   2,012 
    Additional paid-in capital  143,408   143,185 
    Retained earnings  630,809   614,829 
    Accumulated other comprehensive income/(loss)  (125,589)  (139,974)
    Less: Treasury shares at cost-4,071,332 in 2023 and 4,063,028 in 2022  (145,141)  (144,759)
    TOTAL SHAREHOLDERS’ EQUITY  505,499   475,293 
    TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $4,866,821  $4,989,281 
             


    CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
    (Dollar amounts in thousands, except per share data)
            
      Three Months Ended
      March 31,
      2023 2022
            
    INTEREST INCOME:       
    Loans, including related fees $44,595  $32,357 
    Securities:       
    Taxable  6,236   4,583 
    Tax-exempt  2,598   2,348 
    Other  1,271   365 
    TOTAL INTEREST INCOME  54,700   39,653 
    INTEREST EXPENSE:       
    Deposits  9,527   1,676 
    Short-term borrowings  808   82 
    Other borrowings  30   84 
    TOTAL INTEREST EXPENSE  10,365   1,842 
    NET INTEREST INCOME  44,335   37,811 
    Provision for credit losses  1,800   (6,550)
    NET INTEREST INCOME AFTER PROVISION       
    FOR LOAN LOSSES  42,535   44,361 
    NON-INTEREST INCOME:       
    Trust and financial services  1,317   1,372 
    Service charges and fees on deposit accounts  6,818   6,654 
    Other service charges and fees  204   106 
    Securities gains (losses), net  —   5 
    Interchange income  47   118 
    Loan servicing fees  285   359 
    Gain on sales of mortgage loans  180   662 
    Other  524   4,462 
    TOTAL NON-INTEREST INCOME  9,375   13,738 
    NON-INTEREST EXPENSE:       
    Salaries and employee benefits  17,158   17,342 
    Occupancy expense  2,599   2,522 
    Equipment expense  3,299   2,907 
    FDIC Expense  787   428 
    Other  8,478   8,145 
    TOTAL NON-INTEREST EXPENSE  32,321   31,344 
    INCOME BEFORE INCOME TAXES  19,589   26,755 
    Provision for income taxes  3,609   5,831 
    NET INCOME  15,980   20,924 
    OTHER COMPREHENSIVE INCOME (LOSS)       
    Change in unrealized gains/(losses) on securities, net of reclassifications and taxes  14,238   (68,914)
    Change in funded status of post retirement benefits, net of taxes  147   315 
    COMPREHENSIVE INCOME (LOSS) $30,365  $(47,675)
    PER SHARE DATA       
    Basic and Diluted Earnings per Share $1.33  $1.67 
    Weighted average number of shares outstanding (in thousands)  12,058   12,538 

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