• First Financial Corporation Reports 2023 Results

    Source: Nasdaq GlobeNewswire / 30 Jan 2024 09:00:00   America/Chicago

    TERRE HAUTE, Ind., Jan. 30, 2024 (GLOBE NEWSWIRE) -- First Financial Corporation (NASDAQ:THFF) today announced results for the fourth quarter of 2023.

    • Net income was $12.4 million compared to the $16.5 million reported for the same period of 2022;
    • Diluted net income per common share of $1.06 compared to $1.37 for the same period of 2022;
    • Return on average assets was 1.05% compared to 1.34% for the three months ended December 31, 2022;
    • Credit loss provision was $2.5 million compared to provision of $2.7 million for the fourth quarter 2022; and
    • Pre-tax, pre-provision net income was $16.6 million compared to $21.7 million for the same period in 2022.1

    The Corporation further reported results for the year ended December 31, 2023:

    • Net income was $60.7 million compared to the $71.1 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 $5.08 compared to $5.82 for the same period of 2022;
    • Return on average assets was 1.26% compared to 1.41% for the twelve months ended December 31, 2022;
    • Credit loss provision was $7.3 million compared to negative provision of $2.0 million for the twelve months ended December 31, 2022; and
    • Pre-tax, pre-provision net income was $79.7 million compared to $84.9 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 fourth quarter of 2023 were $3.13 billion versus $3.02 billion for the comparable period in 2022, an increase of $117 million or 3.89%.

    Total Loans Outstanding

    Total loans outstanding as of December 31, 2023, were $3.17 billion compared to $3.07 billion as of December 31, 2022, an increase of $100 million or 3.27%, primarily driven by increases in Commercial Construction and Development, Commercial Real Estate, and Consumer Auto loans.

    “We are pleased with our fourth quarter results, as we experienced another quarter of loan growth in a challenging environment. Our credit quality remains stable, and disciplined approach to expense management is constant,” said Norman D. Lowery, President and Chief Executive Officer. “During the quarter we were pleased to announce the signing of a definitive agreement with SimplyBank, which expands our presence into new attractive MSAs in the Tennessee market.”

    Average Total Deposits

    Average total deposits for the quarter ended December 31, 2023, were $4.05 billion versus $4.38 billion as of December 31, 2022. On a linked quarter basis, average deposits increased $50.7 million, or 1.27% from $4.00 billion as of September 30, 2023.

    Total Deposits

    Total deposits were $4.09 billion as of December 31, 2023, compared to $4.37 billion as of December 31, 2022.

    Shareholder Equity

    Shareholder equity at December 31, 2023, was $526.6 million compared to $475.3 million on December 31, 2022. Overall accumulated other comprehensive income/(loss) (“AOCI”) on investments available for sale increased $10.9 million in comparison to December 31, 2022, and increased $47.4 million in comparison to September 30, 2023. During the quarter, there were no share repurchases. An additional 518,860 shares remains under the current repurchase authorization. The Corporation also declared a $0.45 quarterly dividend during the quarter.

    Book Value Per Share

    Book Value per share was $44.64 as of December 31, 2023, compared to $39.44 as of December 31, 2022, an increase of 13.20%.

    Tangible Common Equity to Tangible Asset Ratio

    The Corporation’s tangible common equity to tangible asset ratio was 9.12% at December 31, 2023, compared to 7.79% at December 31, 2022.

    Net Interest Income

    Net interest income for the fourth quarter of 2023 was $39.6 million, compared to $43.7 million reported for the same period of 2022, a decrease of $4.1 million or 9.32%.

    Net Interest Margin

    The net interest margin for the quarter ended December 31, 2023, was 3.63% compared to the 3.81% reported at December 31, 2022, an decrease of 17 basis points or 4.55%.

    Nonperforming Loans

    Nonperforming loans as of December 31, 2023, were $24.6 million versus $9.6 million as of December 31, 2022. The ratio of nonperforming loans to total loans and leases was 0.78% as of December 31, 2023, versus 0.31% as of December 31, 2022. The increase in nonperforming loans is due to a commercial relationship that was downgraded during the quarter.

    Credit Loss Provision

    The provision for credit losses for the three months ended December 31, 2023, was $2.5 million, compared to $2.7 million for the fourth quarter 2022.

    Net Charge-Offs

    In the fourth quarter of 2023 net charge-offs were $1.76 million compared to $2.44 million in the same period of 2022.

    Allowance for Credit Losses

    The Corporation’s allowance for credit losses as of December 31, 2023, was $39.8 million compared to $39.8 million as of December 31, 2022. The allowance for credit losses as a percent of total loans was 1.26% as of December 31, 2023, compared to 1.30% as of December 31, 2022. On a linked quarter basis, the allowance for credit losses as a percent of total loans increased 1 basis point from 1.25% as of September 30, 2023.

    Non-Interest Income

    Non-interest income for the three months ended December 31, 2023 and 2022 was $11.2 million and $10.6 million, respectively, an increase of $679 thousand or 6.43%.

    Non-Interest Expense

    Non-interest expense for the three months ended December 31, 2023, was $34.2 million compared to $32.5 million in 2022.

    Efficiency Ratio

    The Corporation’s efficiency ratio was 65.62% for the quarter ending December 31, 2023, versus 58.78% for the same period in 2022.

    Income Taxes

    Income tax expense for the three months ended December 31, 2023, was $1.7 million versus $2.5 million for the same period in 2022. The effective tax rate for 2023 was 16.31% compared to 18.97% for 2022. The decrease in effective tax rate is due to a $1 million increase in tax credit investments, as well as an increase in tax exempt interest income compared to December 31, 2022.

    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 70 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 Year Ended
      December 31, September 30, December 31, December 31, December 31,
      2023 2023 2022 2023 2022
    END OF PERIOD BALANCES                   
    Assets $4,851,146  $4,784,806  $4,989,281  $4,851,146  $4,989,281 
    Deposits $4,090,068  $4,040,995  $4,368,871  $4,090,068  $4,368,871 
    Loans, including net deferred loan costs $3,167,821  $3,117,626  $3,067,438  $3,167,821  $3,067,438 
    Allowance for Credit Losses $39,767  $39,034  $39,779  $39,767  $39,779 
    Total Equity $527,976  $470,168  $475,293  $527,976  $475,293 
    Tangible Common Equity(a) $435,405  $377,367  $381,594  $435,405  $381,594 
                        
    AVERAGE BALANCES                   
    Total Assets $4,725,297  $4,814,251  $4,930,611  $4,802,448  $5,043,987 
    Earning Assets $4,485,766  $4,575,996  $4,690,594  $4,564,135  $4,800,481 
    Investments $1,279,821  $1,351,433  $1,393,753  $1,358,661  $1,432,681 
    Loans $3,133,267  $3,147,317  $3,015,903  $3,111,784  $2,884,053 
    Total Deposits $4,050,968  $4,000,302  $4,383,505  $4,106,132  $4,408,510 
    Interest-Bearing Deposits $3,291,931  $3,222,633  $3,509,416  $3,304,816  $3,517,468 
    Interest-Bearing Liabilities $206,778  $309,948  $84,210  $199,551  $97,134 
    Total Equity $463,004  $493,764  $438,767  $486,572  $494,837 
                        
    INCOME STATEMENT DATA                   
    Net Interest Income $39,590  $41,150  $43,658  $167,262  $165,042 
    Net Interest Income Fully Tax Equivalent(b) $40,942  $42,539  $44,724  $172,716  $169,699 
    Provision for Credit Losses $2,495  $1,200  $2,725  $7,295  $(2,025)
    Non-interest Income $11,247  $11,627  $10,568  $42,702  $46,716 
    Non-interest Expense $34,244  $32,265  $32,501  $130,176  $126,023 
    Net Income $12,420  $16,285  $16,521  $60,672  $71,109 
                        
    PER SHARE DATA                   
    Basic and Diluted Net Income Per Common Share $1.06  $1.37  $1.37  $5.08  $5.82 
    Cash Dividends Declared Per Common Share $0.45  $—  $0.74  $0.99  $1.28 
    Book Value Per Common Share $44.76  $40.00  $39.44  $44.76  $39.44 
    Tangible Book Value Per Common Share(c) $31.47  $33.69  $28.67  $36.91  $31.66 
    Basic Weighted Average Common Shares Outstanding  11,772   11,901   12,037   11,937   12,211 

    ________________________________

    (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 Year Ended 
      December 31, September 30, December 31, December 31, December 31, 
      2023 2023 2022 2023 2022 
    Return on average assets 1.05%1.35%1.34%1.26%1.41%
    Return on average common shareholder's equity 10.73%13.19%15.06%12.47%14.37%
    Efficiency ratio 65.62%59.57%58.78%60.43%58.23%
    Average equity to average assets 9.80%10.26%8.90%10.13%9.81%
    Net interest margin(a) 3.63%3.74%3.81%3.78%3.54%
    Net charge-offs to average loans and leases 0.22%0.24%0.32%0.23%0.23%
    Credit loss reserve to loans and leases 1.26%1.25%1.30%1.26%1.30%
    Credit loss reserve to nonperforming loans 161.94%310.19%414.36%161.94%414.36%
    Nonperforming loans to loans and leases 0.78%0.40%0.31%0.78%0.31%
    Tier 1 leverage 12.14%11.72%10.78%12.14%10.78%
    Risk-based capital - Tier 1 14.76%14.61%13.58%14.76%13.58%

    __________________________________

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

                         
    Asset Quality Three Months Ended Year Ended
      December 31, September 30, December 31, December 31, December 31,
      2023 2023 2022 2023 2022
    Accruing loans and leases past due 30-89 days $20,168  $15,961  $28,875  $20,168  $28,875 
    Accruing loans and leases past due 90 days or more $960  $1,370  $1,119  $960  $1,119 
    Nonaccrual loans and leases $23,596  $11,214  $8,481  $23,596  $8,481 
    Other real estate owned $107  $63  $337  $107  $337 
    Nonperforming loans and other real estate owned $24,663  $12,647  $9,937  $24,663  $9,937 
    Total nonperforming assets $27,665  $15,671  $12,923  $27,665  $12,923 
    Gross charge-offs $3,976  $3,601  $4,388  $15,496  $15,706 
    Recoveries $2,213  $1,528  $1,947  $8,188  $9,205 
    Net charge-offs/(recoveries) $1,763  $2,073  $2,441  $7,308  $6,501 
                         


             
    Non-GAAP Reconciliations Three Months Ended December 31,
      2023 2022
    ($in thousands, except EPS)        
    Income before Income Taxes $14,098  $19,000 
    Provision for credit losses  2,495   2,725 
    Provision for unfunded commitments  —   — 
    Pre-tax, Pre-provision Income $16,593  $21,725 


           
    Non-GAAP Reconciliations Year Ended December 31,
      2023
    		 2022
    ($ in thousands, except EPS)      
    Income before Income Taxes $72,493  $87,760 
    Provision for credit losses  7,295   (2,025)
    Provision for unfunded commitments  (100)  (850)
    Pre-tax, Pre-provision Income $79,688  $84,885 
             


     
    CONSOLIDATED BALANCE SHEETS
    (Dollar amounts in thousands, except per share data)
           
      December 31, December 31,
      2023
    		 2022
      (unaudited)
    ASSETS      
    Cash and due from banks $76,759  $222,517 
    Federal funds sold  282   9,374 
    Securities available-for-sale  1,259,137   1,330,481 
    Loans:      
    Commercial  1,817,526   1,798,260 
    Residential  695,788   673,464 
    Consumer  646,758   588,539 
       3,160,072   3,060,263 
    (Less) plus:      
    Net deferred loan costs  7,749   7,175 
    Allowance for credit losses  (39,767)  (39,779)
       3,128,054   3,027,659 
    Restricted stock  15,364   15,378 
    Accrued interest receivable  24,877   21,288 
    Premises and equipment, net  67,286   66,147 
    Bank-owned life insurance  114,122   115,704 
    Goodwill  86,985   86,985 
    Other intangible assets  5,586   6,714 
    Other real estate owned  107   337 
    Other assets  72,587   86,697 
    TOTAL ASSETS $4,851,146  $4,989,281 
           
    LIABILITIES AND SHAREHOLDERS’ EQUITY      
    Deposits:      
    Non-interest-bearing $750,335  $857,920 
    Interest-bearing:      
    Certificates of deposit exceeding the FDIC insurance limits  92,921   50,608 
    Other interest-bearing deposits  3,246,812   3,460,343 
       4,090,068   4,368,871 
    Short-term borrowings  67,221   70,875 
    FHLB advances  108,577   9,589 
    Other liabilities  57,304   64,653 
    TOTAL LIABILITIES  4,323,170   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-11,795,024 in 2023 and 12,051,964 in 2022  2,014   2,012 
    Additional paid-in capital  144,152   143,185 
    Retained earnings  663,726   614,829 
    Accumulated other comprehensive income/(loss)  (127,087)  (139,974)
    Less: Treasury shares at cost-4,342,196 in 2023 and 4,063,028 in 2022  (154,829)  (144,759)
    TOTAL SHAREHOLDERS’ EQUITY  527,976   475,293 
    TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $4,851,146  $4,989,281 
             


     
    CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
    (Dollar amounts in thousands, except per share data)
              
      Year Ended
      December 31,
      2023
    		 2022
    		 2021
      (unaudited)
    INTEREST INCOME:         
    Loans, including related fees $189,641  $146,295  $128,000 
    Securities:         
    Taxable  24,643   21,014   13,110 
    Tax-exempt  10,573   9,974   8,762 
    Other  3,540   6,018   2,326 
    TOTAL INTEREST INCOME  228,397   183,301   152,198 
    INTEREST EXPENSE:         
    Deposits  51,694   16,743   8,158 
    Short-term borrowings  5,370   1,243   387 
    Other borrowings  4,071   273   252 
    TOTAL INTEREST EXPENSE  61,135   18,259   8,797 
    NET INTEREST INCOME  167,262   165,042   143,401 
    Provision for credit losses  7,295   (2,025)  2,466 
    NET INTEREST INCOME AFTER PROVISION         
    FOR LOAN LOSSES  159,967   167,067   140,935 
    NON-INTEREST INCOME:         
    Trust and financial services  5,155   5,155   5,255 
    Service charges and fees on deposit accounts  28,079   27,540   24,700 
    Other service charges and fees  801   665   1,163 
    Securities gains (losses), net  (1)  3   114 
    Interchange income  676   559   438 
    Loan servicing fees  1,176   1,554   1,849 
    Gain on sales of mortgage loans  966   1,994   5,003 
    Other  5,850   9,246   3,562 
    TOTAL NON-INTEREST INCOME  42,702   46,716   42,084 
    NON-INTEREST EXPENSE:         
    Salaries and employee benefits  68,525   65,555   64,474 
    Occupancy expense  9,351   9,764   8,774 
    Equipment expense  14,020   12,391   10,174 
    FDIC Expense  2,907   2,327   1,294 
    Other  35,373   35,986   32,690 
    TOTAL NON-INTEREST EXPENSE  130,176   126,023   117,406 
    INCOME BEFORE INCOME TAXES  72,493   87,760   65,613 
    Provision for income taxes  11,821   16,651   12,626 
    NET INCOME  60,672   71,109   52,987 
    OTHER COMPREHENSIVE INCOME (LOSS)         
    Change in unrealized gains/(losses) on securities, net of reclassifications and taxes  10,896   (144,570)  (18,488)
    Change in funded status of post retirement benefits, net of taxes  1,991   7,022   6,298 
    COMPREHENSIVE INCOME (LOSS) $73,559  $(66,439) $40,797 
    PER SHARE DATA         
    Basic and Diluted Earnings per Share $5.08  $5.82  $4.02 
    Weighted average number of shares outstanding (in thousands)  11,937   12,211   13,190 
                 


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