FIRST FINANCIAL CORPORATION
One First Financial Plaza, Terre Haute, Indiana 47807 (812) 238-6000
First Financial Corporation Reports Third Quarter Results
Terre Haute, Indiana, October 26, 2021 – First Financial Corporation (NASDAQ:THFF) today announced results for the period ending September 30, 2021:
For the quarter:
•Net income was $16.1 million compared to $14.0 million for the same period of 2020;
•Diluted net income per common share of $1.24 compared to $1.02 for the same period of 2020; and
•Return on average assets was 1.34% compared to 1.28% for the three months ended September 30, 2020.
The Corporation further reported results for the nine months ending September 30, 2021:
•Net income was $45.6 million compared to $38.1 million for the same period of 2020;
•Diluted net income per common share of $3.42 compared to $2.78 for the same period of 2020; and
•Return on average assets was 1.28% compared to 1.20% for the nine months ended September 30, 2020.
“We are pleased with our third quarter results” said Norman L. Lowery, Chairman and Chief Executive Officer. “Asset quality continues to be good which has allowed us to release additional credit loss reserves which were established during the pandemic. We continue to focus on our customers and assisting them as needed as they navigate the many challenges of the ongoing pandemic.”
Average Total Loans
Average total loans for the third quarter of 2021 were $2.52 billion versus $2.77 billion for the comparable period in 2020.
Total Loans Outstanding
Total loans outstanding as of September 30, 2021 were $2.48 billion compared to $2.75 billion as of September 30, 2020. Total Paycheck Protection Program ("PPP") loans as of September 30, 2021 were $40.9 million compared to $169.6 million for the same period of 2020.
Average Total Deposits
Average total deposits for the quarter ended September 30, 2021, were $4.04 billion versus $3.59 billion as of September 30, 2020, an increase of $449 million or 12.49%.
Total Deposits
Total deposits were $4.03 billion as of September 30, 2021, compared to $3.60 billion as of September 30, 2020, an increase of $424 million or 11.77%. On a linked quarter basis, total deposits increased $40 million from $3.99 billion for the quarter ending June 30, 2021.
Book Value Per Share
Book Value per share was $46.22 at September 30, 2021, compared to $44.27 at September 30, 2020 an increase of 4.41%.
Shareholder Equity
Shareholder equity at September 30, 2021, was $594.9 million compared to $607.1 million on September 30, 2020. In the quarter the Corporation repurchased 176,293 shares of its common stock.
Tangible Common Equity to Tangible Asset Ratio
The Corporation’s tangible common equity to tangible asset ratio was 10.79% at September 30, 2021, compared to 12.07% at September 30, 2020.
Net Interest Income
Net interest income for the third quarter of 2021 was $36.0 million, compared to $36.5 million reported for the same period of 2020.
Net Interest Margin
The net interest margin for the quarter ended September 30, 2021, was 3.22% compared to the 3.99% reported at September 30, 2020.
Nonperforming Loans
Nonperforming loans as of September 30, 2021, were $19.5 million versus $23.7 million as of September 30, 2020. The ratio of nonperforming loans to total loans and leases was 0.79% as of September 30, 2021, versus 0.86% as of September 30, 2020.
Credit Loss Provision
The provision for credit losses for the three months ended September 30, 2021, was $(1.50) million compared to the $4.43 million provision for the third quarter of 2020. In the first three quarters of 2020 the provision was calculated using the incurred loss basis. Beginning in the fourth quarter 2020, the provision was calculated using the current expected credit loss accounting standard.
Net Charge-Offs/Recoveries
In the third quarter of 2021 net charge-offs were $270 thousand compared to $750 thousand in the same period of 2020.
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.
The Corporation’s allowance for credit losses as of September 30, 2021, was $43.0 million compared to $27.0 million as of September 30, 2020. The increase is primarily related to the adoption of CECL. The allowance for credit losses as a percent of total loans was 1.73% as of September 30, 2021, compared to 0.98% as of September 30, 2020. The allowance as of September 30, 2021 was calculated using CECL. The allowance as of September 30, 2020 was calculated using the incurred loss method.
Non-Interest Income
Non-interest income for the three months ended September 30, 2021 and 2020 was $11.1 million and $11.7 million, respectively.
Non-Interest Expense
Non-interest expense for the three months ended September 30, 2021, was $28.5 million compared to $27.1 million in 2020.
Efficiency Ratio
The Corporation’s efficiency ratio was 59.01% for the quarter ending September 30, 2021, versus 54.97% for the same period in 2020.
Income Taxes
Income tax expense for the nine months ended September 30, 2021, was $11.4 million versus $8.6 million for the same period in 2020. The effective tax rate for 2021 was 20.07% compared to 18.47% for 2020.
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 80 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 | Nine Months Ended |
| | September 30, | June 30, | September 30, | September 30, | September 30, |
| | 2021 | 2021 | 2020 | 2021 | 2020 |
| END OF PERIOD BALANCES | | | | | | |
| Assets | | $ | 4,801,093 | | $ | 4,753,308 | | $ | 4,389,996 | | $ | 4,801,093 | | $ | 4,389,996 | |
| Deposits | | $ | 4,028,636 | | $ | 3,988,751 | | $ | 3,604,353 | | $ | 4,028,636 | | $ | 3,604,353 | |
| Loans, including net deferred loan costs | | $ | 2,479,910 | | $ | 2,568,713 | | $ | 2,753,493 | | $ | 2,479,910 | | $ | 2,753,493 | |
| Allowance for Credit Losses | | $ | 42,962 | | $ | 44,732 | | $ | 26,960 | | $ | 42,962 | | $ | 26,960 | |
| Total Equity | | $ | 594,935 | | $ | 588,163 | | $ | 607,095 | | $ | 594,935 | | $ | 607,095 | |
Tangible Common Equity (a) | | $ | 508,618 | | $ | 501,459 | | $ | 519,098 | | $ | 508,618 | | $ | 519,098 | |
| | | | | | |
| AVERAGE BALANCES | | | | | | |
| Total Assets | | $ | 4,818,880 | | $ | 4,751,068 | | $ | 4,379,798 | | $ | 4,723,566 | | $ | 4,239,866 | |
| Earning Assets | | $ | 4,615,235 | | $ | 4,552,581 | | $ | 3,776,803 | | $ | 4,523,975 | | $ | 3,707,653 | |
| Investments | | $ | 1,325,651 | | $ | 1,244,551 | | $ | 1,008,303 | | $ | 1,234,547 | | $ | 995,457 | |
| Loans | | $ | 2,515,639 | | $ | 2,619,887 | | $ | 2,768,003 | | $ | 2,591,939 | | $ | 2,710,953 | |
| Total Deposits | | $ | 4,041,441 | | $ | 3,981,243 | | $ | 3,592,633 | | $ | 3,946,463 | | $ | 3,463,263 | |
| Interest-Bearing Deposits | | $ | 3,223,948 | | $ | 3,173,782 | | $ | 2,887,575 | | $ | 3,152,340 | | $ | 2,828,521 | |
| Interest-Bearing Liabilities | | $ | 106,936 | | $ | 101,594 | | $ | 108,236 | | $ | 106,326 | | $ | 112,290 | |
| Total Equity | | $ | 599,011 | | $ | 600,599 | | $ | 603,067 | | $ | 600,093 | | $ | 588,095 | |
| | | | | | |
| INCOME STATEMENT DATA | | | | | | |
| Net Interest Income | | $ | 36,028 | | $ | 35,628 | | $ | 36,531 | | $ | 106,569 | | $ | 108,776 | |
Net Interest Income Fully Tax Equivalent (b) | | $ | 37,134 | | $ | 36,719 | | $ | 37,612 | | $ | 109,812 | | $ | 111,983 | |
| Provision for Credit Losses | | $ | (1,500) | | $ | (2,196) | | $ | 4,425 | | $ | (3,244) | | $ | 10,080 | |
| Non-interest Income | | $ | 11,092 | | $ | 10,931 | | $ | 11,739 | | $ | 31,317 | | $ | 29,610 | |
| Non-interest Expense | | $ | 28,459 | | $ | 27,996 | | $ | 27,130 | | $ | 84,094 | | $ | 81,567 | |
| Net Income | | $ | 16,098 | | $ | 16,614 | | $ | 14,000 | | $ | 45,589 | | $ | 38,105 | |
| | | | | | |
| PER SHARE DATA | | | | | | |
| Basic and Diluted Net Income Per Common Share | | $ | 1.24 | | $ | 1.24 | | $ | 1.02 | | $ | 3.42 | | $ | 2.78 | |
| Cash Dividends Declared Per Common Share | | $ | — | | $ | 0.53 | | $ | — | | $ | 0.53 | | $ | 0.52 | |
| Book Value Per Common Share | | $ | 46.22 | | $ | 45.08 | | $ | 44.27 | | $ | 46.22 | | $ | 44.27 | |
Tangible Book Value Per Common Share (c) | | $ | 39.38 | | $ | 38.31 | | $ | 37.56 | | $ | 39.51 | | $ | 37.85 | |
| Basic Weighted Average Common Shares Outstanding | | 13,019 | | 13,414 | | 13,715 | | 13,320 | | 13,723 | |
(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 | Nine Months Ended |
| | | September 30, | June 30, | September 30, | September 30, | September 30, |
| | | 2021 | 2021 | 2020 | 2021 | 2020 |
| Return on average assets | | 1.34 | % | 1.40 | % | 1.28 | % | 1.28 | % | 1.20 | % |
| Return on average common shareholder's equity | | 10.75 | % | 11.06 | % | 9.29 | % | 10.10 | % | 8.62 | % |
| Efficiency ratio | | 59.01 | % | 58.75 | % | 54.97 | % | 59.59 | % | 57.61 | % |
| Average equity to average assets | | 12.43 | % | 12.64 | % | 13.77 | % | 12.70 | % | 13.87 | % |
Net interest margin (a) | | 3.22 | % | 3.23 | % | 3.99 | % | 3.24 | % | 4.03 | % |
| Net charge-offs to average loans and leases | | 0.04 | % | (0.02) | % | 0.11 | % | 0.04 | % | 0.15 | % |
| Credit loss reserve to loans and leases | | 1.73 | % | 1.74 | % | 0.98 | % | 1.73 | % | 0.98 | % |
| Credit loss reserve to nonperforming loans | | 220.39 | % | 223.46 | % | 113.89 | % | 220.39 | % | 113.89 | % |
| Nonperforming loans to loans and leases | | 0.79 | % | 0.78 | % | 0.86 | % | 0.79 | % | 0.86 | % |
| Tier 1 leverage | | 10.77 | % | 10.72 | % | 11.81 | % | 10.77 | % | 11.81 | % |
| Risk-based capital - Tier 1 | | 16.63 | % | 17.15 | % | 15.70 | % | 16.63 | % | 15.70 | % |
(a) Net interest margin is calculated on a tax equivalent basis.
| | | | | | | | | | | | | | | | | | | | |
| Asset Quality | | Three Months Ended | Nine Months Ended |
| | | September 30, | June 30, | September 30, | September 30, | September 30, |
| | | 2021 | 2021 | 2020 | 2021 | 2020 |
| Accruing loans and leases past due 30-89 days | | $ | 10,765 | | $ | 9,430 | | $ | 13,490 | | $ | 10,765 | | $ | 13,490 | |
| Accruing loans and leases past due 90 days or more | | $ | 1,355 | | $ | 1,202 | | $ | 2,948 | | $ | 1,355 | | $ | 2,948 | |
| Nonaccrual loans and leases | | $ | 13,650 | | $ | 14,356 | | $ | 16,628 | | $ | 13,650 | | $ | 16,628 | |
| Total troubled debt restructuring | | $ | 4,489 | | $ | 4,460 | | $ | 4,097 | | $ | 4,489 | | $ | 4,097 | |
| Other real estate owned | | $ | 884 | | $ | 989 | | $ | 3,465 | | $ | 884 | | $ | 3,465 | |
| Nonperforming loans and other real estate owned | | $ | 20,378 | | $ | 21,007 | | $ | 27,138 | | $ | 20,378 | | $ | 27,138 | |
| Total nonperforming assets | | $ | 23,622 | | $ | 24,272 | | $ | 30,174 | | $ | 23,622 | | $ | 30,174 | |
| Gross charge-offs | | $ | 1,614 | | $ | 1,151 | | $ | 1,998 | | $ | 5,103 | | $ | 6,442 | |
| Recoveries | | $ | 1,344 | | $ | 1,303 | | $ | 1,248 | | $ | 4,257 | | $ | 3,379 | |
| Net charge-offs/(recoveries) | | $ | 270 | | $ | (152) | | $ | 750 | | $ | 846 | | $ | 3,063 | |
CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands, except per share data)
| | | | | | | | | | | |
| September 30,
2021 | | December 31,
2020 |
| | (unaudited) |
| ASSETS | | | |
| Cash and due from banks | $ | 758,120 | | | $ | 657,470 | |
| Federal funds sold | 6,183 | | | 301 | |
| Securities available-for-sale | 1,270,820 | | | 1,020,744 | |
| Loans: | | | |
| Commercial | 1,457,984 | | | 1,521,711 | |
| Residential | 535,855 | | | 604,652 | |
| Consumer | 482,115 | | | 479,750 | |
| | 2,475,954 | | | 2,606,113 | |
| (Less) plus: | | | |
| Net deferred loan costs | 3,956 | | | 4,181 | |
| Allowance for credit losses | (42,962) | | | (47,052) | |
| | 2,436,948 | | | 2,563,242 | |
| Restricted stock | 14,837 | | | 14,812 | |
| Accrued interest receivable | 15,963 | | | 16,957 | |
| Premises and equipment, net | 63,187 | | | 62,063 | |
| Bank-owned life insurance | 106,895 | | | 95,849 | |
| Goodwill | 78,592 | | | 78,592 | |
| Other intangible assets | 7,725 | | | 8,972 | |
| Other real estate owned | 884 | | | 1,012 | |
| Other assets | 40,939 | | | 37,530 | |
| TOTAL ASSETS | $ | 4,801,093 | | | $ | 4,557,544 | |
| | | |
| LIABILITIES AND SHAREHOLDERS’ EQUITY | | | |
| Deposits: | | | |
| Non-interest-bearing | $ | 814,902 | | | $ | 732,694 | |
| Interest-bearing: | | | |
| Certificates of deposit exceeding the FDIC insurance limits | 68,920 | | | 107,764 | |
| Other interest-bearing deposits | 3,144,814 | | | 2,915,487 | |
| | 4,028,636 | | | 3,755,945 | |
| Short-term borrowings | 101,051 | | | 116,061 | |
| FHLB advances | 5,902 | | | 5,859 | |
| Other liabilities | 70,569 | | | 82,687 | |
| TOTAL LIABILITIES | 4,206,158 | | | 3,960,552 | |
| | | |
| Shareholders’ equity | | | |
| Common stock, $.125 stated value per share; | | | |
| Authorized shares-40,000,000 | | | |
| Issued shares-16,096,313 in 2021 and 16,075,154 in 2020 | | | |
| Outstanding shares-12,871,936 in 2021 and 13,558,511 in 2020 | 2,009 | | | 2,007 | |
| Additional paid-in capital | 141,456 | | | 140,820 | |
| Retained earnings | 559,693 | | | 521,103 | |
| Accumulated other comprehensive income/(loss) | (1,102) | | | 9,764 | |
| Less: Treasury shares at cost-3,224,377 in 2021 and 2,516,643 in 2020 | (107,121) | | | (76,702) | |
| TOTAL SHAREHOLDERS’ EQUITY | 594,935 | | | 596,992 | |
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 4,801,093 | | | $ | 4,557,544 | |
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, |
| | 2021 | | 2020 | | 2021 | | 2020 |
| | (unaudited) |
| INTEREST INCOME: | | | | | | | |
| Loans, including related fees | $ | 31,937 | | | $ | 34,077 | | | $ | 95,760 | | | $ | 102,335 | |
| Securities: | | | | | | | |
| Taxable | 3,627 | | | 3,005 | | | 10,061 | | | 10,658 | |
| Tax-exempt | 2,234 | | | 1,994 | | | 6,471 | | | 5,940 | |
| Other | 347 | | | 463 | | | 1,080 | | | 1,265 | |
| TOTAL INTEREST INCOME | 38,145 | | | 39,539 | | | 113,372 | | | 120,198 | |
| INTEREST EXPENSE: | | | | | | | |
| Deposits | 1,959 | | | 2,689 | | | 6,335 | | | 10,238 | |
| Short-term borrowings | 99 | | | 107 | | | 291 | | | 475 | |
| Other borrowings | 59 | | | 212 | | | 177 | | | 709 | |
| TOTAL INTEREST EXPENSE | 2,117 | | | 3,008 | | | 6,803 | | | 11,422 | |
| NET INTEREST INCOME | 36,028 | | | 36,531 | | | 106,569 | | | 108,776 | |
| Provision for credit losses | (1,500) | | | 4,425 | | | (3,244) | | | 10,080 | |
| NET INTEREST INCOME AFTER PROVISION | | | | | | | |
| FOR LOAN LOSSES | 37,528 | | | 32,106 | | | 109,813 | | | 98,696 | |
| NON-INTEREST INCOME: | | | | | | | |
| Trust and financial services | 1,156 | | | 1,210 | | | 3,774 | | | 4,032 | |
| Service charges and fees on deposit accounts | 2,697 | | | 2,516 | | | 7,267 | | | 7,616 | |
| Other service charges and fees | 4,466 | | | 4,269 | | | 13,747 | | | 11,468 | |
| Securities gains (losses), net | 5 | | | 5 | | | 111 | | | 230 | |
| | | | | | | |
| | | | | | | |
| Gain on sales of mortgage loans | 1,425 | | | 2,910 | | | 4,268 | | | 4,813 | |
| Other | 1,343 | | | 829 | | | 2,150 | | | 1,451 | |
| TOTAL NON-INTEREST INCOME | 11,092 | | | 11,739 | | | 31,317 | | | 29,610 | |
| NON-INTEREST EXPENSE: | | | | | | | |
| Salaries and employee benefits | 15,770 | | | 15,474 | | | 47,478 | | | 45,769 | |
| Occupancy expense | 2,151 | | | 2,003 | | | 6,302 | | | 6,094 | |
| Equipment expense | 2,177 | | | 2,739 | | | 7,195 | | | 7,873 | |
| FDIC Expense | 313 | | | 135 | | | 898 | | | (46) | |
| Other | 8,048 | | | 6,779 | | | 22,221 | | | 21,877 | |
| TOTAL NON-INTEREST EXPENSE | 28,459 | | | 27,130 | | | 84,094 | | | 81,567 | |
| INCOME BEFORE INCOME TAXES | 20,161 | | | 16,715 | | | 57,036 | | | 46,739 | |
| Provision for income taxes | 4,063 | | | 2,715 | | | 11,447 | | | 8,634 | |
| NET INCOME | 16,098 | | | 14,000 | | | 45,589 | | | 38,105 | |
| OTHER COMPREHENSIVE INCOME | | | | | | | |
| Change in unrealized gains/(losses) on securities, net of reclassifications and taxes | (2,985) | | | 2,223 | | | (12,281) | | | 18,451 | |
| Change in funded status of post retirement benefits, net of taxes | 471 | | | 383 | | | 1,415 | | | 1,171 | |
| COMPREHENSIVE INCOME | $ | 13,584 | | | $ | 16,606 | | | $ | 34,723 | | | $ | 57,727 | |
| PER SHARE DATA | | | | | | | |
| Basic and Diluted Earnings per Share | $ | 1.24 | | | $ | 1.02 | | | $ | 3.42 | | | $ | 2.78 | |
| Weighted average number of shares outstanding (in thousands) | 13,019 | | | 13,715 | | | 13,320 | | | 13,723 | |
