FIRST FINANCIAL CORPORATION
One First Financial Plaza, Terre Haute, Indiana 47807 (812) 238-6000
First Financial Corporation Reports Second Quarter Results
Terre Haute, Indiana, July 26, 2022 – First Financial Corporation (NASDAQ:THFF) today announced results for the second quarter of 2022.
•Net income was $15.6 million compared to $16.6 million for the same period of 2021;
•Diluted net income per common share of $1.27 compared to $1.24 for the same period of 2021;
•Return on average assets was 1.24% compared to 1.40% for the three months ended June 30, 2021;
•Credit loss provision was $750 thousand compared to negative provision for credit losses of $2.3 million for the second quarter 2021; and
•Pre-tax, pre-provision net income was $19.7 million compared to $18.6 million for the same period in 2021.1
The Corporation further reported results for the six months ending June 30, 2022:
•Net income was $36.5 million compared to $29.5 million for the same period of 2021;
•Diluted net income per common share of $2.95 compared to $2.19 for the same period of 2021;
•Return on average assets was 1.43% compared to 1.26% for the six months ended June 30, 2021;
•Negative provision for credit losses was $5.8 million compared to negative provision for credit losses of $1.7 million for the six months ended June 30, 2021; and
•Pre-tax, pre-provision net income was $39.4 million compared to $35.1 million for the same period in 2021.1
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.
“We are pleased with our second quarter results” said Norman L. Lowery, Chairman and Chief Executive Officer. “Loan growth continues to be strong which contributed to our fifth straight quarter of net interest income growth.”
Average Total Loans
Average total loans for the second quarter of 2022 were $2.83 billion versus $2.62 billion for the comparable period in 2021, an increase of $206 million or 7.86%.
Total Loans Outstanding
Total loans outstanding as of June 30, 2022 were $2.89 billion compared to $2.57 billion as of June 30, 2021, an increase of $319 million or 12.41%. On a linked quarter basis, total loans increased $82.9 million or 2.95% from $2.80 billion as of March 31, 2022.
Average Total Deposits
Average total deposits for the quarter ended June 30, 2022, were $4.42 billion versus $3.98 billion as of June 30, 2021, an increase of $436 million or 10.93%.
Total Deposits
Total deposits were $4.38 billion as of June 30, 2022, compared to $3.99 billion as of June 30, 2021, an increase of $395 million or 9.89%.
Book Value Per Share
Book Value per share was $38.36 at June 30, 2022, compared to $45.08 at June 30, 2021. The decrease was partially driven by the repurchase of 1,056,597 shares of the Corporation's common stock.
Shareholder Equity
Shareholder equity at June 30, 2022, was $461.5 million compared to $588.2 million on June 30, 2021. In the quarter the Corporation repurchased 404,186 shares of its common stock.
Tangible Common Equity to Tangible Asset Ratio
The Corporation’s tangible common equity to tangible asset ratio was 7.48% at June 30, 2022, compared to 10.75% at June 30, 2021. The decrease was partially driven by the aforementioned share repurchases.
Net Interest Income
Net interest income for the second quarter of 2022 was $40.5 million, compared to $35.6 million reported for the same period of 2021, an increase of $4.8 million or 13.59%.
Net Interest Margin
The net interest margin for the quarter ended June 30, 2022, was 3.46% compared to the 3.23% reported at June 30, 2021. On a linked quarter basis, the net interest margin increased 30 basis points from 3.16% as of March 31, 2022.
Nonperforming Loans
Nonperforming loans as of June 30, 2022, were $13.5 million versus $20.0 million as of June 30, 2021. The ratio of nonperforming loans to total loans and leases was 0.47% as of June 30, 2022, versus 0.78% as of June 30, 2021.
Credit Loss Provision
The provision for credit losses for the three months ended June 30, 2022 was $750 thousand, compared to a negative provision for credit losses of $2.2 million for the second quarter 2021.
Net Charge-Offs
In the second quarter of 2022 net recoveries were $202 thousand compared to $152 thousand in the same period of 2021.
Allowance for Credit Losses
The Corporation’s allowance for credit losses as of June 30, 2022, was $41.5 million compared to $44.7 million as of June 30, 2021. The allowance for credit losses as a percent of total loans was 1.44% as of June 30, 2022, compared to 1.74% as of June 30, 2021.
Non-Interest Income
Non-interest income for the three months ended June 30, 2022 and 2021 was $10.3 million and $10.9 million, respectively.
Non-Interest Expense
Non-interest expense for the three months ended June 30, 2022, was $30.7 million compared to $28.0 million in 2021. The year-over-year change is, in part, impacted by the acquisition of Hancock Bancorp in the third quarter of 2021.
Efficiency Ratio
The Corporation’s efficiency ratio was 59.06% for the quarter ending June 30, 2022, versus 58.75% for the same period in 2021.
Income Taxes
Income tax expense for the three months ended June 30, 2022, was $3.7 million versus $4.1 million for the same period in 2021. The effective tax rate for 2022 was 19.17% compared to 19.97% for 2021.
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 78 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 | Six Months Ended |
| | June 30, | March 31, | June 30, | June 30, | June 30, |
| | 2022 | 2022 | 2021 | 2022 | 2021 |
| END OF PERIOD BALANCES | | | | | | |
| Assets | | $ | 5,006,648 | | $ | 5,081,794 | | $ | 4,756,284 | | $ | 5,006,648 | | $ | 4,756,284 | |
| Deposits | | $ | 4,383,257 | | $ | 4,395,190 | | $ | 3,988,751 | | $ | 4,383,257 | | $ | 3,988,751 | |
| Loans, including net deferred loan costs | | $ | 2,887,527 | | $ | 2,804,650 | | $ | 2,568,713 | | $ | 2,887,527 | | $ | 2,568,713 | |
| Allowance for Credit Losses | | $ | 41,468 | | $ | 40,516 | | $ | 41,756 | | $ | 41,468 | | $ | 41,756 | |
| Total Equity | | $ | 461,531 | | $ | 525,444 | | $ | 588,163 | | $ | 461,531 | | $ | 588,163 | |
Tangible Common Equity (a) | | $ | 367,210 | | $ | 431,629 | | $ | 501,459 | | $ | 367,210 | | $ | 501,459 | |
| | | | | | |
| AVERAGE BALANCES | | | | | | |
| Total Assets | | $ | 5,046,846 | | $ | 5,149,642 | | $ | 4,751,068 | | $ | 5,098,244 | | $ | 4,675,909 | |
| Earning Assets | | $ | 4,809,570 | | $ | 4,927,680 | | $ | 4,552,581 | | $ | 4,868,625 | | $ | 4,478,345 | |
| Investments | | $ | 1,432,321 | | $ | 1,468,471 | | $ | 1,244,551 | | $ | 1,450,396 | | $ | 1,188,995 | |
| Loans | | $ | 2,825,684 | | $ | 2,777,168 | | $ | 2,619,887 | | $ | 2,801,426 | | $ | 2,630,089 | |
| Total Deposits | | $ | 4,416,542 | | $ | 4,427,806 | | $ | 3,981,243 | | $ | 4,422,174 | | $ | 3,898,974 | |
| Interest-Bearing Deposits | | $ | 3,519,122 | | $ | 3,525,766 | | $ | 3,173,782 | | $ | 3,522,444 | | $ | 3,116,536 | |
| Interest-Bearing Liabilities | | $ | 103,223 | | $ | 106,005 | | $ | 101,594 | | $ | 104,614 | | $ | 106,021 | |
| Total Equity | | $ | 494,233 | | $ | 565,123 | | $ | 600,599 | | $ | 529,678 | | $ | 600,634 | |
| | | | | | |
| INCOME STATEMENT DATA | | | | | | |
| Net Interest Income | | $ | 40,469 | | $ | 37,811 | | $ | 35,628 | | $ | 78,280 | | $ | 70,541 | |
Net Interest Income Fully Tax Equivalent (b) | | $ | 41,665 | | $ | 38,908 | | $ | 36,719 | | $ | 80,573 | | $ | 72,678 | |
| Provision for Credit Losses | | $ | 750 | | $ | (6,550) | | $ | (2,196) | | $ | (5,800) | | $ | (1,744) | |
| Non-interest Income | | $ | 10,270 | | $ | 13,738 | | $ | 10,931 | | $ | 24,008 | | $ | 20,225 | |
| Non-interest Expense | | $ | 30,674 | | $ | 31,344 | | $ | 27,996 | | $ | 62,018 | | $ | 55,635 | |
| Net Income | | $ | 15,613 | | $ | 20,924 | | $ | 16,614 | | $ | 36,537 | | $ | 29,491 | |
| | | | | | |
| PER SHARE DATA | | | | | | |
| Basic and Diluted Net Income Per Common Share | | $ | 1.27 | | $ | 1.67 | | $ | 1.24 | | $ | 2.95 | | $ | 2.19 | |
| Cash Dividends Declared Per Common Share | | $ | 0.54 | | $ | — | | $ | 0.53 | | $ | 0.54 | | $ | 0.53 | |
| Book Value Per Common Share | | $ | 38.36 | | $ | 42.25 | | $ | 45.08 | | $ | 38.36 | | $ | 45.08 | |
Tangible Book Value Per Common Share (c) | | $ | 32.65 | | $ | 34.71 | | $ | 38.31 | | $ | 30.52 | | $ | 38.43 | |
| Basic Weighted Average Common Shares Outstanding | | 12,248 | | 12,538 | | 13,414 | | 12,393 | | 13,473 | |
(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, |
| | | 2022 | 2022 | 2021 | 2022 | 2021 |
| Return on average assets | | 1.24 | % | 1.63 | % | 1.40 | % | 1.43 | % | 1.26 | % |
| Return on average common shareholder's equity | | 12.64 | % | 14.81 | % | 11.06 | % | 13.80 | % | 9.82 | % |
| Efficiency ratio | | 59.06 | % | 59.54 | % | 58.75 | % | 59.30 | % | 59.89 | % |
| Average equity to average assets | | 9.79 | % | 10.97 | % | 12.64 | % | 10.39 | % | 12.85 | % |
Net interest margin (a) | | 3.46 | % | 3.16 | % | 3.23 | % | 3.31 | % | 3.25 | % |
| Net charge-offs to average loans and leases | | (0.03) | % | 0.18 | % | (0.02) | % | 0.07 | % | 0.04 | % |
| Credit loss reserve to loans and leases | | 1.44 | % | 1.44 | % | 1.74 | % | 1.44 | % | 1.74 | % |
| Credit loss reserve to nonperforming loans | | 306.97 | % | 312.60 | % | 223.46 | % | 306.97 | % | 223.46 | % |
| Nonperforming loans to loans and leases | | 0.47 | % | 0.46 | % | 0.78 | % | 0.47 | % | 0.78 | % |
| Tier 1 leverage | | 9.97 | % | 9.94 | % | 10.72 | % | 9.97 | % | 10.72 | % |
| Risk-based capital - Tier 1 | | 13.51 | % | 14.46 | % | 17.15 | % | 13.51 | % | 17.15 | % |
(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, |
| | | 2022 | 2022 | 2021 | 2022 | 2021 |
| Accruing loans and leases past due 30-89 days | | $ | 20,273 | | $ | 13,698 | | $ | 9,430 | | $ | 20,273 | | $ | 9,430 | |
| Accruing loans and leases past due 90 days or more | | $ | 980 | | $ | 707 | | $ | 1,202 | | $ | 980 | | $ | 1,202 | |
| Nonaccrual loans and leases | | $ | 8,383 | | $ | 7,712 | | $ | 14,356 | | $ | 8,383 | | $ | 14,356 | |
| Total troubled debt restructuring | | $ | 4,146 | | $ | 4,542 | | $ | 4,460 | | $ | 4,146 | | $ | 4,460 | |
| Other real estate owned | | $ | 170 | | $ | 236 | | $ | 989 | | $ | 170 | | $ | 989 | |
| Nonperforming loans and other real estate owned | | $ | 13,679 | | $ | 13,197 | | $ | 21,007 | | $ | 13,679 | | $ | 21,007 | |
| Total nonperforming assets | | $ | 16,766 | | $ | 16,728 | | $ | 24,272 | | $ | 16,766 | | $ | 24,272 | |
| Gross charge-offs | | $ | 2,411 | | $ | 3,254 | | $ | 1,151 | | $ | 5,665 | | $ | 3,489 | |
| Recoveries | | $ | 2,613 | | $ | 2,015 | | $ | 1,303 | | $ | 4,628 | | $ | 2,913 | |
| Net charge-offs/(recoveries) | | $ | (202) | | $ | 1,239 | | $ | (152) | | $ | 1,037 | | $ | 576 | |
| | | | | | | | | | | |
| Non-GAAP Reconciliations | Three Months Ended June 30, |
| 2022 | | 2021 |
| ($ in thousands, except EPS) | | | |
| Income before Income Taxes | $ | 19,315 | | | $ | 20,759 | |
| Provision for credit losses | 750 | | | (2,196) | |
| Provision for unfunded commitments | (350) | | | — | |
| Pre-tax, Pre-provision Income | $ | 19,715 | | | $ | 18,563 | |
| | | | | | | | | | | |
| Non-GAAP Reconciliations | Six Months Ended June 30, |
| 2022 | | 2021 |
| ($ in thousands, except EPS) | | | |
| Income before Income Taxes | $ | 46,070 | | | $ | 36,875 | |
| Provision for credit losses | (5,800) | | | (1,744) | |
| Provision for unfunded commitments | (850) | | | — | |
| Pre-tax, Pre-provision Income | $ | 39,420 | | | $ | 35,131 | |
CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands, except per share data)
| | | | | | | | | | | |
| June 30,
2022 | | December 31,
2021 |
| | (unaudited) |
| ASSETS | | | |
| Cash and due from banks | $ | 412,136 | | | $ | 682,807 | |
| Federal funds sold | 11,133 | | | 308 | |
| Securities available-for-sale | 1,338,452 | | | 1,364,734 | |
| Loans: | | | |
| Commercial | 1,707,105 | | | 1,674,066 | |
| Residential | 670,641 | | | 664,509 | |
| Consumer | 509,781 | | | 474,026 | |
| | 2,887,527 | | | 2,812,601 | |
| (Less) plus: | | | |
| Net deferred loan costs | 4,961 | | | 3,294 | |
| Allowance for credit losses | (41,468) | | | (48,305) | |
| | 2,851,020 | | | 2,767,590 | |
| Restricted stock | 15,620 | | | 16,200 | |
| Accrued interest receivable | 16,701 | | | 16,946 | |
| Premises and equipment, net | 69,022 | | | 69,522 | |
| Bank-owned life insurance | 117,695 | | | 116,997 | |
| Goodwill | 86,985 | | | 86,135 | |
| Other intangible assets | 7,336 | | | 8,024 | |
| Other real estate owned | 170 | | | 108 | |
| Other assets | 80,378 | | | 45,728 | |
| TOTAL ASSETS | $ | 5,006,648 | | | $ | 5,175,099 | |
| | | |
| LIABILITIES AND SHAREHOLDERS’ EQUITY | | | |
| Deposits: | | | |
| Non-interest-bearing | $ | 886,204 | | | $ | 914,933 | |
| Interest-bearing: | | | |
| Certificates of deposit exceeding the FDIC insurance limits | 60,311 | | | 74,015 | |
| Other interest-bearing deposits | 3,436,742 | | | 3,420,621 | |
| | 4,383,257 | | | 4,409,569 | |
| Short-term borrowings | 84,232 | | | 93,374 | |
| FHLB advances | 15,912 | | | 15,937 | |
| Other liabilities | 61,716 | | | 73,643 | |
| TOTAL LIABILITIES | 4,545,117 | | | 4,592,523 | |
| | | |
| Shareholders’ equity | | | |
| Common stock, $.125 stated value per share; | | | |
| Authorized shares-40,000,000 | | | |
| Issued shares-16,114,992 in 2022 and 16,096,313 in 2021 | | | |
| Outstanding shares-12,031,123 in 2022 and 12,629,893 in 2021 | 2,011 | | | 2,009 | |
| Additional paid-in capital | 142,390 | | | 141,979 | |
| Retained earnings | 589,169 | | | 559,139 | |
| Accumulated other comprehensive income/(loss) | (126,630) | | | (2,426) | |
| Less: Treasury shares at cost-4,083,869 in 2022 and 3,466,420 in 2021 | (145,409) | | | (118,125) | |
| TOTAL SHAREHOLDERS’ EQUITY | 461,531 | | | 582,576 | |
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 5,006,648 | | | $ | 5,175,099 | |
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, |
| | 2022 | | 2021 | | 2022 | | 2021 |
| | (unaudited) |
| INTEREST INCOME: | | | | | | | |
| Loans, including related fees | $ | 34,305 | | | $ | 31,966 | | | $ | 66,662 | | | $ | 63,823 | |
| Securities: | | | | | | | |
| Taxable | 6,048 | | | 3,355 | | | 10,631 | | | 6,434 | |
| Tax-exempt | 2,492 | | | 2,163 | | | 4,840 | | | 4,237 | |
| Other | 358 | | | 387 | | | 723 | | | 733 | |
| TOTAL INTEREST INCOME | 43,203 | | | 37,871 | | | 82,856 | | | 75,227 | |
| INTEREST EXPENSE: | | | | | | | |
| Deposits | 2,473 | | | 2,090 | | | 4,149 | | | 4,376 | |
| Short-term borrowings | 176 | | | 94 | | | 258 | | | 192 | |
| Other borrowings | 85 | | | 59 | | | 169 | | | 118 | |
| TOTAL INTEREST EXPENSE | 2,734 | | | 2,243 | | | 4,576 | | | 4,686 | |
| NET INTEREST INCOME | 40,469 | | | 35,628 | | | 78,280 | | | 70,541 | |
| Provision for credit losses | 750 | | | (2,196) | | | (5,800) | | | (1,744) | |
| NET INTEREST INCOME AFTER PROVISION | | | | | | | |
| FOR LOAN LOSSES | 39,719 | | | 37,824 | | | 84,080 | | | 72,285 | |
| NON-INTEREST INCOME: | | | | | | | |
| Trust and financial services | 1,300 | | | 1,313 | | | 2,672 | | | 2,618 | |
| Service charges and fees on deposit accounts | 2,886 | | | 2,327 | | | 5,736 | | | 4,570 | |
| Other service charges and fees | 4,997 | | | 5,039 | | | 9,396 | | | 9,281 | |
| Securities gains (losses), net | — | | | 258 | | | 5 | | | 106 | |
| | | | | | | |
| | | | | | | |
| Gain on sales of mortgage loans | 603 | | | 1,450 | | | 1,265 | | | 2,843 | |
| Other | 484 | | | 544 | | | 4,934 | | | 807 | |
| TOTAL NON-INTEREST INCOME | 10,270 | | | 10,931 | | | 24,008 | | | 20,225 | |
| NON-INTEREST EXPENSE: | | | | | | | |
| Salaries and employee benefits | 15,668 | | | 16,031 | | | 33,010 | | | 31,708 | |
| Occupancy expense | 2,372 | | | 2,002 | | | 4,894 | | | 4,151 | |
| Equipment expense | 2,959 | | | 2,440 | | | 5,866 | | | 5,018 | |
| FDIC Expense | 542 | | | 287 | | | 970 | | | 585 | |
| Other | 9,133 | | | 7,236 | | | 17,278 | | | 14,173 | |
| TOTAL NON-INTEREST EXPENSE | 30,674 | | | 27,996 | | | 62,018 | | | 55,635 | |
| INCOME BEFORE INCOME TAXES | 19,315 | | | 20,759 | | | 46,070 | | | 36,875 | |
| Provision for income taxes | 3,702 | | | 4,145 | | | 9,533 | | | 7,384 | |
| NET INCOME | 15,613 | | | 16,614 | | | 36,537 | | | 29,491 | |
| OTHER COMPREHENSIVE INCOME (LOSS) | | | | | | | |
| Change in unrealized gains/(losses) on securities, net of reclassifications and taxes | (55,919) | | | 1,772 | | | (124,833) | | | (9,296) | |
| Change in funded status of post retirement benefits, net of taxes | 314 | | | 472 | | | 629 | | | 944 | |
| COMPREHENSIVE INCOME (LOSS) | $ | (39,992) | | | $ | 18,858 | | | $ | (87,667) | | | $ | 21,139 | |
| PER SHARE DATA | | | | | | | |
| Basic and Diluted Earnings per Share | $ | 1.27 | | | $ | 1.24 | | | $ | 2.95 | | | $ | 2.19 | |
| Weighted average number of shares outstanding (in thousands) | 12,248 | | | 13,414 | | | 12,393 | | | 13,473 | |
