[FIRST LOGO] News Release
FIRST FINANCIAL
CORPORATION
ONE FIRST FINANCIAL PLAZA, TERRE HAUTE, INDIANA 47807 (812) 238-6000
For more information contact:
January 20, 2006 Michael A. Carty at (812) 238-6264
FIRST FINANCIAL REPORTS INCREASED 4TH QUARTER EARNINGS
First Financial Corporation today announced that net income for the
fourth quarter of 2005 was $5.4 million compared to $5.0 million for the same
period of 2004. Non-interest income increased 15.3% or $1.0 million over the
same period of 2004. This increase, combined with a $203 thousand increase in
net-interest income, offset the increase of $861 thousand in the provision for
loan losses. Non-interest expense was virtually identical to the same period of
2004. Earnings per share of $0.41, return on assets of 1.00% and return on
equity of 8.15% were all improved over the same period of 2004 by 10.8%, 8.7%
and 15.0% respectively.
The results of operations for the year ended December 31, 2005,
reflected net income of $23.1 million or $1.72 per share. This represents a
decrease of 17.7% from net income in 2004 of $28.0 million. In 2004 the
Corporation recognized a non-taxable gain of $4.1 million on life insurance
benefit from its investment in bank owned life insurance. Excluding this gain,
the decrease in net income in 2005 from 2004 net income was 3.5%
or $842 thousand. During 2005 the Corporation increased the provision for loan
losses by $3.4 million to address credit quality concerns. The Corporation also
increased net-interest income by $2 million and non-interest income, excluding
the life insurance gain, by $384 thousand. Non-interest expense decreased by
$118 thousand. Dividends per share increased 3.8% to $0.82 per share for 2005
from $0.79 per share for 2004.
Increases in net-interest income in 2005 were achieved as a result of
an improved net interest margin. The net interest margin increased to 3.92% from
the 2004 margin of 3.77%. The improved margin is the result of an increase in
deposit balances and a decrease in borrowings, with the funding cost of deposits
being less than borrowings. Rising interest rates during 2005 also resulted in
loan and investment yields increasing at a faster rate than funding costs.
Deposits increased by $21.8 million while borrowings were reduced by $67.9
million. Reduced funding was needed as loans decreased $68.1 million.
"We're proud of our employees for their outstanding performance in a
challenging economic environment," said First Financial Corporation Chairman
Donald E. Smith. "Our success is a direct result of their dedication to customer
satisfaction and convenience."
First Financial Corporation is the holding company for First Financial
Bank NA in Indiana and Illinois, The Morris Plan Company of Terre Haute and
Forrest Sherer Inc. in Indiana.
FIRST FINANCIAL CORPORATION
FOR THE QUARTER AND THE TWELVE MONTHS ENDING DECEMBER 31, 2005
(Dollar amounts in thousands except per share data)
<Table>
<Caption>
12/31/05 12/31/04 CHANGE % CHANGE
YEAR TO DATE INFORMATION:
Net Income $23,054 $28,009 ($4,955) -17.69%
Earnings Per Average Share $1.72 $2.07 ($0.35) -16.91%
Return on Assets 1.07% 1.28% -0.21% -16.41%
Return on Equity 8.52% 10.45% -1.93% -18.47%
Net Interest Margin 3.92% 3.77% 0.15% 3.98%
Net Interest Income $74,178 $72,202 $1,976 2.74%
Non-Interest Income $32,025 $35,754 ($3,729) -10.43%
Non-Interest Expense $63,538 $63,656 ($118) - 0.19%
Loan Loss Provision $11,698 $8,292 $3,406 41.08%
Net Charge Offs $15,574 $9,613 $5.961 62.01%
Efficiency Ratio 57.21% 58.18% -0.96% - 1.66%
QUARTER TO DATE INFORMATION:
Net Income $5,428 $5,020 $408 8.13%
Earnings Per Average Share $0.41 $0.37 $0.04 10.81%
Return on Assets 1.00% 0.92% 0.08% 8.70%
Return on Equity 8.15% 7.09% 1.06% 14.95%
Net Interest Margin 3.95% 3.77% 0.18% 4.77%
Net Interest Income $18,872 $18,669 $203 1.09%
Non-Interest Income $7,679 $6,663 $1,016 15.25%
Non Interest Expense $16,455 $16,377 $78 -0.48%
Loan Loss Provision $3,084 $2,223 $861 38.73%
Net Charge Offs $3,336 $5,011 ($1,675) 33.43%
Efficiency Ratio 59.23% 61.32% -2.09% -3.41%
BALANCE SHEET:
Assets $2,136,918 $2,183,992 ($47,074) -2.16%
Deposits $1,464,918 $1,443,121 $21,797 1.51%
Loans $1,395,741 $1,463,871 ($68,130) -4.65%
Shareholders' Equity $269,323 $268,335 $ 988 0.37%
Book Value Per Share $20.14 $19.82 $ 0.32 1.59%
Average Assets 2,153,517 2,192,168 ($38,651) -1.76%
</Table>