First Financial Corporation Reports Third Quarter Results

Rhea-AI Summary

First Financial Corporation (NASDAQ:THFF) reported a net income of $14.0 million for Q3 2020, up from $12.3 million in Q3 2019. Diluted earnings per share rose to $1.02 from $0.93. Year-to-date net income reached $38.1 million, a 15.6% increase compared to 2019. Total assets grew to $4.39 billion, with loans increasing by 3.19% year-over-year to $2.75 billion. Average total deposits surged to $3.59 billion, up 19.08%. However, nonperforming loans rose to $23.7 million, up from $14.4 million. The loan loss provision increased significantly to $4.43 million, reflecting COVID-19 impacts.

Positive

• Net income increased to $14.0 million for Q3 2020, up 13.9% from Q3 2019.
• Diluted net income per share rose to $1.02 from $0.93 year-over-year.
• Year-to-date net income reached $38.1 million, a 15.6% increase compared to the same period in 2019.
• Total loans increased by 3.19% year-over-year to $2.75 billion.
• Average total deposits surged 19.08% to $3.59 billion.

Negative

• Nonperforming loans increased to $23.7 million, up from $14.4 million in Q3 2019.
• Loan loss provision rose significantly to $4.43 million from $1.50 million in Q3 2019.

TERRE HAUTE, Ind., Oct. 28, 2020 (GLOBE NEWSWIRE) -- First Financial Corporation (NASDAQ:THFF) today announced results for the third quarter of 2020. For the three months ending September 30, 2020:

• Net income was $14.0 million compared to $12.3 million for the same period of 2019;
   
• Diluted net income per common share of $1.02 compared to $0.93 for the same period of 2019; and
   
• Return on average assets was 1.28% compared to 1.33% for the three months ended September 30, 2019.

The Corporation further reported results for the nine months ending September 30, 2020:

• Net income was $38.1 million compared to $34.5 million for the same period of 2019;
   
• Diluted net income per common share of $2.78 compared to $2.74 for the same period of 2019; and
   
• Return on average assets was 1.20% compared to 1.42% for the nine months ended September 30, 2019.

“We are pleased with our third quarter results,” said Norman L. Lowery, Chairman and Chief Executive Officer. “In light of COVID-19 and the continuing restrictions in the four states in which we operate, we had a very solid quarter. During the quarter we focused on helping our clients who participated in the Small Business Administration’s Paycheck Protection Program enacted by the Coronavirus Aid, Relief and Economic Security (CARES) Act apply for loan forgiveness.” Separately, we approved and processed loan modifications totaling $351 million across all portfolios. As of September 30, 2020 all but $122.4 million have returned to principal and interest payments.

Average Total Loans
Average total loans for the third quarter of 2020 were $2.77 billion versus $2.47 billion for the comparable period in 2019, an increase of $297.0 million or 12.00%.

Total Loans Outstanding
Total loans outstanding increased $85.0 million, or 3.19%, from $2.67 billion as of September 30, 2019 to $2.75 billion as of September 30, 2020.

Mr. Lowery added “We also devoted considerable effort to assisting customers refinance their existing mortgages or obtain new mortgages. This resulted in a very successful quarter for our mortgage banking department.”

Average Total Deposits
Average total deposits for the quarter ended September 30, 2020, were $3.59 billion versus $3.02 billion as of September 30, 2019, an increase of $576 million or 19.08%.

Total Deposits
Total deposits were $3.60 billion as of September 30, 2020, compared to $3.22 billion as of September 30, 2019, an increase of $384 million or 11.93%. On a linked quarter basis, total deposits increased $34.5 million from $3.57 billion for the quarter ending June 30, 2020.

Book Value Per Share
Book Value per share was $44.27 at September 30, 2020, compared to $40.59 at September 30, 2019.

Shareholder Equity
Shareholder equity at September 30, 2020, was $607.1 million compared to $556.6 million on September 30, 2019.

Tangible Common Equity to Tangible Asset Ratio
The Corporation’s tangible common equity to tangible asset ratio was 12.07% at September 30, 2020, compared to 12.04% at September 30, 2019.

Net Interest Income
Net interest income for the third quarter of 2020 was $36.5 million, an increase of 7.45% over the $34.0 million reported for the same period of 2019.

Net Interest Margin
The net interest margin for the quarter ended September 30, 2020, was 3.99% compared to the 4.00% reported at September 30, 2019.

Nonperforming Loans
Nonperforming loans as of September 30, 2020, were $23.7 million versus $14.4 million as of September 30, 2019. The ratio of nonperforming loans to total loans and leases was 0.86% as of September 30, 2020, versus 0.54% as of September 30, 2019.

Loan Loss Provision
The provision for loan losses for the three months ended September 30, 2020, was $4.43 million compared to the $1.50 million provision for the third quarter of 2019. The Corporation provided $1.0 million for loan and lease losses in the third quarter of 2020, increasing the year-to-date total to $3.0 million directly related to the estimate of losses resulting from the COVID-19 pandemic.

“Each of the four states in which we do business continue to restrict activities affecting both our business and that of our customers, which may in turn affect loan performance,” stated Lowery.

Net Charge-Offs
Net charge-offs were $750 thousand for the third quarter of 2020 compared to $1.95 million in the same period of 2019.

Allowance for Loan Losses
The Corporation’s allowance for loan losses as of September 30, 2020, was $27.0 million compared to $19.8 million as of September 30, 2019. The allowance for loan losses as a percent of total loans was 0.98% as of September 30, 2020, compared to 0.74% as of September 30, 2019. The Corporation's fair value adjustment due to purchase credit impaired loans was $5.6 million as of September 30, 2020.

Current Expected Credit Losses
As provided in the Coronavirus Aid, Relief, and Economic Security (CARES) Act the Corporation has elected to defer the implementation of the Current Expected Credit Loss accounting standard.

Non-Interest Income
Non-interest income for the three months ended September 30, 2020 and 2019 was $11.7 million and $9.7 million, respectively.

Non-Interest Expense
Non-interest expense for the three months ended September 30, 2020, was $27.1 million compared to $27.4 million in 2019.

Efficiency Ratio
The Corporation’s efficiency ratio was 54.97% for the quarter ending September 30, 2020, versus 61.18% for the same period in 2019.

Income Taxes
Income tax expense for the nine months ended September 30, 2020, was $8.6 million versus $8.0 million for the same period in 2019. The effective tax rate for 2020 was 18.47% compared to 18.82% for 2019.

“Despite the challenges presented by the pandemic, First Financial has continued to meet the financial needs of our customers,” Lowery stated. “I am very proud of our associates and of their unwavering commitment to serve our customers in these challenging times.”

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 81 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									Year Ended
		September 30,			June 30,			September 30,			September 30,			September 30,
		2020			2020			2019			2020			2019
END OF PERIOD BALANCES
Assets		$	4,389,996		$	4,368,112		$	3,988,119		$	4,389,996		$	3,988,119
Deposits		$	3,604,353		$	3,569,893		$	3,220,122		$	3,604,353		$	3,220,122
Loans, including net deferred loan costs		$	2,753,493		$	2,777,083		$	2,668,476		$	2,753,493		$	2,668,476
Allowance for Loan Losses		$	26,960		$	23,285		$	19,799		$	26,960		$	19,799
Total Equity		$	607,095		$	590,284		$	556,582		$	607,095		$	556,582
Tangible Common Equity (a)		$	519,098		$	501,863		$	469,904		$	519,098		$	469,904
AVERAGE BALANCES
Total Assets		$	4,379,798		$	4,317,011		$	3,680,041		$	4,239,866		$	3,239,295
Earning Assets		$	3,776,803		$	3,720,477		$	3,468,396		$	3,707,653		$	3,043,010
Investments		$	1,008,303		$	989,545		$	995,092		$	995,457		$	899,188
Loans		$	2,768,003		$	2,727,820		$	2,471,346		$	2,710,953		$	2,140,890
Total Deposits		$	3,592,633		$	3,526,529		$	3,017,085		$	3,463,263		$	2,636,487
Interest-Bearing Deposits		$	2,887,575		$	2,858,594		$	2,914,816		$	2,828,521		$	2,315,658
Interest-Bearing Liabilities		$	108,236		$	121,791		$	113,019		$	112,290		$	74,737
Total Equity		$	603,067		$	591,522		$	491,586		$	588,095		$	471,136
INCOME STATEMENT DATA
Net Interest Income		$	36,531		$	35,895		$	33,999		$	108,776		$	93,177
Net Interest Income Fully Tax Equivalent (b)		$	37,612		$	36,962		$	35,054		$	111,983		$	96,176
Provision for Loan Losses		$	4,425		$	2,965		$	1,500		$	10,080		$	3,200
Non-interest Income		$	11,739		$	8,776		$	9,746		$	29,610		$	27,125
Non-interest Expense		$	27,130		$	26,883		$	27,409		$	81,567		$	74,594
Net Income		$	14,000		$	11,924		$	12,257		$	38,105		$	34,508
PER SHARE DATA
Basic and Diluted Net Income Per Common Share		$	1.02		$	0.87		$	0.93		$	2.78		$	2.74
Cash Dividends Declared Per Common Share		$	—		$	0.52		$	—		$	0.52		$	0.52
Book Value Per Common Share		$	44.27		$	43.04		$	40.59		$	44.27		$	40.59
Tangible Book Value Per Common Share (c)		$	37.56		$	36.68		$	30.81		$	37.85		$	34.27
Basic Weighted Average Common Shares Outstanding		13,715			13,715			13,141			13,723			12,574
(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,
	2020		2020		2019		2020		2019
Return on average assets	1.28	%	1.10	%	1.33	%	1.20	%	1.42	%
Return on average common shareholder's equity	9.29	%	8.06	%	9.97	%	8.62	%	9.74	%
Efficiency ratio	54.97	%	58.78	%	61.18	%	57.61	%	60.50	%
Average equity to average assets	13.77	%	13.70	%	13.36	%	13.87	%	14.54	%
Net interest margin (a)	3.99	%	3.97	%	4.00	%	4.03	%	4.21	%
Net charge-offs to average loans and leases	0.11	%	0.11	%	0.32	%	0.15	%	0.24	%
Loan and lease loss reserve to loans and leases	0.98	%	0.84	%	0.74	%	0.98	%	0.74	%
Loan and lease loss reserve to nonperforming loans	113.89	%	101.12	%	137.45	%	113.89	%	137.45	%
Nonperforming loans to loans and leases	0.86	%	0.83	%	0.54	%	0.86	%	0.54	%
Tier 1 leverage	11.81	%	11.64	%	13.07	%	11.81	%	13.07	%
Risk-based capital - Tier 1	15.70	%	15.44	%	15.09	%	15.70	%	15.09	%
(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,
		2020			2020			2019			2020			2019
Accruing loans and leases past due 30-89 days		$	13,490		$	15,358		$	10,462		$	13,490		$	10,462
Accruing loans and leases past due 90 days or more		$	2,948		$	4,438		$	744		$	2,948		$	744
Nonaccrual loans and leases		$	16,628		$	14,634		$	9,533		$	16,628		$	9,533
Total troubled debt restructuring		$	4,097		$	3,899		$	4,127		$	4,097		$	4,127
Other real estate owned		$	3,577		$	3,577		$	3,717		$	3,577		$	3,717
Nonperforming loans and other real estate owned		$	27,138		$	26,548		$	18,121		$	27,138		$	18,121
Total nonperforming assets		$	30,174		$	29,493		$	21,725		$	30,174		$	21,725
Gross charge-offs		$	1,998		$	1,540		$	2,926		$	6,442		$	6,941
Recoveries		$	1,248		$	797		$	975		$	3,379		$	3,104
Net charge-offs/(recoveries)		$	750		$	743		$	1,951		$	3,063		$	3,837

CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands, except per share data) 

	September 30, 2020				December 31, 2019
	(unaudited)
ASSETS
Cash and due from banks	$	388,440			$	127,426
Federal funds sold	659				7,500
Securities available-for-sale	956,239				926,717
Loans:
Commercial	1,657,083				1,584,447
Residential	626,441				682,077
Consumer	468,684				386,006
	2,752,208				2,652,530
(Less) plus:
Net deferred loan costs	1,285				3,860
Allowance for loan losses	(26,960		)		(19,943		)
	2,726,533				2,636,447
Restricted stock	15,012				15,394
Accrued interest receivable	18,482				18,523
Premises and equipment, net	62,968				62,576
Bank-owned life insurance	95,459				94,251
Goodwill	78,592				78,592
Other intangible assets	9,405				10,643
Other real estate owned	3,465				3,625
Other assets	34,742				41,556
TOTAL ASSETS	$	4,389,996			$	4,023,250
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Non-interest-bearing	$	709,591			$	547,189
Interest-bearing:
Certificates of deposit exceeding the FDIC insurance limits	109,830				126,738
Other interest-bearing deposits	2,784,932				2,601,430
	3,604,353				3,275,357
Short-term borrowings	95,249				80,119
Other liabilities	72,454				79,193
TOTAL LIABILITIES	3,782,901				3,465,642
Shareholders’ equity
Common stock, $.125 stated value per share;
Authorized shares-40,000,000
Issued shares-16,075,154 in 2020 and 16,055,466 in 2019
Outstanding shares-13,714,524 in 2020 and 13,741,825 in 2019	2,006				2,005
Additional paid-in capital	140,308				139,694
Retained earnings	523,029				492,055
Accumulated other comprehensive income/(loss)	12,121				(7,501		)
Less: Treasury shares at cost-2,360,630 in 2020 and 2,313,641 in 2019	(70,369		)		(68,645		)
TOTAL SHAREHOLDERS’ EQUITY	607,095				557,608
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	4,389,996			$	4,023,250

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,
	2020				2019				2020				2019
	(unaudited)
INTEREST INCOME:
Loans, including related fees	$	34,077			$	33,363			$	102,335			$	87,650
Securities:
Taxable	3,005				3,907				10,658				11,104
Tax-exempt	1,994				1,959				5,940				5,699
Other	463				366				1,265				1,017
TOTAL INTEREST INCOME	39,539				39,595				120,198				105,470
INTEREST EXPENSE:
Deposits	2,689				5,069				10,238				11,202
Short-term borrowings	107				305				475				786
Other borrowings	212				222				709				305
TOTAL INTEREST EXPENSE	3,008				5,596				11,422				12,293
NET INTEREST INCOME	36,531				33,999				108,776				93,177
Provision for loan losses	4,425				1,500				10,080				3,200
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES	32,106				32,499				98,696				89,977
NON-INTEREST INCOME:
Trust and financial services	1,210				1,329				4,032				3,657
Service charges and fees on deposit accounts	2,516				3,227				7,616				8,586
Other service charges and fees	4,269				3,720				11,468				10,242
Securities gains (losses), net	5				6				230				18
Gain on sales of mortgage loans	2,910				865				4,813				1,781
Other	829				599				1,451				2,841
TOTAL NON-INTEREST INCOME	11,739				9,746				29,610				27,125
NON-INTEREST EXPENSE:
Salaries and employee benefits	15,474				14,031				45,769				39,332
Occupancy expense	2,003				1,804				6,094				5,432
Equipment expense	2,739				2,117				7,873				5,685
FDIC Expense	135				155				(46		)		494
Other	6,779				9,302				21,877				23,651
TOTAL NON-INTEREST EXPENSE	27,130				27,409				81,567				74,594
INCOME BEFORE INCOME TAXES	16,715				14,836				46,739				42,508
Provision for income taxes	2,715				2,579				8,634				8,000
NET INCOME	14,000				12,257				38,105				34,508
OTHER COMPREHENSIVE INCOME
Change in unrealized gains/(losses) on securities, net of reclassifications and taxes	2,223				4,124				18,451				22,689
Change in funded status of post retirement benefits, net of taxes	383				303				1,171				910
COMPREHENSIVE INCOME	$	16,606			$	16,684			$	57,727			$	58,107
PER SHARE DATA
Basic and Diluted Earnings per Share	$	1.02			$	0.93			$	2.78			$	2.74
Weighted average number of shares outstanding (in thousands)	13,715				13,141				13,723				12,574

FAQ

What were First Financial Corporation's Q3 2020 earnings?

First Financial Corporation reported a net income of $14.0 million for Q3 2020.

How did THFF's diluted earnings per share change in Q3 2020?

Diluted earnings per share increased to $1.02 in Q3 2020 from $0.93 in Q3 2019.

What was THFF's total loans outstanding as of September 30, 2020?

Total loans outstanding were $2.75 billion as of September 30, 2020.

How much did First Financial's average total deposits increase year-over-year?

Average total deposits increased by 19.08% year-over-year to $3.59 billion.

What was the provision for loan losses for THFF in Q3 2020?

The provision for loan losses was $4.43 million in Q3 2020, significantly higher than $1.50 million in Q3 2019.