First Financial Corporation Reports 2023 Results
First Financial Corporation (NASDAQ:THFF) reported a decrease in net income, diluted net income per common share, and return on average assets for the fourth quarter of 2023 compared to the same period in 2022. The company also announced results for the year ended December 31, 2023, showing a decline in net income, diluted net income per common share, and return on average assets. However, average total loans and total loans outstanding increased, and the company declared a $0.45 quarterly dividend. Shareholder equity, book value per share, and tangible common equity to tangible asset ratio also showed positive growth. Net interest income and net interest margin decreased, and nonperforming loans and non-interest expense increased. The efficiency ratio and income tax expense also saw changes.
Positive
Average total loans and total loans outstanding increased, showing growth in the company's loan portfolio.
Shareholder equity, book value per share, and tangible common equity to tangible asset ratio all increased, indicating positive growth and financial strength.
Non-interest income increased by 6.43% for the three months ended December 31, 2023, compared to the same period in 2022.
The company declared a $0.45 quarterly dividend during the quarter, benefiting shareholders.
The company's credit quality remains stable, and they have a disciplined approach to expense management.
Negative
Net income, diluted net income per common share, and return on average assets all decreased for the fourth quarter of 2023 compared to the same period in 2022, showing a decline in profitability.
Net interest income and net interest margin decreased, impacting the company's overall financial performance.
Nonperforming loans and non-interest expense increased, indicating challenges in credit quality and increased operating expenses.
The reported decrease in net income and diluted net income per common share for both the fourth quarter and the full year suggests a contraction in profitability for First Financial Corporation. This contraction could be indicative of underlying challenges within the company or a broader economic downturn affecting the financial sector. Investors may scrutinize the factors leading to the decrease, such as the uptick in nonperforming loans, which could signal credit quality concerns.
Despite the lower profitability, the growth in total loans outstanding and book value per share is a positive sign, reflecting an expansion in the company's lending activities and an increase in shareholder value. However, the rise in nonperforming loans could offset these gains if it leads to higher credit losses in the future. The efficiency ratio deterioration is another point of concern, as it suggests that the company's expenses are growing faster than its revenues, potentially affecting future earnings.
The net interest margin (NIM) contraction is a critical metric for financial institutions, as it measures the difference between the income generated by banks and the amount of interest paid out to lenders relative to the amount of their interest-earning assets. A decrease in NIM could be due to a variety of factors, such as changes in interest rates, asset yield, or funding costs. In the context of rising interest rates, this decline could suggest that First Financial Corporation is facing challenges in managing interest rate risk or competition for deposits.
The announcement of the agreement with SimplyBank and the expansion into new markets is a strategic move that could offer long-term growth opportunities. However, the immediate impact on the company's financials will depend on the integration success and the performance of the new markets. Investors may view this expansion favorably if it diversifies the company's revenue streams and enhances its market position.
The reported figures provide insights into the broader economic environment in which First Financial Corporation operates. The increase in the provision for credit losses compared to a negative provision in the previous year suggests a more cautious outlook on future credit risks, potentially reflecting economic uncertainties. Additionally, the lower return on average assets (ROAA) might imply a less favorable economic landscape for banking profitability.
The decrease in average total deposits year-over-year, coupled with the increase in shareholder equity , suggests that the bank is strengthening its capital position, which could be a defensive move in anticipation of a tougher economic climate. Moreover, the improved tangible common equity to tangible asset ratio indicates a stronger capital base, which is crucial for absorbing potential losses and supporting future growth.
01/30/2024 - 10:00 AM
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.
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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
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(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.75% .
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 %
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(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 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 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
The ticker symbol for First Financial Corporation is THFF.
The net income for the fourth quarter of 2023 was $12.4 million, and the diluted net income per common share was $1.06.
The return on average assets for the year ended December 31, 2023, was 1.26%.
Yes, the company declared a $0.45 quarterly dividend during the quarter.
The efficiency ratio for the quarter ending December 31, 2023, was 65.62%.
