First Financial Corporation Reports First Quarter Results

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First Financial reported a net income of $10.9 million for Q1 2024 compared to $16.0 million in Q1 2023. Diluted net income per share was $0.93 versus $1.33 for the same period in 2023. Return on average assets decreased to 0.91% from 1.32% in Q1 2023. Credit loss provision remained unchanged at $1.8 million. Pre-tax, pre-provision net income was $14.9 million versus $21.4 million in Q1 2023. Total loans outstanding and deposits increased, while nonperforming loans, net interest income, and net interest margin saw declines.

Positive

• Strong loan growth with total loans outstanding and average total loans increasing.

• Stable asset quality and strong capital levels reported by the company.

• Shareholders' equity increased to $520.8 million, with a rise in Book Value and Tangible Book Value per share.

Negative

• Decline in net income, diluted net income per share, and return on average assets compared to Q1 2023.

• Decrease in net interest income and net interest margin for Q1 2024.

• Increase in nonperforming loans and non-interest expense for the company.

Financial Analyst

First Financial Corporation's Q1 results reveal a contraction in net income to $10.9 million from $16.0 million year-over-year, a substantial 31.9% reduction. Diluted EPS has decreased from $1.33 to $0.93. These metrics indicate a compression in profitability, which might concern investors as it suggests a potentially challenging economic environment or internal inefficiencies. However, an increase in average total loans signifies business growth potential.

Another indicator to consider is the Return on Average Assets (ROAA), which has decreased from 1.32% to 0.91%. This can be reflective of asset performance, affecting overall returns for shareholders. Furthermore, the unchanged Credit Loss Provision year-over-year implies a steady management outlook on potential credit losses, even amid changing economic conditions.

Lastly, the efficiency ratio has deteriorated from 58.73% to 67.21%, suggesting rising costs or declining revenues relative to the bank's total income. For investors, these changes underscore the importance of monitoring cost control and operational efficiency as indicators of management's effectiveness.

Market Research Analyst

The Q1 results exhibit a mixed financial landscape for First Financial Corporation. Loan growth, driven by Commercial Real Estate and Consumer Auto segments, signifies an active lending market and potential interest income streams. Conversely, average total deposits contraction from $4.25 billion to $4.05 billion might reflect shifts in consumer behavior or competitive dynamics within the banking sector.

While the balance sheet shows a steady increase in total loans outstanding and shareholders' equity, the rise in nonperforming loans from $12.1 million to $24.3 million could be a red flag signaling credit risk exposure. Investors could see this as an indication of the economic health of borrowers and the potential for future write-downs affecting profitability. Moreover, the net interest margin decline from 3.96% to 3.53% potentially points to narrower profitability on interest-earning assets, a key factor for revenue generation in banking.

Investment Advisor

When dissecting First Financial Corporation's Q1 results, one must consider the tangible book value per share increment from $34.16 to $36.26 alongside the Tangible Common Equity to Tangible Assets Ratio uptick from 8.63% to 9.00%. These improvements suggest a solidification of the bank's intrinsic value, which could provide a cushion during economic downturns.

However, investors should weigh these positive aspects against the diminished net interest income, which has decreased from $44.3 million to $38.9 million, reflecting pressures on the core business operations. The effective tax rate has seen a minor decline to 16.79%, which might offer slight relief in tax burden but is rather insubstantial in the bigger profitability picture. In essence, retail investors should consider both the strengthening of the bank's core capital metrics and the pressing issues in income and loan performance when evaluating the stock's potential.

TERRE HAUTE, Ind., April 30, 2024 (GLOBE NEWSWIRE) -- First Financial Corporation (NASDAQ:THFF) today announced results for the first quarter of 2024.

• Net income was $10.9 million compared to the $16.0 million reported for the same period of 2023;
• Diluted net income per common share of $0.93 compared to $1.33 for the same period of 2023;
• Return on average assets was 0.91% compared to 1.32% for the three months ended March 31, 2023;
• Credit loss provision was $1.8 million compared to provision of $1.8 million for the first quarter 2023; and
• Pre-tax, pre-provision net income was $14.9 million compared to $21.4 million for the same period in 2023.¹
  

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 first quarter of 2024 were $3.18 billion versus $3.07 billion for the comparable period in 2023, an increase of $111 million or 3.63%. On a linked quarter basis, average loans increased $47 million or 1.50% from $3.13 billion as of December 31, 2023.

Total Loans Outstanding

Total loans outstanding as of March 31, 2024, were $3.19 billion compared to $3.08 billion as of March 31, 2023, an increase of $112 million or 3.63%, primarily driven by increases in Commercial Real Estate and Consumer Auto loans. On a linked quarter basis, total loans increased $24.2 million or 0.76% from $3.17 billion as of December 31, 2023.

“We are pleased with our first quarter results, as we experienced another quarter of solid loan growth,” said Norman D. Lowery, President and Chief Executive Officer. “Our balance sheet is strong, our asset quality is stable, and our capital levels remain strong.”

Average Total Deposits

Average total deposits for the quarter ended March 31, 2024, were $4.05 billion versus $4.25 billion as of March 31, 2023.

Total Deposits

Total deposits were $4.11 billion as of March 31, 2024, compared to $4.17 billion as of March 31, 2023. On a linked quarter basis, total deposits increased $15.0 million, or 0.37% from $4.09 billion. Non-interest bearing deposits were $738 million and time deposits were $581 million as of March 31, 2024.

Shareholders’ Equity

Shareholders’ equity at March 31, 2024, was $520.8 million compared to $505.5 million on March 31, 2023. During the last twelve months, the Corporation has repurchased 311,360 shares of its common stock. There were no shares repurchased during the quarter. 518,860 shares remain available for repurchase under the current repurchase authorization. During the quarter, the Corporation paid a $0.45 per share quarterly dividend and declared a $0.45 quarterly dividend payable April 15, 2024.

Book Value Per Share

Book Value per share was $44.08 as of March 31, 2024, compared to $41.89 as of March 31, 2023, an increase of $2.19 per share or 5.22%. Tangible Book Value per share was $36.26 as of March 31, 2024, compared to $34.16 as of March 31, 2023, an increase of $2.10 per share or 6.15%.

Tangible Common Equity to Tangible Asset Ratio

The Corporation’s tangible common equity to tangible asset ratio was 9.00% at March 31, 2024, compared to 8.63% at March 31, 2023.

Net Interest Income

Net interest income for the first quarter of 2024 was $38.9 million, compared to $44.3 million reported for the same period of 2023. Interest income increased $4.7 million and interest expense increased $10.1 million year over year.

Net Interest Margin

The net interest margin for the quarter ended March 31, 2024, was 3.53% compared to the 3.96% reported at March 31, 2023.

Nonperforming Loans

Nonperforming loans as of March 31, 2024, were $24.3 million versus $12.1 million as of March 31, 2023. The ratio of nonperforming loans to total loans and leases was 0.76% as of March 31, 2024, versus 0.39% as of March 31, 2023. The increase was driven primarily by the addition of one credit placed on non-accrual in fourth quarter 2023.

Credit Loss Provision

The provision for credit losses for the three months ended March 31, 2024, was $1.8 million, unchanged from the first quarter 2023.

Net Charge-Offs

In the first quarter of 2024 net charge-offs were $1.5 million compared to $2.0 million in the same period of 2023.

Allowance for Credit Losses

The Corporation’s allowance for credit losses as of March 31, 2024, was $40.0 million compared to $39.6 million as of March 31, 2023. The allowance for credit losses as a percent of total loans was 1.25% as of March 31, 2024, compared to 1.29% as of March 31, 2023. On a linked quarter basis, the allowance for credit losses as a percent of total loans decreased 1 basis point from 1.26% as of December 31, 2023.

Non-Interest Income

Non-interest income for the three months ended March 31, 2024 was $9.4 million unchanged from the first quarter 2023.

Non-Interest Expense

Non-interest expense for the three months ended March 31, 2024, was $33.4 million compared to $32.3 million in 2023, an increase of 3.4% reflective of our history of strong expense control.

Efficiency Ratio

The Corporation’s efficiency ratio was 67.21% for the quarter ending March 31, 2024, versus 58.73% for the same period in 2023.

Income Taxes

Income tax expense for the three months ended March 31, 2024, was $2.2 million versus $3.6 million for the same period in 2023. The effective tax rate for 2024 was 16.79% compared to 18.42% for 2023.

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.

Investor Contact:
Rodger A. McHargue
Chief Financial Officer
P: 812-238-6334
E: rmchargue@first-online.com

	Three Months Ended
	March 31,				December 31,				March 31,
	2024				2023				2023
END OF PERIOD BALANCES
Assets	$	4,852,615			$	4,851,146			$	4,866,821
Deposits	$	4,105,103			$	4,090,068			$	4,165,398
Loans, including net deferred loan costs	$	3,191,983			$	3,167,821			$	3,080,044
Allowance for Credit Losses	$	40,045			$	39,767			$	39,620
Total Equity	$	520,766			$	527,976			$	505,499
Tangible Common Equity(a)	$	428,430			$	435,405			$	412,118
AVERAGE BALANCES
Total Assets	$	4,804,364			$	4,725,297			$	4,851,484
Earning Assets	$	4,566,461			$	4,485,766			$	4,613,126
Investments	$	1,308,322			$	1,279,821			$	1,407,944
Loans	$	3,180,147			$	3,133,267			$	3,068,716
Total Deposits	$	4,045,838			$	4,050,968			$	4,252,161
Interest-Bearing Deposits	$	3,326,090			$	3,291,931			$	3,407,590
Interest-Bearing Liabilities	$	221,425			$	206,778			$	96,160
Total Equity	$	522,720			$	463,004			$	487,834
INCOME STATEMENT DATA
Net Interest Income	$	38,920			$	39,590			$	44,335
Net Interest Income Fully Tax Equivalent(b)	$	40,297			$	40,942			$	45,654
Provision for Credit Losses	$	1,800			$	2,495			$	1,800
Non-interest Income	$	9,431			$	11,247			$	9,375
Non-interest Expense	$	33,422			$	34,244			$	32,321
Net Income	$	10,924			$	12,420			$	15,980
PER SHARE DATA
Basic and Diluted Net Income Per Common Share	$	0.93			$	1.06			$	1.33
Cash Dividends Declared Per Common Share	$	0.45			$	0.45			$	—
Book Value Per Common Share	$	44.08			$	44.76			$	41.89
Tangible Book Value Per Common Share(c)	$	36.26			$	31.47			$	34.16
Basic Weighted Average Common Shares Outstanding		11,803				11,772				12,058

(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
		March 31,				December 31,				March 31,
		2024				2023				2023
Return on average assets		0.91	%			1.05	%			1.32	%
Return on average common shareholder's equity		8.36	%			10.73	%			13.10	%
Efficiency ratio		67.21	%			65.62	%			58.73	%
Average equity to average assets		10.88	%			9.80	%			10.06	%
Net interest margin(a)		3.53	%			3.63	%			3.96	%
Net charge-offs to average loans and leases		0.19	%			0.22	%			0.26	%
Credit loss reserve to loans and leases		1.25	%			1.26	%			1.29	%
Credit loss reserve to nonperforming loans		165.12	%			161.94	%			328.06	%
Nonperforming loans to loans and leases		0.76	%			0.78	%			0.39	%
Tier 1 leverage		12.02	%			12.14	%			11.30	%
Risk-based capital - Tier 1		14.69	%			14.76	%			14.27	%

(a) Net interest margin is calculated on a tax equivalent basis.

Asset Quality	Three Months Ended
	March 31,				December 31,				March 31,
	2024				2023				2023
Accruing loans and leases past due 30-89 days	$	17,937			$	20,168			$	18,934
Accruing loans and leases past due 90 days or more	$	1,395			$	960			$	1,157
Nonaccrual loans and leases	$	22,857			$	23,596			$	10,920
Other real estate owned	$	167			$	107			$	336
Nonperforming loans and other real estate owned	$	24,419			$	24,663			$	12,413
Total nonperforming assets	$	27,307			$	27,665			$	15,327
Gross charge-offs	$	3,192			$	3,976			$	4,376
Recoveries	$	1,670			$	2,213			$	2,417
Net charge-offs/(recoveries)	$	1,522			$	1,763			$	1,959

Non-GAAP Reconciliations	Three Months Ended March 31,
	2024				2023
($in thousands, except EPS)
Income before Income Taxes	$	13,129			$	19,589
Provision for credit losses		1,800				1,800
Provision for unfunded commitments		—				—
Pre-tax, Pre-provision Income	$	14,929			$	21,389

CONSOLIDATED BALANCE SHEETS (Dollar amounts in thousands, except per share data)
	March 31,				December 31,
		2024				2023
	(unaudited)
ASSETS
Cash and due from banks	$	69,231			$	76,759
Federal funds sold		—				282
Securities available-for-sale		1,218,287				1,259,137
Loans:
Commercial		1,816,854				1,817,526
Residential		710,496				695,788
Consumer		657,299				646,758
		3,184,649				3,160,072
(Less) plus:
Net deferred loan costs		7,334				7,749
Allowance for credit losses		(40,045	)			(39,767	)
		3,151,938				3,128,054
Restricted stock		15,371				15,364
Accrued interest receivable		23,851				24,877
Premises and equipment, net		66,830				67,286
Bank-owned life insurance		114,683				114,122
Goodwill		86,985				86,985
Other intangible assets		5,351				5,586
Other real estate owned		167				107
Other assets		99,921				72,587
TOTAL ASSETS	$	4,852,615			$	4,851,146
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Non-interest-bearing	$	738,478			$	750,335
Interest-bearing:
Certificates of deposit exceeding the FDIC insurance limits		109,228				92,921
Other interest-bearing deposits		3,257,397				3,246,812
		4,105,103				4,090,068
Short-term borrowings		88,873				67,221
FHLB advances		58,576				108,577
Other liabilities		79,297				57,304
TOTAL LIABILITIES		4,331,849				4,323,170
Shareholders’ equity
Common stock, $.125 stated value per share;
Authorized shares-40,000,000
Issued shares-16,165,023 in 2024 and 16,137,220 in 2023
Outstanding shares-11,814,093 in 2024 and 11,795,024 in 2023		2,015				2,014
Additional paid-in capital		144,391				144,152
Retained earnings		667,675				663,726
Accumulated other comprehensive income/(loss)		(138,110	)			(127,087	)
Less: Treasury shares at cost-4,350,930 in 2024 and 4,342,196 in 2023		(155,205	)			(154,829	)
TOTAL SHAREHOLDERS’ EQUITY		520,766				527,976
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	4,852,615			$	4,851,146

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (Dollar amounts in thousands, except per share data)
	Three Months Ended
	March 31,
		2024				2023
INTEREST INCOME:
Loans, including related fees	$	50,052			$	44,595
Securities:
Taxable		5,931				6,236
Tax-exempt		2,603				2,598
Other		817				1,271
TOTAL INTEREST INCOME		59,403				54,700
INTEREST EXPENSE:
Deposits		17,731				9,527
Short-term borrowings		976				808
Other borrowings		1,776				30
TOTAL INTEREST EXPENSE		20,483				10,365
NET INTEREST INCOME		38,920				44,335
Provision for credit losses		1,800				1,800
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES		37,120				42,535
NON-INTEREST INCOME:
Trust and financial services		1,333				1,317
Service charges and fees on deposit accounts		6,708				6,818
Other service charges and fees		223				204
Securities gains (losses), net		—				—
Interchange income		179				47
Loan servicing fees		269				285
Gain on sales of mortgage loans		176				180
Other		543				524
TOTAL NON-INTEREST INCOME		9,431				9,375
NON-INTEREST EXPENSE:
Salaries and employee benefits		17,330				17,158
Occupancy expense		2,359				2,599
Equipment expense		4,144				3,299
FDIC Expense		662				787
Other		8,927				8,478
TOTAL NON-INTEREST EXPENSE		33,422				32,321
INCOME BEFORE INCOME TAXES		13,129				19,589
Provision for income taxes		2,205				3,609
NET INCOME		10,924				15,980
OTHER COMPREHENSIVE INCOME (LOSS)
Change in unrealized gains/(losses) on securities, net of reclassifications and taxes		(11,096	)			14,238
Change in funded status of post retirement benefits, net of taxes		73				147
COMPREHENSIVE INCOME (LOSS)	$	(99	)		$	30,365
PER SHARE DATA
Basic and Diluted Earnings per Share	$	0.93			$	1.33
Weighted average number of shares outstanding (in thousands)		11,803				12,058

FAQ

What was the net income for First Financial in Q1 2024?

First Financial reported a net income of $10.9 million for the first quarter of 2024.

What was the diluted net income per share for the company in Q1 2024?

The diluted net income per common share for First Financial was $0.93 in Q1 2024.

How did the return on average assets change for First Financial in Q1 2024 compared to Q1 2023?

The return on average assets decreased to 0.91% in Q1 2024 from 1.32% in Q1 2023 for First Financial

What was the credit loss provision for the company in the first quarter of 2024?

The credit loss provision for First Financial remained unchanged at $1.8 million in Q1 2024.

How did total loans and deposits change for First Financial in Q1 2024?

Total loans outstanding and deposits increased for First Financial in the first quarter of 2024.