First Financial Corporation Reports Second Quarter Results
07/25/2023 - 10:00 AM
TERRE HAUTE, Ind., July 25, 2023 (GLOBE NEWSWIRE) -- First Financial Corporation (NASDAQ:THFF) today announced results for the second quarter of 2023.
Net income was $16.0 million compared to the $15.6 million reported for the same period of 2022; Diluted net income per common share of $1.33 compared to $1.27 for the same period of 2022; Return on average assets was 1.34% compared to 1.24% for the three months ended June 30, 2022; Credit loss provision was $1.8 million compared to provision of $750 thousand for the second quarter 2022; and Pre-tax, pre-provision net income was $21.2 million compared to $19.7 million for the same period in 2022.1 The Corporation further reported results for the six months ending June 30, 2023:
Net income was $32.0 million compared to the $36.5 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 $2.66 compared to $2.95 for the same period of 2022; Return on average assets was 1.33% compared to 1.43% for the six months ended June 30, 2022; Credit loss provision was $3.6 million compared to negative provision of $5.8 million for the six months ended June 30, 2022; and Pre-tax, pre-provision net income was $42.6 million compared to $39.4 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 second quarter of 2023 were $3.10 billion versus $2.83 billion for the comparable period in 2022, an increase of $272 million or 9.63% . On a linked quarter basis, average loans increased $29 million or 2.26% from $3.07 billion as of March 31, 2023.
Total Loans Outstanding
Total loans outstanding as of June 30, 2023, were $3.13 billion compared to $2.89 billion as of June 30, 2022, an increase of $239 million or 8.28% , primarily driven by increases in Commercial Construction and Development, Commercial Real Estate, and Consumer Auto loans. On a linked quarter basis, total loans increased $46.6 million or 1.51% from $3.08 billion as of March 31, 2023.
“We are pleased with our second quarter results, as we experienced another quarter of loan growth in an increasingly challenging environment. Credit quality remains stable, and our disciplined approach to expense management is constant,” said Norman L. Lowery, Chairman and Chief Executive Officer. “Notwithstanding the turbulent environment that arose in the financial services industry towards the end of the first quarter, liquidity is stable, and our balance sheet and capital levels remain strong.”
Average Total Deposits
Average total deposits for the quarter ended June 30, 2023, were $4.12 billion versus $4.42 billion as of June 30, 2022.
Total Deposits
Total deposits were $4.06 billion as of June 30, 2023, compared to $4.38 billion as of June 30, 2022.
Shareholder Equity
Shareholder equity at June 30, 2023, was $496.9 million compared to $461.5 million on June 30, 2022. The Corporation repurchased 82,903 shares of its stock during the quarter and declared a $0.54 per share semi-annual dividend. An additional 747,317 shares remains under the current authorization. Shareholder’s equity was impacted by the downturn in the markets which affected the accumulated other comprehensive income/(loss) (“AOCI”) on investments available for sale. AOCI decreased $14.6 million in comparison to June 30, 2022, and decreased $15.8 million in comparison to March 31, 2023.
Book Value Per Share
Book Value per share was $41.47 at June 30, 2023, compared to $38.36 at June 30, 2022, an increase of 8.09% .
Tangible Common Equity to Tangible Asset Ratio
The Corporation’s tangible common equity to tangible asset ratio was 8.44% at June 30, 2023, compared to 7.48% at June 30, 2022, partially driven by the aforementioned share repurchases.
Net Interest Income
Net interest income for the second quarter of 2023 was $42.2 million , compared to $40.5 million reported for the same period of 2022, an increase of $1.7 million or 4.25% .
Net Interest Margin
The net interest margin for the quarter ended June 30, 2023, was 3.81% compared to the 3.46% reported at June 30, 2022, an increase of 35 basis points or 9.94% .
Nonperforming Loans
Nonperforming loans as of June 30, 2023, were $13.3 million versus $9.4 million as of June 30, 2022. The ratio of nonperforming loans to total loans and leases was 0.43% as of June 30, 2023, versus 0.32% as of June 30, 2022.
Credit Loss Provision
The provision for credit losses for the three months ended June 30, 2023, was $1.8 million , compared to provision of $750 thousand for the second quarter 2022.
Net Charge-Offs
In the second quarter of 2023 net charge-offs were $1.5 million compared to net recoveries of $202 thousand in the same period of 2022.
Allowance for Credit Losses
The Corporation’s allowance for credit losses as of June 30, 2023, was $39.9 million compared to $41.5 million as of June 30, 2022. The allowance for credit losses as a percent of total loans was 1.28% as of June 30, 2023, compared to 1.44% as of June 30, 2022. On a linked quarter basis, the allowance for credit losses as a percent of total loans decreased 1 basis point from 1.29% as of March 31, 2023.
Non-Interest Income
Non-interest income for the three months ended June 30, 2023 and 2022 was $10.5 million and $10.3 million , respectively.
Non-Interest Expense
Non-interest expense for the three months ended June 30, 2023, was $31.3 million compared to $30.7 million in 2022.
Efficiency Ratio
The Corporation’s efficiency ratio was 58.01% for the quarter ending June 30, 2023, versus 59.06% for the same period in 2022.
Income Taxes
Income tax expense for the three months ended June 30, 2023, was $3.5 million versus $3.7 million for the same period in 2022. The effective tax rate for 2023 was 17.99% compared to 19.17% for 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 71 banking centers in Illinois, Indiana, Kentucky and Tennessee. Additional information is available at www.first-online.bank.
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Three Months Ended Six Months Ended June 30, March 31, June 30, June 30, June 30, 2023 2023 2022 2023 2022 END OF PERIOD BALANCES Assets $ 4,877,231 $ 4,866,821 $ 5,006,648 $ 4,877,231 $ 5,006,648 Deposits $ 4,063,155 $ 4,165,398 $ 4,383,257 $ 4,063,155 $ 4,383,257 Loans, including net deferred loan costs $ 3,126,676 $ 3,080,044 $ 2,887,527 $ 3,126,676 $ 2,887,527 Allowance for Credit Losses $ 39,907 $ 39,620 $ 41,468 $ 39,907 $ 41,468 Total Equity $ 496,888 $ 505,499 $ 461,531 $ 496,888 $ 461,531 Tangible Common Equity(a) $ 403,824 $ 412,118 $ 367,210 $ 403,824 $ 367,210 AVERAGE BALANCES Total Assets $ 4,818,760 $ 4,851,484 $ 5,046,846 $ 4,835,122 $ 5,098,244 Earning Assets $ 4,581,652 $ 4,613,126 $ 4,809,570 $ 4,597,389 $ 4,868,625 Investments $ 1,395,446 $ 1,407,944 $ 1,432,321 $ 1,401,695 $ 1,450,396 Loans $ 3,097,836 $ 3,068,716 $ 2,825,684 $ 3,083,276 $ 2,801,426 Total Deposits $ 4,121,097 $ 4,252,161 $ 4,416,542 $ 4,186,629 $ 4,422,174 Interest-Bearing Deposits $ 3,297,110 $ 3,407,590 $ 3,519,122 $ 3,352,350 $ 3,522,444 Interest-Bearing Liabilities $ 185,318 $ 96,160 $ 103,223 $ 140,739 $ 104,614 Total Equity $ 501,686 $ 487,834 $ 494,233 $ 494,760 $ 529,678 INCOME STATEMENT DATA Net Interest Income $ 42,187 $ 44,335 $ 40,469 $ 86,522 $ 78,280 Net Interest Income Fully Tax Equivalent(b) $ 43,581 $ 45,654 $ 41,665 $ 89,235 $ 80,573 Provision for Credit Losses $ 1,800 $ 1,800 $ 750 $ 3,600 $ (5,800 ) Non-interest Income $ 10,453 $ 9,375 $ 10,270 $ 19,828 $ 24,008 Non-interest Expense $ 31,346 $ 32,321 $ 30,674 $ 63,667 $ 62,018 Net Income $ 15,987 $ 15,980 $ 15,613 $ 31,967 $ 36,537 PER SHARE DATA Basic and Diluted Net Income Per Common Share $ 1.33 $ 1.33 $ 1.27 $ 2.66 $ 2.95 Cash Dividends Declared Per Common Share $ — $ — $ 0.54 $ 0.54 $ 0.54 Book Value Per Common Share $ 41.47 $ 41.89 $ 38.36 $ 41.47 $ 38.36 Tangible Book Value Per Common Share(c) $ 33.99 $ 34.16 $ 32.65 $ 33.70 $ 30.52 Basic Weighted Average Common Shares Outstanding 12,022 12,058 12,248 12,040 12,393
(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 Six Months Ended June 30, March 31, June 30, June 30, June 30, 2023 2023 2022 2023 2022 Return on average assets 1.34 % 1.32 % 1.24 % 1.33 % 1.43 % Return on average common shareholder's equity 12.75 % 13.10 % 12.64 % 12.92 % 13.80 % Efficiency ratio 58.01 % 58.73 % 59.06 % 58.38 % 59.30 % Average equity to average assets 10.48 % 10.06 % 9.79 % 10.27 % 10.39 % Net interest margin(a) 3.81 % 3.96 % 3.46 % 3.88 % 3.31 % Net charge-offs to average loans and leases 0.20 % 0.26 % (0.03 )% 0.23 % 0.07 % Credit loss reserve to loans and leases 1.28 % 1.29 % 1.44 % 1.28 % 1.44 % Credit loss reserve to nonperforming loans 300.10 % 328.06 % 442.89 % 300.10 % 442.89 % Nonperforming loans to loans and leases 0.43 % 0.39 % 0.32 % 0.43 % 0.32 % Tier 1 leverage 11.49 % 11.30 % 9.97 % 11.49 % 9.97 % Risk-based capital - Tier 1 14.44 % 14.27 % 13.51 % 14.44 % 13.51 %
(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, 2023 2023 2022 2023 2022 Accruing loans and leases past due 30-89 days $ 15,583 $ 18,934 $ 20,273 $ 15,583 $ 20,273 Accruing loans and leases past due 90 days or more $ 682 $ 1,157 $ 980 $ 682 $ 980 Nonaccrual loans and leases $ 12,616 $ 10,920 $ 8,383 $ 12,616 $ 8,383 Other real estate owned $ 90 $ 336 $ 170 $ 90 $ 170 Nonperforming loans and other real estate owned $ 13,388 $ 12,413 $ 9,533 $ 13,388 $ 9,533 Total nonperforming assets $ 16,302 $ 15,327 $ 12,620 $ 16,302 $ 12,620 Gross charge-offs $ 3,543 $ 4,376 $ 2,411 $ 7,919 $ 5,665 Recoveries $ 2,030 $ 2,417 $ 2,613 $ 4,447 $ 4,628 Net charge-offs/(recoveries) $ 1,513 $ 1,959 $ (202 ) $ 3,472 $ 1,037
Non-GAAP Reconciliations Three Months Ended June 30, 2023 2022 ($in thousands, except EPS) Income before Income Taxes $ 19,494 $ 19,315 Provision for credit losses 1,800 750 Provision for unfunded commitments (100 ) (350 ) Pre-tax, Pre-provision Income $ 21,194 $ 19,715
Non-GAAP Reconciliations Six Months Ended June 30, 2023 2022 ($ in thousands, except EPS) Income before Income Taxes $ 39,083 $ 46,070 Provision for credit losses 3,600 (5,800 ) Provision for unfunded commitments (100 ) (850 ) Pre-tax, Pre-provision Income $ 42,583 $ 39,420
CONSOLIDATED BALANCE SHEETS June 30, December 31, 2023 2022 (unaudited) ASSETS Cash and due from banks $ 82,095 $ 222,517 Federal funds sold 363 9,374 Securities available-for-sale 1,299,226 1,330,481 Loans: Commercial 1,812,035 1,798,260 Residential 689,199 673,464 Consumer 625,442 588,539 3,126,676 3,060,263 (Less) plus: Net deferred loan costs 7,962 7,175 Allowance for credit losses (39,907 ) (39,779 ) 3,094,731 3,027,659 Restricted stock 15,391 15,378 Accrued interest receivable 21,311 21,288 Premises and equipment, net 67,127 66,147 Bank-owned life insurance 116,613 115,704 Goodwill 86,985 86,985 Other intangible assets 6,079 6,714 Other real estate owned 90 337 Other assets 87,220 86,697 TOTAL ASSETS $ 4,877,231 $ 4,989,281 LIABILITIES AND SHAREHOLDERS’ EQUITY Deposits: Non-interest-bearing $ 817,380 $ 857,920 Interest-bearing: Certificates of deposit exceeding the FDIC insurance limits 60,541 50,608 Other interest-bearing deposits 3,185,234 3,460,343 4,063,155 4,368,871 Short-term borrowings 128,859 70,875 FHLB advances 134,582 9,589 Other liabilities 53,747 64,653 TOTAL LIABILITIES 4,380,343 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-11,982,985 in 2023 and 12,051,964 in 2022 2,013 2,012 Additional paid-in capital 143,632 143,185 Retained earnings 640,325 614,829 Accumulated other comprehensive income/(loss) (141,250 ) (139,974 ) Less: Treasury shares at cost-4,154,235 in 2023 and 4,063,028 in 2022 (147,832 ) (144,759 ) TOTAL SHAREHOLDERS’ EQUITY 496,888 475,293 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 4,877,231 $ 4,989,281
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME Three Months Ended Six Months Ended June 30, June 30, 2023 2022 2023 2022 (unaudited) INTEREST INCOME: Loans, including related fees $ 46,479 $ 34,305 $ 91,074 $ 66,662 Securities: Taxable 6,231 6,048 12,467 10,631 Tax-exempt 2,678 2,492 5,276 4,840 Other 841 358 2,112 723 TOTAL INTEREST INCOME 56,229 43,203 110,929 82,856 INTEREST EXPENSE: Deposits 11,957 2,473 21,484 4,149 Short-term borrowings 1,294 176 2,102 258 Other borrowings 791 85 821 169 TOTAL INTEREST EXPENSE 14,042 2,734 24,407 4,576 NET INTEREST INCOME 42,187 40,469 86,522 78,280 Provision for credit losses 1,800 750 3,600 (5,800 ) NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 40,387 39,719 82,922 84,080 NON-INTEREST INCOME: Trust and financial services 1,185 1,300 2,502 2,672 Service charges and fees on deposit accounts 7,054 7,079 13,872 13,733 Other service charges and fees 196 222 400 328 Securities gains (losses), net — — — 5 Interchange income — 151 47 269 Loan servicing fees 264 368 549 727 Gain on sales of mortgage loans 311 603 490 1,265 Other 1,443 547 1,968 5,009 TOTAL NON-INTEREST INCOME 10,453 10,270 19,828 24,008 NON-INTEREST EXPENSE: Salaries and employee benefits 16,946 15,668 34,104 33,010 Occupancy expense 2,132 2,372 4,731 4,894 Equipment expense 3,525 2,959 6,824 5,866 FDIC Expense 577 542 1,364 970 Other 8,166 9,133 16,644 17,278 TOTAL NON-INTEREST EXPENSE 31,346 30,674 63,667 62,018 INCOME BEFORE INCOME TAXES 19,494 19,315 39,083 46,070 Provision for income taxes 3,507 3,702 7,116 9,533 NET INCOME 15,987 15,613 31,967 36,537 OTHER COMPREHENSIVE INCOME (LOSS) Change in unrealized gains/(losses) on securities, net of reclassifications and taxes (15,808 ) (55,919 ) (1,570 ) (124,833 ) Change in funded status of post retirement benefits, net of taxes 147 314 294 629 COMPREHENSIVE INCOME (LOSS) $ 326 $ (39,992 ) $ 30,691 $ (87,667 ) PER SHARE DATA Basic and Diluted Earnings per Share $ 1.33 $ 1.27 $ 2.66 $ 2.95 Weighted average number of shares outstanding (in thousands) 12,022 12,248 12,040 12,393
