First Financial Corporation Reports Third Quarter Results
First Financial Corporation (NASDAQ:THFF) announced its third-quarter results for 2023. Net income was $16.3 million, a decrease from $18.1 million in the same period last year. Diluted net income per common share was $1.37, down from $1.50. Return on average assets was 1.35%, compared to 1.43%. Credit loss provision was $1.2 million, up from $1.1 million. Pre-tax, pre-provision net income was $20.5 million, down from $23.7 million. For the nine months ending September 30, 2023, net income was $48.3 million, diluted net income per common share was $4.02, return on average assets was 1.33%, credit loss provision was $4.8 million, and pre-tax, pre-provision net income was $63.1 million.
Positive
Net income for the third quarter and nine months of 2023
Negative
Decrease in net income compared to the same period last year
10/24/2023 - 10:00 AM
TERRE HAUTE, Ind., Oct. 24, 2023 (GLOBE NEWSWIRE) -- First Financial Corporation (NASDAQ:THFF) today announced results for the third quarter of 2023.
Net income was $16.3 million compared to the $18.1 million reported for the same period of 2022; Diluted net income per common share of $1.37 compared to $1.50 for the same period of 2022; Return on average assets was 1.35% compared to 1.43% for the three months ended September 30, 2022; Credit loss provision was $1.2 million compared to provision of $1.1 million for the third quarter 2022; and Pre-tax, pre-provision net income was $20.5 million compared to $23.7 million for the same period in 2022.1 The Corporation further reported results for the nine months ending September 30, 2023:
Net income was $48.3 million compared to the $54.6 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 $4.02 compared to $4.45 for the same period of 2022; Return on average assets was 1.33% compared to 1.43% for the nine months ended September 30, 2022; Credit loss provision was $4.8 million compared to negative provision of $4.8 million for the nine months ended September 30, 2022; and Pre-tax, pre-provision net income was $63.1 million compared to $63.2 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 third quarter of 2023 were $3.15 billion versus $2.92 billion for the comparable period in 2022, an increase of $230 million or 7.88% . On a linked quarter basis, average loans increased $49 million or 1.60% from $3.10 billion as of June 30, 2023.
Total Loans Outstanding
Total loans outstanding as of September 30, 2023, were $3.12 billion compared to $2.97 billion as of September 30, 2022, an increase of $147 million or 4.95% , primarily driven by increases in Commercial Construction and Development, Commercial Real Estate, and Consumer Auto loans. On a linked quarter basis, total loans decreased $9.1 million or 0.29% from $3.13 billion as of June 30, 2023.
“We are pleased with our third quarter results, in spite of 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. “Our liquidity is stable and our balance sheet and capital levels remain strong.”
Average Total Deposits
Average total deposits for the quarter ended September 30, 2023, were $4.00 billion versus $4.41 billion as of September 30, 2022.
Total Deposits
Total deposits were $4.04 billion as of September 30, 2023, compared to $4.41 billion as of September 30, 2022.
Shareholder Equity
Shareholder equity at September 30, 2023, was $470.2 million compared to $438.6 million on September 30, 2022. During the quarter, the Corporation repurchased 228,457 shares of its common stock. An additional 518,860 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 $8.7 million in comparison to September 30, 2022, and decreased $34.8 million in comparison to June 30, 2023.
Book Value Per Share
Book Value per share was $40.00 as of September 30, 2023, compared to $36.49 as of September 30, 2022, an increase of 9.63% .
Tangible Common Equity to Tangible Asset Ratio
The Corporation’s tangible common equity to tangible asset ratio was 8.04% at September 30, 2023, compared to 7.01% at September 30, 2022, partially driven by the aforementioned share repurchases.
Net Interest Income
Net interest income for the third quarter of 2023 was $41.2 million , compared to $43.1 million reported for the same period of 2022, a decrease of $2.0 million or 4.53% .
Net Interest Margin
The net interest margin for the quarter ended September 30, 2023, was 3.74% compared to the 3.71% reported at September 30, 2022, an increase of 3 basis points or 0.69% .
Nonperforming Loans
Nonperforming loans as of September 30, 2023, were $12.6 million versus $10.3 million as of September 30, 2022. The ratio of nonperforming loans to total loans and leases was 0.40% as of September 30, 2023, versus 0.35% as of September 30, 2022.
Credit Loss Provision
The provision for credit losses for the three months ended September 30, 2023, was $1.20 million , compared to $1.05 million for the third quarter 2022.
Net Charge-Offs
In the third quarter of 2023 net charge-offs were $2.07 million compared to $3.02 million in the same period of 2022. On July 12, 2022, the Corporation sold seven classified non farm non residential commercial loans, which were acquired in the two acquisitions in 2019 and 2021, with a total principal balance of $14.9 million . The net recovery on the sale of $361 thousand was a result of the charge-off of the seven loans of $2.1 million , netted by the reserve on those loans and the unamortized discount remaining from the acquisitions.
Allowance for Credit Losses
The Corporation’s allowance for credit losses as of September 30, 2023, was $39.0 million compared to $39.5 million as of September 30, 2022. The allowance for credit losses as a percent of total loans was 1.25% as of September 30, 2023, compared to 1.33% as of September 30, 2022. On a linked quarter basis, the allowance for credit losses as a percent of total loans decreased 3 basis points from 1.28% as of June 30, 2023.
Non-Interest Income
Non-interest income for the three months ended September 30, 2023 and 2022 was $11.6 million and $12.1 million , respectively. Both periods reflect Bank Owned Life Insurance (“BOLI”) proceeds of $1.4 million in 2023 and $2.5 million in 2022.
Non-Interest Expense
Non-interest expense for the three months ended September 30, 2023, was $32.3 million compared to $31.5 million in 2022.
Efficiency Ratio
The Corporation’s efficiency ratio was 59.57% for the quarter ending September 30, 2023, versus 55.72% for the same period in 2022.
Income Taxes
Income tax expense for the three months ended September 30, 2023, was $3.0 million versus $4.6 million for the same period in 2022. The effective tax rate for 2023 was 17.37% compared to 20.61% for 2022. The decrease in tax expense is due to a non-taxable gain on BOLI claim proceeds and an adjustment to tax credit investments.
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 Nine Months Ended September 30, June 30, September 30, September 30, September 30, 2023 2023 2022 2023 2022 END OF PERIOD BALANCES Assets $ 4,784,806 $ 4,877,231 $ 5,009,339 $ 4,784,806 $ 5,009,339 Deposits $ 4,040,995 $ 4,063,155 $ 4,407,506 $ 4,040,995 $ 4,407,506 Loans, including net deferred loan costs $ 3,117,626 $ 3,126,676 $ 2,970,475 $ 3,117,626 $ 2,970,475 Allowance for Credit Losses $ 39,034 $ 39,907 $ 39,495 $ 39,034 $ 39,495 Total Equity $ 470,168 $ 496,888 $ 438,626 $ 470,168 $ 438,626 Tangible Common Equity (a) $ 377,367 $ 403,824 $ 344,617 $ 377,367 $ 344,617 AVERAGE BALANCES Total Assets $ 4,814,251 $ 4,818,760 $ 5,048,849 $ 4,828,165 $ 5,081,779 Earning Assets $ 4,575,996 $ 4,581,652 $ 4,774,080 $ 4,590,258 $ 4,837,110 Investments $ 1,351,433 $ 1,395,446 $ 1,436,179 $ 1,384,941 $ 1,445,657 Loans $ 3,147,317 $ 3,097,836 $ 2,917,457 $ 3,104,623 $ 2,840,103 Total Deposits $ 4,000,302 $ 4,121,097 $ 4,406,187 $ 4,124,520 $ 4,416,845 Interest-Bearing Deposits $ 3,222,633 $ 3,297,110 $ 3,515,568 $ 3,309,111 $ 3,520,152 Interest-Bearing Liabilities $ 309,948 $ 185,318 $ 95,098 $ 197,142 $ 101,442 Total Equity $ 493,764 $ 501,686 $ 481,225 $ 494,428 $ 513,527 INCOME STATEMENT DATA Net Interest Income $ 41,150 $ 42,187 $ 43,104 $ 127,672 $ 121,384 Net Interest Income Fully Tax Equivalent (b) $ 42,539 $ 43,581 $ 44,402 $ 131,774 $ 124,975 Provision for Credit Losses $ 1,200 $ 1,800 $ 1,050 $ 4,800 $ (4,750 ) Non-interest Income $ 11,627 $ 10,453 $ 12,140 $ 31,455 $ 36,148 Non-interest Expense $ 32,265 $ 31,346 $ 31,504 $ 95,932 $ 93,522 Net Income $ 16,285 $ 15,987 $ 18,051 $ 48,252 $ 54,588 PER SHARE DATA Basic and Diluted Net Income Per Common Share $ 1.37 $ 1.33 $ 1.50 $ 4.02 $ 4.45 Cash Dividends Declared Per Common Share $ — $ 0.54 $ — $ 0.54 $ 0.54 Book Value Per Common Share $ 40.00 $ 41.47 $ 36.49 $ 40.00 $ 36.49 Tangible Book Value Per Common Share (c) $ 33.69 $ 33.99 $ 33.27 $ 32.10 $ 28.67 Basic Weighted Average Common Shares Outstanding 11,901 12,022 12,029 11,993 12,270
(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 Nine Months Ended September 30, June 30, September 30, September 30, September 30, 2023 2023 2022 2023 2022 Return on average assets 1.35 % 1.34 % 1.43 % 1.33 % 1.43 % Return on average common shareholder's equity 13.19 % 12.75 % 15.00 % 12.98 % 14.14 % Efficiency ratio 59.57 % 58.01 % 55.72 % 58.77 % 58.04 % Average equity to average assets 10.26 % 10.48 % 9.53 % 10.24 % 10.11 % Net interest margin (a) 3.74 % 3.81 % 3.71 % 3.83 % 3.44 % Net charge-offs to average loans and leases 0.24 % 0.20 % 0.19 % 0.24 % 0.19 % Credit loss reserve to loans and leases 1.25 % 1.28 % 1.33 % 1.25 % 1.33 % Credit loss reserve to nonperforming loans 310.19 % 300.10 % 382.26 % 310.19 % 382.26 % Nonperforming loans to loans and leases 0.40 % 0.43 % 0.35 % 0.40 % 0.35 % Tier 1 leverage 11.72 % 11.49 % 10.33 % 11.72 % 10.33 % Risk-based capital - Tier 1 14.61 % 14.44 % 13.69 % 14.61 % 13.69 %
(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, 2023 2023 2022 2023 2022 Accruing loans and leases past due 30-89 days $ 15,961 $ 15,583 $ 18,626 $ 15,961 $ 18,626 Accruing loans and leases past due 90 days or more $ 1,370 $ 682 $ 1,185 $ 1,370 $ 1,185 Nonaccrual loans and leases $ 11,214 $ 12,616 $ 9,147 $ 11,214 $ 9,147 Other real estate owned $ 63 $ 90 $ 214 $ 63 $ 214 Nonperforming loans and other real estate owned $ 12,647 $ 13,388 $ 10,546 $ 12,647 $ 10,546 Total nonperforming assets $ 15,671 $ 16,302 $ 13,657 $ 15,671 $ 13,657 Gross charge-offs $ 3,601 $ 3,543 $ 5,653 $ 11,520 $ 11,318 Recoveries $ 1,528 $ 2,030 $ 2,630 $ 5,975 $ 7,258 Net charge-offs/(recoveries) $ 2,073 $ 1,513 $ 3,023 $ 5,545 $ 4,060
Non-GAAP Reconciliations Three Months Ended September 30, 2023 2022 ($in thousands, except EPS) Income before Income Taxes $ 19,312 $ 22,690 Provision for credit losses 1,200 1,050 Provision for unfunded commitments — — Pre-tax, Pre-provision Income $ 20,512 $ 23,740
Non-GAAP Reconciliations Nine Months Ended September 30, 2023 2022 ($ in thousands, except EPS) Income before Income Taxes $ 58,395 $ 68,760 Provision for credit losses 4,800 (4,750 ) Provision for unfunded commitments (100 ) (850 ) Pre-tax, Pre-provision Income $ 63,095 $ 63,160
CONSOLIDATED BALANCE SHEETS
September 30, December 31, 2023 2022 (unaudited) ASSETS Cash and due from banks $ 74,668 $ 222,517 Federal funds sold 688 9,374 Securities available-for-sale 1,225,219 1,330,481 Loans: Commercial 1,775,004 1,798,260 Residential 687,069 673,464 Consumer 647,658 588,539 3,109,731 3,060,263 (Less) plus: Net deferred loan costs 7,895 7,175 Allowance for credit losses (39,034 ) (39,779 ) 3,078,592 3,027,659 Restricted stock 15,398 15,378 Accrued interest receivable 22,546 21,288 Premises and equipment, net 67,424 66,147 Bank-owned life insurance 113,684 115,704 Goodwill 86,985 86,985 Other intangible assets 5,816 6,714 Other real estate owned 63 337 Other assets 93,723 86,697 TOTAL ASSETS $ 4,784,806 $ 4,989,281 LIABILITIES AND SHAREHOLDERS’ EQUITY Deposits: Non-interest-bearing $ 770,511 $ 857,920 Interest-bearing: Certificates of deposit exceeding the FDIC insurance limits 82,741 50,608 Other interest-bearing deposits 3,187,743 3,460,343 4,040,995 4,368,871 Short-term borrowings 132,734 70,875 FHLB advances 84,578 9,589 Other liabilities 56,331 64,653 TOTAL LIABILITIES 4,314,638 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-11,754,528 in 2023 and 12,051,964 in 2022 2,014 2,012 Additional paid-in capital 143,855 143,185 Retained earnings 656,610 614,829 Accumulated other comprehensive income/(loss) (176,038 ) (139,974 ) Less: Treasury shares at cost-4,382,692 in 2023 and 4,063,028 in 2022 (156,273 ) (144,759 ) TOTAL SHAREHOLDERS’ EQUITY 470,168 475,293 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 4,784,806 $ 4,989,281
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 (unaudited) INTEREST INCOME: Loans, including related fees $ 49,146 $ 38,021 $ 140,220 $ 104,683 Securities: Taxable 6,164 7,327 18,631 17,958 Tax-exempt 2,661 2,562 7,937 7,402 Other 752 336 2,864 1,059 TOTAL INTEREST INCOME 58,723 48,246 169,652 131,102 INTEREST EXPENSE: Deposits 13,627 4,644 35,111 8,793 Short-term borrowings 1,923 418 4,025 676 Other borrowings 2,023 80 2,844 249 TOTAL INTEREST EXPENSE 17,573 5,142 41,980 9,718 NET INTEREST INCOME 41,150 43,104 127,672 121,384 Provision for credit losses 1,200 1,050 4,800 (4,750 ) NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 39,950 42,054 122,872 126,134 NON-INTEREST INCOME: Trust and financial services 1,140 1,015 3,642 3,687 Service charges and fees on deposit accounts 7,099 6,965 20,971 20,698 Other service charges and fees 213 160 613 488 Securities gains (losses), net — — — 5 Interchange income — 149 47 418 Loan servicing fees 447 457 997 1,184 Gain on sales of mortgage loans 321 440 811 1,705 Other 2,407 2,954 4,374 7,963 TOTAL NON-INTEREST INCOME 11,627 12,140 31,455 36,148 NON-INTEREST EXPENSE: Salaries and employee benefits 17,159 15,943 51,263 48,953 Occupancy expense 2,389 2,525 7,120 7,419 Equipment expense 3,580 3,311 10,404 9,177 FDIC Expense 613 556 1,977 1,526 Other 8,524 9,169 25,168 26,447 TOTAL NON-INTEREST EXPENSE 32,265 31,504 95,932 93,522 INCOME BEFORE INCOME TAXES 19,312 22,690 58,395 68,760 Provision for income taxes 3,027 4,639 10,143 14,172 NET INCOME 16,285 18,051 48,252 54,588 OTHER COMPREHENSIVE INCOME (LOSS) Change in unrealized gains/(losses) on securities, net of reclassifications and taxes (34,934 ) (41,060 ) (36,504 ) (165,893 ) Change in funded status of post retirement benefits, net of taxes 146 315 440 944 COMPREHENSIVE INCOME (LOSS) $ (18,503 ) $ (22,694 ) $ 12,188 $ (110,361 ) PER SHARE DATA Basic and Diluted Earnings per Share $ 1.37 $ 1.50 $ 4.02 $ 4.45 Weighted average number of shares outstanding (in thousands) 11,901 12,029 11,993 12,270
What was the net income for the third quarter of 2023?
The net income for the third quarter of 2023 was $16.3 million.
What was the diluted net income per common share for the nine months ending September 30, 2023?
The diluted net income per common share for the nine months ending September 30, 2023, was $4.02.
What was the credit loss provision for the third quarter of 2023?
The credit loss provision for the third quarter of 2023 was $1.2 million.
What was the pre-tax, pre-provision net income for the nine months ending September 30, 2023?
The pre-tax, pre-provision net income for the nine months ending September 30, 2023, was $63.1 million.
