First Financial Corporation Reports Third Quarter Results
10/28/2020 - 10:32 AM
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