EX-99.1 2 thff8k20201231ex-99x1.htm EX-99.1 Document

News Release
 
FIRST FINANCIAL CORPORATION
One First Financial Plaza, Terre Haute, Indiana 47807 (812) 238-6000
 
 
First Financial Corporation Reports 2020 Results

Terre Haute, Indiana, February 2, 2021 – First Financial Corporation (NASDAQ:THFF) today announced results for the three months ending December 31, 2020:

For the quarter:

•Net income was $15.7 million compared to $14.4 million for the same period of 2019;

•Diluted net income per common share of $1.15 compared to $1.05 for the same period of 2019; and

•Return on average assets was 1.39% compared to 1.42% for the three months ended December 31, 2019.

The Corporation further reported results for the twelve months ending December 31, 2020:

•Net income was $53.8 million compared to $48.9 million for the same period of 2019;

•Diluted net income per common share of $3.93 compared to $3.80 for the same period of 2019; and

•Return on average assets was 1.25% compared to 1.42% for the twelve months ended December 31, 2019.

“Despite the headwinds of the global pandemic and the varied restrictions of the four states in which we do business, we were able to deliver our third consecutive year of record earnings” said Norman L. Lowery, Chairman and Chief Executive Officer. “We are proud that during the fourth quarter we were able to assist many of our clients who participated in the Paycheck Protection Program apply for and receive forgiveness of the loans which have enabled them to keep their employees working and doors open.”

Average Total Loans
Average total loans for the fourth quarter of 2020 were $2.68 billion versus $2.66 billion for the comparable period in 2019, an increase of $18.0 million or 0.68%.

Total Loans Outstanding
Total loans outstanding decreased $46.0 million, from $2.66 billion as of December 31, 2019 to $2.61 billion as of December 31, 2020.

"On December 27, 2020 a second stimulus bill was signed into law providing an additional $285 billion in the form of PPP loans. We look forward to continuing to assist our clients whose businesses have suffered the brunt of the economic slowdown caused by the pandemic to help them realize the benefits of this program.”



Average Total Deposits
Average total deposits for the quarter ended December 31, 2020, were $3.74 billion versus $3.28 billion as of December 31, 2019, an increase of $461 million or 14.06%.

Total Deposits
Total deposits were $3.76 billion as of December 31, 2020, compared to $3.28 billion as of December 31, 2019, an increase of $481 million or 14.67%. On a linked quarter basis, total deposits increased $151.6 million from $3.60 billion for the quarter ending September 30, 2020.

Book Value Per Share
Book Value per share was $44.03 at December 31, 2020, compared to $40.58 at December 31, 2019 a 9.28% increase.

Shareholder Equity
Shareholder equity at December 31, 2020, was $597.0 million compared to $557.6 million on December 31, 2019. During the quarter the Corporation repurchased 195,042 shares of its common stock.

Tangible Common Equity to Tangible Asset Ratio
The Corporation’s tangible common equity to tangible asset ratio was 11.40% at December 31, 2020, compared to 11.91% at December 31, 2019.

Net Interest Income
Net interest income for the fourth quarter of 2020 was $37.6 million, compared to $38.5 million reported for the same period of 2019. The decrease was primarily driven by the 150 basis point interest rate reduction by the Federal Reserve in response to the pandemic.

Net Interest Margin
The net interest margin for the quarter ended December 31, 2020, was 4.11% compared to the 4.37% reported at December 31, 2019.

Nonperforming Loans
Nonperforming loans as of December 31, 2020, were $21.9 million versus $15.3 million as of December 31, 2019. The ratio of nonperforming loans to total loans and leases was 0.84% as of December 31, 2020, versus 0.58% as of December 31, 2019.

Loan Loss Provision
In 2019 provision was calculated using the incurred loss basis. In the fourth quarter 2020, provision was calculated using the expected loss basis. The provision for loan losses for the three months ended December 31 2020, was $448 thousand compared to the $1.50 million provision for the fourth quarter of 2019.

Net Charge-Offs
Net charge-offs were $416 thousand for the fourth quarter of 2020 compared to $1.4 million in the same period of 2019.

Allowance for Credit Losses
In March 2020 due to the uncertainty surrounding the global pandemic and as provided by the Coronavirus Aid Relief and Economic Security Act the Corporation elected to delay the implementation of the Current Expected Credit Loss accounting standard. On December 31, 2020 the


Corporation adopted ASU 2016-13 (topic 326), “Measurement of Credit Losses on Financial Instruments” commonly referenced as the Current Expected Credit Loss (“CECL”) model. CECL was retrospectively adopted on January 1, 2020. Upon adoption, the Corporation recognized a $20.0 million increase in its allowance for credit losses, which includes $6.1 million in the remaining loan fair value marks on prior acquisitions and $1.0 million in its reserve for unfunded commitments. These one-time increases, net of tax, were $10.4 million and recorded as an adjustment to beginning retained earnings.

The Corporation’s allowance for credit losses as of December 31, 2020, was $47.1 million compared to $19.9 million as of December 31, 2019. The variance is directly related to the adoption of CECL. The allowance for credit losses as a percent of total loans was 1.80% as of December 31, 2020, compared to 0.75% as of December 31, 2019. For the quarter ended December 31, 2019 and the first three quarters of 2020, provision for loan loss was calculated using the incurred loss model.

Non-Interest Income
Non-interest income for the three months ended December 31, 2020 and 2019 was $12.9 and $11.3 million, respectively. During the quarter, the Corporation sold its merchant card processing portfolio and recorded a $1.0 million gain on the sale. The company has entered into an agent relationship to continue to provide these services to our customers.

Non-Interest Expense
Non-interest expense for the three months ended December 31, 2020, was $31.2 million compared to $29.8 million in 2019.

Efficiency Ratio
The Corporation’s efficiency ratio was 60.60% for the quarter ending December 31, 2020, versus 58.43% for the same period in 2019.

Income Taxes
Income tax expense for the three months ended December 31, 2020, was $3.1 million versus $4.2 million for the same period in 2019. The effective tax rate for 2020 was 17.84% compared to 19.95% 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 EndedYear Ended
December 31,September 30,December 31,December 31,December 31,
20202020201920202019
END OF PERIOD BALANCES
    Assets$4,557,544 $4,389,996 $4,023,250 $4,557,544 $4,023,250 
    Deposits$3,755,945 $3,604,353 $3,275,357 $3,755,945 $3,275,357 
    Loans, including net deferred loan costs$2,610,294 $2,753,493 $2,656,390 $2,610,294 $2,656,390 
    Allowance for Credit Losses$47,052 $26,960 $19,943 $47,052 $19,943 
    Total Equity$596,992 $607,095 $557,608 $596,992 $557,608 
    Tangible Common Equity (a)
$509,428 $519,098 $468,373 $509,428 $468,373 
AVERAGE BALANCES
    Total Assets$4,532,078 $4,379,798 $4,041,287 $4,312,919 $3,439,793 
    Earning Assets$3,736,217 $3,776,803 $3,662,390 $3,714,794 $3,197,855 
    Investments$1,058,925 $1,008,303 $1,000,488 $1,011,324 $924,513 
    Loans$2,676,041 $2,768,003 $2,658,582 $2,702,225 $2,270,313 
    Total Deposits$3,741,155 $3,592,633 $3,279,859 $3,532,736 $2,797,330 
    Interest-Bearing Deposits$3,005,337 $2,887,575 $3,072,566 $2,872,725 $2,504,885 
    Interest-Bearing Liabilities$98,922 $108,236 $118,605 $108,948 $85,704 
    Total Equity$610,879 $603,067 $575,908 $593,791 $497,329 
INCOME STATEMENT DATA
    Net Interest Income$37,570 $36,531 $38,475 $146,346 $131,652 
    Net Interest Income Fully Tax Equivalent (b)
$38,606 $37,612 $39,594 $150,590 $135,770 
    Provision for Loan Losses$448 $4,425 $1,500 $10,528 $4,700 
    Non-interest Income$12,866 $11,739 $11,327 $42,476 $38,452 
    Non-interest Expense$31,191 $27,130 $29,754 $112,758 $104,348 
    Net Income$15,739 $14,000 $14,364 $53,844 $48,872 
PER SHARE DATA
    Basic and Diluted Net Income Per Common Share$1.15 $1.02 $1.05 $3.93 $3.80 
    Cash Dividends Declared Per Common Share$0.53 $— $0.52 $1.05 $1.04 
    Book Value Per Common Share$44.03 $44.27 $40.58 $44.03 $40.58 
    Tangible Book Value Per Common Share (c)
$37.64 $37.56 $35.46 $37.57 $34.08 
    Basic Weighted Average Common Shares Outstanding13,695 13,715 13,726 13,716 12,865 
(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 RatiosThree Months EndedYear Ended
 December 31,September 30,December 31,December 31,December 31,
 20202020201920202019
Return on average assets1.39 %1.28 %1.42 %1.25 %1.42 %
Return on average common shareholder's equity10.31 %9.29 %9.98 %9.07 %9.83 %
Efficiency ratio60.60 %54.97 %58.43 %58.40 %59.89 %
Average equity to average assets13.48 %13.77 %14.25 %13.77 %14.46 %
Net interest margin (a)
4.11 %3.99 %4.37 %4.05 %4.25 %
Net charge-offs to average loans and leases0.05 %0.11 %0.20 %0.13 %0.23 %
Loan and lease loss reserve to loans and leases1.80 %0.98 %0.75 %1.80 %0.75 %
Loan and lease loss reserve to nonperforming loans214.88 %113.89 %130.01 %214.88 %130.01 %
Nonperforming loans to loans and leases0.84 %0.86 %0.58 %0.84 %0.58 %
Tier 1 leverage 11.24 %11.81 %12.04 %11.24 %12.04 %
Risk-based capital - Tier 116.11 %15.70 %15.51 %16.11 %15.51 %
(a) Net interest margin is calculated on a tax equivalent basis.


Asset QualityThree Months EndedYear Ended
 December 31,September 30,December 31,December 31,December 31,
 20202020201920202019
Accruing loans and leases past due 30-89 days$17,309 $13,490 $24,040 $17,309 $24,040 
Accruing loans and leases past due 90 days or more$2,324 $2,948 $1,610 $2,324 $1,610 
Nonaccrual loans and leases$15,367 $16,628 $9,535 $15,367 $9,535 
Total troubled debt restructuring$4,206 $4,097 $4,194 $4,206 $4,194 
Other real estate owned$1,012 $3,577 $3,625 $1,012 $3,625 
Nonperforming loans and other real estate owned$22,909 $27,138 $18,964 $22,909 $18,964 
Total nonperforming assets$26,045 $30,174 $22,583 $26,045 $22,583 
Gross charge-offs$1,954 $1,998 $3,456 $8,396 $10,673 
Recoveries$1,538 $1,248 $2,100 $4,917 $5,480 
Net charge-offs/(recoveries)$416 $750 $1,356 $3,479 $5,193 















CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands, except per share data)
December 31,
2020		December 31,
2019
    (unaudited)
ASSETS  
Cash and due from banks$657,470 $127,426 
Federal funds sold301 7,500 
Securities available-for-sale1,020,744 926,717 
Loans:  
Commercial1,521,711 1,584,447 
Residential604,652 682,077 
Consumer479,750 386,006 
 2,606,113 2,652,530 
(Less) plus:  
Net deferred loan costs4,181 3,860 
Allowance for credit losses(47,052)(19,943)
 2,563,242 2,636,447 
Restricted stock14,812 15,394 
Accrued interest receivable16,957 18,523 
Premises and equipment, net62,063 62,576 
Bank-owned life insurance95,849 94,251 
Goodwill78,592 78,592 
Other intangible assets8,972 10,643 
Other real estate owned1,012 3,625 
Other assets37,530 41,556 
TOTAL ASSETS$4,557,544 $4,023,250 
LIABILITIES AND SHAREHOLDERS’ EQUITY  
Deposits:  
Non-interest-bearing$732,694 $547,189 
Interest-bearing:  
Certificates of deposit exceeding the FDIC insurance limits107,764 126,738 
Other interest-bearing deposits2,915,487 2,601,430 
 3,755,945 3,275,357 
Short-term borrowings116,061 80,119 
Other liabilities82,687 79,193 
TOTAL LIABILITIES3,960,552 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-13,558,511 in 2020 and 13,741,825 in 20192,007 2,005 
Additional paid-in capital140,820 139,694 
Retained earnings521,103 492,055 
Accumulated other comprehensive income/(loss)9,764 (7,501)
Less: Treasury shares at cost-2,516,643 in 2020 and 2,313,641 in 2019(76,702)(68,645)
TOTAL SHAREHOLDERS’ EQUITY596,992 557,608 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY$4,557,544 $4,023,250 

 


CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Dollar amounts in thousands, except per share data)
 
Years Ended December 31,
 202020192018
 (unaudited)
INTEREST INCOME:   
Loans, including related fees$137,241 $124,788 $100,541 
Securities:   
Taxable13,625 15,191 16,942 
Tax-exempt7,952 7,674 7,455 
Other1,667 1,468 1,286 
TOTAL INTEREST INCOME160,485 149,121 126,224 
INTEREST EXPENSE:   
Deposits12,801 15,711 9,032 
Short-term borrowings568 1,105 501 
Other borrowings770 653 112 
TOTAL INTEREST EXPENSE14,139 17,469 9,645 
NET INTEREST INCOME146,346 131,652 116,579 
Provision for loan losses10,528 4,700 5,768 
NET INTEREST INCOME AFTER PROVISION   
FOR LOAN LOSSES135,818 126,952 110,811 
NON-INTEREST INCOME:   
Trust and financial services5,423 5,036 5,286 
Service charges and fees on deposit accounts10,256 11,795 11,733 
Other service charges and fees15,644 14,012 13,012 
Securities gains (losses), net233 44 2 
Gain on sales of mortgage loans6,626 2,573 1,829 
Other4,294 4,992 6,344 
TOTAL NON-INTEREST INCOME42,476 38,452 38,206 
NON-INTEREST EXPENSE:   
Salaries and employee benefits61,931 54,827 50,658 
Occupancy expense8,202 7,600 7,030 
Equipment expense10,568 8,244 6,827 
FDIC Expense316 693 929 
Other31,741 32,984 25,845 
TOTAL NON-INTEREST EXPENSE112,758 104,348 91,289 
INCOME BEFORE INCOME TAXES65,536 61,056 57,728 
Provision for income taxes11,692 12,184 11,145 
NET INCOME53,844 48,872 46,583 
OTHER COMPREHENSIVE INCOME   
Change in unrealized gains/(losses) on securities, net of reclassifications and taxes19,269 20,998 (8,363)
Change in funded status of post retirement benefits, net of taxes(2,004)(5,045)(387)
COMPREHENSIVE INCOME$71,109 $64,825 $37,833 
PER SHARE DATA   
Basic and Diluted Earnings per Share$3.93 $3.80 $3.80 
Weighted average number of shares outstanding (in thousands)13,716 12,865 12,256