First Financial Corporation Reports 2023 Results
TERRE HAUTE, Ind., Jan. 30, 2024 (GLOBE NEWSWIRE) — First Financial Corporation (NASDAQ:THFF) today announced results for the fourth quarter of 2023.
- Net income was $12.4 million compared to the $16.5 million reported for the same period of 2022;
- Diluted net income per common share of $1.06 compared to $1.37 for the same period of 2022;
- Return on average assets was 1.05% compared to 1.34% for the three months ended December 31, 2022;
- Credit loss provision was $2.5 million compared to provision of $2.7 million for the fourth quarter 2022; and
- Pre-tax, pre-provision net income was $16.6 million compared to $21.7 million for the same period in 2022.1
The Corporation further reported results for the year ended December 31, 2023:
- Net income was $60.7 million compared to the $71.1 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 $5.08 compared to $5.82 for the same period of 2022;
- Return on average assets was 1.26% compared to 1.41% for the twelve months ended December 31, 2022;
- Credit loss provision was $7.3 million compared to negative provision of $2.0 million for the twelve months ended December 31, 2022; and
- Pre-tax, pre-provision net income was $79.7 million compared to $84.9 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 fourth quarter of 2023 were $3.13 billion versus $3.02 billion for the comparable period in 2022, an increase of $117 million or 3.89%.
Total Loans Outstanding
Total loans outstanding as of December 31, 2023, were $3.17 billion compared to $3.07 billion as of December 31, 2022, an increase of $100 million or 3.27%, primarily driven by increases in Commercial Construction and Development, Commercial Real Estate, and Consumer Auto loans.
“We are pleased with our fourth quarter results, as we experienced another quarter of loan growth in a challenging environment. Our credit quality remains stable, and disciplined approach to expense management is constant,” said Norman D. Lowery, President and Chief Executive Officer. “During the quarter we were pleased to announce the signing of a definitive agreement with SimplyBank, which expands our presence into new attractive MSAs in the Tennessee market.”
Average Total Deposits
Average total deposits for the quarter ended December 31, 2023, were $4.05 billion versus $4.38 billion as of December 31, 2022. On a linked quarter basis, average deposits increased $50.7 million, or 1.27% from $4.00 billion as of September 30, 2023.
Total Deposits
Total deposits were $4.09 billion as of December 31, 2023, compared to $4.37 billion as of December 31, 2022.
Shareholder Equity
Shareholder equity at December 31, 2023, was $526.6 million compared to $475.3 million on December 31, 2022. Overall accumulated other comprehensive income/(loss) (“AOCI”) on investments available for sale increased $10.9 million in comparison to December 31, 2022, and increased $47.4 million in comparison to September 30, 2023. During the quarter, there were no share repurchases. An additional 518,860 shares remains under the current repurchase authorization. The Corporation also declared a $0.45 quarterly dividend during the quarter.
Book Value Per Share
Book Value per share was $44.64 as of December 31, 2023, compared to $39.44 as of December 31, 2022, an increase of 13.20%.
Tangible Common Equity to Tangible Asset Ratio
The Corporation’s tangible common equity to tangible asset ratio was 9.12% at December 31, 2023, compared to 7.79% at December 31, 2022.
Net Interest Income
Net interest income for the fourth quarter of 2023 was $39.6 million, compared to $43.7 million reported for the same period of 2022, a decrease of $4.1 million or 9.32%.
Net Interest Margin
The net interest margin for the quarter ended December 31, 2023, was 3.63% compared to the 3.81% reported at December 31, 2022, an decrease of 17 basis points or 4.55%.
Nonperforming Loans
Nonperforming loans as of December 31, 2023, were $24.6 million versus $9.6 million as of December 31, 2022. The ratio of nonperforming loans to total loans and leases was 0.78% as of December 31, 2023, versus 0.31% as of December 31, 2022. The increase in nonperforming loans is due to a commercial relationship that was downgraded during the quarter.
Credit Loss Provision
The provision for credit losses for the three months ended December 31, 2023, was $2.5 million, compared to $2.7 million for the fourth quarter 2022.
Net Charge-Offs
In the fourth quarter of 2023 net charge-offs were $1.76 million compared to $2.44 million in the same period of 2022.
Allowance for Credit Losses
The Corporation’s allowance for credit losses as of December 31, 2023, was $39.8 million compared to $39.8 million as of December 31, 2022. The allowance for credit losses as a percent of total loans was 1.26% as of December 31, 2023, compared to 1.30% as of December 31, 2022. On a linked quarter basis, the allowance for credit losses as a percent of total loans increased 1 basis point from 1.25% as of September 30, 2023.
Non-Interest Income
Non-interest income for the three months ended December 31, 2023 and 2022 was $11.2 million and $10.6 million, respectively, an increase of $679 thousand or 6.43%.
Non-Interest Expense
Non-interest expense for the three months ended December 31, 2023, was $34.2 million compared to $32.5 million in 2022.
Efficiency Ratio
The Corporation’s efficiency ratio was 65.62% for the quarter ending December 31, 2023, versus 58.78% for the same period in 2022.
Income Taxes
Income tax expense for the three months ended December 31, 2023, was $1.7 million versus $2.5 million for the same period in 2022. The effective tax rate for 2023 was 16.31% compared to 18.97% for 2022. The decrease in effective tax rate is due to a $1 million increase in tax credit investments, as well as an increase in tax exempt interest income compared to December 31, 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 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 | Year Ended | |||||||||||||||||||
| December 31, | September 30, | December 31, | December 31, | December 31, | ||||||||||||||||
| 2023 | 2023 | 2022 | 2023 | 2022 | ||||||||||||||||
| END OF PERIOD BALANCES | ||||||||||||||||||||
| Assets | $ | 4,851,146 | $ | 4,784,806 | $ | 4,989,281 | $ | 4,851,146 | $ | 4,989,281 | ||||||||||
| Deposits | $ | 4,090,068 | $ | 4,040,995 | $ | 4,368,871 | $ | 4,090,068 | $ | 4,368,871 | ||||||||||
| Loans, including net deferred loan costs | $ | 3,167,821 | $ | 3,117,626 | $ | 3,067,438 | $ | 3,167,821 | $ | 3,067,438 | ||||||||||
| Allowance for Credit Losses | $ | 39,767 | $ | 39,034 | $ | 39,779 | $ | 39,767 | $ | 39,779 | ||||||||||
| Total Equity | $ | 527,976 | $ | 470,168 | $ | 475,293 | $ | 527,976 | $ | 475,293 | ||||||||||
| Tangible Common Equity(a) | $ | 435,405 | $ | 377,367 | $ | 381,594 | $ | 435,405 | $ | 381,594 | ||||||||||
| AVERAGE BALANCES | ||||||||||||||||||||
| Total Assets | $ | 4,725,297 | $ | 4,814,251 | $ | 4,930,611 | $ | 4,802,448 | $ | 5,043,987 | ||||||||||
| Earning Assets | $ | 4,485,766 | $ | 4,575,996 | $ | 4,690,594 | $ | 4,564,135 | $ | 4,800,481 | ||||||||||
| Investments | $ | 1,279,821 | $ | 1,351,433 | $ | 1,393,753 | $ | 1,358,661 | $ | 1,432,681 | ||||||||||
| Loans | $ | 3,133,267 | $ | 3,147,317 | $ | 3,015,903 | $ | 3,111,784 | $ | 2,884,053 | ||||||||||
| Total Deposits | $ | 4,050,968 | $ | 4,000,302 | $ | 4,383,505 | $ | 4,106,132 | $ | 4,408,510 | ||||||||||
| Interest-Bearing Deposits | $ | 3,291,931 | $ | 3,222,633 | $ | 3,509,416 | $ | 3,304,816 | $ | 3,517,468 | ||||||||||
| Interest-Bearing Liabilities | $ | 206,778 | $ | 309,948 | $ | 84,210 | $ | 199,551 | $ | 97,134 | ||||||||||
| Total Equity | $ | 463,004 | $ | 493,764 | $ | 438,767 | $ | 486,572 | $ | 494,837 | ||||||||||
| INCOME STATEMENT DATA | ||||||||||||||||||||
| Net Interest Income | $ | 39,590 | $ | 41,150 | $ | 43,658 | $ | 167,262 | $ | 165,042 | ||||||||||
| Net Interest Income Fully Tax Equivalent(b) | $ | 40,942 | $ | 42,539 | $ | 44,724 | $ | 172,716 | $ | 169,699 | ||||||||||
| Provision for Credit Losses | $ | 2,495 | $ | 1,200 | $ | 2,725 | $ | 7,295 | $ | (2,025 | ) | |||||||||
| Non-interest Income | $ | 11,247 | $ | 11,627 | $ | 10,568 | $ | 42,702 | $ | 46,716 | ||||||||||
| Non-interest Expense | $ | 34,244 | $ | 32,265 | $ | 32,501 | $ | 130,176 | $ | 126,023 | ||||||||||
| Net Income | $ | 12,420 | $ | 16,285 | $ | 16,521 | $ | 60,672 | $ | 71,109 | ||||||||||
| PER SHARE DATA | ||||||||||||||||||||
| Basic and Diluted Net Income Per Common Share | $ | 1.06 | $ | 1.37 | $ | 1.37 | $ | 5.08 | $ | 5.82 | ||||||||||
| Cash Dividends Declared Per Common Share | $ | 0.45 | $ | — | $ | 0.74 | $ | 0.99 | $ | 1.28 | ||||||||||
| Book Value Per Common Share | $ | 44.76 | $ | 40.00 | $ | 39.44 | $ | 44.76 | $ | 39.44 | ||||||||||
| Tangible Book Value Per Common Share(c) | $ | 31.47 | $ | 33.69 | $ | 28.67 | $ | 36.91 | $ | 31.66 | ||||||||||
| Basic Weighted Average Common Shares Outstanding | 11,772 | 11,901 | 12,037 | 11,937 | 12,211 | |||||||||||||||
________________________________
(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 | Year Ended | |||||||||
| December 31, | September 30, | December 31, | December 31, | December 31, | |||||||
| 2023 | 2023 | 2022 | 2023 | 2022 | |||||||
| Return on average assets | 1.05 | % | 1.35 | % | 1.34 | % | 1.26 | % | 1.41 | % | |
| Return on average common shareholder’s equity | 10.73 | % | 13.19 | % | 15.06 | % | 12.47 | % | 14.37 | % | |
| Efficiency ratio | 65.62 | % | 59.57 | % | 58.78 | % | 60.43 | % | 58.23 | % | |
| Average equity to average assets | 9.80 | % | 10.26 | % | 8.90 | % | 10.13 | % | 9.81 | % | |
| Net interest margin(a) | 3.63 | % | 3.74 | % | 3.81 | % | 3.78 | % | 3.54 | % | |
| Net charge-offs to average loans and leases | 0.22 | % | 0.24 | % | 0.32 | % | 0.23 | % | 0.23 | % | |
| Credit loss reserve to loans and leases | 1.26 | % | 1.25 | % | 1.30 | % | 1.26 | % | 1.30 | % | |
| Credit loss reserve to nonperforming loans | 161.94 | % | 310.19 | % | 414.36 | % | 161.94 | % | 414.36 | % | |
| Nonperforming loans to loans and leases | 0.78 | % | 0.40 | % | 0.31 | % | 0.78 | % | 0.31 | % | |
| Tier 1 leverage | 12.14 | % | 11.72 | % | 10.78 | % | 12.14 | % | 10.78 | % | |
| Risk-based capital – Tier 1 | 14.76 | % | 14.61 | % | 13.58 | % | 14.76 | % | 13.58 | % | |
__________________________________
(a) Net interest margin is calculated on a tax equivalent basis.
| Asset Quality | Three Months Ended | Year Ended | ||||||||||||||||||
| December 31, | September 30, | December 31, | December 31, | December 31, | ||||||||||||||||
| 2023 | 2023 | 2022 | 2023 | 2022 | ||||||||||||||||
| Accruing loans and leases past due 30-89 days | $ | 20,168 | $ | 15,961 | $ | 28,875 | $ | 20,168 | $ | 28,875 | ||||||||||
| Accruing loans and leases past due 90 days or more | $ | 960 | $ | 1,370 | $ | 1,119 | $ | 960 | $ | 1,119 | ||||||||||
| Nonaccrual loans and leases | $ | 23,596 | $ | 11,214 | $ | 8,481 | $ | 23,596 | $ | 8,481 | ||||||||||
| Other real estate owned | $ | 107 | $ | 63 | $ | 337 | $ | 107 | $ | 337 | ||||||||||
| Nonperforming loans and other real estate owned | $ | 24,663 | $ | 12,647 | $ | 9,937 | $ | 24,663 | $ | 9,937 | ||||||||||
| Total nonperforming assets | $ | 27,665 | $ | 15,671 | $ | 12,923 | $ | 27,665 | $ | 12,923 | ||||||||||
| Gross charge-offs | $ | 3,976 | $ | 3,601 | $ | 4,388 | $ | 15,496 | $ | 15,706 | ||||||||||
| Recoveries | $ | 2,213 | $ | 1,528 | $ | 1,947 | $ | 8,188 | $ | 9,205 | ||||||||||
| Net charge-offs/(recoveries) | $ | 1,763 | $ | 2,073 | $ | 2,441 | $ | 7,308 | $ | 6,501 | ||||||||||
| Non-GAAP Reconciliations | Three Months Ended December 31, | |||||||
| 2023 | 2022 | |||||||
| ($in thousands, except EPS) | ||||||||
| Income before Income Taxes | $ | 14,098 | $ | 19,000 | ||||
| Provision for credit losses | 2,495 | 2,725 | ||||||
| Provision for unfunded commitments | — | — | ||||||
| Pre-tax, Pre-provision Income | $ | 16,593 | $ | 21,725 | ||||
| Non-GAAP Reconciliations | Year Ended December 31, | |||||||
| 2023 | 2022 | |||||||
| ($ in thousands, except EPS) | ||||||||
| Income before Income Taxes | $ | 72,493 | $ | 87,760 | ||||
| Provision for credit losses | 7,295 | (2,025 | ) | |||||
| Provision for unfunded commitments | (100 | ) | (850 | ) | ||||
| Pre-tax, Pre-provision Income | $ | 79,688 | $ | 84,885 | ||||
| CONSOLIDATED BALANCE SHEETS (Dollar amounts in thousands, except per share data) | ||||||||
| December 31, | December 31, | |||||||
| 2023 | 2022 | |||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| Cash and due from banks | $ | 76,759 | $ | 222,517 | ||||
| Federal funds sold | 282 | 9,374 | ||||||
| Securities available-for-sale | 1,259,137 | 1,330,481 | ||||||
| Loans: | ||||||||
| Commercial | 1,817,526 | 1,798,260 | ||||||
| Residential | 695,788 | 673,464 | ||||||
| Consumer | 646,758 | 588,539 | ||||||
| 3,160,072 | 3,060,263 | |||||||
| (Less) plus: | ||||||||
| Net deferred loan costs | 7,749 | 7,175 | ||||||
| Allowance for credit losses | (39,767 | ) | (39,779 | ) | ||||
| 3,128,054 | 3,027,659 | |||||||
| Restricted stock | 15,364 | 15,378 | ||||||
| Accrued interest receivable | 24,877 | 21,288 | ||||||
| Premises and equipment, net | 67,286 | 66,147 | ||||||
| Bank-owned life insurance | 114,122 | 115,704 | ||||||
| Goodwill | 86,985 | 86,985 | ||||||
| Other intangible assets | 5,586 | 6,714 | ||||||
| Other real estate owned | 107 | 337 | ||||||
| Other assets | 72,587 | 86,697 | ||||||
| TOTAL ASSETS | $ | 4,851,146 | $ | 4,989,281 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Deposits: | ||||||||
| Non-interest-bearing | $ | 750,335 | $ | 857,920 | ||||
| Interest-bearing: | ||||||||
| Certificates of deposit exceeding the FDIC insurance limits | 92,921 | 50,608 | ||||||
| Other interest-bearing deposits | 3,246,812 | 3,460,343 | ||||||
| 4,090,068 | 4,368,871 | |||||||
| Short-term borrowings | 67,221 | 70,875 | ||||||
| FHLB advances | 108,577 | 9,589 | ||||||
| Other liabilities | 57,304 | 64,653 | ||||||
| TOTAL LIABILITIES | 4,323,170 | 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-11,795,024 in 2023 and 12,051,964 in 2022 | 2,014 | 2,012 | ||||||
| Additional paid-in capital | 144,152 | 143,185 | ||||||
| Retained earnings | 663,726 | 614,829 | ||||||
| Accumulated other comprehensive income/(loss) | (127,087 | ) | (139,974 | ) | ||||
| Less: Treasury shares at cost-4,342,196 in 2023 and 4,063,028 in 2022 | (154,829 | ) | (144,759 | ) | ||||
| TOTAL SHAREHOLDERS’ EQUITY | 527,976 | 475,293 | ||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 4,851,146 | $ | 4,989,281 | ||||
| CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (Dollar amounts in thousands, except per share data) | ||||||||||||
| Year Ended | ||||||||||||
| December 31, | ||||||||||||
| 2023 | 2022 | 2021 | ||||||||||
| (unaudited) | ||||||||||||
| INTEREST INCOME: | ||||||||||||
| Loans, including related fees | $ | 189,641 | $ | 146,295 | $ | 128,000 | ||||||
| Securities: | ||||||||||||
| Taxable | 24,643 | 21,014 | 13,110 | |||||||||
| Tax-exempt | 10,573 | 9,974 | 8,762 | |||||||||
| Other | 3,540 | 6,018 | 2,326 | |||||||||
| TOTAL INTEREST INCOME | 228,397 | 183,301 | 152,198 | |||||||||
| INTEREST EXPENSE: | ||||||||||||
| Deposits | 51,694 | 16,743 | 8,158 | |||||||||
| Short-term borrowings | 5,370 | 1,243 | 387 | |||||||||
| Other borrowings | 4,071 | 273 | 252 | |||||||||
| TOTAL INTEREST EXPENSE | 61,135 | 18,259 | 8,797 | |||||||||
| NET INTEREST INCOME | 167,262 | 165,042 | 143,401 | |||||||||
| Provision for credit losses | 7,295 | (2,025 | ) | 2,466 | ||||||||
| NET INTEREST INCOME AFTER PROVISION | ||||||||||||
| FOR LOAN LOSSES | 159,967 | 167,067 | 140,935 | |||||||||
| NON-INTEREST INCOME: | ||||||||||||
| Trust and financial services | 5,155 | 5,155 | 5,255 | |||||||||
| Service charges and fees on deposit accounts | 28,079 | 27,540 | 24,700 | |||||||||
| Other service charges and fees | 801 | 665 | 1,163 | |||||||||
| Securities gains (losses), net | (1 | ) | 3 | 114 | ||||||||
| Interchange income | 676 | 559 | 438 | |||||||||
| Loan servicing fees | 1,176 | 1,554 | 1,849 | |||||||||
| Gain on sales of mortgage loans | 966 | 1,994 | 5,003 | |||||||||
| Other | 5,850 | 9,246 | 3,562 | |||||||||
| TOTAL NON-INTEREST INCOME | 42,702 | 46,716 | 42,084 | |||||||||
| NON-INTEREST EXPENSE: | ||||||||||||
| Salaries and employee benefits | 68,525 | 65,555 | 64,474 | |||||||||
| Occupancy expense | 9,351 | 9,764 | 8,774 | |||||||||
| Equipment expense | 14,020 | 12,391 | 10,174 | |||||||||
| FDIC Expense | 2,907 | 2,327 | 1,294 | |||||||||
| Other | 35,373 | 35,986 | 32,690 | |||||||||
| TOTAL NON-INTEREST EXPENSE | 130,176 | 126,023 | 117,406 | |||||||||
| INCOME BEFORE INCOME TAXES | 72,493 | 87,760 | 65,613 | |||||||||
| Provision for income taxes | 11,821 | 16,651 | 12,626 | |||||||||
| NET INCOME | 60,672 | 71,109 | 52,987 | |||||||||
| OTHER COMPREHENSIVE INCOME (LOSS) | ||||||||||||
| Change in unrealized gains/(losses) on securities, net of reclassifications and taxes | 10,896 | (144,570 | ) | (18,488 | ) | |||||||
| Change in funded status of post retirement benefits, net of taxes | 1,991 | 7,022 | 6,298 | |||||||||
| COMPREHENSIVE INCOME (LOSS) | $ | 73,559 | $ | (66,439 | ) | $ | 40,797 | |||||
| PER SHARE DATA | ||||||||||||
| Basic and Diluted Earnings per Share | $ | 5.08 | $ | 5.82 | $ | 4.02 | ||||||
| Weighted average number of shares outstanding (in thousands) | 11,937 | 12,211 | 13,190 | |||||||||
