TERRE HAUTE, Ind., Feb. 01, 2023 (GLOBE NEWSWIRE) — First Financial Corporation (NASDAQ:THFF) today announced results for the period ending December 31, 2023. These quarterly comparisons include the Corporation’s acquisition of Hancock Bancorp, Inc., Hawesville, Kentucky, on November 5, 2023. Total assets acquired were $326 million, including $234 million in loans and $285 million in deposits.
For the quarter:
- Net income was $7.4 million reflecting $1.0 million in merger expenses, $4.0 million in merger related provision expense for Hancock, and $1.6 million in expense related to our previously announced branch optimization strategy in which nine branches were closed and consolidated into nearby locations. This compared to $15.7 million for the same period of 2020;
- Adjusted net income would have been $13.0 million or $0.99 per common share excluding the merger and branch optimization expenses incurred. 1
- Diluted net income per common share of $0.58 compared to $1.15 for the same period of 2020; and
- Return on average assets was 0.58% compared to 1.39% for the three months ended December 31, 2020.
The Corporation further reported results for the twelve months ending December 31, 2023:
- Net income was $53.0 million compared to $53.8 million for the same period of 2020;
- Adjusted net income would have been $58.4 million or $4.43 per common share excluding the merger and branch optimization expenses incurred. 1
- Diluted net income per common share of $4.02 compared to $3.93 for the same period of 2020; and
- Return on average assets was 1.10% compared to 1.25% for the twelve months ended December 31, 2020.
1 Non-GAAP financial measure that Management believes is useful for investors and management to understand the effects of certain non-recurring noninterest items and 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.
“We are pleased with our fourth quarter results,” said Norman L. Lowery, Chairman and Chief Executive Officer. “We completed our recently announced merger with Hancock Bancorp and completed the system conversion during the quarter, allowing us to expand our presence in Kentucky, including the attractive Bowling Green, Kentucky market. We also completed our recently announced branch optimization strategy during the quarter, which is projected to save $2.3 million per year in operating expenses, but still retain the ability to serve customers in these markets. Lastly, we had exceptional loan growth during the quarter. Total loans grew by $113.0 million, or 4.55% excluding the transaction.”
Average Total Loans
Average total loans for the fourth quarter of 2023 were $2.63 billion versus $2.68 billion for the comparable period in 2020.
Total Loans Outstanding
Total loans outstanding as of December 31, 2023 were $2.82 billion compared to $2.61 billion as of December 31, 2020, an increase of $206 million or 7.88%. On a linked quarter basis, total loans grew $336 million or 13.55%. Excluding the transaction, total loans grew $113 million or 4.55%. PPP loans decreased $16 million.
Average Total Deposits
Average total deposits for the quarter ended December 31, 2023, were $4.31 billion versus $3.74 billion as of December 31, 2020, an increase of $571 million or 15.24%.
Total Deposits
Total deposits were $4.41 billion as of December 31, 2023, compared to $3.76 billion as of December 31, 2020, an increase of $654 million or 17.40%. On a linked quarter basis, total deposits increased $381 million or 9.46% from $4.03 billion for the quarter ending September 30, 2023.
Book Value Per Share
Book Value per share was $46.13 at December 31, 2023, compared to $44.03 at December 31, 2020, an increase of 4.76%.
Shareholder Equity
Shareholder equity at December 31, 2023, was $582.6 million compared to $597.0 million on December 31, 2020. In the quarter the Corporation repurchased 273,166 shares of its common stock, bringing total shares repurchased to 980,900 for 2023.
Tangible Common Equity to Tangible Asset Ratio
The Corporation’s tangible common equity to tangible asset ratio was 9.62% at December 31, 2023, compared to 11.40% at December 31, 2020.
Net Interest Income
Net interest income for the fourth quarter of 2023 was $36.8 million, compared to $37.6 million reported for the same period of 2020.
Net Interest Margin
The net interest margin for the quarter ended December 31, 2023, was 3.08% compared to the 4.11% reported at December 31, 2020.
Nonperforming Loans
Nonperforming loans as of December 31, 2023, were $15.0 million versus $21.8 million as of December 31, 2020. The ratio of nonperforming loans to total loans and leases was 0.53% as of December 31, 2023, versus 0.84% as of December 31, 2020.
Credit Loss Provision
The provision for credit losses for the three months ended December 31, 2023, was $5.7 million, including the $4.0 million related to the Hancock Bancorp merger, compared to the $448 thousand provision for the fourth quarter of 2020. In the first three quarters of 2020 the provision was calculated using the incurred loss basis. Beginning in the fourth quarter 2020, the provision was calculated using the current expected credit loss accounting standard.
Net Charge-Offs
In the fourth quarter of 2023 net charge-offs were $1.8 million compared to $416 thousand in the same period of 2020.
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.
The Corporation’s allowance for credit losses as of December 31, 2023, was $48.3 million compared to $43.6 million as of December 31, 2020. The allowance for credit losses as a percent of total loans was 1.72% as of December 31, 2023, compared to 1.67% as of December 31, 2020.
Non-Interest Income
Non-interest income for the three months ended December 31, 2023 and 2020 was $10.8 million and $12.9 million, respectively.
Non-Interest Expense
Non-interest expense for the three months ended December 31, 2023, was $33.3 million compared to $31.2 million in 2020. There were $1.0 million of expenses in the quarter related to the Hancock Bancorp merger and $1.6 million related to branch optimization.
Efficiency Ratio
The Corporation’s efficiency ratio was 68.37% for the quarter ending December 31, 2023, versus 60.60% for the same period in 2020, which was also impacted by the Hancock Bancorp merger and branch optimization.
Income Taxes
Income tax expense for the twelve months ended December 31, 2023, was $12.6 million versus $11.7 million for the same period in 2020. The effective tax rate for 2023 was 19.24% compared to 17.84% for 2020.
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 78 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: [email protected]
| Three Months Ended | Year Ended | |||||||||||
| December 31, | September 30, | December 31, | December 31, | December 31, | ||||||||
| 2021 | 2021 | 2020 | 2021 | 2020 | ||||||||
| END OF PERIOD BALANCES | ||||||||||||
| Assets | $ | 5,170,799 | $ | 4,804,569 | $ | 4,560,959 | $ | 5,170,799 | $ | 4,560,959 | ||
| Deposits | $ | 4,409,569 | $ | 4,028,636 | $ | 3,755,945 | $ | 4,409,569 | $ | 3,755,945 | ||
| Loans, including net deferred loan costs | $ | 2,815,895 | $ | 2,479,910 | $ | 2,610,294 | $ | 2,815,895 | $ | 2,610,294 | ||
| Allowance for Credit Losses | $ | 48,305 | $ | 39,486 | $ | 43,637 | $ | 48,305 | $ | 43,637 | ||
| Total Equity | $ | 582,576 | $ | 594,935 | $ | 596,992 | $ | 582,576 | $ | 596,992 | ||
| Tangible Common Equity (a) | $ | 488,417 | $ | 508,618 | $ | 509,428 | $ | 488,417 | $ | 509,428 | ||
| AVERAGE BALANCES | ||||||||||||
| Total Assets | $ | 5,086,702 | $ | 4,818,880 | $ | 4,532,078 | $ | 4,814,350 | $ | 4,312,919 | ||
| Earning Assets | $ | 4,875,039 | $ | 4,615,235 | $ | 3,736,217 | $ | 4,611,741 | $ | 3,714,794 | ||
| Investments | $ | 1,410,351 | $ | 1,325,651 | $ | 1,058,925 | $ | 1,278,498 | $ | 1,011,324 | ||
| Loans | $ | 2,633,559 | $ | 2,515,639 | $ | 2,676,041 | $ | 2,602,344 | $ | 2,702,225 | ||
| Total Deposits | $ | 4,312,115 | $ | 4,041,441 | $ | 3,741,155 | $ | 4,037,876 | $ | 3,532,736 | ||
| Interest-Bearing Deposits | $ | 3,823,428 | $ | 3,223,948 | $ | 3,005,337 | $ | 3,320,112 | $ | 2,872,725 | ||
| Interest-Bearing Liabilities | $ | 110,490 | $ | 106,936 | $ | 98,922 | $ | 107,367 | $ | 108,948 | ||
| Total Equity | $ | 589,197 | $ | 599,011 | $ | 610,879 | $ | 597,369 | $ | 593,791 | ||
| INCOME STATEMENT DATA | ||||||||||||
| Net Interest Income | $ | 36,832 | $ | 36,028 | $ | 37,570 | $ | 143,401 | $ | 146,346 | ||
| Net Interest Income Fully Tax Equivalent (b) | $ | 37,953 | $ | 37,134 | $ | 38,606 | $ | 147,765 | $ | 150,590 | ||
| Provision for Credit Losses | $ | 5,710 | $ | (1,500 | ) | $ | 448 | $ | 2,466 | $ | 10,528 | |
| Non-interest Income | $ | 10,767 | $ | 11,092 | $ | 12,866 | $ | 42,084 | $ | 42,476 | ||
| Non-interest Expense | $ | 33,312 | $ | 28,459 | $ | 31,191 | $ | 117,406 | $ | 112,758 | ||
| Net Income | $ | 7,398 | $ | 16,098 | $ | 15,739 | $ | 52,987 | $ | 53,844 | ||
| PER SHARE DATA | ||||||||||||
| Basic and Diluted Net Income Per Common Share | $ | 0.58 | $ | 1.24 | $ | 1.15 | $ | 4.02 | $ | 3.93 | ||
| Cash Dividends Declared Per Common Share | $ | 0.63 | $ | — | $ | 0.53 | $ | 1.16 | $ | 1.05 | ||
| Book Value Per Common Share | $ | 46.13 | $ | 46.22 | $ | 44.03 | $ | 46.13 | $ | 44.03 | ||
| Tangible Book Value Per Common Share (c) | $ | 38.66 | $ | 39.38 | $ | 37.64 | $ | 38.67 | $ | 37.57 | ||
| Basic Weighted Average Common Shares Outstanding | 12,804 | 13,019 | 13,695 | 13,190 | 13,716 | |||||||
(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, | |||||||
| 2021 | 2021 | 2020 | 2021 | 2020 | |||||||
| Return on average assets | 0.58 | % | 1.34 | % | 1.39 | % | 1.10 | % | 1.25 | % | |
| Return on average common shareholder’s equity | 5.02 | % | 10.75 | % | 10.31 | % | 8.87 | % | 9.07 | % | |
| Efficiency ratio | 68.37 | % | 59.01 | % | 60.60 | % | 61.84 | % | 58.40 | % | |
| Average equity to average assets | 11.58 | % | 12.43 | % | 13.48 | % | 12.41 | % | 13.77 | % | |
| Net interest margin (a) | 3.08 | % | 3.22 | % | 4.11 | % | 3.20 | % | 4.05 | % | |
| Net charge-offs to average loans and leases | 0.27 | % | 0.04 | % | 0.05 | % | 0.10 | % | 0.13 | % | |
| Credit loss reserve to loans and leases | 1.72 | % | 1.59 | % | 1.67 | % | 1.72 | % | 1.67 | % | |
| Credit loss reserve to nonperforming loans | 321.78 | % | 210.83 | % | 216.28 | % | 324.11 | % | 210.37 | % | |
| Nonperforming loans to loans and leases | 0.53 | % | 0.79 | % | 0.84 | % | 0.53 | % | 0.84 | % | |
| Tier 1 leverage | 9.83 | % | 10.77 | % | 11.24 | % | 9.83 | % | 11.24 | % | |
| Risk-based capital – Tier 1 | 14.37 | % | 16.63 | % | 16.11 | % | 14.37 | % | 16.11 | % | |
(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, | |||||||
| 2021 | 2021 | 2020 | 2021 | 2020 | |||||||
| Accruing loans and leases past due 30-89 days | $ | 17,096 | $ | 10,765 | $ | 17,309 | $ | 17,096 | $ | 17,309 | |
| Accruing loans and leases past due 90 days or more | $ | 515 | $ | 1,355 | $ | 2,324 | $ | 515 | $ | 2,324 | |
| Nonaccrual loans and leases | $ | 9,590 | $ | 13,650 | $ | 15,367 | $ | 9,590 | $ | 15,367 | |
| Total troubled debt restructuring | $ | 4,799 | $ | 4,489 | $ | 4,206 | $ | 4,799 | $ | 4,206 | |
| Other real estate owned | $ | 108 | $ | 884 | $ | 1,012 | $ | 108 | $ | 1,012 | |
| Nonperforming loans and other real estate owned | $ | 15,012 | $ | 20,378 | $ | 22,909 | $ | 15,012 | $ | 22,909 | |
| Total nonperforming assets | $ | 18,371 | $ | 23,622 | $ | 26,045 | $ | 18,371 | $ | 26,045 | |
| Gross charge-offs | $ | 3,113 | $ | 1,614 | $ | 1,954 | $ | 8,216 | $ | 8,396 | |
| Recoveries | $ | 1,312 | $ | 1,344 | $ | 1,538 | $ | 5,569 | $ | 4,917 | |
| Net charge-offs/(recoveries) | $ | 1,801 | $ | 270 | $ | 416 | $ | 2,647 | $ | 3,479 | |
| Non-GAAP Reconciliations | |||||||||||
| ($ in thousands, except EPS) | 4Q21 | Adjustments | Adjusted 4Q21 | ||||||||
| Net Interest Income | $ | 36,832 | $ | — | $ | 36,832 | |||||
| Provision for credit losses | (5,710 | ) | 3,980 | (a) | (1,730 | ) | |||||
| Noninterest income | 10,767 | — | 10,767 | ||||||||
| Noninterest expense | (33,312 | ) | 2,585 | (b)(c) | (30,727 | ) | |||||
| Income before Income Taxes | $ | 8,577 | $ | 6,565 | $ | 15,142 | |||||
| Income Taxes | (1,179 | ) | (1,313 | ) | (2,492 | ) | |||||
| Net Income | $ | 7,398 | $ | 5,252 | $ | 12,650 | |||||
| Average Shares Outstanding | 12,804 | 12,804 | 12,804 | ||||||||
| Basic and Diluted Earnings Per Share | $ | 0.58 | $ | 0.41 | $ | 0.99 | |||||
(a) CECL provision addition for acquisition of Hancock Bancorp.
(b) Merger expenses: acquisition expense $810,000; severance $193,000.
(c) Branch optimization: lease termination $249,000; severance $144,000; real estate write downs $1,189,000.
| Non-GAAP Reconciliations | |||||||||||
| ($ in thousands, except EPS) | 2021 | Adjustments | Adjusted 2023 | ||||||||
| Net Interest Income | $ | 143,401 | $ | — | $ | 143,401 | |||||
| Provision for credit losses | (2,466 | ) | 3,980 | (a) | 1,514 | ||||||
| Noninterest income | 42,084 | — | 42,084 | ||||||||
| Noninterest expense | (117,406 | ) | 2,827 | (b)(c) | (114,579 | ) | |||||
| Income before Income Taxes | $ | 65,613 | $ | 6,807 | $ | 72,420 | |||||
| Income Taxes | (12,626 | ) | (1,361 | ) | (13,987 | ) | |||||
| Net Income | $ | 52,987 | $ | 5,446 | $ | 58,433 | |||||
| Average Shares Outstanding | 13,190 | 13,190 | 13,190 | ||||||||
| Basic and Diluted Earnings Per Share | $ | 4.02 | $ | 0.41 | $ | 4.43 | |||||
(a) CECL provision addition for acquisition of Hancock Bancorp.
(b) Merger expenses: acquisition expense $1,052,000; severance $193,000.
(c) Branch optimization: lease termination $249,000; severance $144,000; real estate write downs $1,189,000.
CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands, except per share data)
| December 31, 2021 |
December 31, 2020 |
||||||
| (unaudited) | |||||||
| ASSETS | |||||||
| Cash and due from banks | $ | 682,807 | $ | 657,470 | |||
| Federal funds sold | 308 | 301 | |||||
| Securities available-for-sale | 1,364,734 | 1,020,744 | |||||
| Loans: | |||||||
| Commercial | 1,674,066 | 1,521,711 | |||||
| Residential | 664,509 | 604,652 | |||||
| Consumer | 474,026 | 479,750 | |||||
| 2,812,601 | 2,606,113 | ||||||
| (Less) plus: | |||||||
| Net deferred loan costs | 3,294 | 4,181 | |||||
| Allowance for credit losses | (48,305 | ) | (43,637 | ) | |||
| 2,767,590 | 2,566,657 | ||||||
| Restricted stock | 16,200 | 14,812 | |||||
| Accrued interest receivable | 16,946 | 16,957 | |||||
| Premises and equipment, net | 69,522 | 62,063 | |||||
| Bank-owned life insurance | 116,997 | 95,849 | |||||
| Goodwill | 86,135 | 78,592 | |||||
| Other intangible assets | 8,024 | 8,972 | |||||
| Other real estate owned | 108 | 1,012 | |||||
| Other assets | 41,428 | 37,530 | |||||
| TOTAL ASSETS | $ | 5,170,799 | $ | 4,560,959 | |||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
| Deposits: | |||||||
| Non-interest-bearing | $ | 914,933 | $ | 732,694 | |||
| Interest-bearing: | |||||||
| Certificates of deposit exceeding the FDIC insurance limits | 74,015 | 107,764 | |||||
| Other interest-bearing deposits | 3,420,621 | 2,915,487 | |||||
| 4,409,569 | 3,755,945 | ||||||
| Short-term borrowings | 93,374 | 116,061 | |||||
| FHLB advances | 15,937 | 5,859 | |||||
| Other liabilities | 69,343 | 86,102 | |||||
| TOTAL LIABILITIES | 4,588,223 | 3,963,967 | |||||
| Shareholders’ equity | |||||||
| Common stock, $.125 stated value per share; | |||||||
| Authorized shares-40,000,000 | |||||||
| Issued shares-16,096,313 in 2023 and 16,075,154 in 2020 | |||||||
| Outstanding shares-12,629,893 in 2023 and 13,558,511 in 2020 | 2,009 | 2,007 | |||||
| Additional paid-in capital | 141,979 | 140,820 | |||||
| Retained earnings | 559,139 | 521,103 | |||||
| Accumulated other comprehensive income/(loss) | (2,426 | ) | 9,764 | ||||
| Less: Treasury shares at cost-3,466,420 in 2023 and 2,516,643 in 2020 | (118,125 | ) | (76,702 | ) | |||
| TOTAL SHAREHOLDERS’ EQUITY | 582,576 | 596,992 | |||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 5,170,799 | $ | 4,560,959 | |||
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Dollar amounts in thousands, except per share data)
| Year Ended December 31, | |||||||||||
| 2021 | 2020 | 2019 | |||||||||
| (unaudited) | |||||||||||
| INTEREST INCOME: | |||||||||||
| Loans, including related fees | $ | 128,000 | $ | 137,241 | $ | 124,788 | |||||
| Securities: | |||||||||||
| Taxable | 13,998 | 13,625 | 15,191 | ||||||||
| Tax-exempt | 8,762 | 7,952 | 7,674 | ||||||||
| Other | 1,438 | 1,667 | 1,468 | ||||||||
| TOTAL INTEREST INCOME | 152,198 | 160,485 | 149,121 | ||||||||
| INTEREST EXPENSE: | |||||||||||
| Deposits | 8,158 | 12,801 | 15,711 | ||||||||
| Short-term borrowings | 387 | 568 | 1,105 | ||||||||
| Other borrowings | 252 | 770 | 653 | ||||||||
| TOTAL INTEREST EXPENSE | 8,797 | 14,139 | 17,469 | ||||||||
| NET INTEREST INCOME | 143,401 | 146,346 | 131,652 | ||||||||
| Provision for credit losses | 2,466 | 10,528 | 4,700 | ||||||||
| NET INTEREST INCOME AFTER PROVISION | |||||||||||
| FOR LOAN LOSSES | 140,935 | 135,818 | 126,952 | ||||||||
| NON-INTEREST INCOME: | |||||||||||
| Trust and financial services | 5,255 | 5,423 | 5,036 | ||||||||
| Service charges and fees on deposit accounts | 10,089 | 10,256 | 11,795 | ||||||||
| Other service charges and fees | 18,212 | 15,644 | 14,012 | ||||||||
| Securities gains (losses), net | 114 | 233 | 44 | ||||||||
| Gain on sales of mortgage loans | 5,003 | 6,626 | 2,573 | ||||||||
| Other | 3,411 | 4,294 | 4,992 | ||||||||
| TOTAL NON-INTEREST INCOME | 42,084 | 42,476 | 38,452 | ||||||||
| NON-INTEREST EXPENSE: | |||||||||||
| Salaries and employee benefits | 64,474 | 61,931 | 54,827 | ||||||||
| Occupancy expense | 8,774 | 8,202 | 7,600 | ||||||||
| Equipment expense | 10,174 | 10,568 | 8,244 | ||||||||
| FDIC Expense | 1,294 | 316 | 693 | ||||||||
| Other | 32,690 | 31,741 | 32,984 | ||||||||
| TOTAL NON-INTEREST EXPENSE | 117,406 | 112,758 | 104,348 | ||||||||
| INCOME BEFORE INCOME TAXES | 65,613 | 65,536 | 61,056 | ||||||||
| Provision for income taxes | 12,626 | 11,692 | 12,184 | ||||||||
| NET INCOME | 52,987 | 53,844 | 48,872 | ||||||||
| OTHER COMPREHENSIVE INCOME | |||||||||||
| Change in unrealized gains/(losses) on securities, net of reclassifications and taxes | (18,148 | ) | 19,269 | 20,998 | |||||||
| Change in funded status of post retirement benefits, net of taxes | 6,298 | (2,004 | ) | (5,045 | ) | ||||||
| COMPREHENSIVE INCOME | $ | 41,137 | $ | 71,109 | $ | 64,825 | |||||
| PER SHARE DATA | |||||||||||
| Basic and Diluted Earnings per Share | $ | 4.02 | $ | 3.93 | $ | 3.80 | |||||
| Weighted average number of shares outstanding (in thousands) | 13,190 | 13,716 | 12,865 | ||||||||
