GlobeNewswire Inc | Oct 28, 2020 10:32AM EDT

October 28, 2020

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 Administrations 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 LoansAverage 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 OutstandingTotal 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 DepositsAverage 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 DepositsTotal 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 ShareBook Value per share was $44.27 at September 30, 2020, compared to $40.59 at September 30, 2019.

Shareholder EquityShareholder equity at September 30, 2020, was $607.1 million compared to $556.6 million on September 30, 2019.

Tangible Common Equity to Tangible Asset RatioThe Corporations tangible common equity to tangible asset ratio was 12.07% at September 30, 2020, compared to 12.04% at September 30, 2019.

Net Interest IncomeNet 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 MarginThe net interest margin for the quarter ended September 30, 2020, was 3.99% compared to the 4.00% reported at September 30, 2019.

Nonperforming LoansNonperforming 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 ProvisionThe 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-OffsNet 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 LossesThe Corporations 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 LossesAs 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 IncomeNon-interest income for the three months ended September 30, 2020 and 2019 was $11.7 million and $9.7 million, respectively.

Non-Interest ExpenseNon-interest expense for the three months ended September 30, 2020, was $27.1 million compared to $27.4 million in 2019.

Efficiency RatioThe Corporations efficiency ratio was 54.97% for the quarter ending September 30, 2020, versus 61.18% for the same period in 2019.

Income TaxesIncome 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 CorporationFirst 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. McHargueChief Financial OfficerP: 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 2019END OF PERIOD BALANCESAssets $ 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, includingnet deferred $ 2,753,493 $ 2,777,083 $ 2,668,476 $ 2,753,493 $ 2,668,476 loan costsAllowance for $ 26,960 $ 23,285 $ 19,799 $ 26,960 $ 19,799 Loan LossesTotal Equity $ 607,095 $ 590,284 $ 556,582 $ 607,095 $ 556,582 Tangible Common $ 519,098 $ 501,863 $ 469,904 $ 519,098 $ 469,904 Equity ^(a) 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 $ 2,887,575 $ 2,858,594 $ 2,914,816 $ 2,828,521 $ 2,315,658 DepositsInterest-Bearing $ 108,236 $ 121,791 $ 113,019 $ 112,290 $ 74,737 LiabilitiesTotal Equity $ 603,067 $ 591,522 $ 491,586 $ 588,095 $ 471,136 INCOME STATEMENT DATANet Interest $ 36,531 $ 35,895 $ 33,999 $ 108,776 $ 93,177 IncomeNet InterestIncome Fully Tax $ 37,612 $ 36,962 $ 35,054 $ 111,983 $ 96,176 Equivalent ^(b)Provision for $ 4,425 $ 2,965 $ 1,500 $ 10,080 $ 3,200 Loan LossesNon-interest $ 11,739 $ 8,776 $ 9,746 $ 29,610 $ 27,125 IncomeNon-interest $ 27,130 $ 26,883 $ 27,409 $ 81,567 $ 74,594 ExpenseNet Income $ 14,000 $ 11,924 $ 12,257 $ 38,105 $ 34,508 PER SHARE DATA Basic andDiluted Net $ 1.02 $ 0.87 $ 0.93 $ 2.78 $ 2.74 Income PerCommon ShareCash DividendsDeclared Per $ ? $ 0.52 $ ? $ 0.52 $ 0.52 Common ShareBook Value Per $ 44.27 $ 43.04 $ 40.59 $ 44.27 $ 40.59 Common ShareTangible BookValue Per Common $ 37.56 $ 36.68 $ 30.81 $ 37.85 $ 34.27 Share ^(c)Basic WeightedAverage Common 13,715 13,715 13,141 13,723 12,574 SharesOutstanding (a) Tangible common equity is a non-GAAP financial measure derived fromGAAP-based amounts. We calculate tangible common equity by excluding goodwilland other intangible assets from shareholder's equity.(b) Net interest income fully tax equivalent is a non-GAAP financial measurederived from GAAP-based amounts. We calculate net interest income fully taxequivalent by adding back the tax equivalent factor of tax exempt income to netinterest income. We calculate the tax equivalent factor of tax exempt income bydividing tax exempt income by the net of tax rate of 75%.(c) Tangible book value per common share is a non-GAAP financial measurederived from GAAP-based amounts. We calculate the factor by dividing averagetangible common equity by average shares outstanding. We calculate averagetangible common equity by excluding average intangible assets from averageshareholder's equity.

Key Ratios Three Months Ended Nine Months Ended September June 30, September September September 30, 30, 30, 30, 2020 2020 2019 2020 2019Return on average assets 1.28 % 1.10 % 1.33 % 1.20 % 1.42 %Return on average common 9.29 % 8.06 % 9.97 % 8.62 % 9.74 %shareholder's equityEfficiency ratio 54.97 % 58.78 % 61.18 % 57.61 % 60.50 %Average equity to average 13.77 % 13.70 % 13.36 % 13.87 % 14.54 %assetsNet interest margin ^(a) 3.99 % 3.97 % 4.00 % 4.03 % 4.21 %Net charge-offs to average 0.11 % 0.11 % 0.32 % 0.15 % 0.24 %loans and leasesLoan and lease loss reserve 0.98 % 0.84 % 0.74 % 0.98 % 0.74 %to loans and leasesLoan and lease loss reserve 113.89 % 101.12 % 137.45 % 113.89 % 137.45 %to nonperforming loansNonperforming loans to loans 0.86 % 0.83 % 0.54 % 0.86 % 0.54 %and leasesTier 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 June 30, September September September 30, 30, 30, 30, 2020 2020 2019 2020 2019Accruingloans andleases past $ 13,490 $ 15,358 $ 10,462 $ 13,490 $ 10,462 due 30-89daysAccruingloans andleases past $ 2,948 $ 4,438 $ 744 $ 2,948 $ 744 due 90 daysor moreNonaccrualloans and $ 16,628 $ 14,634 $ 9,533 $ 16,628 $ 9,533 leasesTotaltroubled debt $ 4,097 $ 3,899 $ 4,127 $ 4,097 $ 4,127 restructuringOther real $ 3,577 $ 3,577 $ 3,717 $ 3,577 $ 3,717 estate ownedNonperformingloans and $ 27,138 $ 26,548 $ 18,121 $ 27,138 $ 18,121 other realestate ownedTotalnonperforming $ 30,174 $ 29,493 $ 21,725 $ 30,174 $ 21,725 assetsGross $ 1,998 $ 1,540 $ 2,926 $ 6,442 $ 6,941 charge-offsRecoveries $ 1,248 $ 797 $ 975 $ 3,379 $ 3,104 Netcharge-offs/ $ 750 $ 743 $ 1,951 $ 3,063 $ 3,837 (recoveries)

CONSOLIDATED BALANCE SHEETS(Dollar amounts in thousands, except per share data)

September 30, December 31, 2020 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 109,830 126,738 insurance limitsOther 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 2019Outstanding shares-13,714,524 in 2020 and 2,006 2,005 13,741,825 in 2019Additional 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 (70,369 ) (68,645 )2,313,641 in 2019TOTAL 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 Nine Months Ended September September 30, 30, 2020 2019 2020 2019 (unaudited)INTEREST INCOME: Loans, including $ 34,077 $ 33,363 $ 102,335 $ 87,650 related feesSecurities: 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 3,008 5,596 11,422 12,293 EXPENSENET INTEREST INCOME 36,531 33,999 108,776 93,177 Provision for loan 4,425 1,500 10,080 3,200 lossesNET INTEREST INCOME AFTER PROVISIONFOR LOAN LOSSES 32,106 32,499 98,696 89,977 NON-INTEREST INCOME: Trust and financial 1,210 1,329 4,032 3,657 servicesService charges andfees on deposit 2,516 3,227 7,616 8,586 accountsOther service charges 4,269 3,720 11,468 10,242 and feesSecurities gains 5 6 230 18 (losses), netGain on sales of 2,910 865 4,813 1,781 mortgage loansOther 829 599 1,451 2,841 TOTAL NON-INTEREST 11,739 9,746 29,610 27,125 INCOMENON-INTEREST EXPENSE: Salaries and employee 15,474 14,031 45,769 39,332 benefitsOccupancy 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 27,130 27,409 81,567 74,594 EXPENSEINCOME BEFORE INCOME 16,715 14,836 46,739 42,508 TAXESProvision for income 2,715 2,579 8,634 8,000 taxesNET INCOME 14,000 12,257 38,105 34,508 OTHER COMPREHENSIVE INCOMEChange in unrealizedgains/(losses) onsecurities, net of 2,223 4,124 18,451 22,689 reclassifications andtaxesChange in fundedstatus of post 383 303 1,171 910 retirement benefits,net of taxesCOMPREHENSIVE INCOME $ 16,606 $ 16,684 $ 57,727 $ 58,107 PER SHARE DATA Basic and Diluted $ 1.02 $ 0.93 $ 2.78 $ 2.74 Earnings per ShareWeighted averagenumber of shares 13,715 13,141 13,723 12,574 outstanding (inthousands)