GlobeNewswire Inc | Jul 31, 2020 10:00AM EDT

July 31, 2020

TERRE HAUTE, Ind., July 31, 2020 (GLOBE NEWSWIRE) -- First Financial Corporation (NASDAQ:THFF) today announced results for the second quarter of 2020. For the three months ending June 30, 2020:

-- Net income was $11.9 million compared to $12.6 million for the same period of 2019; -- Diluted net income per common share of $0.87 compared to $1.02 for the same period of 2019; and -- Return on average assets was 1.10% compared to 1.66% for the three months ended June 30, 2019.

The Corporation further reported results for the six months ending June 30, 2020:

-- Net income was $24.1 million compared to $22.3 million for the same period of 2019; -- Diluted net income per common share of $1.76 compared to $1.81 for the same period of 2019; and -- Return on average assets was 1.16% compared to 1.47% for the six months ended June 30, 2019.

In light of COVID-19 and the stay at home orders in the four states we do business in we are pleased with our second quarter results said Norman L. Lowery, Chairman and Chief Executive Officer. While eager to get back to normal operations, we have been cautious in the steps we have taken as the number of COVID 19 cases continue to increase across our footprint. Protecting the health of our associates, customers and their families has been, and will continue to be, our number one priority. During the second quarter much of our attention was devoted to the Small Business Administrations Paycheck Protection Program enacted by the Coronavirus Aid, Relief and Economics Security Act (CARES). We are pleased we were able to fund 1,734 loans totaling $170 million to secure twenty-four thousand jobs which are so important to our customers, their families and the economy of the communities we serve. We are also pleased that during this challenging quarter we were able to assist many of our customers to take advantage of the current low interest rates by refinancing their home mortgages, lowering their payments or allowing them to purchase a new home.

Average Total LoansAverage total loans for the second quarter of 2020 were $2.73 billion versus $1.98 billion for the comparable period in 2019, an increase of $748.8 million or 37.84%.

Total Loans OutstandingTotal loans outstanding increased $770.7 million, or 38.40%, from $2.01 billion as of June 30, 2019 to $2.78 billion as of June 30, 2020. On a linked quarter basis, total loans increased $159.3 million from $2.62 billion for the quarter ending March 31, 2020.

Because of COVID 19 each of the four states in which we do business have imposed restrictions which affect our operations and the business of our customers, stated Lowery. "While we have not experienced a significant increase in charge-offs, we have continued to increase reserves in response to theeffect of the pandemic on asset quality. We have also sought to meet the needs of our customers by assisting them with reasonable loan accommodations. To date, we have approved and processed requests totaling $343 million across all portfolios. Commercial loan requests comprise $321 million of this total."

Average Total DepositsAverage total deposits for the quarter ended June 30, 2020, were $3.53 billion versus $2.46 billion as of June 30, 2019, an increase of $1.06 billion or 43.11%.

Total DepositsTotal deposits were $3.57 billion as of June 30, 2020, compared to $2.46 billion as of June 30, 2019, an increase of $1.11 billion or 44.94%. On a linked quarter basis, total deposits increased $278.7 million from $3.29 billion for the quarter ending March 31, 2020.

Book Value Per ShareBook Value per share was $43.04 at June 30, 2020, compared to $38.88 at June 30, 2019.

Shareholder EquityShareholder equity at June 30, 2020, was $590.3 million compared to $477.8 million on June 30, 2019.

Tangible Common Equity to Tangible Asset RatioThe Corporations tangible common equity to tangible asset ratio was 11.73% at June 30, 2020, compared to 14.61% at June 30, 2019.

Net Interest IncomeNet interest income for the second quarter of 2020 was $35.9 million, an increase of 20.65% over the $29.8 million reported for the same period of 2019.

Net Interest MarginThe net interest margin for the quarter ended June 30, 2020, was 3.97% compared to the 4.33% reported at June 30, 2019.

Nonperforming LoansNonperforming loans as of June 30, 2020, were $23.0 million versus $15.2 million as of June 30, 2019. The ratio of nonperforming loans to total loans and leases was 0.83% as of June 30, 2020, versus 0.76% as of June 30, 2019.

Loan Loss ProvisionThe provision for loan losses for the three months ended June 30, 2020, was $2.97 million compared to the $230 thousand provision for the second quarter of 2019. The Corporation increased the allowance for loan and lease losses by $1.0 million in the second quarter of 2020 directly related to the estimate of losses resulting from the COVID-19 pandemic.

Net Charge-OffsNet charge-offs were $743 thousand for the second quarter of 2020 compared to $940 thousand in the same period of 2019.

Allowance for Loan LossesThe Corporations allowance for loan losses as of June 30, 2020, was $23.3 million compared to $20.3 million as of June 30, 2019. The allowance for loan losses as a percent of total loans was 0.84% as of June 30, 2020, compared to 1.01% as of June 30, 2019. The decrease is primarily due to acquired loans being recorded at fair value. The Corporation's fair value adjustment due to purchased credit impaired loans was $5.9 million as of June 30, 2020.

Current Expected Credit LossesAs provided in the Coronavirus Aid, Relief, and Economic Security Act (CARES) 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 June 30, 2020 and 2019 was $8.8 and $9.7 million, respectively. In the second quarter 2019, we recorded a $1.5 million incentive received from a third-party vendor.

Non-Interest ExpenseNon-interest expense for the three months ended June 30, 2020, was $26.9 million compared to $23.5 million in 2019.

Efficiency RatioThe Corporations efficiency ratio was 58.78% for the quarter ending June 30, 2020, versus 58.06% for the same period in 2019.

Income TaxesIncome tax expense for the six months ended June 30, 2020, was $5.92 million versus $5.42 million for the same period in 2019. The effective tax rate for 2020 was 19.71% compared to 19.59% for 2019.

In these unprecedented times, we are proud we continue to meet the financial needs of our customers and the communities we serve. I am proud of our associates and their unwavering commitment, Lowery stated.

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 June 30, March 31, June 30, June 30, June 30, 2020 2020 2019 2020 2019END OF PERIOD BALANCESAssets $ 4,368,112 $ 4,062,414 $ 3,064,212 $ 4,368,112 $ 3,064,212 Deposits $ 3,569,893 $ 3,291,231 $ 2,463,018 $ 3,569,893 $ 2,463,018 Loans, includingnet deferred $ 2,777,083 $ 2,622,637 $ 2,010,198 $ 2,777,083 $ 2,010,198 loan costsAllowance for $ 23,285 $ 21,063 $ 20,250 $ 23,285 $ 20,250 Loan LossesTotal Equity $ 590,284 $ 581,771 $ 477,820 $ 590,284 $ 477,820 Tangible Common $ 501,863 $ 492,943 $ 442,496 $ 501,863 $ 442,496 Equity ^(a) AVERAGE BALANCES Total Assets $ 4,317,011 $ 4,022,789 $ 3,033,788 $ 4,169,900 $ 3,018,922 Earning Assets $ 3,720,477 $ 3,625,679 $ 2,836,110 $ 3,673,078 $ 2,830,317 Investments $ 989,545 $ 988,523 $ 851,723 $ 989,034 $ 851,236 Loans $ 2,727,820 $ 2,637,036 $ 1,978,991 $ 2,682,428 $ 1,975,662 Total Deposits $ 3,526,529 $ 3,270,627 $ 2,464,212 $ 3,398,578 $ 2,446,188 Interest-Bearing $ 2,858,594 $ 2,739,394 $ 2,032,886 $ 2,798,994 $ 2,016,079 DepositsInterest-Bearing $ 121,791 $ 106,843 $ 39,269 $ 114,317 $ 55,596 LiabilitiesTotal Equity $ 591,522 $ 569,696 $ 471,156 $ 580,609 $ 460,911 INCOME STATEMENT DATANet Interest $ 35,895 $ 36,350 $ 29,752 $ 72,245 $ 59,178 IncomeNet InterestIncome Fully Tax $ 36,962 $ 37,409 $ 30,721 $ 74,371 $ 61,122 Equivalent ^(b)Provision for $ 2,965 $ 2,690 $ 230 $ 5,655 $ 1,700 Loan LossesNon-interest $ 8,776 $ 9,095 $ 9,743 $ 17,871 $ 17,379 IncomeNon-interest $ 26,883 $ 27,554 $ 23,492 $ 54,437 $ 47,185 ExpenseNet Income $ 11,924 $ 12,181 $ 12,569 $ 24,105 $ 22,251 PER SHARE DATA Basic andDiluted Net $ 0.87 $ 0.89 $ 1.02 $ 1.76 $ 1.81 Income PerCommon ShareCash DividendsDeclared Per $ 0.52 $ ? $ 0.52 $ 0.52 $ 0.52 Common ShareBook Value Per $ 43.04 $ 42.42 $ 38.88 $ 43.04 $ 38.88 Common ShareTangible BookValue Per Common $ 36.68 $ 35.94 $ 35.46 $ 36.59 $ 36.00 Share ^(c)Basic WeightedAverage Common 13,715 13,740 12,290 13,727 12,286 SharesOutstanding

(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 Six Months Ended June 30, March 31, June 30, June 30, June 30, 2020 2020 2019 2020 2019Return on average 1.10 % 1.21 % 1.66 % 1.16 % 1.47 %assetsReturn on averagecommon shareholder's 8.06 % 8.55 % 10.67 % 8.30 % 9.66 %equityEfficiency ratio 58.78 % 59.25 % 58.06 % 59.02 % 60.11 %Average equity to 13.70 % 14.16 % 15.53 % 13.92 % 15.27 %average assetsNet interest margin ^ 3.97 % 4.13 % 4.33 % 4.05 % 4.32 %(a)Net charge-offs toaverage loans and 0.11 % 0.24 % 0.49 % 0.17 % 0.19 %leasesLoan and lease lossreserve to loans and 0.84 % 0.80 % 1.01 % 0.84 % 1.01 %leasesLoan and lease lossreserve to 101.12 % 119.70 % 133.14 % 101.12 % 133.14 %nonperforming loansNonperforming loans 0.83 % 0.67 % 0.76 % 0.83 % 0.76 %to loans and leasesTier 1 leverage 11.64 % 12.38 % 14.83 % 11.64 % 14.83 %Risk-based capital - 15.44 % 16.19 % 18.65 % 15.44 % 18.65 %Tier 1

(a) Net interest margin is calculated on a tax equivalent basis.

Asset Quality Three Months Ended Six Months Ended June 30, March 31, June 30, June 30, June 30, 2020 2020 2019 2020 2019Accruingloans andleases past $ 15,358 $ 27,037 $ 8,296 $ 15,358 $ 8,296 due 30-89daysAccruingloans andleases past $ 4,438 $ 1,430 $ 683 $ 4,438 $ 683 due 90 daysor moreNonaccrualloans and $ 14,634 $ 12,011 $ 9,985 $ 14,634 $ 9,985 leasesTotaltroubled debt $ 3,899 $ 4,156 $ 4,541 $ 3,899 $ 4,541 restructuringOther real $ 3,577 $ 3,894 $ 498 $ 3,577 $ 498 estate ownedNonperformingloans and $ 26,548 $ 21,491 $ 15,707 $ 26,548 $ 15,707 other realestate ownedTotalnonperforming $ 29,493 $ 24,724 $ 19,040 $ 29,493 $ 19,040 assetsGross $ 1,540 $ 2,904 $ 1,906 $ 4,444 $ 4,015 charge-offsRecoveries $ 797 $ 1,334 $ 966 $ 2,131 $ 2,129 Netcharge-offs/ $ 743 $ 1,570 $ 940 $ 2,313 $ 1,886 (recoveries)

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

June 30, December 31, 2020 2019 (unaudited)ASSETS Cash and due from banks $ 386,507 $ 127,426 Federal funds sold ? 7,500 Securities available-for-sale 907,433 926,717 Loans: Commercial 1,694,376 1,584,447 Residential 657,657 682,077 Consumer 425,601 386,006 2,777,634 2,652,530 (Less) plus: Net deferred loan costs (551 ) 3,860 Allowance for loan losses (23,285 ) (19,943 ) 2,753,798 2,636,447 Restricted stock 15,200 15,394 Accrued interest receivable 17,205 18,523 Premises and equipment, net 63,270 62,576 Bank-owned life insurance 95,013 94,251 Goodwill 78,592 78,592 Other intangible assets 9,829 10,643 Other real estate owned 3,577 3,625 Other assets 37,688 41,556 TOTAL ASSETS $ 4,368,112 $ 4,023,250 LIABILITIES AND SHAREHOLDERS? EQUITY Deposits: Non-interest-bearing $ 681,155 $ 547,189 Interest-bearing: Certificates of deposit exceeding the FDIC 109,548 126,738 insurance limitsOther interest-bearing deposits 2,779,190 2,601,430 3,569,893 3,275,357 Short-term borrowings 100,096 80,119 Other liabilities 79,722 79,193 TOTAL LIABILITIES 3,777,828 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 140,103 139,694 Retained earnings 509,029 492,055 Accumulated other comprehensive income/(loss) 9,515 (7,501 )Less: Treasury shares at cost-2,360,630 in 2020 and (70,369 ) (68,645 )2,313,641 in 2019TOTAL SHAREHOLDERS? EQUITY 590,284 557,608 TOTAL LIABILITIES AND SHAREHOLDERS? EQUITY $ 4,368,112 $ 4,023,250

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME(Dollar amounts in thousands, except per share data)

Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 (unaudited)INTEREST INCOME: Loans, including $ 33,224 $ 27,533 $ 68,258 $ 54,287 related feesSecurities: Taxable 3,624 3,516 7,653 7,197 Tax-exempt 2,008 1,873 3,946 3,740 Other 400 337 802 651 TOTAL INTEREST 39,256 33,259 80,659 65,875 INCOMEINTEREST EXPENSE: Deposits 3,019 3,316 7,549 6,133 Short-term 101 158 368 481 borrowingsOther borrowings 241 33 497 83 TOTAL INTEREST 3,361 3,507 8,414 6,697 EXPENSENET INTEREST 35,895 29,752 72,245 59,178 INCOMEProvision for 2,965 230 5,655 1,700 loan lossesNET INTERESTINCOME AFTER PROVISIONFOR LOAN LOSSES 32,930 29,522 66,590 57,478 NON-INTEREST INCOME:Trust andfinancial 1,288 1,124 2,822 2,328 servicesService chargesand fees on 2,102 2,735 5,100 5,359 deposit accountsOther service 3,869 3,408 7,199 6,522 charges and feesSecurities gains 31 16 225 12 (losses), netGain on sales of 1,205 496 1,903 916 mortgage loansOther 281 1,964 622 2,242 TOTALNON-INTEREST 8,776 9,743 17,871 17,379 INCOMENON-INTEREST EXPENSE:Salaries and 14,323 12,546 30,295 25,301 employee benefitsOccupancy expense 2,162 1,813 4,091 3,628 Equipment expense 2,673 1,751 5,134 3,568 FDIC Expense 49 199 (181 ) 339 Other 7,676 7,183 15,098 14,349 TOTALNON-INTEREST 26,883 23,492 54,437 47,185 EXPENSEINCOME BEFORE 14,823 15,773 30,024 27,672 INCOME TAXESProvision for 2,899 3,204 5,919 5,421 income taxesNET INCOME 11,924 12,569 24,105 22,251 OTHERCOMPREHENSIVE INCOMEChange inunrealized gains/(losses) onsecurities, net 3,130 8,341 16,228 18,565 ofreclassificationsand taxesChange in fundedstatus of postretirement 384 304 788 607 benefits, net oftaxesCOMPREHENSIVE $ 15,438 $ 21,214 $ 41,121 $ 41,423 INCOMEPER SHARE DATA Basic and DilutedEarnings per $ 0.87 $ 1.02 $ 1.76 $ 1.81 ShareWeighted averagenumber of shares 13,715 12,290 13,727 12,286 outstanding (inthousands)