GlobeNewswire Inc | Feb 2, 2021 01:30PM EST

February 02, 2021

TERRE HAUTE, Ind., Feb. 02, 2021 (GLOBE NEWSWIRE) -- 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 LoansAverage 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 OutstandingTotal 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 DepositsAverage 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 DepositsTotal 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 ShareBook Value per share was $44.03 at December 31, 2020, compared to $40.58 at December 31, 2019, a 9.28% increase.

Shareholder EquityShareholder 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 RatioThe Corporations tangible common equity to tangible asset ratio was 11.40% at December 31, 2020, compared to 11.91% at December 31, 2019.

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

Nonperforming LoansNonperforming 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 ProvisionIn 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-OffsNet 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 LossesIn 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 Corporations 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 IncomeNon-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 ExpenseNon-interest expense for the three months ended December 31, 2020, was $31.2 million compared to $29.8 million in 2019.

Efficiency RatioThe Corporations efficiency ratio was 60.60% for the quarter ending December 31, 2020, versus 58.43% for the same period in 2019.

Income TaxesIncome 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 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 December 31, September 30, December 31, December 31, December 31, 2020 2020 2019 2020 2019END OF PERIOD BALANCESAssets $ 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, includingnet deferred $ 2,610,294 $ 2,753,493 $ 2,656,390 $ 2,610,294 $ 2,656,390 loan costsAllowance for $ 47,052 $ 26,960 $ 19,943 $ 47,052 $ 19,943 Credit LossesTotal Equity $ 596,992 $ 607,095 $ 557,608 $ 596,992 $ 557,608 Tangible Common $ 509,428 $ 519,098 $ 468,373 $ 509,428 $ 468,373 Equity ^(a) 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 $ 3,005,337 $ 2,887,575 $ 3,072,566 $ 2,872,725 $ 2,504,885 DepositsInterest-Bearing $ 98,922 $ 108,236 $ 118,605 $ 108,948 $ 85,704 LiabilitiesTotal Equity $ 610,879 $ 603,067 $ 575,908 $ 593,791 $ 497,329 INCOME STATEMENT DATANet Interest $ 37,570 $ 36,531 $ 38,475 $ 146,346 $ 131,652 IncomeNet InterestIncome Fully Tax $ 38,606 $ 37,612 $ 39,594 $ 150,590 $ 135,770 Equivalent ^(b)Provision for $ 448 $ 4,425 $ 1,500 $ 10,528 $ 4,700 Loan LossesNon-interest $ 12,866 $ 11,739 $ 11,327 $ 42,476 $ 38,452 IncomeNon-interest $ 31,191 $ 27,130 $ 29,754 $ 112,758 $ 104,348 ExpenseNet Income $ 15,739 $ 14,000 $ 14,364 $ 53,844 $ 48,872 PER SHARE DATA Basic andDiluted Net $ 1.15 $ 1.02 $ 1.05 $ 3.93 $ 3.80 Income PerCommon ShareCash DividendsDeclared Per $ 0.53 $ ? $ 0.52 $ 1.05 $ 1.04 Common ShareBook Value Per $ 44.03 $ 44.27 $ 40.58 $ 44.03 $ 40.58 Common ShareTangible BookValue Per Common $ 37.64 $ 37.56 $ 35.46 $ 37.57 $ 34.08 Share ^(c)Basic WeightedAverage Common 13,695 13,715 13,726 13,716 12,865 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 Year Ended December September December December December 31, 30, 31, 31, 31, 2020 2020 2019 2020 2019Return on average assets 1.39 % 1.28 % 1.42 % 1.25 % 1.42 %Return on average common 10.31 % 9.29 % 9.98 % 9.07 % 9.83 %shareholder's equityEfficiency ratio 60.60 % 54.97 % 58.43 % 58.40 % 59.89 %Average equity to average 13.48 % 13.77 % 14.25 % 13.77 % 14.46 %assetsNet interest margin ^(a) 4.11 % 3.99 % 4.37 % 4.05 % 4.25 %Net charge-offs to average 0.05 % 0.11 % 0.20 % 0.13 % 0.23 %loans and leasesLoan and lease loss reserve to 1.80 % 0.98 % 0.75 % 1.80 % 0.75 %loans and leasesLoan and lease loss reserve to 214.88 % 113.89 % 130.01 % 214.88 % 130.01 %nonperforming loansNonperforming loans to loans 0.84 % 0.86 % 0.58 % 0.84 % 0.58 %and leasesTier 1 leverage 11.24 % 11.81 % 12.04 % 11.24 % 12.04 %Risk-based capital - Tier 1 16.11 % 15.70 % 15.51 % 16.11 % 15.51 %

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

Asset Quality Three Months Ended Year Ended December 31, September December 31, December 31, December 31, 30, 2020 2020 2019 2020 2019Accruingloans andleases past $ 17,309 $ 13,490 $ 24,040 $ 17,309 $ 24,040 due 30-89daysAccruingloans andleases past $ 2,324 $ 2,948 $ 1,610 $ 2,324 $ 1,610 due 90 daysor moreNonaccrualloans and $ 15,367 $ 16,628 $ 9,535 $ 15,367 $ 9,535 leasesTotaltroubled debt $ 4,206 $ 4,097 $ 4,194 $ 4,206 $ 4,194 restructuringOther real $ 1,012 $ 3,577 $ 3,625 $ 1,012 $ 3,625 estate ownedNonperformingloans and $ 22,909 $ 27,138 $ 18,964 $ 22,909 $ 18,964 other realestate ownedTotalnonperforming $ 26,045 $ 30,174 $ 22,583 $ 26,045 $ 22,583 assetsGross $ 1,954 $ 1,998 $ 3,456 $ 8,396 $ 10,673 charge-offsRecoveries $ 1,538 $ 1,248 $ 2,100 $ 4,917 $ 5,480 Netcharge-offs/ $ 416 $ 750 $ 1,356 $ 3,479 $ 5,193 (recoveries)

CONSOLIDATED BALANCE SHEETS(Dollar amounts in thousands, except per share data) December 31, December 31, 2020 2019 (unaudited)ASSETS Cash and due from banks $ 657,470 $ 127,426 Federal funds sold 301 7,500 Securities available-for-sale 1,020,744 926,717 Loans: Commercial 1,521,711 1,584,447 Residential 604,652 682,077 Consumer 479,750 386,006 2,606,113 2,652,530 (Less) plus: Net deferred loan costs 4,181 3,860 Allowance for credit losses (47,052 ) (19,943 ) 2,563,242 2,636,447 Restricted stock 14,812 15,394 Accrued interest receivable 16,957 18,523 Premises and equipment, net 62,063 62,576 Bank-owned life insurance 95,849 94,251 Goodwill 78,592 78,592 Other intangible assets 8,972 10,643 Other real estate owned 1,012 3,625 Other assets 37,530 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 107,764 126,738 insurance limitsOther interest-bearing deposits 2,915,487 2,601,430 3,755,945 3,275,357 Short-term borrowings 116,061 80,119 Other liabilities 82,687 79,193 TOTAL LIABILITIES 3,960,552 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 2019Outstanding shares-13,558,511 in 2020 and 2,007 2,005 13,741,825 in 2019Additional paid-in capital 140,820 139,694 Retained earnings 521,103 492,055 Accumulated other comprehensive income/(loss) 9,764 (7,501 )Less: Treasury shares at cost-2,516,643 in 2020 and (76,702 ) (68,645 )2,313,641 in 2019TOTAL SHAREHOLDERS? EQUITY 596,992 557,608 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, 2020 2019 2018 (unaudited)INTEREST INCOME: Loans, including related fees $ 137,241 $ 124,788 $ 100,541 Securities: Taxable 13,625 15,191 16,942 Tax-exempt 7,952 7,674 7,455 Other 1,667 1,468 1,286 TOTAL INTEREST INCOME 160,485 149,121 126,224 INTEREST EXPENSE: Deposits 12,801 15,711 9,032 Short-term borrowings 568 1,105 501 Other borrowings 770 653 112 TOTAL INTEREST EXPENSE 14,139 17,469 9,645 NET INTEREST INCOME 146,346 131,652 116,579 Provision for loan losses 10,528 4,700 5,768 NET INTEREST INCOME AFTER PROVISIONFOR LOAN LOSSES 135,818 126,952 110,811 NON-INTEREST INCOME: Trust and financial services 5,423 5,036 5,286 Service charges and fees on 10,256 11,795 11,733 deposit accountsOther service charges and fees 15,644 14,012 13,012 Securities gains (losses), net 233 44 2 Gain on sales of mortgage loans 6,626 2,573 1,829 Other 4,294 4,992 6,344 TOTAL NON-INTEREST INCOME 42,476 38,452 38,206 NON-INTEREST EXPENSE: Salaries and employee benefits 61,931 54,827 50,658 Occupancy expense 8,202 7,600 7,030 Equipment expense 10,568 8,244 6,827 FDIC Expense 316 693 929 Other 31,741 32,984 25,845 TOTAL NON-INTEREST EXPENSE 112,758 104,348 91,289 INCOME BEFORE INCOME TAXES 65,536 61,056 57,728 Provision for income taxes 11,692 12,184 11,145 NET INCOME 53,844 48,872 46,583 OTHER COMPREHENSIVE INCOME Change in unrealized gains/(losses) on securities, net of 19,269 20,998 (8,363 )reclassifications and taxesChange in funded status of post (2,004 ) (5,045 ) (387 )retirement benefits, net of taxesCOMPREHENSIVE INCOME $ 71,109 $ 64,825 $ 37,833 PER SHARE DATA Basic and Diluted Earnings per $ 3.93 $ 3.80 $ 3.80 ShareWeighted average number of shares 13,716 12,865 12,256 outstanding (in thousands)