THFF First Financial Corporation

First Financial Corporation (NASDAQ:THFF) today announced results for the fourth quarter of 2022.

• Net income was $16.5 million compared to $7.4 million for the same period of 2021;
• Diluted net income per common share of $1.37 compared to $0.58 for the same period of 2021;
• Return on average assets was 1.34% compared to 0.58% for the three months ended December 31, 2021;
• Credit loss provision was $2.7 million compared to $5.7 million for the fourth quarter 2021; and
• Pre-tax, pre-provision net income was $21.7 million compared to $14.3 million for the same period in 2021.1

The Corporation further reported results for the year ended December 31, 2022:

• Net income was $71.1 million compared to $53.0 million for the same period of 2021;
• Diluted net income per common share of $5.82 compared to $4.02 for the same period of 2021;
• Return on average assets was 1.41% compared to 1.10% for the twelve months ended December 31, 2021;
• Negative provision for credit losses was $2.0 million compared to provision for credit losses of $2.5 million for the twelve months ended December 31, 2021; and
• Pre-tax, pre-provision net income was $84.9 million compared to $68.1 million for the same period in 2021.1

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.

“We are pleased with our fourth quarter and full year results” said Norman L. Lowery, Chairman and Chief Executive Officer. “2022 was a record year for net income. Loan growth continues to be strong which contributed to our seventh straight quarter of net interest income growth.”

Average Total Loans

Average total loans for the fourth quarter of 2022 were $3.02 billion versus $2.63 billion for the comparable period in 2021, an increase of $382 million or 14.5%.

Total Loans Outstanding

Total loans outstanding as of December 31, 2022, were $3.07 billion compared to $2.82 billion as of December 31, 2021, an increase of $252 million or 8.93%. On a linked quarter basis, total loans increased $97.0 million or 3.26% from $2.97 billion as of September 30, 2022.

Average Total Deposits

Average total deposits for the quarter ended December 31, 2022, were $4.38 billion versus $4.31 billion as of December 31, 2021, an increase of $71 million or 1.7%.

Total Deposits

Total deposits were $4.37 billion as of December 31, 2022, compared to $4.41 billion as of December 31, 2021.

Book Value Per Share

Book Value per share was $39.44 at December 31, 2022, compared to $46.13 at December 31, 2021. The decrease was partially driven by the repurchase of 618,263 shares of the Corporation’s common stock.

Shareholder Equity

Shareholder equity at December 31, 2022, was $475.3 million compared to $582.6 million on December 31, 2021. The decrease in shareholder’s equity is reflective of the downturn in the markets which affected the accumulated other comprehensive income/(loss) (“AOCI”) on investments available for sale. AOCI has decreased $138 million in comparison to December 31, 2021.

Tangible Common Equity to Tangible Asset Ratio

The Corporation’s tangible common equity to tangible asset ratio was 7.79% at December 31, 2022, compared to 9.62% at December 31, 2021. The decrease was partially driven by the aforementioned share repurchases.

Net Interest Income

Net interest income for the fourth quarter of 2022 was $43.7 million, compared to $36.8 million reported for the same period of 2021, an increase of $6.8 million or 18.53%.

Net Interest Margin

The net interest margin for the quarter ended December 31, 2022, was 3.81% compared to the 3.08% reported at December 31, 2021. On a linked quarter basis, the net interest margin increased 10 basis points from 3.71% as of September 30, 2022.

Nonperforming Loans

Nonperforming loans as of December 31, 2022, were $13.4 million versus $14.9 million as of December 31, 2021. The ratio of nonperforming loans to total loans and leases was 0.44% as of December 31, 2022, versus 0.53% as of December 31, 2021.

Credit Loss Provision

The provision for credit losses for the three months ended December 31, 2022 was $2.73 million, compared to $5.71 million for the fourth quarter 2021.

Net Charge-Offs

In the fourth quarter of 2022 net charge-offs were $2.4 million compared to $1.8 million in the same period of 2021.

Allowance for Credit Losses

The Corporation’s allowance for credit losses as of December 31, 2022, was $39.8 million compared to $48.3 million as of December 31, 2021. The allowance for credit losses as a percent of total loans was 1.30% as of December 31, 2022, compared to 1.72% as of December 31, 2021.

Non-Interest Income

Non-interest income for the three months ended December 31, 2022 and 2021 was $10.6 million and $10.8 million, respectively.

Non-Interest Expense

Non-interest expense for the three months ended December 31, 2022, was $32.5 million compared to $33.3 million in 2021.

Efficiency Ratio

The Corporation’s efficiency ratio was 58.78% for the quarter ending December 31, 2022, versus 68.37% for the same period in 2021.

Income Taxes

Income tax expense for the three months ended December 31, 2022, was $2.5 million versus $1.2 million for the same period in 2021. The effective tax rate for 2022 was 19.0% compared to 19.2% for 2021.

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 78 banking centers in Illinois, Indiana, Kentucky and Tennessee. Additional information is available at www.first-online.bank.

Investor Contact:Rodger A. McHargueChief Financial OfficerP: 812-238-6334E: rmchargue@first-online.com

		Three Months Ended									Year Ended
		December 31,			September 30,			December 31,			December 31,				December 31,
		2022			2022			2021			2022				2021
END OF PERIOD BALANCES
Assets		$	4,989,281		$	5,009,339		$	5,175,099		$	4,989,281			$	5,175,099
Deposits		$	4,368,871		$	4,407,506		$	4,409,569		$	4,368,871			$	4,409,569
Loans, including net deferred loan costs		$	3,067,438		$	2,970,475		$	2,815,895		$	3,067,438			$	2,815,895
Allowance for Credit Losses		$	39,779		$	39,495		$	48,305		$	39,779			$	48,305
Total Equity		$	475,284		$	438,626		$	582,576		$	475,284			$	582,576
Tangible Common Equity(a)		$	381,585		$	344,617		$	488,417		$	381,585			$	488,417
AVERAGE BALANCES
Total Assets		$	4,930,611		$	5,048,849		$	5,086,702		$	5,043,987			$	4,814,350
Earning Assets		$	4,690,594		$	4,774,080		$	4,875,039		$	4,800,481			$	4,611,741
Investments		$	1,393,753		$	1,436,179		$	1,410,351		$	1,432,681			$	1,278,498
Loans		$	3,015,903		$	2,917,457		$	2,633,559		$	2,884,053			$	2,602,344
Total Deposits		$	4,383,505		$	4,406,187		$	4,312,115		$	4,408,510			$	4,037,876
Interest-Bearing Deposits		$	3,509,416		$	3,515,568		$	3,823,428		$	3,517,468			$	3,320,112
Interest-Bearing Liabilities		$	84,210		$	95,098		$	110,490		$	97,134			$	107,367
Total Equity		$	438,767		$	481,225		$	589,197		$	494,837			$	597,369
INCOME STATEMENT DATA
Net Interest Income		$	43,658		$	43,104		$	36,832		$	165,042			$	143,401
Net Interest Income Fully Tax Equivalent(b)		$	44,724		$	44,402		$	37,953		$	169,699			$	147,765
Provision for Credit Losses		$	2,725		$	1,050		$	5,710		$	(2,025	)		$	2,466
Non-interest Income		$	10,568		$	12,140		$	10,767		$	46,716			$	42,084
Non-interest Expense		$	32,501		$	31,504		$	33,312		$	126,023			$	117,406
Net Income		$	16,521		$	18,051		$	7,398		$	71,109			$	52,987
PER SHARE DATA
Basic and Diluted Net Income Per Common Share		$	1.37		$	1.50		$	0.58		$	5.82			$	4.02
Cash Dividends Declared Per Common Share		$	0.74		$	—		$	0.63		$	1.28			$	1.16
Book Value Per Common Share		$	39.44		$	36.49		$	46.13		$	39.44			$	46.13
Tangible Book Value Per Common Share(c)		$	28.67		$	33.27		$	38.66		$	31.66			$	38.67
Basic Weighted Average Common Shares Outstanding			12,037			12,029			12,804			12,211				13,190

 

(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,
		2022		2022		2021		2022		2021
Return on average assets		1.34	%	1.43	%	0.58	%	1.41	%	1.10	%
Return on average common shareholder's equity		15.06	%	15.00	%	5.02	%	14.37	%	8.87	%
Efficiency ratio		58.78	%	55.72	%	68.37	%	58.23	%	61.84	%
Average equity to average assets		8.90	%	9.53	%	11.58	%	9.81	%	12.41	%
Net interest margin(a)		3.81	%	3.71	%	3.08	%	3.54	%	3.20	%
Net charge-offs to average loans and leases		0.32	%	0.19	%	0.27	%	0.23	%	0.10	%
Credit loss reserve to loans and leases		1.30	%	1.33	%	1.72	%	1.30	%	1.72	%
Credit loss reserve to nonperforming loans		289.51	%	276.59	%	321.78	%	296.79	%	324.11	%
Nonperforming loans to loans and leases		0.44	%	0.48	%	0.53	%	0.44	%	0.53	%
Tier 1 leverage		10.78	%	10.33	%	9.83	%	10.78	%	9.83	%
Risk-based capital - Tier 1		13.58	%	13.69	%	14.37	%	13.58	%	14.37	%

(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,
		2022			2022			2021			2022			2021
Accruing loans and leases past due 30-89 days		$	28,875		$	18,626		$	17,096		$	28,875		$	17,096
Accruing loans and leases past due 90 days or more		$	1,119		$	1,185		$	515		$	1,119		$	515
Nonaccrual loans and leases		$	8,481		$	9,147		$	9,590		$	8,481		$	9,590
Total troubled debt restructuring		$	3,803		$	3,947		$	4,799		$	3,803		$	4,799
Other real estate owned		$	337		$	214		$	108		$	337		$	108
Nonperforming loans and other real estate owned		$	13,740		$	14,493		$	15,012		$	13,740		$	15,012
Total nonperforming assets		$	16,726		$	17,604		$	18,371		$	16,726		$	18,371
Gross charge-offs		$	4,388		$	5,653		$	3,113		$	15,706		$	8,216
Recoveries		$	1,947		$	2,630		$	1,312		$	9,205		$	5,569
Net charge-offs/(recoveries)		$	2,441		$	3,023		$	1,801		$	6,501		$	2,647

Non-GAAP Reconciliations		Three Months Ended December 31,
		2022			2021
($in thousands, except EPS)
Income before Income Taxes		$	19,000		$	8,577
Provision for credit losses			2,725			5,710
Provision for unfunded commitments			—			—
Pre-tax, Pre-provision Income		$	21,725		$	14,287

Non-GAAP Reconciliations		Year Ended December 31,
		2022				2021
($ in thousands, except EPS)
Income before Income Taxes		$	87,760			$	65,613
Provision for credit losses			(2,025	)			2,466
Provision for unfunded commitments			(850	)			—
Pre-tax, Pre-provision Income		$	84,885			$	68,079

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

		December 31,				December 31,
		2022				2021
		(unaudited)
ASSETS
Cash and due from banks		$	220,039			$	682,807
Federal funds sold			9,374				308
Securities available-for-sale			1,332,947				1,364,734
Loans:
Commercial			1,798,260				1,674,066
Residential			673,464				664,509
Consumer			588,539				474,026
			3,060,263				2,812,601
(Less) plus:
Net deferred loan costs			7,175				3,294
Allowance for credit losses			(39,779	)			(48,305	)
			3,027,659				2,767,590
Restricted stock			15,378				16,200
Accrued interest receivable			21,288				16,946
Premises and equipment, net			66,147				69,522
Bank-owned life insurance			115,704				116,997
Goodwill			86,985				86,135
Other intangible assets			6,714				8,024
Other real estate owned			337				108
Other assets			86,709				45,728
TOTAL ASSETS		$	4,989,281			$	5,175,099
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Non-interest-bearing		$	857,920			$	914,933
Interest-bearing:
Certificates of deposit exceeding the FDIC insurance limits			50,608				74,015
Other interest-bearing deposits			3,460,343				3,420,621
			4,368,871				4,409,569
Short-term borrowings			70,875				93,374
FHLB advances			9,589				15,937
Other liabilities			64,662				73,643
TOTAL LIABILITIES			4,513,997				4,592,523
Shareholders’ equity
Common stock, $.125 stated value per share;
Authorized shares-40,000,000
Issued shares-16,114,992 in 2022 and 16,096,313 in 2021
Outstanding shares-12,051,964 in 2022 and 12,629,893 in 2021			2,012				2,009
Additional paid-in capital			143,185				141,979
Retained earnings			614,829				559,139
Accumulated other comprehensive income/(loss)			(139,983	)			(2,426	)
Less: Treasury shares at cost-4,063,028 in 2022 and 3,466,420 in 2021			(144,759	)			(118,125	)
TOTAL SHAREHOLDERS’ EQUITY			475,284				582,576
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$	4,989,281			$	5,175,099

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

		Year Ended December 31,
		2022				2021				2020
		(unaudited)
INTEREST INCOME:
Loans, including related fees		$	146,295			$	128,000			$	137,241
Securities:
Taxable			21,014				13,110				12,979
Tax-exempt			9,974				8,762				7,952
Other			6,018				2,326				2,313
TOTAL INTEREST INCOME			183,301				152,198				160,485
INTEREST EXPENSE:
Deposits			16,743				8,158				12,801
Short-term borrowings			1,243				387				568
Other borrowings			273				252				770
TOTAL INTEREST EXPENSE			18,259				8,797				14,139
NET INTEREST INCOME			165,042				143,401				146,346
Provision for credit losses			(2,025	)			2,466				10,528
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES			167,067				140,935				135,818
NON-INTEREST INCOME:
Trust and financial services			5,155				5,255				5,423
Service charges and fees on deposit accounts			11,842				10,089				10,256
Other service charges and fees			18,604				18,212				15,644
Securities gains (losses), net			3				114				233
Gain on sales of mortgage loans			1,994				5,003				6,626
Other			9,118				3,411				4,294
TOTAL NON-INTEREST INCOME			46,716				42,084				42,476
NON-INTEREST EXPENSE:
Salaries and employee benefits			65,555				64,474				61,931
Occupancy expense			9,764				8,774				8,202
Equipment expense			12,391				10,174				10,568
FDIC Expense			2,327				1,294				316
Other			35,986				32,690				31,741
TOTAL NON-INTEREST EXPENSE			126,023				117,406				112,758
INCOME BEFORE INCOME TAXES			87,760				65,613				65,536
Provision for income taxes			16,651				12,626				11,692
NET INCOME			71,109				52,987				53,844
OTHER COMPREHENSIVE INCOME (LOSS)
Change in unrealized gains/(losses) on securities, net of reclassifications and taxes			(144,579	)			(18,148	)			19,269
Change in funded status of post retirement benefits, net of taxes			7,022				6,298				(2,004	)
COMPREHENSIVE INCOME (LOSS)		$	(66,448	)		$	41,137			$	71,109
PER SHARE DATA
Basic and Diluted Earnings per Share		$	5.82			$	4.02			$	3.93
Weighted average number of shares outstanding (in thousands)			12,211				13,190				13,716