First Financial Corporation Reports 3rd Quarter 2012 Results

TERRE HAUTE, IN--(Marketwire - Oct 30, 2012) -  First Financial Corporation (NASDAQ: THFF) today announced results for the nine and three months ended September 30, 2012. Net income of $24.2 and $8.1 million for the nine and three months, respectively, compares to $27.0 and $9.8 million for the same periods of 2011. Return on assets for the nine and three months ended September 30, 2012 was 1.12% and 1.16%, respectively, compared to 1.44% and 1.57% for the nine and three months ended September 30, 2011. Results for the first nine months of 2012 include income and expenses associated with the purchase of Freestar Bank on December 30, 2011 and were not reflected in the results for the first nine months of 2011.

Net interest income for the third quarter of 2012 was $27.4 million, an increase of 10.0% over the $24.9 million reported for the same period of 2011. Net interest income for the nine months ended September 30, 2012 was $82.2 million compared to the $74.8 million reported for the same period of 2011, an increase of $7.4 million. The net interest margin at September 30, 2012 was 4.41%, compared to the 4.52% reported at September 30, 2011.

The provision for loan losses for the three months ended September 30, 2012 was $2.6 million compared to the $1.4 million provision for the third quarter of 2011. For the nine months ended September 30, 2012 and 2011, the provision expense was $7.3 and $3.9 million, respectively. 

Non-interest income for the three months ended September 30, 2012 and 2011 was $9.7 and $8.9 million, respectively, an 8.7% increase. Gains from the sale of mortgage loans comprised $0.9 million of the increase. For the nine months ended September 30, 2012, non-interest income increased $3.9 million to $29.0 million from the $25.1 million reported for the same period of 2011.

Non-interest expense for the three months ended September 30, 2012 was $23.0 million compared to $18.6 million in 2011. For the nine months ended September 30, 2012, non-interest expense was $69.5 million compared to $56.9 for the nine months ended September 30, 2011. 2012 non-interest expense contains salary, benefits and one-time expenses related to the acquisition of Freestar Bank. In addition, costs related to the opening of four banking centers by First Financial Bank during the quarter resulted in expenses that did not exist during the same quarter of 2011.

Total loans at September 30, 2012 of $1.86 billion compare to the $1.66 billion reported during the same period a year ago. Deposits increased by $332.7 million to $2.26 billion. These increases were primarily driven by the Freestar Bank acquisition. 

Book value per share was $27.86, a 2.77% increase from the $27.11 at September 30, 2011. Shareholders' equity increased 3.42% to $368.8 million from $356.6 million on September 30, 2011.

First Financial Corporation is the holding company for First Financial Bank N.A. in Indiana and Illinois, The Morris Plan Company of Terre Haute and Forrest Sherer Inc. in Indiana.

CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands, except per share data)				September 30,				December 31,
				2012				2011
				(Unaudited)
ASSETS
Cash and due from banks				$	63,638			$	134,280
Federal funds sold and short-term investments					55,773				11,725
Securities available-for-sale					656,506				666,287
Loans:					-				-
	Commercial				1,078,449				1,099,324
	Residential				507,446				505,600
	Consumer				273,196				289,717
					1,859,091				1,894,641
Less:
	Unearned Income				(930	)			(962	)
	Allowance for loan losses				(21,457	)			(19,241	)
					1,836,704				1,874,438
Restricted Stock					21,296				22,282
Accrued interest receivable					12,785				12,947
Premises and equipment, net					44,722				40,105
Bank-owned life insurance					76,280				82,646
Goodwill					37,612				37,612
Other intangible assets					4,216				5,142
Other real estate owned					8,670				4,964
FDIC Indemnification asset					1,602				2,384
Other assets					59,437				59,964
TOTAL ASSETS				$	2,879,241			$	2,954,776
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
	Noninterest-bearing			$	430,619			$	435,236
	Interest-bearing:				-				-
		Certificates of deposit of $100 or more			233,814				242,001
		Other interest-bearing deposits			1,595,237				1,597,262
					2,259,670				2,274,499
Short-term borrowings					43,997				100,022
Other borrowings					125,863				146,427
Other liabilities					80,950				86,867
TOTAL LIABILITIES					2,510,480				2,607,815
Shareholders' equity
	Common stock, $.125 stated value per share;
		Authorized shares-40,000,000
		Issued shares-14,490,609 in 2012 and 14,450,966 in 2011
		Outstanding shares-13,237,523 in 2012 and 13,197,880 in 2011			1,808				1,806
	Additional paid-in capital				69,692				69,328
	Retained earnings				336,147				318,130
	Accumulated other comprehensive income (loss)				(7,077	)			(10,494	)
Treasury shares at cost-1,253,086 in 2012 and 2011					(31,809	)			(31,809	)
TOTAL SHAREHOLDERS' EQUITY					368,761				346,961
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY				$	2,879,241			$	2,954,776

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Dollar amounts in thousands, except per share data)
				Three Months Ended								Nine Months Ended
				September 30,								September 30,
				2012				2011				2012				2011
				(unaudited)				(unaudited)				(unaudited)				(unaudited)
INTEREST INCOME:
	Loans, including related fees			$	24,725			$	22,943			$	75,149			$	68,903
	Securities:
		Taxable			3,308				4,016				10,339				12,532
		Tax-exempt			1,827				1,712				5,442				5,075
	Other				568				479				1,781				1,426
TOTAL INTEREST INCOME					30,428				29,150				92,711				87,936
INTEREST EXPENSE:
Deposits					1,881				2,974				6,714				9,339
Short-term borrowings					33				56				116				151
Other borrowings					1,108				1,216				3,648				3,628
TOTAL INTEREST EXPENSE					3,022				4,246				10,478				13,118
NET INTEREST INCOME					27,406				24,904				82,233				74,818
Provision for loan losses					2,559				1,360				7,304				3,894
NET INTEREST INCOME AFTER PROVISION
	FOR LOAN LOSSES				24,847				23,544				74,929				70,924
NON-INTEREST INCOME:
Trust and financial services					1,413				1,002				4,332				3,530
Service charges and fees on deposit accounts					2,560				2,305				7,166				6,808
Other service charges and fees					2,506				2,142				7,237				6,223
Securities gains/(losses), net					17				-				677				7
Total impairment losses					-				(13	)			(11	)			(110	)
		Loss recognized in other comprehensive loss
		Net impairment loss recognized in earnings			-				(13	)			(11	)			(110	)
Insurance commissions					1,736				1,935				5,426				5,328
Gain on sales of mortgage loans					1,253				406				2,970				1,144
Other					203				1,133				1,159				2,168
TOTAL NON-INTEREST INCOME					9,688				8,910				28,956				25,098
NON-INTEREST EXPENSE:
Salaries and employee benefits					13,695				11,475				42,005				34,430
Occupancy expense					1,465				1,171				4,370				3,624
Equipment expense					1,335				1,079				4,016				3,308
FDIC Expense					494				161				1,449				1,440
Other					5,975				4,667				17,646				14,113
TOTAL NON-INTEREST EXPENSE					22,964				18,553				69,486				56,915
INCOME BEFORE INCOME TAXES					11,571				13,901				34,399				39,107
Provision for income taxes					3,480				4,087				10,160				12,073
NET INCOME					8,091				9,814				24,239				27,034
OTHER COMPREHENSIVE INCOME
Change in unrealized gains/losses on securities, net of reclassifications					3,123				6,322				3,763				21,828
Tax effect					(1,249	)			(2,529	)			(1,505	)			(8,731	)
					1,874				3,793				2,258				13,097
Change in funded status of post retirement benefits					645				505				1,932				1,513
Tax effect					(258	)			(202	)			(773	)			(605	)
					387				303				1,159				908
TOTAL OTHER COMPREHENSIVE INCOME					2,261				4,096				3,417				14,005
COMPREHENSIVE INCOME				$	10,352			$	13,910			$	27,656			$	41,039
PER SHARE DATA
Basic and Diluted					0.61				0.75				1.83				2.06
Dividends per Share					-				-				0.47				0.47
Weighted average number of shares outstanding (in thousands)					13,238				13,152				13,233				13,152

Key Ratios		For the nine months ended
		September 30,				September 30,
		2012				2011
Return on average assets			1.12	%			1.44	%
Return on average common shareholder's equity			9.06	%			10.65	%
Average common shareholder's equity to average assets			12.86	%			13.89	%
End of period tangible common equity to tangible assets			11.52	%			10.45	%
Book value per share		$	27.86			$	27.11
Tangible book value per share		$	24.70			$	23.86
Risk-based capital - Tier 1			15.15	%			17.77	%
Risk-based capital - Total			16.12	%			18.92	%
Net interest margin			4.41	%			4.52	%
Efficiency Ratio			60.04	%			54.74	%
Net charge-offs to average loans and leases			0.33	%			0.18	%
Loan and lease loss reserve to loans and leases			1.15	%			0.99	%
Nonperforming assets to loans and leases			2.93	%			3.10	%

Asset Quality		For the nine months ended
		September 30,			September 30,
		2012			2011
Accruing loans and leases past due 90 days or more		$	3,772		$	2,992
Nonaccrual loans and leases			41,913			43,389
Other real estate owned			8,670			4,964
Total nonperforming assets		$	54,355		$	51,345