First Financial Corporation Reports 2012 Results

TERRE HAUTE, IN--(Marketwire - Feb 8, 2013) - First Financial Corporation (NASDAQ: THFF) today announced results for the three months and year ended December 31, 2012. Net income of $32.8 and $8.6 million for the twelve and three months, respectively, compares to $37.2 and $10.2 million for the same periods of 2011. Return on assets for the twelve and three months ended December 31, 2012 was 1.13% and 1.14%, respectively, compared to 1.49% and 1.61% for the twelve and three months ended December 31, 2011. Results for 2012 include income and expenses incurred in 2012 associated with the purchase of Freestar Bank on December 30, 2011.

Net interest income for the last quarter of 2012 was $26.7 million, an increase of 9.45% over the $24.4 million reported for the same period of 2011. Net interest income for the year ended December 31, 2012 was $108.9 million compared to the $99.2 million reported for the same period of 2011, an increase of $9.7 million. The net interest margin at December 31, 2012 was 4.30%, compared to 4.50% reported at December 31, 2011.

The provision for loan losses for the three months ended December 31, 2012 was $1.5 million compared to the $1.9 million provision for the fourth quarter of 2011. For the year ended December 31, 2012 and 2011, the provision expense was $8.8 and $5.8 million, respectively. 

Non-interest income for the three months ended December 31, 2012 and 2011 was $10.6 and $8.2 million, respectively, a 28.5% increase. Gains from the sale of mortgage loans comprised $0.8 million of the increase. For the year ended December 31, 2012, non-interest income increased $6.2 million to $39.5 million from the $33.3 million reported for the same period of 2011.

Non-interest expense for the three months ended December 31, 2012 was $23.6 million compared to $18.3 million in 2011. For the year ended December 31, 2012, non-interest expense was $93.1 million compared to $75.2 for the year ended December 31, 2011. 2012 non-interest expense contains the additional salary, benefits and one-time expenses related to the acquisition of Freestar Bank and the opening of four banking centers by First Financial Bank which did not exist during 2011.

Total loans at December 31, 2012 of $1.86 billion compare to the $1.89 billion reported during the same period a year ago. Deposits increased by $1.6 million to $2.27 billion. The allowance for loan losses increased 14.1% to $22.0 million from the $19.2 million at December 31, 2011. Net charge-offs for 2012 were down $0.7 million from 2011.

Book value per share was $27.93 at year end 2012, a 5.9% increase from the $26.38 at December 31, 2011. Shareholders' equity increased 7.3% to $372.1 million from $347.0 million on December 31, 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
			December 31,
(Dollar amounts in thousands, except per share data)			2012				2011
ASSETS
Cash and due from banks			$	87,230			$	134,280
Federal funds sold				20,800				11,725
Securities available-for-sale				691,000				666,287
Loans, net of allowance of $21,958 in 2012 and $19,241 in 2011				1,829,978				1,874,438
Restricted Stock				21,292				22,282
Accrued interest receivable				12,024				12,947
Premises and equipment, net				47,308				40,105
Bank-owned life insurance				77,295				82,646
Goodwill				37,612				36,897
Other intangible assets				3,893				5,142
Other real estate owned				7,722				4,964
FDIC Indemnification Asset				2,632				2,384
Other assets				56,622				59,964
	TOTAL ASSETS		$	2,895,408			$	2,954,061
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Non-interest-bearing			$	465,954			$	435,236
Interest-bearing:
	Certificates of deposit of $100 or more			213,610				242,001
	Other interest-bearing deposits			1,596,570				1,597,262
				2,276,134				2,274,499
Short-term borrowings				40,551				100,022
Other borrowings				119,705				146,427
Other liabilities				86,896				86,152
	TOTAL LIABILITIES			2,523,286				2,607,100
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-13,287,348 in 2012 and 13,197,880 in 2011			1,808				1,806
Additional paid-in capital				69,989				69,328
Retained earnings				338,342				318,130
Accumulated other comprehensive income (loss)				(7,472	)			(10,494	)
Less: Treasury shares at cost-1,203,261 in 2012 and 1,253,086 in 2011				(30,545	)			(31,809	)
	TOTAL SHAREHOLDERS' EQUITY			372,122				346,961
	TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$	2,895,408			$	2,954,061

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
				Years Ended December 31,
(Dollar amounts in thousands, except per share data)				2012				2011
INTEREST AND DIVIDEND INCOME:
Loans, including related fees				$	99,196			$	91,392
	Securities:
	Taxable				13,542				16,161
	Tax-exempt				7,246				6,779
Other					2,321				2,009
		TOTAL INTEREST AND DIVIDEND INCOME			122,305				116,341
INTEREST EXPENSE:
Deposits					8,520				12,127
Short-term borrowings					140				187
Other borrowings					4,733				4,833
		TOTAL INTEREST EXPENSE			13,393				17,147
		NET INTEREST INCOME			108,912				99,194
Net Provision for loan losses					8,773				5,755
		NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES			100,139				93,439
NON-INTEREST INCOME:
Trust and financial services					5,804				4,544
Service charges and fees on deposit accounts					9,742				8,995
Other service charges and fees					9,710				8,289
Securities gain, net					886				6
Other-than-temporary loss
	Total impairment loss				(11	)			(110	)
	Loss recognized in other comprehensive income				-				-
		Net impairment loss recognized in earnings			(11	)			(110	)
Insurance commissions					7,422				7,347
Gain on sale of mortgage loans					4,590				1,957
Other					1,404				2,312
		TOTAL NON-INTEREST INCOME			39,547				33,340
NON-INTEREST EXPENSES:
Salaries and employee benefits					56,211				45,362
Occupancy expense					5,746				4,777
Equipment expense					5,489				4,352
Federal Deposit Insurance					1,949				1,804
Other					23,661				18,892
		TOTAL NON-INTEREST EXPENSE			93,056				75,187
		INCOME BEFORE INCOME TAXES			46,630				51,592
Provision for income taxes					13,818				14,397
		NET INCOME		$	32,812			$	37,195
OTHER COMPREHENSIVE INCOME
		Change in unrealized gains/losses on securities, net of reclassifications and taxes		$	691			$	8,857
		Change in funded status of post retirement benefits, net of taxes		$	2,331			$	(9,982	)
		COMPREHENSIVE INCOME		$	35,834			$	36,070
EARNINGS PER SHARE:
		BASIC AND DILUTED		$	2.48			$	2.83
Weighted average number of shares outstanding (in thousands)					13,240				13,163

Key Ratios		For the year ended
		December 31,				December 31,
		2012				2011
Return on average assets			1.13	%			1.49	%
Return on average common shareholder's equity			9.02	%			10.90	%
Average common shareholder's equity to average assets			12.84	%			12.32	%
End of period tangible common equity to tangible assets			11.58	%			10.47	%
Book value per share		$	28.01			$	26.38
Tangible book value per share		$	24.88			$	23.19
Risk-based capital - Tier 1			14.78	%			13.96	%
Risk-based capital - Total			15.67	%			14.71	%
Net interest margin			4.30	%			4.50	%
Efficiency Ratio			60.24	%			54.47	%
Net charge-offs to average loans and leases			0.45	%			0.33	%
Loan and lease loss reserve to loans and leases			1.19	%			1.15	%
Nonperforming assets to loans and leases			2.53	%			2.38	%
Asset Quality		For the year ended
		December 31,				December 31,
		2012				2011
Accruing loans and leases past due 90 days or more		$	3,362			$	2,047
Nonaccrual loans and leases			35,794				38,102
Other real estate owned			7,722				4,964
Total nonperforming assets		$	46,878			$	45,113