First Financial Corporation Reports 2015 Results

TERRE HAUTE, IN--(Marketwired - February 08, 2016) - First Financial Corporation (NASDAQ: THFF) today announced results for the fourth quarter of 2015 and the year ended December 31, 2015. Net income for the three months ending December 31, 2015 was $7.1 million compared to $9.2 million for the same period of 2014. The variance in income was, in part, driven by higher pension expense partially due to increased benefit plan cost from the use of a lower discount rate and the use of the updated mortality tables. Diluted net income per common share for the three month period ended December 31, 2015 was $0.56 compared to $0.71 for the comparable period of 2014.

The Corporation further reported net income of $30.2 million for the twelve months ended December 31, 2015 versus $33.8 million for the comparable period of 2014. The full year variance was also impacted by the pension expense discussed previously. Diluted net income per common share reported was $2.35 for the twelve months ended December 31, 2015 versus $2.55 for the comparable period of 2014. Return on assets for the twelve months ended December 31, 2015 was 1.01% compared to 1.12% for the twelve months ended December 31, 2014.

Book value per share was $32.21 at December 31, 2015, a 5.75% increase from the $30.46 at December 31, 2014. Shareholders' equity increased $16.1 million or 4.08% to $410.3 million from $394.2 million on December 31, 2014.

During 2015 the Corporation completed the announced stock repurchase plan to acquire 5% of the Corporation's outstanding common stock. Total shares repurchased under the plan were 667,700 valued at $21.6 million.

Average total loans for the fourth quarter of 2015 were $1.75 billion versus $1.80 billion for the comparable period in 2014 Total loans outstanding decreased $19.0 million from $1.78 billion as of December 31, 2014 to $1.76 billion as of December 31, 2015. On a linked quarter basis, average total loans decreased $19.7 million from $1.77 billion for the quarter ending September 30, 2015.

Average total deposits for the quarter ended December 31, 2015 were $2.44 billion versus $2.47 billion as of December 31, 2014. Non-interest bearing deposits, however, increased 4.87% while interest earning deposits decreased 1.48%. Higher cost time deposits decreased $95.6 million during 2015.

The company's tangible common equity to tangible asset ratio was 12.51% at December 31, 2015, compared to 11.86% at December 31, 2014, a 5.48% increase.

Net interest income for the fourth quarter of 2015 was $26.0 million compared to $26.9 million reported for the same period of 2014. The net interest margin for the quarter ended December 31, 2015 was 4.04% compared to 3.99% reported at December 31, 2014.

Asset quality remains strong with nonperforming loans and Oreo decreasing 16.3% to $28.9 million as of December 31, 2015 versus $34.5 million as of December 31, 2014. The ratio of nonperforming loans to total loans and leases also decreased to 1.64% as of December 31, 2015 versus 1.94% as of December 31, 2014.

The provision for loan losses for the three months ended December 31, 2015 was $1.1 million compared to the $2.0 million provision for the fourth quarter of 2014. Net charge-offs were $1.0 million for the fourth quarter of 2015 compared to $618 thousand in the same period of 2014. The Corporation's allowance for loan losses as of December 31, 2015 was $19.9 million compared to $18.8 million as of December 31, 2014. The allowance for loan losses as a percent of total loans was 1.13% as of December 31, 2015 compared to 1.06% as of December 31, 2014.

Non-interest income for the three months ended December 31, 2015 was $9.4 compared to $10.6 million in 2014. Non-interest income for the years ended December 31, 2015 and 2014 was $39.2 and $40.8 million, respectively. Increased income from interchange income and sale of mortgages effectively offset the reduced investment service income and income from the Corporation's insurance agency for 2015.

Non-interest expense for the three months ended December 31, 2015 increased $1.8 million to $24.9 million compared to $23.1 million in 2014. On a linked quarter basis, non-interest expense increased $791 thousand from $24.2 million for the quarter ended September 30, 2015. On a year-over-year basis, employee benefits increased $4.3 million due to the lower discount rate and the use of the updated mortality table previously discussed. The pension plan was frozen for the majority of employees as of December 31, 2012. Occupancy expenses decreased $240 thousand and equipment expense decreased $278 thousand for the year ended 2015. The Corporation's efficiency ratio was 67.51% for the quarter ending December 31, 2015 versus 59.11% for the same period in 2014.

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.

			Three Months Ended						Year Ended
		December 31,		September 30,		December 31,			December 31,
		2015		2015		2014			2015		2014
END OF PERIOD BALANCES
	Assets	$	2,979,585	$	2,942,833	$	3,002,485	$	2,979,585	$	3,002,485
	Deposits		2,442,369		2,418,589		2,457,197		2,442,369		2,457,197
	Loans		1,763,808		1,766,667		1,781,428		1,763,808		1,781,428
	Allowance for Loan Losses		19,946		19,925		18,839		19.946		18,839
	Total Equity		410,316		408,591		394,214		410,316		394,214
	Tangible Common Equity		367,649		365,727		350,824		367,649		350,824

AVERAGE BALANCES
	Total Assets		2,974,567		2,954,983		3,027,478		2,976,931		3,020,068
	Earning Assets		2,735,328		2,733,630		2,792,506		2,744,469		2,793,424
	Investments		950,245		960,139		992,441		964,309		998,189
	Loans		1,749,261		1,769,009		1,800,065		1,761,888		1,795,235
	Total Deposits		2,443,478		2,418,162		2,469,170		2,446,331		2,461,253
	Interest-Bearing Deposits		1,889,350		1,884,420		1,917,728		1,901,623		1,934,597
	Interest-Bearing Borrowings		41,269		58,957		83,577		47,107		100,512
	Total Equity		408,730		401,840		412,296		404,845		403,413

INCOME STATEMENT DATA
	Net Interest Income		26,012		26,576		26,939		104,507		107,832
	Net Interest Income Fully Tax Equivalent		27,561		28,134		28,504		110,744		114,039
	Provision for Loan Losses		1,050		1,050		1,962		4,700		5,072
	Non-interest Income		9,389		9,951		10,615		39,179		40,785
	Non-interest Expense		24,943		24,152		23,125		98,398		95,584
	Net Income		7,114		8,398		9,181		30,196		33,772

PER SHARE DATA
	Basic and Diluted Net Income Per Common Share		0.56		0.65		0.71		2.35		2.55
	Cash Dividends Declared Per Common Share		0.49		-		0.49		0.98		0.98
	Book Value Per Common Share		32.21		32.16		30.46		32.21		30.46
	Tangible Book Value Per Common Share		28.86		28.79		27.11		28.86		27.11
	Basic Weighted Average Common Shares Outstanding		12,722		12,773		12,932		12,836		13,226

Key Ratios	Three Months Ended						Year Ended
	December 31,		September 30,		December 31,		December 31,
	2015		2015		2014		2015		2014
Return on average assets	96	%	1.14	%	1.21	%	1.01	%	1.12	%
Return on average common shareholder's equity	6.96	%	8.36	%	8.91	%	7.46	%	8.37	%
Efficiency ratio	67.51	%	63.42	%	59.11	%	65.63	%	61.74	%
Average equity to average assets	13.74	%	13.6	%	13.62	%	13.6	%	13.36	%
Net interest margin	4.04	%	4.12	%	3.99	%	4.04	%	4.08	%
Net charge-offs to average loans and leases	0.20	%	0.22	%	0.14	%	0.14	%	0.31	%
Loan and lease loss reserve to loans and leases	1.13	%	1.13	%	1.06	%	1.13	%	1.06	%
Loan and lease loss reserve to nonperforming loans	0.78	%	0.72	%	0.06	%	0.78	%	0.60	%
Nonperforming loans to loans	1.46	%	1.75	%	1.76	%	1.44	%	1.76	%
Tier 1 leverage	12.92	%	12.92	%	12.33	%	12.92	%	12.33	%
Risk-based capital - Tier 1	17.69	%	17.30	%	16.99	%	17.69	%	16.99	%


Asset Quality	Three Months Ended						Year Ended
	December 31,		September 30,		December 31,		December 31,
	2015		2015			2014	2015		2014
Accruing loans and leases past due 30-89 days	$	12,294	$	6,778	$	13,444	$	12,294	$	13,444
Accruing loans and leases past due 90 days or more	$	964	$	1,632	$	780	$	964	$	780
Nonaccrual loans and leases	$	14,634	$	16,112	$	15,034	$	14,634	$	15,034
Nonperforming loans	$	25,458	$	30,954	$	30,572	$	25,458	$	30,572
Other real estate owned	$	3,466	$	3,382	$	3,965	$	3,466	$	3,965
Total nonperforming assets	$	43,799	$	46,072	$	49,639	$	43,799	$	49,639
Total troubled debt restructurings	$	9,860	$	9,828	$	14,758	$	9,860	$	14,758
Gross charge-offs	$	1,931	$	3,295	$	2,308	$	8,528	$	9,450
Recoveries	$	902	$	2,309	$	1,690	$	4,935	$	3,836
Net charge-offs/(recoveries)	$	1,029	$	986	$	618	$	3,593	$	5,614

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

	December 31,
(Dollar amounts in thousands, except per share data)	2015			2014
	(unaudited)
ASSETS
Cash and due from banks	$	88,695		$	78,102
Federal funds sold		9,815			8,000
Securities available-for-sale		891,082			897,053
Loans, net of allowance of $19,946 in 2015 and $18,839 in 2014		1,743,862			1,762,589
Restricted stock		10,838			16,404
Accrued interest receivable		11,733			11,593
Premises and equipment, net		50,531			51,802
Bank-owned life insurance		82,323			80,730
Goodwill		39,489			39,489
Other intangible assets		3,178			3,901
Other real estate owned		3,466			3,965
Other assets		44,573			48,857
TOTAL ASSETS	$	2,979,585		$	3,002,485
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Non-interest-bearing	$	563,302		$	556,389
Interest-bearing:
Certificates of deposit of $100 or more		46,753			53,733
Other interest-bearing deposits		1,832,314			1,847,075
		2,442,369			2,457,197
Short-term borrowings		33,831			48,015
Other borrowings		12,677			12,886
Other liabilities		80,392			90,173
TOTAL LIABILITIES		2,569,269			2,608,271
Shareholders' equity
Common stock, $.125 stated value per share;
Authorized shares-40,000,000
Issued shares-14,557,815 in 2015 and 14,538,132 in 2014
Outstanding shares-12,740,018 in 2015 and 12,942,175 in 2014		1,817			1,815
Additional paid-in capital		73,396			72,405
Retained earnings		395,633			377,970
Accumulated other comprehensive income (loss)		(9,401	)		(14,529	)
Less: Treasury shares at cost-1,817,797 in 2015 and 1,595,957 in 2014		(51,129	)		(43,447	)
TOTAL SHAREHOLDERS' EQUITY		410,316			394,214
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	2,979,585		$	3,002,485

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

	Years Ended December 31,
(Dollar amounts in thousands, except per share data)	2015			2014			2013
	(unaudited)
INTEREST AND DIVIDEND INCOME:
Loans, including related fees	$	84,022		$	87,530		$	91,242
Securities:
Taxable		15,815			17,015			16,157
Tax-exempt		7,194			7,084			7,046
Other		1,645			1,729			1,776
TOTAL INTEREST AND DIVIDEND INCOME		108,676			113,358			116,221
INTEREST EXPENSE:
Deposits		3,934			4,624			5,886
Short-term borrowings		70			99			78
Other borrowings		165			803			2,997
TOTAL INTEREST EXPENSE		4,169			5,526			8,961
NET INTEREST INCOME		104,507			107,832			107,260
Net provision for loan losses		4,700			5,072			7,860
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		99,807			102,760			99,400
NON-INTEREST INCOME:
Trust and financial services		5,586			5,860			6,035
Service charges and fees on deposit accounts		10,145			10,772			10,162
Other service charges and fees		11,798			11,697			11,081
Securities gain, net		17			(3	)		423
Insurance commissions		6,945			7,646			7,750
Gain on sale of mortgage loans		1,998			1,849			3,052
Other		2,690			2,964			1,952
TOTAL NON-INTEREST INCOME		39,179			40,785			40,455
NON-INTEREST EXPENSES:
Salaries and employee benefits		60,109			55,936			55,097
Occupancy expense		6,978			7,218			6,102
Equipment expense		6,991			7,269			6,348
Federal Deposit Insurance		1,769			1,931			2,052
Other		22,551			23,230			24,955
TOTAL NON-INTEREST EXPENSE		98,398			95,584			94,554
INCOME BEFORE INCOME TAXES		40,588			47,961			45,301
Provision for income taxes		10,392			14,189			13,767
NET INCOME	$	30,196		$	33,772		$	31,534
OTHER COMPREHENSIVE INCOME
Change in unrealized gains/losses on securities, net of reclassifications and taxes	$	(1,225	)	$	13,913		$	(17,066	)
Change in funded status of post-retirement benefits, net of taxes	$	6,353		$	(14,473	)	$	10,569
COMPREHENSIVE INCOME	$	35,324		$	33,212		$	25,037
EARNINGS PER SHARE:
BASIC AND DILUTED	$	2.35		$	2.55		$	2.37
Weighted average number of shares outstanding (in thousands)		12,836			13,226			13,310

Contact Information:

For more information contact:
Rodger A. McHargue
(812) 238-6334