First Financial Corporation Reports 2nd Quarter 2012 Results

TERRE HAUTE, IN--(Marketwire - Jul 30, 2012) -  First Financial Corporation (NASDAQ: THFF) today announced results for the six and three months ended June 30, 2012. Net income of $16.1 and $8.7 million for the six and three months, respectively, compares to $17.2 and $8.4 million for the same periods of 2011. Return on assets for the six and three months ended June 30, 2012 was 1.11% and 1.20%, respectively, compared to 1.38% and 1.35% for the six and three months ended June 30, 2011. The first six months of 2012 include income and expenses associated with the purchase of Freestar Bank on December 31, 2011 that are not part of the results for the first six months of 2011.

Net interest income for the second quarter of 2012 was $27.7 million, an increase of 10.0% over the $25.2 million reported for the same period of 2011. Net interest income for the six months ended June 30, 2012 was $54.8 million compared to the $49.9 million reported for the same period of 2011, an increase of $4.9 million. The net interest margin at June 30, 2012 was 4.34%, compared to 4.53% reported at June 30, 2011.

The provision for loan losses for the three months ended June 30, 2012 was $1.8 million compared to the $1.4 million provision for the second quarter of 2011. For the six months ended June 30, 2012 and 2011, the provision expense was $4.7 and $2.5 million, respectively. 

Non-interest income for the three months ended June 30, 2012 and 2011 was $9.8 and $7.9 million, respectively, a 23.7% increase. Securities gains and gains from the sale of mortgage loans of $1.1 million comprise most of the increase. For the six months ended June 30, 2012, non-interest income increased $3.1 million to $19.3 million from the $16.2 million for the same period of 2011. All categories of non-interest income increased.

Non-interest expense for the three months ended June 30, 2012 was $23.1 million compared to $19.4 million in 2011. For the six months ended June 30, 2012, non-interest expense was $46.5 million compared to $38.3 for the six months ended June 30, 2011. The 2012 non-interest expense contains salary, benefits and one-time expenses related to the acquisition of the Freestar Bank.

Total loans at June 30, 2012 of $1.88 billion compare to the $1.65 billion reported the same time a year ago. Deposits increased by $359.9 million to $2.25 billion. These increases were primarily driven by the Freestar Bank acquisition. 

Book value per share was $27.07, a 3.82% increase from $26.07 at June 30, 2011. Shareholders' equity increased 4.05% to $358.3 million from $342.9 million on June 30, 2011. During the second quarter of 2012 the Corporation declared a $0.47 per share dividend. This marked the 24^th consecutive year of dividend increases to shareholders.

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)				June 30,				December 31,
				2012				2011
				(Unaudited)
ASSETS
Cash and due from banks				$	84,669			$	134,280
Federal funds sold and short-term investments					27,472				11,725
Securities available-for-sale					658,751				666,287
Loans:					-				-
	Commercial				1,101,791				1,099,324
	Residential				500,110				505,600
	Consumer				276,758				289,717
					1,878,659				1,894,641
Less:
	Unearned Income				(936	)			(962	)
	Allowance for loan losses				(20,092	)			(19,241	)
					1,857,631				1,874,438
Restricted Stock					21,296				22,282
Accrued interest receivable					11,829				12,947
Premises and equipment, net					44,945				40,105
Bank-owned life insurance					74,187				82,646
Goodwill					37,612				37,612
Other intangible assets					4,539				5,142
Other real estate owned					7,163				4,964
FDIC Indemnification asset					1,608				2,384
Other assets					60,036				59,964
TOTAL ASSETS				$	2,891,738			$	2,954,776
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing				$	496,303			$	435,236
Interest-bearing:					-				-
	Certificates of deposit of $100 or more				217,523				242,001
	Other interest-bearing deposits				1,539,395				1,597,262
					2,253,221				2,274,499
Short-term borrowings					47,091				100,022
Other borrowings					146,111				146,427
Other liabilities					87,028				86,867
TOTAL LIABILITIES					2,533,451				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			1,807				1,806
	Additional paid-in capital				69,571				69,328
	Retained earnings				328,056				318,130
	Accumulated other comprehensive income (loss)				(9,338	)			(10,494	)
Treasury shares at cost-1,253,086 in 2012 and 2011					(31,809	)			(31,809	)
TOTAL SHAREHOLDERS' EQUITY					358,287				346,961
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY				$	2,891,738			$	2,954,776

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Dollar amounts in thousands, except per share data)
				Three Months Ended								Six Months Ended
				June 30,								June 30,
				2012				2011				2012				2011
			(unaudited)				(unaudited)				(unaudited)				(unaudited)
INTEREST INCOME:
	Loans, including related fees			$	25,226			$	23,004			$	50,424			$	45,960
	Securities:
		Taxable			3,508				4,321				7,031				8,516
		Tax-exempt			1,810				1,699				3,615				3,363
	Other				590				471				1,213				947
TOTAL INTEREST INCOME					31,134				29,495				62,283				58,786
INTEREST EXPENSE:
Deposits					2,169				3,082				4,833				6,365
Short-term borrowings					37				41				83				95
Other borrowings					1,266				1,213				2,540				2,412
TOTAL INTEREST EXPENSE					3,472				4,336				7,456				8,872
NET INTEREST INCOME					27,662				25,159				54,827				49,914
Provision for loan losses					1,789				1,352				4,745				2,534
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES					25,873				23,807				50,082				47,380
NON-INTEREST INCOME:
Trust and financial services					1,439				1,191				2,919				2,528
Service charges and fees on deposit accounts					2,402				2,354				4,606				4,503
Other service charges and fees					2,276				2,092				4,731				4,081
Securities gains/(losses), net					664				4				660				7
Total impairment losses					(11	)			(97	)			(11	)			(97	)
	Loss recognized in other comprehensive loss
	Net impairment loss recognized in earnings				(11	)			(97	)			(11	)			(97	)
Insurance commissions					1,799				1,673				3,690				3,393
Gain on sales of mortgage loans					792				401				1,717				738
Other					396				268				956				1,035
TOTAL NON-INTEREST INCOME					9,757				7,886				19,268				16,188
NON-INTEREST EXPENSE:
Salaries and employee benefits					13,891				11,517				28,310				22,955
Occupancy expense					1,488				1,203				2,905				2,453
Equipment expense					1,399				1,095				2,681				2,229
FDIC Expense					527				536				955				1,279
Other					5,797				5,061				11,671				9,446
TOTAL NON-INTEREST EXPENSE					23,102				19,412				46,522				38,362
INCOME BEFORE INCOME TAXES					12,528				12,281				22,828				25,206
Provision for income taxes					3,823				3,864				6,680				7,986
NET INCOME					8,705				8,417				16,148				17,220
OTHER COMPREHENSIVE INCOME
Change in unrealized gains/losses on securities, net of reclassifications					570				9,158				640				15,507
Tax effect					(228	)			(3,663	)			(256	)			(6,203	)
					342				5,495				384				9,304
Change in funded status of post retirement benefits					670				503				1,287				1,008
Tax effect					(268	)			(201	)			(515	)			(403	)
					402				302				772				605
TOTAL OTHER COMPREHENSIVE INCOME					744				5,797				1,156				9,909
COMPREHENSIVE INCOME				$	9,449			$	14,214			$	17,304			$	27,129
PER SHARE DATA
Basic and Diluted					0.66				0.64				1.22				1.31
Dividends per Share					0.47				0.47				0.47				0.47
Weighted average number of shares outstanding (in thousands)					13,238				13,152				13,230				13,152

Key Ratios		For the six months ended
		June 30,				June 30,
		2012				2011
Return on average assets			1.11	%			1.38	%
Return on average common shareholder's equity			8.96	%			10.34	%
Average common shareholder's equity to average assets			12.32	%			13.89	%
End of period tangible common equity to tangible assets			11.09	%			10.45	%
Book value per share		$	27.07			$	26.07
Tangible book value per share		$	23.88			$	22.82
Risk-based capital - Tier 1			14.45	%			17.27	%
Risk-based capital - Total			15.35	%			18.39	%
Net interest margin			4.34	%			4.53	%
Efficiency Ratio			60.32	%			55.79	%
Net charge-offs to average loans and leases			0.26	%			0.18	%
Loan and lease loss reserve to loans and leases			1.07	%			0.99	%
Nonperforming assets to loans and leases			2.73	%			3.12	%

Asset Quality		For the six months ended
		June 30,			June 30,
		2012			2011
Accruing loans and leases past due 90 days or more		$	7,995		$	2,992
Nonaccrual loans and leases			36,066			43,389
Other real estate owned			7,163			4,964
Total nonperforming assets		$	51,224		$	51,345