FIRST FINANCIAL CORP IN

Previous wording

The ACL and allowance for unfunded commitments were $40.0 million and $2.0 million, respectively at March 31, 2024, compared to $39.8 million and $2.0 million, respectively at December 31, 2023. The qualitative amount of the reserve decreased $638 thousand to $10.3 million. The quantitative amount is $29.4 million at March 31, 2024, compared to $28.4 million at December 31, 2023. There was no change in the allowance for unfunded commitments. See additional discussion of ACL in the Allowance for Credit Losses section below.

Current wording

The ACL and allowance for unfunded commitments were $38.3 million and $1.7 million, respectively at June 30, 2024, compared to $39.8 million and $2.0 million, respectively at December 31, 2023. The qualitative amount of the reserve decreased $421 thousand to $10.5 million. The quantitative amount is $27.8 million at June 30, 2024, compared to $28.4 million at December 31, 2023. There was a decrease of $300 thousand in the allowance for unfunded commitments. See additional discussion of ACL in the Allowance for Credit Losses section below.

Previous wording

Net income for the three months ended March 31, 2024 was $10.9 million, compared to $16.0 million for the same period in 2023. Basic earnings per share decreased to $0.93 for the first quarter of 2024 compared to $1.33 for the same period in 2023. Return on average assets and return on average equity were 0.91% and 8.36% respectively, for the three months ended March 31, 2024 compared to 1.32% and 13.10% for the three months ended March 31, 2023.

Current wording

Net income for the three months ended June 30, 2024 was $11.4 million, compared to $16.0 million for the same period in 2023. Basic earnings per share decreased to $0.96 for the second quarter of 2024 compared to $1.33 for the same period in 2023. Return on average assets and return on average equity were 0.94% and 8.78% respectively, for the three months ended June 30, 2024 compared to 1.34% and 12.75% for the three months ended June 30, 2023. Net income for the six months ended June 30, 2024 was $22.3 million, compared to $32.0 million for the same period in 2023. Basic earnings per share decreased to $1.89 for the first six months of 2024 compared to $2.66 for the same period in 2023. Return on average assets and return on average equity were 0.93% and 8.57% respectively, for the six months ended June 30, 2024 compared to 1.33% and 12.92% for the six months ended June 30, 2023.

Previous wording

On November 13, 2023, First Financial Corporation, an Indiana corporation ("FFC"), First Financial Bank, National Association, a national banking association and wholly-owned subsidiary of FFC (“First Financial Bank”), and SimplyBank., a Tennessee-chartered commercial bank (“SimplyBank”), entered into an Agreement and Plan of Reorganization (the "Merger Agreement"). Pursuant to the terms of the Merger Agreement, FFC will form an interim national banking association as a wholly-owned subsidiary, which will merge with and into SimplyBank, with SimplyBank as the surviving entity (the "Interim Merger"). Immediately following the Interim Merger, SimplyBank will merge with and into First Financial Bank, with First Financial Bank as the surviving entity (the "Bank Merger," and together with the Interim Merger, the "Transactions").

Current wording

On November 13, 2023, First Financial Corporation, an Indiana corporation ("FFC"), First Financial Bank, National Association, a national banking association and wholly-owned subsidiary of FFC (“First Financial Bank”), and SimplyBank., a Tennessee-chartered commercial bank (“SimplyBank”), entered into an Agreement and Plan of Reorganization (the "Merger Agreement"). Pursuant to the terms of the Merger Agreement, FFC will form an interim national banking association as a wholly-owned subsidiary, which will merge with and into SimplyBank, with SimplyBank as the surviving entity (the "Interim Merger"). Immediately following the Interim Merger, SimplyBank will merge with and into First Financial Bank, with First Financial Bank as the surviving entity (the "Bank Merger," and together with the Interim Merger, the "Transactions"). See Subsequent Events footnote for discussion of the closing of the merger.

Previous wording

The Corporation’s primary source of earnings is net interest income, which is the difference between the interest earned on loans and other investments and the interest paid for deposits and other sources of funds. Net interest income decreased $5.4 million in the three months ended March 31, 2024 to $38.9 million from $44.3 million in the same period in 2023. The net interest margin for the three months ended March 31, 2024 is 3.53% compared to 3.96% for the same period in 2023, a 10.83% decrease.

Current wording

The Corporation’s primary source of earnings is net interest income, which is the difference between the interest earned on loans and other investments and the interest paid for deposits and other sources of funds. Net interest income decreased $2.9 million in the three months ended June 30, 2024 to $39.3 million from $42.2 million in the same period in 2023. The net interest margin for the three months ended June 30, 2024 is 3.57% compared to 3.81% for the same period in 2023, a 6.18% decrease. Net interest income decreased $8.3 million in the six months ended June 30, 2024 to $78.2 million from $86.5 million in the same period in 2023. The net interest margin for the six months ended June 30, 2024 is 3.55% compared to 3.88% for the same period in 2023.

Previous wording

The increase in yields on net loans and leases of 49 basis points is the primary contributor to the improved yield on average earning assets for the three months ended March 31, 2024, compared to the three months ended March 31, 2023, which was due to market conditions as a result of Federal Reserve interest rate increases. Comparing the three months ended March 31, 2024 to the three months ended March 31, 2023, the effective rate paid on average interest-bearing deposits increased 101 basis points, due to rate competition in the market. For the same period discussed above, interest paid on other borrowings increased 148 basis points due to higher borrowing rates.

Current wording

The increase in yields on net loans and leases of 46 basis points is the primary contributor to the improved yield on average earning assets for the six months ended June 30, 2024, compared to the six months ended June 30, 2023, which was due to market conditions as a result of Federal Reserve interest rate increases. Comparing the six months ended June 30, 2024 to the six months ended June 30, 2023, the effective rate paid on average interest-bearing deposits increased 82 basis points, due to rate competition in the market. For the same period discussed above, interest paid on other borrowings increased 109 basis points due to higher borrowing rates.

Previous wording

The Corporation’s non-interest expense for the quarter ended March 31, 2024 was $33.4 million compared to $32.3 million for the same period in 2023.

Current wording

The Corporation’s non-interest expense for the quarter ended June 30, 2024 was $32.7 million compared to $31.3 million for the same period in 2023. The Corporation’s non-interest expense for the six months ended June 30, 2024 increased $2.4 million to $66.1 milllion compared to the same period in 2023. This includes $976 thousand of acquisition related expenses.

Previous wording

The Corporation’s provision for credit losses for the three months ended March 31, 2024, was $1.8 million, unchanged from the first quarter of 2023. Net charge-offs for the first quarter of 2024 were $1.5 million compared to net charge-offs of $2.0 million for the same period of 2023. Based on management’s analysis of the current portfolio, an evaluation that includes consideration of changes in CECL model assumptions of credit quality, economic conditions, and loan composition, management believes the allowance is adequate. In the first quarter 2024, no significant changes were made.

Current wording

The Corporation’s provision for credit losses for the three months ended June 30, 2024, was $3.0 million, compared to provision of $1.8 million for the same period of 2023. Net charge-offs for the second quarter of 2024 were $4.7 million compared to net charge-offs of $1.5 million for the same period of 2023. The provision for credit losses increased $1.2 million to $4.8 million for the six months ended June 30, 2024, compared to a provision of $3.6 million for the same period in 2023. Net charge-offs for the first six months of 2024 increased $2.7 million to $6.2 million compared to the same period in 2023. The increase in provision as well as charge-offs were related to one previously identified credit, reflecting further deterioration in collateral values in the quarter. Based on management’s analysis of the current portfolio, an evaluation that includes consideration of changes in CECL model assumptions of credit quality, economic conditions, and loan composition, management believes the allowance is adequate. In the first six months of 2024, no significant changes were made.

Previous wording

The Corporation’s effective income tax rate for the first three months of 2024 was 16.79% compared to 18.42% for the same period in 2023. Pretax income for the first three months in 2023 was significantly higher than pretax income for first three months in 2024. Since our permanent differences remained similar, income was the driving factor for the decrease in effective tax rate.

Current wording

The Corporation’s effective income tax rate for the first six months of 2024 was 16.54% compared to 18.21% for the same period in 2023. Pretax income for the first six months in 2023 was significantly higher than pretax income for first six months in 2024. Since our permanent differences remained similar, income was the driving factor for the decrease in effective tax rate.

Previous wording

Non-performing loans consist of (1) non-accrual loans on which the ultimate collectability of the full amount of interest is uncertain, and (2) loans past due ninety days or more as to principal or interest. Non-performing loans decreased to $24.3 million at March 31,

Current wording

Non-performing loans consist of (1) non-accrual loans on which the ultimate collectability of the full amount of interest is uncertain, and (2) loans past due ninety days or more as to principal or interest. Non-performing loans decreased to $15.9 million at June 30, 2024 compared to $24.6 million at December 31, 2023. Nonperforming loans increased 19.7% compared to $13.3 million as of June 30, 2023.

Previous wording

The table below shows the Corporation’s estimated sensitivity profile as of March 31, 2024. The change in interest rates assumes a parallel shift in interest rates of 100, 200, and 300 basis points. Given a 100 basis point increase in rates, net interest income would decrease 2.23% over the next 12 months and increase 0.31% over the following 12 months. Given a 100 basis point decrease in rates, net interest income would increase 5.71% over the next 12 months and increase 2.73% over the following 12 months. These estimates assume all rate changes occur overnight and management takes no action as a result of this change.

Current wording

The table below shows the Corporation’s estimated sensitivity profile as of June 30, 2024. The change in interest rates assumes a parallel shift in interest rates of 100, 200, and 300 basis points. Given a 100 basis point increase in rates, net interest income would decrease 2.61% over the next 12 months and increase 0.12% over the following 12 months. Given a 100 basis point decrease in rates, net interest income would increase 5.97% over the next 12 months and increase 2.79% over the following 12 months. These estimates assume all rate changes occur overnight and management takes no action as a result of this change.

Previous wording

Liquidity represents an institution’s ability to provide funds to satisfy demands from depositors, borrowers, and other creditors by either converting assets into cash or accessing new or existing sources of incremental funds. Generally the Corporation relies on deposits, loan repayments and repayments of investment securities as its primary sources of funds. The Corporation has $10.5 million of investments that mature throughout the next 12 months. The Corporation also anticipates $111.6 million of principal payments from mortgage-backed and other securities. Given the current rate environment, the Corporation anticipates $16.6 million in securities to be called within the next 12 months. The Corporation also has $250.5 million of unused borrowing capacity available with the Federal Home Loan Bank of Indianapolis, $212.8 million available with the Federal Reserve Bank, and $125 million of available fed funds lines with correspondent banks. With these sources of funds, the Corporation currently anticipates adequate liquidity to meet the expected obligations of its customers.

Current wording

Liquidity represents an institution’s ability to provide funds to satisfy demands from depositors, borrowers, and other creditors by either converting assets into cash or accessing new or existing sources of incremental funds. Generally the Corporation relies on deposits, loan repayments and repayments of investment securities as its primary sources of funds. The Corporation has $11.6 million of investments that mature throughout the next 12 months. The Corporation also anticipates $116.0 million of principal payments from mortgage-backed and other securities. Given the current rate environment, the Corporation anticipates $17.1 million in securities to be called within the next 12 months. The Corporation also has $229.1 million of unused borrowing capacity available with the Federal Home Loan Bank of Indianapolis, $371.8 million available with the Federal Reserve Bank, and $125 million of available fed funds lines with correspondent banks. With these sources of funds, the Corporation currently anticipates adequate liquidity to meet the expected obligations of its customers.

Previous wording

Comparing the first three months of 2024 to year-ended December 31, 2023, loans net of deferred loan costs, have increased $24 million to $3.2 billion. Deposits increased 0.37% to $4.1 billion at March 31, 2024 compared to December 31, 2023. Other borrowings decreased $50 million to $58.6 million at March 31, 2024 compared to December 31, 2023. Shareholders’ equity decreased 1.37% or $7.2 million. This financial performance decreased book value per share 1.52% to $44.08 at March 31, 2024 from $44.76 at December 31, 2023. Book value per share is calculated by dividing the total shareholders’ equity by the number of shares outstanding. Accumulated other comprehensive loss decreased $11.0 million primarily due to the market value of the securities portfolio, which reflected the decrease in securities pricing.

Current wording

million. This financial performance increased book value per share 0.36% to $44.92 at June 30, 2024 from $44.76 at December 31, 2023. Book value per share is calculated by dividing the total shareholders’ equity by the number of shares outstanding. Accumulated other comprehensive loss decreased $7.4 million primarily due to the market value of the securities portfolio, which reflected the decrease in securities pricing.