FIRST FINANCIAL CORP IN
For the period ended Sep 30, 2024. Filed Nov 6, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 6, 2024
THFF$76.24-0.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-07.
0000714562-24-000043
Items 2 and 3. Management’s Discussion and Analysis of Financial Condition and Results of Operations and Quantitative and Qualitative Disclosures About Market RiskCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-06.
0000714562-24-000061
Items 2 and 3. Management’s Discussion and Analysis of Financial Condition and Results of Operations and Quantitative and Qualitative Disclosures About Market RiskThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 54 previous paragraphs and 52 current paragraphs.
38 unchanged; 13 reworded; 0 added; 2 removed; 1 previous and 1 current paragraphs rearranged.
Tables are not compared: 7 previous and 7 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Removed paragraphs (2)
Previous report
which has supported the Corporation’s strong credit performance during prior financial crises. Refer to the section Non-Performing Loan for additional information.
Previous report
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.
Reworded paragraphs (13)
Previous 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.
Current wording
The ACL and allowance for unfunded commitments were $46.2 million and $1.8 million, respectively at September 30, 2024, compared to $39.8 million and $2.0 million, respectively at December 31, 2023. The qualitative amount of the reserve increased $1.6 million to $12.6 million. The quantitative amount is $33.3 million at September 30, 2024, compared to $28.4 million at December 31, 2023. There was a decrease of $200 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 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.
Current wording
Net income for the three months ended September 30, 2024 was $8.7 million, compared to $16.3 million for the same period in 2023. Basic earnings per share decreased to $0.74 for the third quarter of 2024 compared to $1.37 for the same period in 2023. Return on average assets and return on average equity were 0.64% and 6.39% respectively, for the three months ended September 30, 2024 compared to 1.35% and 13.19% for the three months ended September 30, 2023. Net income for the nine months ended September 30, 2024 was $31.0 million, compared to $48.3 million for the same period in 2023. Basic earnings per share decreased to $2.63 for the first nine months of 2024 compared to $4.02 for the same period in 2023. Return on average assets and return on average equity were 0.82% and 7.80% respectively, for the nine months ended September 30, 2024 compared to 1.33% and 12.98% for the nine months ended September 30, 2023.
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 $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.
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 increased $6.0 million in the three months ended September 30, 2024 to $47.2 million from $41.2 million in the same period in 2023. The net interest margin for the three months ended September 30, 2024 is 3.78% compared to 3.74% for the same period in 2023, a 1.16% increase. Net interest income decreased $2.3 million in the nine months ended September 30, 2024 to $125.4 million from $127.7 million in the same period in 2023. The net interest margin for the nine months ended September 30, 2024 is 3.63% compared to 3.83% for the same period in 2023.
Previous 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.
Current wording
The increase in yields on net loans and leases of 44 basis points is the primary contributor to the improved yield on average earning assets for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, which was due to market conditions as a result of Federal Reserve interest rate increases. Comparing the nine months ended September 30, 2024 to the nine months ended September 30, 2023, the effective rate paid on average interest-bearing deposits increased 72 basis points, due to rate competition in the market. For the same period discussed above, interest paid on other borrowings increased 99 basis points due to higher borrowing rates.
Previous wording
Non-interest income for the three months ended June 30, 2024 was $9.9 million compared to $10.5 million for the same period in 2023. Non-interest income for the six months ended June 30, 2024 was $19.3 million compared to $19.8 million for the same period in 2023.
Current wording
Non-interest income for the three months ended September 30, 2024 was $11.2 million compared to $11.6 million for the same period in 2023. Non-interest income for the nine months ended September 30, 2024 was $30.6 million compared to $31.5 million for the same period in 2023.
Previous 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.
Current wording
The Corporation’s non-interest expense for the quarter ended September 30, 2024 was $38.6 million compared to $32.3 million for the same period in 2023. The Corporation’s non-interest expense for the nine months ended September 30, 2024 increased $8.7 million to $104.6 milllion compared to the same period in 2023. This includes $1.7 million of acquisition related expenses, as well as an overall increase in operating expenses as a result of the acquisition.
Previous 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.
Current wording
The Corporation’s provision for credit losses for the three months ended September 30, 2024, was $9.4 million, compared to provision of $1.2 million for the same period of 2023. Net charge-offs for the third quarter of 2024 were $4.6 million compared to net charge-offs of $2.1 million for the same period of 2023. The provision for credit losses increased $9.4 million to $14.2 million for the nine months ended September 30, 2024, compared to a provision of $4.8 million for the same period in 2023. Net charge-offs for the first nine months of 2024 increased $5.2 million to $10.8 million compared to the same period in 2023. The Corporation recorded $5.5 million in Day 2 provision on non-PCD loans acquired from SimplyBank. Additionally, 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. No further losses are expected on this credit. 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 nine months of 2024, no significant changes were made.
Previous 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.
Current wording
The Corporation’s effective income tax rate for the first nine months of 2024 was 16.44% compared to 17.37% for the same period in 2023. Pretax income for the first nine months in 2023 was significantly higher than pretax income for first nine 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 $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.
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 $14.1 million at September 30, 2024 compared to $24.6 million at December 31, 2023. Nonperforming loans increased 12.3% compared to $12.6 million as of September 30, 2023.
Previous wording
The Asset Liability position is measured using sophisticated risk management tools, including earning simulation and market value of equity sensitivity analysis. These tools allow management to quantify and monitor both short-term and long-term exposure to interest rate risk. Simulation modeling measures the effects of changes in interest rates, changes in the shape of the yield curve and the effects of embedded options on net interest income. This measure projects earnings in the various environments over the next three years. It is important to note that measures of interest rate risk have limitations and are dependent on various assumptions. These assumptions are inherently uncertain and, as a result, the model cannot precisely predict the impact of interest rate fluctuations on net interest income. Actual results will differ from simulated results due to timing, frequency and amount of interest rate changes as well as overall market conditions. The Committee has performed a thorough analysis of these assumptions and believes them to be valid and theoretically sound. These assumptions are continuously monitored for behavioral changes.
Current wording
The Asset Liability position is measured using sophisticated risk management tools, including earning simulation and market value of equity sensitivity analysis. These tools allow management to quantify and monitor both short-term and long-term exposure to interest rate risk. Simulation modeling measures the effects of changes in interest rates, changes in the shape of the yield curve and the effects of embedded options on net interest income. This measure projects earnings in the various environments over the next three years. It is important to note that measures of interest rate risk have limitations and are dependent on various assumptions. These assumptions are
Previous 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.
Current wording
The table below shows the Corporation’s estimated sensitivity profile as of September 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 1.55% over the next 12 months and increase 1.09% over the following 12 months. Given a 100 basis point decrease in rates, net interest income would increase 5.96% over the next 12 months and increase 2.74% 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 $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.
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 $14.4 million of investments that mature throughout the next 12 months. The Corporation also anticipates $131.9 million of principal payments from mortgage-backed and other securities. Given the current rate environment, the Corporation anticipates $26.9 million in securities to be called within the next 12 months. The Corporation also has $346.3 million of unused borrowing capacity available with the Federal Home Loan Bank of Indianapolis, $378.9 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
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.
Current wording
Comparing the first nine months of 2024 to year-ended December 31, 2023, loans net of deferred loan costs, have increased $547 million to $3.7 billion. Deposits increased 15.3% to $4.7 billion at September 30, 2024 compared to December 31, 2023. Other borrowings decreased $78.1 million to $30.5 million at September 30, 2024 compared to December 31, 2023. Shareholders’ equity increased 7.19% or $38.0 million. This financial performance increased book value per share 7.08% to $47.93 at September 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 increased $24.3 million primarily due to the market value of the securities portfolio, which reflected the increase in securities pricing.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
inherently uncertain and, as a result, the model cannot precisely predict the impact of interest rate fluctuations on net interest income. Actual results will differ from simulated results due to timing, frequency and amount of interest rate changes as well as overall market conditions. The Committee has performed a thorough analysis of these assumptions and believes them to be valid and theoretically sound. These assumptions are continuously monitored for behavioral changes.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Comparing the first six months of 2024 to year-ended December 31, 2023, loans net of deferred loan costs, have increased $36 million to $3.2 billion. Deposits increased 1.03% to $4.1 billion at June 30, 2024 compared to December 31, 2023. Other borrowings remain unchanged at $108.6 million at June 30, 2024 compared to December 31, 2023. Shareholders’ equity increased 0.51% or $2.7