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First Financial (THFF) - 2024 Q3 - Quarterly Report

PART I. Financial Information Item 1. Financial Statements This section presents the unaudited consolidated financial statements of First Financial Corporation for the periods ended September 30, 2024, and December 31, 2023, including balance sheets, income statements, statements of shareholders' equity, and cash flows, along with detailed notes on significant accounting policies, new accounting standards, credit losses, securities, fair value measurements, borrowings, benefit costs, revenue recognition, accumulated other comprehensive income, leases, and recent acquisitions Consolidated Balance Sheets This section provides a snapshot of the Corporation's financial position, detailing assets, liabilities, and equity at specific points in time | Metric | September 30, 2024 (in thousands) | December 31, 2023 (in thousands) | | :-------------------------------- | :-------------------------------- | :--------------------------------- | | Total Assets | $5,484,612 | $4,851,146 | | Total Loans (net) | $3,669,066 | $3,128,054 | | Total Deposits | $4,717,489 | $4,090,068 | | Total Shareholders' Equity | $565,951 | $527,976 | Consolidated Statements of Income and Comprehensive Income This section outlines the Corporation's financial performance over specific periods, detailing revenues, expenses, and net income | Metric | Three Months Ended Sept 30, 2024 (in thousands) | Three Months Ended Sept 30, 2023 (in thousands) | Nine Months Ended Sept 30, 2024 (in thousands) | Nine Months Ended Sept 30, 2023 (in thousands) | | :----------------------------------- | :------------------------------------ | :------------------------------------ | :----------------------------------- | :----------------------------------- | | Net Income | $8,741 | $16,285 | $31,034 | $48,252 | | Basic and Diluted EPS | $0.74 | $1.37 | $2.63 | $4.02 | | Total Interest Income | $71,695 | $58,723 | $191,869 | $169,652 | | Total Interest Expense | $24,525 | $17,573 | $66,485 | $41,980 | | Net Interest Income | $47,170 | $41,150 | $125,384 | $127,672 | | Provision for Credit Losses | $9,400 | $1,200 | $14,166 | $4,800 | Consolidated Statements of Shareholders' Equity This section details changes in the Corporation's equity over time, reflecting net income, comprehensive income, and dividend distributions | Metric | September 30, 2024 (in thousands) | September 30, 2023 (in thousands) | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Total Shareholders' Equity | $565,951 | $470,168 | | Accumulated Other Comprehensive Loss | $(102,800) | $(176,038) | | Cash Dividends (9 months ended Sept 30) | $15,946 | $6,471 | Consolidated Statements of Cash Flows This section summarizes the cash inflows and outflows from operating, investing, and financing activities over specific periods | Metric | Nine Months Ended Sept 30, 2024 (in thousands) | Nine Months Ended Sept 30, 2023 (in thousands) | | :----------------------------------- | :----------------------------------- | :----------------------------------- | | Net Cash from Operating Activities | $44,515 | $66,193 | | Net Cash from Investing Activities | $30,136 | $3,330 | | Net Cash from Financing Activities | $(74,098) | $(217,372) | | Net Change in Cash and Cash Equivalents | $553 | $(147,849) | Notes to Consolidated Financial Statements This section provides detailed explanations and additional information regarding the figures presented in the consolidated financial statements 1. Significant Accounting Policies This subsection outlines the key accounting principles and methods used in preparing the financial statements - The Corporation reports financial information for only one segment: banking15 - On July 1, 2024, the Corporation completed its acquisition of SimplyBank, with results included from that date17 - The Omnibus Equity Incentive Plan awarded 27,803 shares in 2024 and 22,228 shares in 2023, vesting over three years, with a grant date value of $1.0 million for both years16 2. New accounting standards This subsection details the adoption and assessment of new accounting pronouncements and their impact on the financial statements - Adopted ASU 2022-03 (Fair Value Measurements) on January 1, 2024, with no impact on consolidated financial statements18 - Adopted ASU 2023-02 (Investments in Tax Credit Structures) on January 1, 2024, resulting in a $19 million increase in other assets, $21 million increase in other liabilities, and a $1.7 million decrease in retained earnings19 - The Corporation is assessing the effects of ASU 2023-07 (Segment Reporting) and ASU 2023-09 (Income Tax Disclosures) on its consolidated financial statements and related disclosures2223 3. Allowance for Credit Losses This subsection provides information on the allowance for credit losses, including changes in the allowance and non-performing loan metrics | Metric | September 30, 2024 (in thousands) | September 30, 2023 (in thousands) | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Allowance for Credit Losses | $46,169 | $39,034 | | Provision for Credit Losses (3 months) | $9,400 | $1,200 | | Provision for Credit Losses (9 months) | $14,166 | $4,800 | | Total Non-performing Loans (Sept 30) | $14,175 | $12,617 | - All loans modified to borrowers experiencing financial difficulty during the twelve months ended September 30, 2024, are in a current status of repayment37 4. Securities This subsection details the Corporation's investment securities portfolio, including available-for-sale securities and unrealized gains or losses | Metric | September 30, 2024 (in thousands) | December 31, 2023 (in thousands) | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Total Securities Available-for-Sale (Amortized Cost) | $1,393,693 | $1,412,498 | | Total Securities Available-for-Sale (Fair Value) | $1,271,992 | $1,259,137 | | Gross Unrealized Losses | $(127,510) | $(157,845) | - Management believes gross unrealized losses on investment securities are due to increased market interest rates, not creditworthiness, and does not intend to sell these securities before anticipated recovery58 5. Qualified Affordable Housing Project Investments This subsection provides information on the Corporation's investments in qualified affordable housing projects and associated tax benefits | Metric | September 30, 2024 (in thousands) | December 31, 2023 (in thousands) | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Investment Balance | $28,000 | $7,800 | | Unfunded Commitments | $19,900 | N/A | | Tax Credits and Other Benefits (9 months) | $2,400 | $1,400 | 6. Fair Value This subsection describes the methodologies and inputs used to determine the fair value of financial instruments and other assets - Fair value of most available-for-sale securities is determined using Level 1 (quoted prices) or Level 2 (matrix pricing) inputs65 - Level 3 valuations are used for certain trust preferred securities and state/municipal securities, relying on unobservable inputs like credit spreads66 | Metric | September 30, 2024 (in thousands) | December 31, 2023 (in thousands) | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Other Real Estate Owned (Fair Value) | $169 | $107 | | Fair Value Adjustment (OREO) | $(45) | $(57) | | Collateral Dependent Loans (Fair Value) | $4,965 | $11,306 | [7.