First Financial (THFF) - 2025 Q2 - Quarterly Results

1. Executive Summary First Financial Corporation reported strong Q2 2025 results with consecutive loan growth, record net interest income, and expanded net interest margin, alongside substantial year-to-date growth in net income and EPS 1.1. Second Quarter 2025 Performance Highlights First Financial Corporation reported strong Q2 2025 results, marked by its 7th consecutive quarter of loan growth, record net interest income, and an expanded net interest margin. Key financial metrics like net income, diluted EPS, and return on average assets significantly improved year-over-year - CEO Norman D. Lowery expressed satisfaction with the second quarter results, highlighting the 7th consecutive quarter of loan growth, a record quarter for net interest income, and an expanded net margin of 4.15%[7] Second Quarter 2025 Key Financial Highlights (YoY) | Metric | Q2 2025 | Q2 2024 | Change (YoY) | | :-------------------------------- | :-------- | :-------- | :----------- | | Net income | $18.6 million | $11.4 million | +63.16% | | Diluted net income per common share | $1.57 | $0.96 | +63.54% | | Return on average assets | 1.34% | 0.94% | +0.40 pp | | Provision for credit losses | $2.0 million | $3.0 million | -33.33% | | Pre-tax, pre-provision net income | $24.9 million | $16.2 million | +53.70% | 1.2. Year-to-Date June 30, 2025 Performance Highlights For the first six months of 2025, the Corporation also demonstrated substantial growth, with net income and diluted EPS nearly doubling compared to the same period in 2024, alongside improved return on average assets and pre-tax, pre-provision net income Year-to-Date June 30, 2025 Key Financial Highlights (YoY) | Metric | YTD 2025 | YTD 2024 | Change (YoY) | | :-------------------------------- | :-------- | :-------- | :----------- | | Net income | $37.0 million | $22.3 million | +65.92% | | Diluted net income per common share | $3.12 | $1.89 | +65.08% | | Return on average assets | 1.34% | 0.93% | +0.41 pp | | Provision for credit losses | $3.9 million | $4.8 million | -18.75% | | Pre-tax, pre-provision net income | $50.6 million | $31.2 million | +62.18% | 2. Loan and Deposit Performance The Corporation achieved significant loan growth both organically and through acquisition, while deposits also saw substantial increases, primarily driven by the SimplyBank acquisition 2.1. Loans The Corporation experienced significant loan growth, both organically and through the SimplyBank acquisition. Average total loans increased over 21% year-over-year, and total loans outstanding showed similar robust growth 2.1.1. Average Total Loans Average total loans for Q2 2025 increased significantly year-over-year, driven by both acquisition and organic growth Average Total Loans | Period | Amount | | :-------------------- | :------------- | | Q2 2025 | $3.88 billion | | Q2 2024 | $3.20 billion | | Linked Quarter (Q1 2025) | $3.84 billion | - Average total loans for Q2 2025 increased by $680 million or 21.25% year-over-year[5]. On a linked quarter basis, average loans increased $35 million or 0.92%[5] - The year-over-year increase in average loans was a combination of the acquisition of SimplyBank on July 1, 2024, and organic growth[5] 2.1.2. Total Loans Outstanding Total loans outstanding as of June 30, 2025, showed strong year-over-year growth, influenced by the SimplyBank acquisition and organic expansion in key loan categories Total Loans Outstanding | Date | Amount | | :-------------------- | :------------- | | June 30, 2025 | $3.90 billion | | June 30, 2024 | $3.20 billion | | March 31, 2025 | $3.85 billion | - Total loans outstanding as of June 30, 2025, increased by $693 million or 21.62% year-over-year[6]. On a linked quarter basis, total loans increased $42.6 million or 1.11%[6] - The year-over-year increase was impacted by $467 million in loans acquired in the SimplyBank acquisition in July 2024[6]. Organic growth was primarily driven by increases in Commercial Construction and Development, Commercial Real Estate, and Consumer Auto loans[6] 2.2. Deposits Total deposits also saw substantial growth, largely due to the SimplyBank acquisition, with average total deposits increasing over 13% year-over-year 2.2.1. Average Total Deposits Average total deposits for Q2 2025 increased significantly year-over-year, primarily as a result of the SimplyBank acquisition Average Total Deposits | Period | Amount | | :-------------------- | :------------- | | Q2 2025 | $4.65 billion | | Q2 2024 | $4.11 billion | - Average total deposits for Q2 2025 increased by $537 million or 13.06% year-over-year[8]. On a linked quarter basis, average deposits remained stable[8] - The year-over-year increase in average deposits was mostly a result of the acquisition of SimplyBank[8] 2.2.2. Total Deposits Total deposits as of June 30, 2025, increased on a linked quarter basis, with the SimplyBank acquisition contributing substantially to the year-over-year growth Total Deposits | Date | Amount | | :-------------------- | :------------- | | June 30, 2025 | $4.66 billion | | June 30, 2024 | $4.13 billion | | March 31, 2025 | $4.64 billion | - Total deposits as of June 30, 2025, increased by $22.9 million or 0.49% on a linked quarter basis[9]. The SimplyBank acquisition in July 2024 contributed $622 million in deposits[9] Deposit Composition (June 30, 2025 vs 2024) | Type | June 30, 2025 | June 30, 2024 | | :-------------------- | :------------- | :------------- | | Non-interest bearing | $860 million | $749 million | | Time deposits | $710 million | $586 million | 3. Capital and Shareholder Metrics Shareholders' equity and per-share metrics improved year-over-year, while the tangible common equity ratio saw a slight decrease 3.1. Shareholders' Equity and Dividends Shareholders' equity increased year-over-year, reaching $587.7 million. The Corporation maintained its quarterly dividend at $0.51 per share and did not repurchase any shares in the last twelve months Shareholders' Equity | Date | Amount | | :-------------------- | :------------- | | June 30, 2025 | $587.7 million | | June 30, 2024 | $530.7 million | - The Corporation has not repurchased any shares of its common stock during the last twelve months[10]. 518,860 shares remain available for repurchase under the current authorization[10] - A $0.51 per share quarterly dividend was paid in April and declared for July 15, 2025[10] 3.2. Book Value Per Share Both book value per share and tangible book value per share increased significantly year-over-year, reflecting improved equity Book Value Per Share | Metric | June 30, 2025 | June 30, 2024 | Change (YoY) | | :-------------------- | :------------- | :------------- | :----------- | | Book Value per share | $49.59 | $44.92 | +10.40% | | Tangible Book Value per share | $39.74 | $37.12 | +7.06% | 3.3. Tangible Common Equity to Tangible Asset Ratio The tangible common equity to tangible asset ratio slightly decreased year-over-year, from 9.14% to 8.58% Tangible Common Equity to Tangible Asset Ratio | Date | Ratio | | :-------------------- | :------------- | | June 30, 2025 | 8.58% | | June 30, 2024 | 9.14% | 4. Net Interest Income and Margin First Financial Corporation achieved a record net interest income of $52.7 million in Q2 2025, a 34.0% increase year-over-year, driven by sustained loan growth. The net interest margin also expanded significantly to 4.15% 4.1. Net Interest Income and Margin First Financial Corporation achieved a record net interest income of $52.7 million in Q2 2025, a 34.0% increase year-over-year, driven by sustained loan growth. The net interest margin also expanded significantly to 4.15% Net Interest Income and Margin | Metric | Q2 2025 | Q2 2024 | Change (YoY) | | :-------------------- | :------------- | :------------- | :----------- | | Net interest income | $52.7 million | $39.3 million | +34.0% | | Net interest margin | 4.15% | 3.57% | +0.58 pp | - The increase in net interest income was primarily due to a $13.4 million increase in interest income, while interest expense increased by only $29 thousand year over year[13]. This was supported by seven consecutive quarters of loan growth[13] 5. Asset Quality Asset quality improved with significant decreases in nonperforming loans, credit loss provision, and net charge-offs, while the allowance for credit losses increased in absolute terms 5.1. Nonperforming Loans Nonperforming loans significantly decreased year-over-year, resulting in a lower ratio of nonperforming loans to total loans and leases Nonperforming Loans | Metric | June 30, 2025 | June 30, 2024 | Change (YoY) | | :------------------------------------ | :------------- | :------------- | :----------- | | Nonperforming loans | $9.8 million | $15.9 million | -38.4% | | Ratio to total loans and leases | 0.25% | 0.50% | -0.25 pp | - On a linked quarter basis, nonperforming loans decreased from $10.2 million as of March 31, 2025, and the ratio of nonperforming loans to total loans and leases improved from 0.26%[15] 5.2. Credit Loss Provision and Net Charge-Offs The provision for credit losses and net charge-offs both decreased substantially in Q2 2025 compared to the same period in 2024, indicating improved credit performance Credit Loss Provision and Net Charge-Offs (Q2 YoY) | Metric | Q2 2025 | Q2 2024 | Change (YoY) | | :-------------------------- | :------------- | :------------- | :----------- | | Provision for credit losses | $2.0 million | $3.0 million | -33.33% | | Net charge-offs | $1.7 million | $4.7 million | -63.83% | 5.3. Allowance for Credit Losses The allowance for credit losses increased in absolute terms but remained stable as a percentage of total loans, reflecting prudent risk management Allowance for Credit Losses | Metric | June 30, 2025 | June 30, 2024 | Change (YoY) | | :------------------------------------ | :------------- | :------------- | :----------- | | Allowance for credit losses | $47.1 million | $38.3 million | +22.98% | | As a percent of total loans | 1.21% | 1.20% | +0.01 pp | - On a linked quarter basis, the allowance for credit losses as a percent of total loans decreased one basis point from 1.22% as of March 31, 2025[18] 6. Non-Interest Income and Expense Non-interest income saw a modest increase, while non-interest expense also rose, yet the efficiency ratio improved, indicating better operational leverage 6.1. Non-Interest Income Non-interest income for Q2 2025 saw a modest increase to $10.4 million from $9.9 million in the prior year Non-Interest Income (Q2 YoY) | Period | Amount | | :-------------------- | :------------- | | Q2 2025 | $10.4 million | | Q2 2024 | $9.9 million | 6.2. Non-Interest Expense Non-interest expense increased to $38.3 million in Q2 2025 from $32.7 million in Q2 2024 Non-Interest Expense (Q2 YoY) | Period | Amount | | :-------------------- | :------------- | | Q2 2025 | $38.3 million | | Q2 2024 | $32.7 million | 6.3. Efficiency Ratio The Corporation's efficiency ratio improved to 59.37% in Q2 2025 from 64.56% in Q2 2024, indicating increased operational efficiency Efficiency Ratio (Q2 YoY) | Period | Ratio | | :-------------------- | :------------- | | Q2 2025 | 59.37% | | Q2 2024 | 64.56% | 7. Income Taxes Income tax expense increased in Q2 2025, with a higher effective tax rate compared to the previous year 7.1. Income Taxes Income tax expense increased in Q2 2025, with a higher effective tax rate compared to the previous year Income Taxes (Q2 YoY) | Metric | Q2 2025 | Q2 2024 | | :-------------------- | :------------- | :------------- | | Income tax expense | $4.2 million | $2.2 million | | Effective tax rate | 18.58% | 16.29% | 8. About First Financial Corporation First Financial Corporation is the holding company for First Financial Bank N.A., the fifth oldest national bank in the U.S., operating 83 banking centers across five states 8.1. Company Overview First Financial Corporation is the holding company for First Financial Bank N.A., the fifth oldest national bank in the U.S., operating 83 banking centers across five states - First Financial Corporation (NASDAQ:THFF) is the holding company for First Financial Bank N.A.[23] - First Financial Bank N.A. is the fifth oldest national bank in the United States[23] - The bank operates 83 banking centers in Illinois, Indiana, Kentucky, Tennessee, and Georgia[23] 9. Consolidated Financial Data This section provides detailed consolidated financial data, including end-of-period and average balances, income statement figures, per-share data, key ratios, asset quality details, and non-GAAP reconciliations, highlighting overall improved performance 9.1. End of Period and Average Balances This section provides detailed balances for assets, deposits, loans, and equity at period end and average balances for the quarter and year-to-date, showing growth across key balance sheet items End of Period Balances (in thousands) | Metric | June 30, 2025 | June 30, 2024 | | :-------------------------- | :------------ | :------------ | | Assets | $5,602,969 | $4,891,068 | | Deposits | $4,662,889 | $4,132,327 | | Loans, including net deferred loan costs | $3,896,563 | $3,204,009 | | Allowance for Credit Losses | $47,087 | $38,334 | | Total Equity | $587,668 | $530,670 | | Tangible Common Equity | $470,894 | $438,569 | Average Balances (in thousands) - Q2 2025 vs Q2 2024 | Metric | Q2 2025 | Q2 2024 | | :-------------------------- | :------------ | :------------ | | Total Assets | $5,529,225 | $4,813,308 | | Loans | $3,877,246 | $3,197,695 | | Total Deposits | $4,651,051 | $4,113,826 | | Total Equity | $576,288 | $517,890 | 9.2. Income Statement Data Key income statement figures for net interest income, provision for credit losses, non-interest income, non-interest expense, and net income are presented for the quarter and year-to-date periods, showing significant improvements in profitability Income Statement Data (in thousands) - Q2 2025 vs Q2 2024 | Metric | Q2 2025 | Q2 2024 | | :-------------------------- | :------------ | :------------ | | Net Interest Income | $52,671 | $39,294 | | Provision for Credit Losses | $1,950 | $2,966 | | Non-interest Income | $10,381 | $9,905 | | Non-interest Expense | $38,276 | $32,651 | | Net Income | $18,586 | $11,369 | Income Statement Data (in thousands) - YTD 2025 vs YTD 2024 | Metric | YTD 2025 | YTD 2024 | | :-------------------------- | :------------ | :------------ | | Net Interest Income | $104,646 | $78,214 | | Provision for Credit Losses | $3,900 | $4,766 | | Non-interest Income | $20,892 | $19,336 | | Non-interest Expense | $75,035 | $66,073 | | Net Income | $36,992 | $22,293 | 9.3. Per Share Data Detailed per share data, including basic and diluted net income, cash dividends, book value, and tangible book value, highlights strong shareholder returns and equity growth Per Share Data - Q2 2025 vs Q2 2024 | Metric | Q2 2025 | Q2 2024 | | :-------------------------------- | :------ | :------ | | Basic and Diluted Net Income Per Common Share | $1.57 | $0.96 | | Cash Dividends Declared Per Common Share | $0.51 | $0.45 | | Book Value Per Common Share | $49.59 | $44.92 | | Tangible Book Value Per Common Share | $38.78 | $36.04 | Per Share Data - YTD 2025 vs YTD 2024 | Metric | YTD 2025 | YTD 2024 | | :-------------------------------- | :------ | :------ | | Basic and Diluted Net Income Per Common Share | $3.12 | $1.89 | | Cash Dividends Declared Per Common Share | $1.02 | $0.90 | | Book Value Per Common Share | $49.59 | $44.92 | | Tangible Book Value Per Common Share | $39.74 | $37.12 | 9.4. Key Ratios A comprehensive table of key financial ratios, including profitability, efficiency, asset quality, and capital ratios, demonstrates overall improved performance and sound financial health Key Ratios - Q2 2025 vs Q2 2024 | Metric | Q2 2025 | Q2 2024 | | :------------------------------------ | :------ | :------ | | Return on average assets | 1.34 % | 0.94 % | | Return on average common shareholder's equity | 12.90 % | 8.78 % | | Efficiency ratio | 59.37 % | 64.56 % | | Net interest margin (tax equivalent) | 4.15 % | 3.57 % | | Nonperforming loans to loans and leases | 0.25 % | 0.50 % | | Tier 1 leverage | 10.91 % | 12.14 % | 9.5. Asset Quality Details Detailed breakdown of asset quality metrics, including past due loans, nonaccrual loans, other real estate owned, and net charge-offs, indicating a healthier loan portfolio Asset Quality (in thousands) - June 30, 2025 vs June 30, 2024 | Metric | June 30, 2025 | June 30, 2024 | | :------------------------------------ | :------------ | :------------ | | Accruing loans and leases past due 30-89 days | $22,303 | $14,913 | | Nonaccrual loans and leases | $7,878 | $14,563 | | Nonperforming loans and other real estate owned | $10,178 | $16,086 | | Total nonperforming assets | $13,087 | $18,978 | | Net charge-offs/(recoveries) (Q2) | $1,698 | $4,677 | | Net charge-offs/(recoveries) (YTD) | $3,545 | $6,199 | 9.6. Non-GAAP Reconciliations Reconciliations for pre-tax, pre-provision income are provided for both the three and six months ended June 30, 2025 and 2024, offering additional perspective on core profitability Pre-tax, Pre-provision Income (in thousands) - Q2 2025 vs Q2 2024 | Metric | Q2 2025 | Q2 2024 | | :-------------------------- | :------------ | :------------ | | Income before Income Taxes | $22,826 | $13,582 | | Provision for credit losses | $1,950 | $2,966 | | Provision for unfunded commitments | $100 | $(300) | | Pre-tax, Pre-provision Income | $24,876 | $16,248 | Pre-tax, Pre-provision Income (in thousands) - YTD 2025 vs YTD 2024 | Metric | YTD 2025 | YTD 2024 | | :-------------------------- | :------------ | :------------ | | Income before Income Taxes | $46,603 | $26,711 | | Provision for credit losses | $3,900 | $4,766 | | Provision for unfunded commitments | $100 | $(300) | | Pre-tax, Pre-provision Income | $50,603 | $31,177 | 10. Consolidated Financial Statements This section presents the full consolidated balance sheets and statements of income and comprehensive income, offering a complete view of the Corporation's financial position and performance 10.1. Consolidated Balance Sheets The consolidated balance sheets provide a detailed breakdown of assets, liabilities, and shareholders' equity as of June 30, 2025, and December 31, 2024, reflecting the company's financial position Consolidated Balance Sheet (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | TOTAL ASSETS | $5,602,969 | $5,560,348 | | TOTAL LIABILITIES | $5,015,301 | $5,011,307 | | TOTAL SHAREHOLDERS' EQUITY | $587,668 | $549,041 | Loan Composition (in thousands) - June 30, 2025 | Type | Amount | | :-------------------- | :------------- | | Commercial | $2,222,015 | | Residential | $987,738 | | Consumer | $681,538 | Deposit Composition (in thousands) - June 30, 2025 | Type | Amount | | :-------------------- | :------------- | | Non-interest-bearing | $859,699 | | Interest-bearing | $3,803,190 | 10.2. Consolidated Statements of Income and Comprehensive Income The consolidated statements of income and comprehensive income present the financial performance for the three and six months ended June 30, 2025, and 2024, detailing interest income, interest expense, non-interest income, non-interest expense, and net income Consolidated Statements of Income (in thousands) - Q2 2025 vs Q2 2024 | Metric | Q2 2025 | Q2 2024 | | :------------------------------------ | :------------ | :------------ | | TOTAL INTEREST INCOME | $74,177 | $60,771 | | TOTAL INTEREST EXPENSE | $21,506 | $21,477 | | NET INTEREST INCOME | $52,671 | $39,294 | | Provision for credit losses | $1,950 | $2,966 | | TOTAL NON-INTEREST INCOME | $10,381 | $9,905 | | TOTAL NON-INTEREST EXPENSE | $38,276 | $32,651 | | NET INCOME | $18,586 | $11,369 | Consolidated Statements of Income (in thousands) - YTD 2025 vs YTD 2024 | Metric | YTD 2025 | YTD 2024 | | :------------------------------------ | :------------ | :------------ | | TOTAL INTEREST INCOME | $147,209 | $120,174 | | TOTAL INTEREST EXPENSE | $42,563 | $41,960 | | NET INTEREST INCOME | $104,646 | $78,214 | | Provision for credit losses | $3,900 | $4,766 | | TOTAL NON-INTEREST INCOME | $20,892 | $19,336 | | TOTAL NON-INTEREST EXPENSE | $75,035 | $66,073 | | NET INCOME | $36,992 | $22,293 |