First Financial Posts Record Profit as Lending Income Climbs
Net interest income rose 16.2% to a record $61.2 million.
First Financial Corporation (THFF), the Indiana-based bank holding company, posted record second-quarter earnings as loan growth and a wider net interest margin lifted its core banking business.
The quarter extended First Financial’s earnings momentum while presenting a mixed credit picture. Profitability improved both year over year and sequentially, though charge-offs remained elevated and reserve coverage narrowed.
Net income reached $22.7 million, up 22.4% from $18.6 million a year earlier and 14.8% from the first quarter. Diluted earnings rose to $1.91 a share from $1.57 a year earlier and $1.67 in the preceding quarter, while pre-tax, pre-provision income increased 17.7% to $29.3 million.
Net interest income benefited from average loans rising 14.83% to $4.45 billion. The net interest margin widened 18 basis points from a year earlier and 10 basis points sequentially to 4.33%, helping return on average assets increase to 1.48% from 1.34% a year earlier.
Period-end loans increased 14.66% from a year earlier, including $300 million of organic growth led by commercial construction and development, commercial real estate and consumer auto lending. First Financial also added $292 million of loans and $313 million of deposits through its March acquisition of CedarStone Financial.
Expenses rose 11.1% to $42.5 million, while non-interest income was nearly unchanged at $10.6 million. The efficiency ratio nevertheless improved to 57.95% from 59.37% a year earlier as growth in net interest income outpaced the increase in costs.
Credit trends tempered the stronger operating results. Nonperforming loans climbed to $27.1 million from $9.8 million a year earlier, though they eased from the first quarter, while net charge-offs increased to $2.7 million. The provision for credit losses declined to $1.3 million, and reserve coverage fell to 1.14% of loans from 1.21% a year earlier.