Press Release

First Financial Bancorp Announces Second Quarter Financial Results

- Second Quarter 2019 Earnings per Diluted Share Increased 13% from First Quarter 2019

- 7.8% Loan Growth on an Annualized Basis

- Board Approves Dividend Increase

Company Release - 7/18/2019 4:15 PM ET

CINCINNATI, July 18, 2019 /PRNewswire/ -- First Financial Bancorp. (Nasdaq: FFBC) ("First Financial" or the "Company") announced financial results for the second quarter 2019 and an increase in the quarterly dividend from $0.22 to $0.23 per share, payable on September 16, 2019 to shareholders of record as of September 2, 2019.

For the three months ended June 30, 2019, the Company reported net income of $52.7 million, or $0.53 per diluted common share.  These results compare to net income of $45.8 million, or $0.47 per diluted common share, for the first quarter of 2019 and $36.4 million, or $0.37 per diluted common share, for the second quarter of 2018.  Second quarter 2019 income before taxes was negatively impacted by $5.2 million of severance and merger related costs.  For the six months ended June 30, 2019, First Financial had earnings per diluted common share of $1.00 compared to $0.83 for the same period in 2018.

Return on average assets for the second quarter of 2019 was 1.50% while return on average tangible common equity was 17.33%.  These compare to returns on average assets of 1.33% and 1.05%, and returns on average tangible common equity of 15.95% and 13.75%, in the first quarter of 2019 and the second quarter of 2018, respectively.

Second quarter 2019 highlights include:

  • After adjustments(1) for merger-related and nonrecurring items:
    • Net income of $0.58 per diluted common share
    • 1.63% return on average assets
    • 18.87% return on average tangible common equity
  • Loan balances grew 7.8% on an annualized basis
    • $171.6 million increase compared to the linked quarter
  • Net interest margin of 4.04% on a fully tax-equivalent basis(1)
    • 6 basis point reduction from the linked quarter driven by higher funding costs and day count
  • Noninterest income increased 29.1% compared to the linked quarter
    • Driven by record client derivative fees and solid mortgage banking activity combined with higher bankcard and service charge income
  • Noninterest expenses of $84.4 million, or $78.9 million as adjusted(1)
    • Efficiency ratio of 53.8% for the second quarter; 50.3% as adjusted(1)
  • Provision expense of $6.7 million; primarily impacted by additional reserves required for the franchise relationship discussed in the first quarter
  • Strong capital ratios
    • Total capital of 14.21%; Tier 1 common equity of 12.02%; Tangible common equity of 9.34%
    • Tangible book value increased to $12.79

(1) Financial information in this release that is described as "adjusted" or that is presented on a fully tax equivalent basis is non-GAAP.  For details on the calculation of these non-GAAP financial measures and a reconciliation to the GAAP financial measure, see the sections titled "Use of Non-GAAP Financial Measures" in this release and "Appendix: Non-GAAP to GAAP Reconciliation" in the accompanying slide presentation.

Archie Brown, President and Chief Executive Officer, commented, "The second quarter of 2019 was another highly successful one for First Financial, and further demonstrates the consistency and capabilities of the Company.  Loan growth, net interest margin, fee income and efficiency all met or surpassed our expectations resulting in adjusted(1) earnings per share of $0.58 and a top quartile adjusted(1) return on assets of 1.63%."

Mr. Brown continued, "We remain optimistic about the prospect of sustained success in the near term.  We were particularly pleased with the level of loan growth during the quarter, in addition to record fee income and prudent expense management.  While we face some pressure on the margin given the expected rate environment, we are working to mitigate the potential impact through disciplined deposit pricing initiatives.  Aside from additional provision related to the workout of the franchise credit disclosed last quarter, credit costs were better than expectations and overall credit remains stable."

Mr. Brown concluded, "We were excited to announce the acquisition of Bannockburn Global Forex, LLC, which will enhance our capabilities to serve middle market clients, broaden our customer base and drive higher fee income.  Additionally, we are pleased to announce an increase in the quarterly dividend to $0.23, reflecting our commitment to deploying capital in a way that sustains financial and operating success in addition to directly rewarding shareholders.  While the announced acquisition impacted potential share repurchase activity during the quarter, our strong capital levels provide the flexibility for further additional capital deployment opportunities in the future."

Full detail of the Company's second quarter and year to date performance is provided in the accompanying financial statements and slide presentation.


Teleconference / Webcast Information
First Financial's executive management will host a conference call to discuss the Company's financial and operating results on Friday, July 19, 2019 at 8:30 a.m. Eastern Time.  Members of the public who would like to listen to the conference call should dial (877) 506-6873 (U.S. toll free), (855) 669-9657 (Canada toll free) or +1 (412) 380-2003 (International) (no passcode required).  The number should be dialed five to ten minutes prior to the start of the conference call.  The conference call will also be accessible as an audio webcast via the Investor Relations section of the Company's website at www.bankatfirst.com.  A replay of the conference call will be available beginning one hour after the completion of the live call at (877) 344-7529 (U.S. toll free), (855) 669-9658 (Canada toll free) and +1 (412) 317-0088 (International); conference number 10133133.  The webcast will be archived on the Investor Relations section of the Company's website for 12 months.

Press Release and Additional Information on Website
This press release as well as supplemental information are available to the public through the Investor Relations section of First Financial's website at www.bankatfirst.com.

Use of Non-GAAP Financial Measures
This earnings release contains GAAP financial measures and Non-GAAP financial measures where management believes it to be helpful in understanding the Company's results of operations or financial position.  Where Non-GAAP financial measures are used, the comparable GAAP financial measures, as well as a reconciliation to the comparable GAAP financial measure, can be found in the section titled "Appendix: Non-GAAP to GAAP Reconciliation" in the accompanying slide presentation.

Forward-Looking Statement

Certain statements contained in this report which are not statements of historical fact constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  Words such as ''believes,'' ''anticipates,'' "likely," "expected," "estimated," ''intends'' and other similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements.  Examples of forward-looking statements include, but are not limited to, statements we make about (i) our future operating or financial performance, including revenues, income or loss and earnings or loss per share, (ii) future common stock dividends, (iii) our capital structure, including future capital levels, (iv) our plans, objectives and strategies, and (v) the assumptions that underlie our forward-looking statements.

As with any forecast or projection, forward-looking statements are subject to inherent uncertainties, risks and changes in circumstances that may cause actual results to differ materially from those set forth in the forward-looking statements.  Forward-looking statements are not historical facts but instead express only management's beliefs regarding future results or events, many of which, by their nature, are inherently uncertain and outside of management's control. It is possible that actual results and outcomes may differ, possibly materially, from the anticipated results or outcomes indicated in these forward-looking statements.  Important factors that could cause actual results to differ materially from those in our forward-looking statements include the following, without limitation: (i) economic, market, liquidity, credit, interest rate, operational and technological risks associated with the Company's business; (ii) the effect of and changes in policies and laws or regulatory agencies, including the Dodd-Frank Wall Street Reform and Consumer Protection Act and other legislation and regulation relating to the banking industry; (iii) management's ability to effectively execute its business plans; (iv) mergers and acquisitions, including costs or difficulties related to the integration of acquired companies; (v) the possibility that any of the anticipated benefits of the Company's merger with MainSource Financial Group, Inc. will not be realized or will not be realized within the expected time period; (vi) the effect of changes in accounting policies and practices; (vii) changes in consumer spending, borrowing and saving and changes in unemployment; (viii) changes in customers' performance and creditworthiness; and (ix) the costs and effects of litigation and of unexpected or adverse outcomes in such litigation.  Additional factors that may cause our actual results to differ materially from those described in our forward-looking statements can be found in our Form 10-K for the year ended December 31, 2018, as well as our other filings with the SEC, which are available on the SEC website at www.sec.gov.  

All forward-looking statements included in this filing are made as of the date hereof and are based on information available at the time of the filing.  Except as required by law, the Company does not assume any obligation to update any forward-looking statement.

About First Financial Bancorp.

First Financial Bancorp. is a Cincinnati, Ohio based bank holding company.  As of June 30, 2019, the Company had $14.4 billion in assets, $9.0 billion in loans, $10.1 billion in deposits and $2.2 billion in shareholders' equity.  The Company's subsidiary, First Financial Bank, founded in 1863, provides banking and financial services products through its six lines of business: Commercial, Retail Banking, Investment Commercial Real Estate, Mortgage Banking, Commercial Finance and Wealth Management.  These business units provide traditional banking services to business and retail clients.  Wealth Management provides wealth planning, portfolio management, trust and estate, brokerage and retirement plan services and had approximately $2.8 billion in assets under management as of June 30, 2019.  The Company operated 159 banking centers as of June 30, 2019, primarily in Ohio, Indiana and Kentucky, while the Commercial Finance business lends into targeted industry verticals on a nationwide basis.  Additional information about the Company, including its products, services and banking locations, is available at www.bankatfirst.com.

 

FIRST FINANCIAL BANCORP.

CONSOLIDATED FINANCIAL HIGHLIGHTS

(Dollars in thousands, except per share data)

(Unaudited)
















Three Months Ended,


Six months ended,


Jun. 30,


Mar. 31,


Dec. 31,


Sep. 30,


Jun. 30,


June 30,


2019


2019


2018


2018


2018


2019


2018

RESULTS OF OPERATIONS














Net income

$

52,703



$

45,839



$

55,014



$

50,657



$

36,418



$

98,542



$

66,924


Net earnings per share - basic

$

0.54



$

0.47



$

0.56



$

0.52



$

0.37



$

1.01



$

0.84


Net earnings per share - diluted

$

0.53



$

0.47



$

0.56



$

0.51



$

0.37



$

1.00



$

0.83


Dividends declared per share

$

0.22



$

0.22



$

0.20



$

0.20



$

0.19



$

0.44



$

0.38
















KEY FINANCIAL RATIOS














Return on average assets

1.50

%


1.33

%


1.59

%


1.45

%


1.05

%


1.42

%


1.18

%

Return on average shareholders' equity

9.85

%


8.88

%


10.68

%


9.94

%


7.36

%


9.37

%


9.19

%

Return on average tangible shareholders' equity

17.33

%


15.95

%


19.63

%


18.52

%


13.75

%


16.66

%


15.12

%















Net interest margin

3.99

%


4.05

%


4.16

%


4.06

%


4.10

%


4.02

%


3.98

%

Net interest margin (fully tax equivalent) (1)

4.04

%


4.10

%


4.21

%


4.12

%


4.15

%


4.07

%


4.03

%















Ending shareholders' equity as a percent of ending assets

15.16

%


15.14

%


14.86

%


14.70

%


14.46

%


15.16

%


14.46

%

Ending tangible shareholders' equity as a percent of:














Ending tangible assets

9.34

%


9.15

%


8.79

%


8.53

%


8.30

%


9.34

%


8.30

%

Risk-weighted assets

11.84

%


11.61

%


11.20

%


10.77

%


10.52

%


11.84

%


10.52

%















Average shareholders' equity as a percent of average assets

15.22

%


15.01

%


14.84

%


14.62

%


14.33

%


15.12

%


12.87

%

Average tangible shareholders' equity as a percent of














    average tangible assets

9.26

%


8.95

%


8.66

%


8.42

%


8.16

%


9.11

%


8.24

%















Book value per share

$

22.18



$

21.60



$

21.23



$

20.79



$

20.56



$

22.18



$

20.56


Tangible book value per share

$

12.79



$

12.19



$

11.72



$

11.25



$

11.01



$

12.79



$

11.01
















Common equity tier 1 ratio (2)

12.02

%


12.03

%


11.87

%


11.52

%


11.15

%


12.02

%


11.15

%

Tier 1 ratio (2)

12.42

%


12.43

%


12.28

%


11.93

%


11.55

%


12.42

%


11.55

%

Total capital ratio (2)

14.21

%


14.24

%


14.10

%


13.77

%


13.36

%


14.21

%


13.36

%

Leverage ratio (2)

10.02

%


9.84

%


9.71

%


9.41

%


9.06

%


10.02

%


9.06

%















AVERAGE BALANCE SHEET ITEMS














Loans (3)

$

8,852,662



$

8,773,310



$

8,766,302



$

8,848,710



$

8,933,400



$

8,813,206



$

7,483,004


FDIC indemnification asset













747


Investment securities

3,408,994



3,355,732



3,204,758



3,168,044



3,157,339



3,382,510



2,603,139


Interest-bearing deposits with other banks

33,255



34,709



32,013



39,873



29,261



33,978



28,173


  Total earning assets

$

12,294,911



$

12,163,751



$

12,003,073



$

12,056,627



$

12,120,000



$

12,229,694



$

10,115,063


Total assets

$

14,102,733



$

13,952,551



$

13,768,958



$

13,822,675



$

13,956,360



$

14,028,058



$

11,407,429


Noninterest-bearing deposits

$

2,484,214



$

2,457,587



$

2,476,773



$

2,388,976



$

2,421,230



$

2,470,974



$

1,998,251


Interest-bearing deposits

7,612,146



7,610,092



7,573,069



7,499,112



7,961,405



7,611,125



6,654,334


  Total deposits

$

10,096,360



$

10,067,679



$

10,049,842



$

9,888,088



$

10,382,635



$

10,082,099



$

8,652,585


Borrowings

$

1,656,570



$

1,587,068



$

1,509,642



$

1,748,415



$

1,408,024



$

1,622,011



$

1,138,931


Shareholders' equity

$

2,146,997



$

2,094,234



$

2,042,884



$

2,021,400



$

2,000,093



$

2,120,762



$

1,467,741
















CREDIT QUALITY RATIOS













Allowance to ending loans

0.69

%


0.64

%


0.64

%


0.65

%


0.61

%


0.69

%


0.61

%

Allowance to nonaccrual loans

119.86

%


95.40

%


79.97

%


136.22

%


133.65

%


119.86

%


133.65

%

Allowance to nonperforming loans

69.33

%


68.94

%


65.13

%


92.08

%


86.80

%


69.33

%


86.80

%

Nonperforming loans to total loans

0.99

%


0.93

%


0.98

%


0.71

%


0.70

%


0.99

%


0.70

%

Nonperforming assets to ending loans, plus OREO

1.00

%


0.95

%


1.00

%


0.73

%


0.72

%


1.00

%


0.72

%

Nonperforming assets to total assets

0.62

%


0.60

%


0.63

%


0.47

%


0.46

%


0.62

%


0.46

%

Classified assets to total assets

1.02

%


1.01

%


0.94

%


1.00

%


1.00

%


1.02

%


1.00

%

Net charge-offs to average loans (annualized)

0.08

%


0.64

%


0.29

%


(0.02)

%


0.18

%


0.36

%


0.16

%






















(1) The tax equivalent adjustment to net interest income recognizes the income tax savings when comparing taxable and tax-exempt assets and assumes a 21% tax rate.  Management believes that it is a standard practice in the banking industry to present net interest margin and net interest income on a fully tax equivalent basis.  Therefore, management believes these measures provide useful information to investors by allowing them to make peer comparisons.  Management also uses these measures to make peer comparisons.

(2) June 30, 2019 regulatory capital ratios are preliminary.

(3) Includes loans held for sale.

 

 

FIRST FINANCIAL BANCORP.

CONSOLIDATED STATEMENTS OF INCOME

(Dollars in thousands, except per share data)

(Unaudited)






Three months ended,


Six months ended,


June 30,


June 30,


2019


2018


% Change


2019


2018


% Change

Interest income












  Loans and leases, including fees

$

126,365



$

122,290



3.3

%


$

249,421



$

197,210



26.5

%

  Investment securities












     Taxable

23,616



20,844



13.3

%


47,851



34,514



38.6

%

     Tax-exempt

4,336



4,068



6.6

%


8,594



5,725



50.1

%

        Total investment securities interest

27,952



24,912



12.2

%


56,445



40,239



40.3

%

  Other earning assets

206



177



16.4

%


416



284



46.5

%

       Total interest income

154,523



147,379



4.8

%


306,282



237,733



28.8

%













Interest expense












  Deposits

20,612



14,794



39.3

%


39,855



25,092



58.8

%

  Short-term borrowings

6,646



4,132



60.8

%


12,606



6,795



85.5

%

  Long-term borrowings

4,963



4,474



10.9

%


10,004



6,055



65.2

%

      Total interest expense

32,221



23,400



37.7

%


62,465



37,942



64.6

%

      Net interest income

122,302



123,979



(1.4)

%


243,817



199,791



22.0

%

  Provision for loan and lease losses

6,658



3,735



78.3

%


20,741



6,038



243.5

%

      Net interest income after provision for loan and lease losses

115,644



120,244



(3.8)

%


223,076



193,753



15.1

%













Noninterest income












  Service charges on deposit accounts

9,819



9,568



2.6

%


18,722



14,607



28.2

%

  Trust and wealth management fees

3,943



3,697



6.7

%


8,013



7,651



4.7

%

  Bankcard income

6,497



5,343



21.6

%


12,083



8,737



38.3

%

  Client derivative fees

4,905



1,463



235.3

%


6,609



3,220



105.2

%

  Net gains from sales of loans

3,432



2,316



48.2

%


5,322



2,904



83.3

%

  Net gains (losses) on sale of investment securities

(37)



(30)



23.3

%


(215)



(30)



616.7

%

  Other

6,079



5,899



3.1

%


10,931



8,105



34.9

%

      Total noninterest income

34,638



28,256



22.6

%


61,465



45,194



36.0

%













Noninterest expenses












  Salaries and employee benefits

53,985



55,531



(2.8)

%


101,897



86,633



17.6

%

  Net occupancy

5,596



6,631



(15.6)

%


12,226



11,128



9.9

%

  Furniture and equipment

4,222



5,298



(20.3)

%


7,638



7,338



4.1

%

  Data processing

4,984



14,304



(65.2)

%


10,111



17,976



(43.8)

%

  Marketing

1,976



2,644



(25.3)

%


3,582



3,445



4.0

%

  Communication

747



1,118



(33.2)

%


1,475



1,577



(6.5)

%

  Professional services

2,039



5,659



(64.0)

%


4,291



7,857



(45.4)

%

  State intangible tax

1,307