Press Release

First Financial Bancorp Announces Second Quarter 2020 Financial Results

Company Release - 7/23/2020 4:15 PM ET

CINCINNATI, July 23, 2020 /PRNewswire/ --

  • Earnings per diluted share of $0.38; $0.40 on an adjusted(1) basis
  • Return on average assets of 0.96%; 1.00% as adjusted(1)
  • 57.5% efficiency ratio; 56.1% as adjusted(1)
  • Record core fee income driven by $16.7 million of mortgage banking income
  • $20.2 million total provision for credit losses

First Financial Bancorp. (Nasdaq: FFBC) ("First Financial" or the "Company") announced financial results for the three and six months ended June 30, 2020. 

For the three months ended June 30, 2020, the Company reported net income of $37.4 million, or $0.38 per diluted common share.  These results compare to net income of $28.6 million, or $0.29 per diluted common share, for the first quarter of 2020 and $52.7 million, or $0.53 per diluted common share, for the second quarter of 2019.  For the six months ended June 30, 2020, First Financial had earnings per diluted common share of $0.67 compared to $1.00 for the same period in 2019.

Return on average assets for the second quarter of 2020 was 0.96% while return on average tangible common equity was 12.90%.  These compare to returns on average assets of 0.79% and 1.50%, and returns on average tangible common equity of 9.71% and 17.33%, in the first quarter of 2020 and the second quarter of 2019, respectively.

Second quarter 2020 highlights include:

  • After adjustments(1) for certain nonrecurring and certain COVID-19 related items:
    • Net income of $0.40 per diluted common share
    • 1.00% return on average assets
    • 13.47% return on average tangible common equity
  • Adjustments(1) to net income include:
    • $0.7 million of costs directly related to COVID-19
    • $1.5 million of other nonrecurring costs such as branch consolidation costs
  • Total Allowance for Credit Losses of $175.3 million; Total quarterly provision for credit losses of $20.2 million
    • Loans and leases - ACL of $158.7 million, 1.56% of total loans; 1.71% of loans excluding PPP
    • Unfunded Commitments - ACL of $16.7 million; $2.4 million provision expense
    • Similar to first quarter, substantially all second quarter provision expense related to expected economic impact from COVID-19
  • Strong noninterest income of $42.7 million, an increase of 20.7% from the linked quarter
    • Mortgage banking revenue increased $13.8 million, or 488.6%
    • Continued strong client derivative fee income
    • Foreign exchange income of $6.6 million despite COVID-19 headwinds
    • Service charges on deposits, including overdrafts, declined $2.4 million, or 28.9%
  • Noninterest expenses of $88.7 million, or $86.5 million as adjusted(1)
    • Efficiency ratio of 57.5%; 56.1% as adjusted(1)

(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.

  • Loan balances grew $873.9 million, or 37.8% on an annualized basis
    • Loan growth driven by $885.3 million of PPP loans, net of unearned fees
  • Net interest margin of 3.44% on a fully tax-equivalent basis(1)
    • 33 basis point decline compared to the linked quarter; 62 basis point decline due to loan yields
    • 3 basis points of dilution from PPP
    • Impact of downward movement in short term rates, including the normalization of LIBOR, partially offset by funding cost reductions, higher loan fees, and elevated purchase accounting accretion
  • Strong capital ratios
    • Total capital of 15.13%; bolstered by $150 million sub-debt issuance in early second quarter
    • Tier 1 common equity of 11.44%
    • Tangible common equity of 8.09%; 8.62% excluding PPP loans 
    • Tangible book value per share of $12.26

In response to COVID-19, the Company has:

  • Introduced hardship relief programs that include payment deferrals, fee-waivers and suspension of foreclosures
    • Processed over $2.0 billion of commercial modifications
    • Modified over $126 million of consumer loans including $103 million in residential mortgages
  • Participated in CARES Act SBA Paycheck Protection Program
    • Received in excess of 8,200 PPP applications; over $1.2 billion in requests
    • Approximately 6,800 PPP requests, or 83% of applicants, approved by SBA
    • $912.9 million in PPP balances as of June 30; to date forgiveness has not been requested on any loan
  • Continued implementation of new processes and technologies to improve customer access to banking services
  • Updated existing internal processes and systems to react to high customer demand for relief
  • Donated $1.0 million to fund COVID-19 related relief in our geographic footprint in the first quarter

Archie Brown, President and Chief Executive Officer, remarked, "We are very pleased with our second quarter performance, especially when considering the unique circumstances in which we were operating due to COVID-19.  While second quarter earnings were negatively impacted by pandemic-related events, we posted solid results as reflected in our adjusted(1) earnings per share of $0.40, adjusted(1) return on assets of 1.00% and adjusted(1) efficiency ratio of 56.1%.  Additionally, credit trends remained stable while our allowance for credit losses increased to 1.71% of total loans, excluding PPP, and we recorded $20.2 million of provision expense in anticipation of credit deterioration in the latter part of the year and into 2021."

Mr. Brown continued, "The second quarter was our highest core fee income quarter on record and was the primary driver of our excellent performance.  Our mortgage team had a sensational quarter as the hard work of our team combined with the historic low interest rate environment to drive an almost 500% increase in total mortgage banking revenue to $16.7 million.  In addition, client derivative income remained steady during the quarter and Bannockburn revenue, while lower than the first quarter, was in line with our expectations given the challenges caused by business shutdowns.  Additionally, total expenses declined during the quarter as we limited discretionary spending and implemented additional controls on hiring."

Mr. Brown further commented, "We are pleased with and appreciative of the incredible work performed by our associates during the quarter.  We successfully implemented our pandemic management plan, which resulted in over 50% of our associates working remotely and our branches operating with closed lobbies for most of the quarter.  This required a prompt evaluation of our client service model and a shift to leveraging technology in new and innovative ways.  Our associates met the challenge, and went above and beyond to originate and fund over $900 million in PPP loans, provide customer deferrals for over $2 billion of loans, and process historic numbers of fee waivers and mortgage applications.  By the second half of the quarter, sales activity returned to near pre-pandemic levels which led to increases in new households with checking accounts, strong consumer loan originations and robust wealth production."

Mr. Brown continued, "At this time, approximately 60% of our banking center lobbies are fully open with the remainder servicing clients by appointment.  Physical staffing levels in our office buildings is currently limited to 25% of normal capacity, mostly on a volunteer basis, with the remainder of the staff continuing to work remotely.  We continually monitor conditions in our markets and banking centers, in addition to guidance provided by local and state governments with regard to safely returning to the workplace and opening our branch locations to customers."

Mr. Brown concluded, "The second quarter was historic and challenging, however it illuminated what we are capable of as a company and positioned us to build on the lessons learned in a meaningful way.  We continue to better leverage technology and are reevaluating our distribution model to better serve the needs of our customers.  The broader economic environment remains uncertain and our clients continue to face serious challenges.  We are committed to be a stabilizing presence in our communities and remain steadfast in our promise to manage the Company in a manner that prioritizes the physical and financial well-being of our associates and clients while delivering long-term value to our shareholders."

Full detail of the Company's second quarter 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 24, 2020 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 10145789.  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:

  • economic, market, liquidity, credit, interest rate, operational and technological risks associated with the Company's business;
  • future credit quality and performance, including our expectations regarding future loan losses and our allowance for credit losses
  • 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; (iv) management's ability to effectively execute its business plans;
  • mergers and acquisitions, including costs or difficulties related to the integration of acquired companies;
  • the possibility that any of the anticipated benefits of the Company's acquisitions will not be realized or will not be realized within the expected time period;
  • the effect of changes in accounting policies and practices;
  • changes in consumer spending, borrowing and saving and changes in unemployment;
  • changes in customers' performance and creditworthiness;
  • the costs and effects of litigation and of unexpected or adverse outcomes in such litigation;  
  • current and future economic and market conditions, including the effects of declines in housing prices, high unemployment rates, U.S. fiscal debt, budget and tax matters, geopolitical matters, and any slowdown in global economic growth;
  • the adverse impact on the U.S. economy, including the markets in which we operate, of the novel coronavirus, which causes the Coronavirus disease 2019 ("COVID-19"), global pandemic, and the impact of a slowing U.S. economy and increased unemployment on the performance of our loan and lease portfolio, the market value of our investment securities, the availability of sources of funding and the demand for our products;
  • our capital and liquidity requirements (including under regulatory capital standards, such as the Basel III capital standards) and our ability to generate capital internally or raise capital on favorable terms;
  • financial services reform and other current, pending or future legislation or regulation that could have a negative effect on our revenue and businesses, including the Dodd-Frank Act and other legislation and regulation relating to bank products and services;
  • the effect of the current interest rate environment or changes in interest rates or in the level or composition of our assets or liabilities on our net interest income, net interest margin and our mortgage originations, mortgage servicing rights and mortgage loans held for sale;
  • the effect of a fall in stock market prices on our brokerage, asset and wealth management businesses;
  • a failure in or breach of our operational or security systems or infrastructure, or those of our third-party vendors or other service providers, including as a result of cyber attacks;
  • the effect of changes in the level of checking or savings account deposits on our funding costs and net interest margin; and
  • our ability to develop and execute effective business plans and strategies.

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, 2019, 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, 2020, the Company had $15.9 billion in assets, $10.2 billion in loans, $11.7 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, 2020.  The Company operated 141 full service banking centers as of June 30, 2020, 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,


June 30,


Mar. 31,


Dec. 31,


Sep. 30,


June 30,


June 30,


2020


2020


2019


2019


2019


2020


2019

RESULTS OF OPERATIONS














Net income

$

37,393



$

28,628



$

48,677



$

50,856



$

52,703



$

66,021



$

98,542


Net earnings per share - basic

$

0.38



$

0.29



$

0.49



$

0.52



$

0.54



$

0.68



$

1.01


Net earnings per share - diluted

$

0.38



$

0.29



$

0.49



$

0.51



$

0.53



$

0.67



$

1.00


Dividends declared per share

$

0.23



$

0.23



$

0.23



$

0.23



$

0.22



$

0.46



$

0.44
















KEY FINANCIAL RATIOS














Return on average assets

0.96

%


0.79

%


1.34

%


1.41

%


1.50

%


0.88

%


1.42

%

Return on average shareholders' equity

6.88

%


5.21

%


8.60

%


9.13

%


9.85

%


6.04

%


9.37

%

Return on average tangible shareholders' equity

12.90

%


9.71

%


15.84

%


16.15

%


17.33

%


11.29

%


16.66

%















Net interest margin

3.38

%


3.71

%


3.84

%


3.91

%


3.99

%


3.54

%


4.02

%

Net interest margin (fully tax equivalent) (1)

3.44

%


3.77

%


3.89

%


3.96

%


4.04

%


3.60

%


4.07

%















Ending shareholders' equity as a percent of ending assets

13.99

%


14.47

%


15.49

%


15.62

%


15.16

%


13.99

%


15.16

%

Ending tangible shareholders' equity as a percent of:














Ending tangible assets

8.09

%


8.25

%


9.07

%


9.17

%


9.34

%


8.09

%


9.34

%

Risk-weighted assets

10.85

%


10.50

%


11.09

%


11.34

%


11.82

%


10.85

%


11.82

%















Average shareholders' equity as a percent of average assets

13.91

%


15.21

%


15.53

%


15.43

%


15.22

%


14.54

%


15.12

%

Average tangible shareholders' equity as a percent of














    average tangible assets

7.94

%


8.79

%


9.07

%


9.35

%


9.26

%


8.34

%


9.11

%















Book value per share

$

22.66



$

22.25



$

22.82



$

22.59



$

22.18



$

22.66



$

22.18


Tangible book value per share

$

12.26



$

11.82



$

12.42



$

12.33



$

12.79



$

12.26



$

12.79
















Common equity tier 1 ratio (2)

11.44

%


11.27

%


11.30

%


11.52

%


12.00

%


11.44

%


12.00

%

Tier 1 ratio (2)

11.83

%


11.66

%


11.69

%


11.91

%


12.40

%


11.83

%


12.40

%

Total capital ratio (2)

15.13

%


13.54

%


13.39

%


13.62

%


14.20

%


15.13

%


14.20

%

Leverage ratio (2)

8.98

%


9.49

%


9.58

%


9.75

%


10.02

%


8.98

%


10.02

%















AVERAGE BALANCE SHEET ITEMS














Loans (3)

$

10,002,379



$

9,220,643



$

9,149,222



$

9,014,092



$

8,852,662



$

9,611,511



$

8,813,206


Investment securities

3,164,243



3,115,723



3,102,867



3,290,666



3,408,994



3,139,983



3,382,510


Interest-bearing deposits with other banks

91,990



39,332



36,672



38,569



33,255



65,661



33,978


  Total earning assets

$

13,258,612



$

12,375,698



$

12,288,761



$

12,343,327



$

12,294,911



$

12,817,155



$

12,229,694


Total assets

$

15,710,204



$

14,524,422



$

14,460,288



$

14,320,514



$

14,102,733



$

15,117,313



$

14,028,058


Noninterest-bearing deposits

$

3,335,866



$

2,643,240



$

2,638,908



$

2,513,458



$

2,484,214



$

2,989,553



$

2,470,974


Interest-bearing deposits

8,395,229



7,590,791



7,583,531



7,504,708



7,612,146



7,993,010



7,611,125


  Total deposits

$

11,731,095



$

10,234,031



$

10,222,439



$

10,018,166



$

10,096,360



$

10,982,563



$

10,082,099


Borrowings

$

1,272,819



$

1,735,767



$

1,613,696



$

1,816,983



$

1,656,570



$

1,504,293



$

1,622,011


Shareholders' equity

$

2,185,865



$

2,209,733



$

2,245,107



$

2,210,327



$

2,146,997



$

2,197,799



$

2,120,762
















CREDIT QUALITY RATIOS













Allowance to ending loans

1.56

%


1.55

%


0.63

%


0.62

%


0.69

%


1.56

%


0.69

%

Allowance to nonaccrual loans

233.74

%


296.51

%


119.69

%


93.18

%


119.86

%


233.74

%


119.86

%

Allowance to nonperforming loans

208.06

%


203.42

%


96.73

%


71.46

%


69.33

%


208.06

%


69.33

%

Nonperforming loans to total loans

0.75

%


0.76

%


0.65

%


0.87

%


0.99

%


0.75

%


0.99

%

Nonperforming assets to ending loans, plus OREO

0.77

%


0.78

%


0.67

%


0.89

%


1.00

%


0.77

%


1.00

%

Nonperforming assets to total assets

0.49

%


0.48

%


0.42

%


0.56

%


0.62

%


0.49

%


0.62

%

Classified assets to total assets

0.79

%


0.83

%


0.62

%


0.92

%


1.02

%


0.79

%


1.02

%

Net charge-offs to average loans (annualized)

0.12

%


(0.04)

%


0.15

%


0.45

%


0.08

%


0.05

%


0.36

%


(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, 2020 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,


2020


2019


% Change


2020


2019


% Change

Interest income












  Loans and leases, including fees

$

105,900



$

126,365



(16.2)

%


$

221,675



$

249,421



(11.1)

%

  Investment securities












     Taxable

18,476



23,616



(21.8)

%


37,481



47,851



(21.7)

%

     Tax-exempt

4,937



4,336



13.9

%


9,519



8,594



10.8

%

        Total investment securities interest

23,413



27,952



(16.2)

%


47,000



56,445



(16.7)

%

  Other earning assets

47



206



(77.2)

%


189



416



(54.6)

%

       Total interest income

129,360



154,523



(16.3)

%


268,864



306,282



(12.2)

%













Interest expense












  Deposits

11,751



20,612



(43.0)

%


28,116



39,855



(29.5)

%

  Short-term borrowings

1,274



6,646



(80.8)

%


6,361



12,606



(49.5)

%

  Long-term borrowings

4,759



4,963



(4.1)

%


8,529



10,004



(14.7)

%

      Total interest expense

17,784



32,221



(44.8)

%


43,006



62,465



(31.2)

%

      Net interest income

111,576



122,302



(8.8)

%


225,858



243,817



(7.4)

%

  Provision for credit losses-loans and leases (1)

17,859



6,658



168.2

%


41,739



20,741



101.2

%

  Provision for credit losses-unfunded commitments (1)

2,370



(132)



N/M


3,938



(126)



N/M

      Net interest income after provision for credit losses

91,347



115,776



(21.1)

%


180,181



223,202



(19.3)

%













Noninterest income












  Service charges on deposit accounts

6,001



9,819



(38.9)

%


14,436



18,722



(22.9)

%

  Trust and wealth management fees

4,114



3,943



4.3

%


8,583



8,013



7.1

%

  Bankcard income

2,844



6,497



(56.2)

%


5,542



12,083



(54.1)

%

  Client derivative fees

2,984



4,905



(39.2)

%


6,089



6,609



(7.9)

%

  Foreign exchange income

6,576



17



N/M


16,542



17



N/M

  Net gains from sales of loans

16,662



3,432



385.5

%


19,493



5,322



266.3

%

  Net gains (losses) on sale of investment securities

2



(37)



105.4

%


(57)



(215)



73.5

%

  Other

3,542



6,062



(41.6)

%


7,481



10,914



(31.5)

%

      Total noninterest income

42,725



34,638



23.3

%


78,109



61,465



27.1

%













Noninterest expenses












  Salaries and employee benefits

55,925



53,985



3.6

%


110,747



101,897



8.7

%

  Net occupancy

5,378



5,596



(3.9)

%


11,482



12,226



(6.1)

%

  Furniture and equipment

3,681



4,222



(12.8)

%


7,734



7,638



1.3

%

  Data processing

7,019



4,984



40.8

%


13,408



10,111



32.6

%

  Marketing

1,339



1,976



(32.2)

%


2,559



3,582



(28.6)

%

  Communication

907



747



21.4

%


1,797



1,475



21.8

%

  Professional services

2,205



2,039



8.1

%


4,480



4,291



4.4

%

  State intangible tax

1,514



1,307



15.8

%


3,030



2,617



15.8

%

  FDIC assessments

1,290



1,065



21.1

%


2,695



2,015



33.7

%

  Intangible amortization

2,791



2,044



36.5

%


5,583



4,089



36.5

%

  Other

6,640



6,545



1.5

%


14,840



13,062



13.6

%

      Total noninterest expenses

88,689



84,510



4.9

%


178,355



163,003



9.4

%

Income before income taxes

45,383



65,904



(31.1)

%


79,935



121,664



(34.3)

%

Income tax expense

7,990



13,201



(39.5)

%


13,914



23,122



(39.8)

%

      Net income

$

37,393



$

52,703



(29.0)

%


$

66,021



$

98,542



(33.0)

%













ADDITIONAL DATA












Net earnings per share - basic

$

0.38



$

0.54





$

0.68



$

1.01




Net earnings per share - diluted

$

0.38



$

0.53





$

0.67



$

1.00




Dividends declared per share

$

0.23



$

0.22





$

0.46



$

0.44
















Return on average assets

0.96

%


1.50

%




0.88

%


1.42

%



Return on average shareholders' equity

6.88

%


9.85

%




6.04

%


9.37

%















Interest income

$

129,360



$

154,523



(16.3)

%


$

268,864



$

306,282



(12.2)

%

Tax equivalent adjustment

1,664



1,416



17.5

%


3,288



2,939



11.9

%

   Interest income - tax equivalent

131,024



155,939



(16.0)

%


272,152



309,221



(12.0)

%

Interest expense

17,784



32,221



(44.8)

%


43,006



62,465



(31.2)

%

   Net interest income - tax equivalent

$

113,240



$

123,718



(8.5)

%


$

229,146



$

246,756



(7.1)

%













Net interest margin

3.38

%


3.99

%




3.54

%


4.02

%



Net interest margin (fully tax equivalent) (2)

3.44

%


4.04

%




3.60

%


4.07

%















Full-time equivalent employees

2,076



2,076






















(1) Beginning January 1,2020, calculation is based on current expected loss methodology. Prior to January 1, 2020, calculation was based on the incurred loss methodology.



(2) 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 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.

 

 


FIRST FINANCIAL BANCORP.

CONSOLIDATED QUARTERLY STATEMENTS OF INCOME

(Dollars in thousands, except per share data)

(Unaudited)










2020


Second


First


Full


% Change


Quarter


Quarter


Year


Linked Qtr.

Interest income








  Loans and leases, including fees

$

105,900



$

115,775



$

221,675



(8.5)

%

  Investment securities








     Taxable

18,476



19,005



37,481



(2.8)

%

     Tax-exempt

4,937



4,582



9,519



7.7

%

        Total investment securities interest

23,413



23,587



47,000



(0.7)

%

  Other earning assets

47



142



189



(66.9)

%

       Total interest income

129,360



139,504



268,864



(7.3)

%









Interest expense








  Deposits

11,751



16,365



28,116



(28.2)

%

  Short-term borrowings

1,274



5,087



6,361



(75.0)

%

  Long-term borrowings

4,759



3,770



8,529



26.2

%

      Total interest expense

17,784



25,222



43,006



(29.5)

%

      Net interest income

111,576



114,282



225,858



(2.4)

%

  Provision for credit losses-loans and leases (1)

17,859



23,880



41,739



(25.2)

%

  Provision for credit losses-unfunded commitments (1)

2,370



1,568



3,938



51.1

%

      Net interest income after provision for credit losses

91,347



88,834



180,181



2.8

%









Noninterest income








  Service charges on deposit accounts

6,001



8,435



14,436



(28.9)

%

  Trust and wealth management fees

4,114



4,469



8,583



(7.9)

%

  Bankcard income

2,844



2,698



5,542



5.4

%

  Client derivative fees

2,984



3,105



6,089



(3.9)

%

  Foreign exchange income

6,576



9,966



16,542



(34.0)

%

  Net gains from sales of loans

16,662



2,831



19,493



488.6

%

  Net gains (losses) on sale of investment securities

2



(59)



(57)



103.4

%

  Other

3,542



3,939



7,481



(10.1)

%

      Total noninterest income

42,725



35,384



78,109



20.7

%









Noninterest expenses








  Salaries and employee benefits

55,925



54,822



110,747



2.0

%

  Net occupancy

5,378



6,104



11,482



(11.9)

%

  Furniture and equipment

3,681



4,053



7,734



(9.2)

%

  Data processing

7,019



6,389



13,408



9.9

%

  Marketing

1,339



1,220



2,559



9.8

%

  Communication

907



890



1,797



1.9

%

  Professional services

2,205



2,275



4,480



(3.1)

%

  State intangible tax

1,514



1,516



3,030



(0.1)

%

  FDIC assessments

1,290



1,405



2,695



(8.2)

%

  Intangible amortization

2,791



2,792



5,583



0.0

%

  Other

6,640



8,200



14,840



(19.0)

%

      Total noninterest expenses

88,689



89,666



178,355



(1.1)

%

Income before income taxes

45,383



34,552



79,935



31.3

%

Income tax expense

7,990



5,924



13,914



34.9

%

      Net income

$

37,393



$

28,628



$

66,021



30.6

%









ADDITIONAL DATA








Net earnings per share - basic

$

0.38



$

0.29



$

0.68




Net earnings per share - diluted

$

0.38



$

0.29



$

0.67




Dividends declared per share

$

0.23



$

0.23



$

0.46












Return on average assets

0.96

%


0.79

%


0.88

%



Return on average shareholders' equity

6.88

%


5.21

%


6.04

%











Interest income

$

129,360



$

139,504



$

268,864



(7.3)

%

Tax equivalent adjustment

1,664



1,624



3,288



2.5

%

   Interest income - tax equivalent

131,024



141,128



272,152



(7.2)

%

Interest expense

17,784



25,222



43,006



(29.5)

%

   Net interest income - tax equivalent

$

113,240



$

115,906



$

229,146



(2.3)

%









Net interest margin

3.38

%


3.71

%


3.54

%



Net interest margin (fully tax equivalent) (2)

3.44

%


3.77

%


3.60

%











Full-time equivalent employees

2,076



2,067














(1) Beginning January 1,2020, calculation is based on current expected loss methodology. Prior to January 1, 2020, calculation was based on the incurred loss methodology.



(2) 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 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.

 

 


FIRST FINANCIAL BANCORP.

CONSOLIDATED QUARTERLY STATEMENTS OF INCOME

(Dollars in thousands, except per share data)

(Unaudited)












2019


Fourth


Third


Second


First


Full


Quarter


Quarter


Quarter


Quarter


Year

Interest income










  Loans and leases, including fees

$

122,802



$

126,786



$

126,365



$

123,056



$

499,009


  Investment securities










     Taxable

20,137



22,180



23,616



24,235



90,168


     Tax-exempt

4,545



4,457



4,336



4,258



17,596


        Total investment securities interest

24,682



26,637



27,952



28,493



107,764


  Other earning assets

167



222



206



210



805


       Total interest income

147,651



153,645



154,523



151,759



607,578












Interest expense










  Deposits

19,026



20,151



20,612



19,243



79,032


  Short-term borrowings

5,430



7,199



6,646



5,960



25,235


  Long-term borrowings

4,293



4,760



4,963



5,041



19,057


      Total interest expense

28,749



32,110



32,221



30,244



123,324


      Net interest income

118,902



121,535



122,302



121,515



484,254


  Provision for credit losses-loans and leases (1)

4,629



5,228



6,658



14,083



30,598


  Provision for credit losses-unfunded commitments (1)

177



(216)



(132)



6



(165)


      Net interest income after provision for credit losses

114,096



116,523



115,776



107,426



453,821












Noninterest income










  Service charges on deposit accounts

9,343



9,874



9,819



8,903



37,939


  Trust and wealth management fees

3,913



3,718



3,943



4,070



15,644


  Bankcard income

3,405



3,316



6,497



5,586



18,804


  Client derivative fees

4,194



4,859



4,905



1,704



15,662


  Foreign exchange income

6,014



1,708



17



0



7,739


  Net gains from sales of loans

4,723



4,806



3,432



1,890



14,851


  Net gains on sale of investment securities

(296)



105



(37)



(178)



(406)


  Other

5,472



4,754



6,062



4,852



21,140


      Total noninterest income

36,768



33,140



34,638



26,827



131,373












Noninterest expenses










  Salaries and employee benefits

53,952



53,212



53,985



47,912



209,061


  Net occupancy

6,334



5,509



5,596



6,630



24,069


  Furniture and equipment

4,145



4,120



4,222



3,416



15,903


  Data processing

5,996



5,774



4,984



5,127



21,881


  Marketing

1,980



1,346



1,976



1,606



6,908


  Communication

882



910



747



728



3,267


  Professional services

2,192



4,771



2,039



2,252



11,254


  State intangible tax

1,767



1,445



1,307



1,310



5,829


  FDIC assessments

1,055



(1,097)



1,065



950



1,973


  Intangible amortization

3,150



2,432



2,044



2,045



9,671


  Other

11,434



8,020



6,545



6,517



32,516


      Total noninterest expenses

92,887



86,442



84,510



78,493



342,332


Income before income taxes

57,977



63,221



65,904



55,760



242,862


Income tax expense (benefit)

9,300



12,365



13,201



9,921



44,787


      Net income

$

48,677



$

50,856



$

52,703



$

45,839



$

198,075












ADDITIONAL DATA










Net earnings per share - basic

$

0.49



$

0.52



$

0.54



$

0.47



$

2.01


Net earnings per share - diluted

$

0.49



$

0.51



$

0.53



$

0.47



$

2.00


Dividends declared per share

$

0.23



$

0.23



$

0.22



$

0.22



$

0.90












Return on average assets

1.34

%


1.41

%


1.50

%


1.33

%


1.39

%

Return on average shareholders' equity

8.60

%


9.13

%


9.85

%


8.88

%


9.11

%











Interest income

$

147,651



$

153,645



$

154,523



$

151,759



$

607,578


Tax equivalent adjustment

1,630



1,759



1,416



1,523



6,328


   Interest income - tax equivalent

149,281



155,404



155,939



153,282



613,906


Interest expense

28,749



32,110



32,221



30,244



123,324


   Net interest income - tax equivalent

$

120,532



$

123,294



$

123,718



$

123,038



$

490,582












Net interest margin

3.84

%


3.91

%


3.99

%


4.05

%


3.95

%

Net interest margin (fully tax equivalent) (2)

3.89

%


3.96

%


4.04

%


4.10

%


4.00

%











Full-time equivalent employees

2,065



2,064



2,076



2,087














(1) Beginning January 1,2020, calculation is based on current expected loss methodology. Prior to January 1, 2020, calculation was based on the incurred loss methodology.



(2) 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 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.

 

 


FIRST FINANCIAL BANCORP.

CONSOLIDATED STATEMENTS OF CONDITION

(Dollars in thousands)

(Unaudited)
















June 30,


Mar. 31,


Dec. 31,


Sep. 30,


June 30,


% Change


% Change


2020


2020


2019


2019


2019


Linked Qtr.


Comp Qtr.

ASSETS














     Cash and due from banks

$

283,639



$

261,892



$

200,691



$

242,482



$

169,694



8.3

%


67.1

%

     Interest-bearing deposits with other banks

38,845



71,071



56,948



39,669



101,668



(45.3)

%


(61.8)

%

     Investment securities available-for-sale

2,897,413



2,908,688



2,852,084



2,850,502



3,152,970



(0.4)

%


(8.1)

%

     Investment securities held-to-maturity

127,347



136,744



142,862



148,778



154,327



(6.9)

%


(17.5)

%

     Other investments

132,366



143,581



125,020



124,965



127,439



(7.8)

%


3.9

%

     Loans held for sale

43,950



27,334



13,680



23,528



20,244



60.8

%


117.1

%

     Loans and leases














       Commercial and industrial

3,322,374



2,477,773



2,465,877



2,470,017



2,547,997



34.1

%


30.4

%

       Lease financing

80,087



82,602



88,364



92,616



90,638



(3.0)

%


(11.6)

%

       Construction real estate

506,085



500,311



493,182



515,960



497,683



1.2

%


1.7

%

       Commercial real estate

4,343,702



4,278,257



4,194,651



4,015,908



3,903,654



1.5

%


11.3

%

       Residential real estate

1,043,745



1,061,792



1,055,949



1,055,007



1,015,820



(1.7)

%


2.7

%

       Home equity

764,171



781,243



771,869



776,885



787,139



(2.2)

%


(2.9)

%

       Installment

79,150



80,085



82,589



88,275



89,149



(1.2)

%


(11.2)

%

       Credit card

42,397



45,756



49,184



49,010



48,706



(7.3)

%


(13.0)

%

          Total loans

10,181,711



9,307,819



9,201,665



9,063,678



8,980,786



9.4

%


13.4

%

       Less:














          Allowance for credit losses (1)

158,661



143,885



57,650



56,552



61,549



10.3

%


157.8

%

                Net loans

10,023,050



9,163,934



9,144,015



9,007,126



8,919,237



9.4

%


12.4

%

     Premises and equipment

211,164



212,787



214,506



213,681



211,313



(0.8)

%


(0.1)

%

     Goodwill

937,771



937,771



937,771



937,689



879,727



0.0

%


6.6

%

     Other intangibles

70,325



73,258



76,201



79,506



36,349



(4.0)

%


93.5

%

     Accrued interest and other assets

1,105,020



1,120,507



747,847



812,519



664,695



(1.4)

%


66.2

%

       Total Assets

$

15,870,890



$

15,057,567



$

14,511,625



$

14,480,445



$

14,437,663



5.4

%


9.9

%















LIABILITIES














     Deposits














       Interest-bearing demand

$

2,657,841



$

2,498,109



$

2,364,881



$

2,316,301



$

2,332,692



6.4

%


13.9

%

       Savings

3,287,314



2,978,250



2,960,979



2,924,200



2,953,114



10.4

%


11.3

%

       Time

2,241,212



2,435,858



2,240,441



2,308,617



2,321,908



(8.0)

%


(3.5)

%

          Total interest-bearing deposits

8,186,367



7,912,217



7,566,301



7,549,118



7,607,714



3.5

%


7.6

%

       Noninterest-bearing

3,515,048



2,723,341



2,643,928



2,534,739



2,501,290



29.1

%


40.5

%

          Total deposits

11,701,415



10,635,558



10,210,229



10,083,857



10,109,004



10.0

%


15.8

%

     Federal funds purchased and securities sold














         under agreements to repurchase

154,347



215,824



165,181



85,286



260,621



(28.5)

%


(40.8)

%

     FHLB short-term borrowings

0



1,181,900



1,151,000



1,128,900



1,052,700



(100.0)

%


(100.0)

%

          Total short-term borrowings

154,347



1,397,724



1,316,181



1,214,186



1,313,321



(89.0)

%


(88.2)

%

     Long-term debt

1,285,767



325,566



414,376



498,778



547,042



294.9

%


135.0

%

          Total borrowed funds

1,440,114



1,723,290



1,730,557



1,712,964