First Financial Bancorp Announces Third Quarter 2020 Financial Results

Rhea-AI Summary

First Financial Bancorp (FFBC) reported Q3 2020 net income of $41.5 million and earnings per diluted share of $0.42, a rise from $37.4 million in Q2 2020. Adjusted net income was $0.44 per share, with a return on average assets of 1.04%. The company achieved record core fee income of $49.5 million, up 15.9% from the previous quarter, largely driven by strong mortgage banking and foreign exchange income. However, a provision for credit losses of $13.4 million was recorded due to anticipated economic impacts from COVID-19. Overall, FFBC demonstrated resilience amid challenging conditions.

Positive

• Net income increased to $41.5 million, up from $37.4 million in Q2 2020.
• Record core fee income of $49.5 million, a 15.9% increase from the previous quarter.
• Adjusted earnings per diluted share of $0.44.
• Return on average assets improved to 1.04%.
• Strong mortgage banking revenue increased by $1.9 million, or 11.6% from the previous quarter.

Negative

• Provision for credit losses amounted to $13.4 million due to expected economic impact from COVID-19.
• Earnings per diluted share for the nine months decreased to $1.10 from $1.51 in 2019.
• Net interest margin declined by 8 basis points compared to the linked quarter.

CINCINNATI, Oct. 22, 2020 /PRNewswire/ -- 

• Earnings per diluted share of $0.42; $0.44 on an adjusted⁽¹⁾ basis
• Return on average assets of 1.04%; 1.09% as adjusted⁽¹⁾ 
• Record core fee income driven by $18.6 million of mortgage banking and $10.5 million of foreign exchange income
• Provision for credit losses of $13.4 million; 34% reduction from second quarter

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

For the three months ended September 30, 2020, the Company reported net income of $41.5 million, or $0.42 per diluted common share.  These results compare to net income of $37.4 million, or $0.38 per diluted common share, for the second quarter of 2020 and $50.9 million, or $0.51 per diluted common share, for the third quarter of 2019.  For the nine months ended September 30,  2020, First Financial had earnings per diluted common share of $1.10 compared to $1.51 for the same period in 2019.

Return on average assets for the third quarter of 2020 was 1.04% while return on average tangible common equity was 13.61%.  These compare to returns on average assets of 0.96% and 1.41%, and returns on average tangible common equity of 12.90% and 16.15%, in the second quarter of 2020 and the third quarter of 2019, respectively.

Third quarter 2020 highlights include:

• After adjustments⁽¹⁾ for certain nonrecurring and certain COVID-19 related items:
• Net income of $0.44 per diluted common share
• 1.09% return on average assets
• 14.18% return on average tangible common equity

• Adjustments⁽¹⁾ to net income include:
• $0.1 million of costs directly related to COVID-19
• $2.1 million of other nonrecurring costs such as merger related and branch consolidation costs

• Strong noninterest income of $49.5 million, an increase of 15.9% from the linked quarter
• Mortgage banking revenue increased $1.9 million, or 11.6%
• Record foreign exchange income of $10.5 million; 60.1% increase from linked quarter
• Service charges on deposits, including overdrafts, increased $1.4 million, or 22.6%

• Noninterest expenses of $97.5 million, or $95.3 million as adjusted⁽¹⁾
• Includes $7.0 million of incremental incentive compensation expenses directly related to strong operating results and fee income generation
• Includes $0.5 million contribution to First Financial Foundation
• Efficiency ratio of 60.3%; 58.9% as adjusted⁽¹⁾

• Loan balances were relatively unchanged at $10.2 billion
• Average transactional deposit balances grew $434.5 million compared to the linked quarter; 19.0% on an annualized basis

_________________________________________________________________________________________ (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.

• Total Allowance for Credit Losses of $183.3 million; Total quarterly provision for credit losses of $13.4 million
• Loans and leases - ACL of $168.5 million, 1.65% of total loans; 1.81% of loans excluding PPP
• Unfunded Commitments - ACL of $14.8 million
• Third quarter provision expense driven by expected economic impact from COVID-19, partially offset by higher prepayment rates

• Net interest margin of 3.36% on a fully tax-equivalent basis⁽¹⁾
• 8 basis point decline compared to the linked quarter; 19 basis point decline due to loan yields partially offset by 14 basis point impact from reduced funding costs
• 3 basis points of incremental dilution from PPP from the linked quarter
• Impact of decline in short term rates, partially offset by funding cost reductions and higher loan fees

• Strong capital ratios
• Total capital of 15.37%
• Tier 1 common equity of 11.63%
• Tangible common equity of 8.25%; 8.79% excluding PPP loans 
• Tangible book value per share of $12.56; $0.30 increase compared to linked quarter

Archie Brown, President and Chief Executive Officer, remarked, "We are pleased with our strong third quarter operating results while maintaining focus on three important pandemic related priorities: maintaining the health and safety of our associates, assisting our clients and communities and strengthening our Company."

Mr. Brown continued, "Despite continued interest rate headwinds and difficult business conditions, we posted strong earnings as reflected in our adjusted earnings per share of $0.44, adjusted return on assets of 1.09%, and an adjusted efficiency ratio of 58.9%.  Additionally, we were encouraged that credit trends remained relatively stable for the quarter.  Given the backdrop of increasing Covid-19 cases in the Midwest and uncertainty about the timing of vaccines to bring the pandemic under control, we recorded $13.4 million of provision expense in anticipation of credit deterioration in future quarters, leading to an increase in our allowance for credit losses to 1.81% of total loans, excluding PPP."

Mr. Brown further commented, "Third quarter results were primarily driven by exceptional fee income, well exceeding second quarter results, which at the time was our highest core fee income on record.  The steadfast diligence of our mortgage team capitalized on the continued historic low interest rate environment to drive another sensational quarter in mortgage banking revenue, and Bannockburn recorded its highest income quarter ever.  We were also pleased to see service charges improve as local economies continued to gradually reopen and consumer spending increased.  Total expenses increased during the quarter as a direct result of our strong operating performance and fee income generation leading to higher incentive and commission expense."

Mr. Brown concluded, "We are encouraged by our improved operating performance and by the resiliency of our associates.  Six months into a global pandemic, we now have 98% of our banking centers fully open to service the needs of our clients, and associates in our corporate offices and operations centers have begun gradually returning, albeit at significantly reduced capacity levels.  We continue to provide a bridge for our clients to navigate the environment with approximately $630 million, or 6.2% of total loans, receiving a round two deferral and all capital ratios have improved to equal or surpass pre-pandemic levels.  Additionally, this year we have added $125 million to our Allowance for Credit Losses, which brings our total ACL to greater than three times the balance at December 31, 2019.  We remain committed to managing pandemic priorities and positioning the Company for even stronger performance when the health crisis subsides."

Full detail of the Company's third 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, October 23, 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 1048538.  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 September 30, 2020, the Company had $15.9 billion in assets, $10.2 billion in loans, $11.6 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 September 30, 2020.  The Company operated 143 full service banking centers as of September 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,																				Nine months ended,
	Sep. 30,				June 30,				Mar. 31,				Dec. 31,				Sep. 30,				September 30,
	2020				2020				2020				2019				2019				2020				2019
RESULTS OF OPERATIONS
Net income	$	41,477			$	37,393			$	28,628			$	48,677			$	50,856			$	107,498			$	149,398
Net earnings per share - basic	$	0.43			$	0.38			$	0.29			$	0.49			$	0.52			$	1.10			$	1.52
Net earnings per share - diluted	$	0.42			$	0.38			$	0.29			$	0.49			$	0.51			$	1.10			$	1.51
Dividends declared per share	$	0.23			$	0.23			$	0.23			$	0.23			$	0.23			$	0.69			$	0.67
KEY FINANCIAL RATIOS
Return on average assets	1.04		%		0.96		%		0.79		%		1.34		%		1.41		%		0.93		%		1.41		%
Return on average shareholders' equity	7.40		%		6.88		%		5.21		%		8.60		%		9.13		%		6.50		%		9.29		%
Return on average tangible shareholders' equity	13.61		%		12.90		%		9.71		%		15.84		%		16.15		%		12.08		%		16.48		%
Net interest margin	3.32		%		3.38		%		3.71		%		3.84		%		3.91		%		3.46		%		3.98		%
Net interest margin (fully tax equivalent) (1)	3.36		%		3.44		%		3.77		%		3.89		%		3.96		%		3.52		%		4.03		%
Ending shareholders' equity as a percent of ending assets	14.11		%		13.99		%		14.47		%		15.49		%		15.62		%		14.11		%		15.62		%
Ending tangible shareholders' equity as a percent of:
Ending tangible assets	8.25		%		8.09		%		8.25		%		9.07		%		9.17		%		8.25		%		9.17		%
Risk-weighted assets	11.07		%		10.89		%		10.50		%		11.09		%		11.34		%		11.07		%		11.34		%
Average shareholders' equity as a percent of average assets	14.08		%		13.91		%		15.21		%		15.53		%		15.43		%		14.38		%		15.23		%
Average tangible shareholders' equity as a percent of
average tangible assets	8.18		%		7.94		%		8.79		%		9.07		%		9.35		%		8.29		%		9.19		%
Book value per share	$	22.94			$	22.66			$	22.25			$	22.82			$	22.59			$	22.94			$	22.59
Tangible book value per share	$	12.56			$	12.26			$	11.82			$	12.42			$	12.33			$	12.56			$	12.33
Common equity tier 1 ratio (2)	11.63		%		11.49		%		11.27		%		11.30		%		11.52		%		11.63		%		11.52		%
Tier 1 ratio (2)	12.02		%		11.87		%		11.66		%		11.69		%		11.91		%		12.02		%		11.91		%
Total capital ratio (2)	15.37		%		15.19		%		13.54		%		13.39		%		13.62		%		15.37		%		13.62		%
Leverage ratio (2)	9.55		%		8.98		%		9.49		%		9.58		%		9.75		%		9.55		%		9.75		%
AVERAGE BALANCE SHEET ITEMS
Loans (3)	$	10,253,392			$	10,002,379			$	9,220,643			$	9,149,222			$	9,014,092			$	9,827,033			$	8,880,904
Investment securities	3,162,832				3,164,243				3,115,723				3,102,867				3,290,666				3,147,655				3,351,559
Interest-bearing deposits with other banks	40,277				91,990				39,332				36,672				38,569				57,138				35,525
Total earning assets	$	13,456,501			$	13,258,612			$	12,375,698			$	12,288,761			$	12,343,327			$	13,031,826			$	12,267,988
Total assets	$	15,842,010			$	15,710,204			$	14,524,422			$	14,460,288			$	14,320,514			$	15,360,642			$	14,126,615
Noninterest-bearing deposits	$	3,535,432			$	3,335,866			$	2,643,240			$	2,638,908			$	2,513,458			$	3,172,841			$	2,485,291
Interest-bearing deposits	8,027,082				8,395,229				7,590,791				7,583,531				7,504,708				8,004,450				7,575,263
Total deposits	$	11,562,514			$	11,731,095			$	10,234,031			$	10,222,439			$	10,018,166			$	11,177,291			$	10,060,554
Borrowings	$	1,519,748			$	1,272,819			$	1,735,767			$	1,613,696			$	1,816,983			$	1,509,482			$	1,687,716
Shareholders' equity	$	2,230,422			$	2,185,865			$	2,209,733			$	2,245,107			$	2,210,327			$	2,208,753			$	2,150,945
CREDIT QUALITY RATIOS
Allowance to ending loans	1.65		%		1.56		%		1.55		%		0.63		%		0.62		%		1.65		%		0.62		%
Allowance to nonaccrual loans	216.28		%		233.74		%		296.51		%		119.69		%		93.18		%		216.28		%		93.18		%
Allowance to nonperforming loans	196.69		%		208.06		%		203.42		%		96.73		%		71.46		%		196.69		%		71.46		%
Nonperforming loans to total loans	0.84		%		0.75		%		0.76		%		0.65		%		0.87		%		0.84		%		0.87		%
Nonperforming assets to ending loans, plus OREO	0.86		%		0.77		%		0.78		%		0.67		%		0.89		%		0.86		%		0.89		%
Nonperforming assets to total assets	0.55		%		0.49		%		0.48		%		0.42		%		0.56		%		0.55		%		0.56		%
Classified assets to total assets	0.84		%		0.79		%		0.83		%		0.62		%		0.92		%		0.84		%		0.92		%
Net charge-offs to average loans (annualized)	0.21		%		0.12		%		(0.04)		%		0.15		%		0.45		%		0.10		%		0.39		%

 

	(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) September 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,											Nine months ended,
	September 30,											September 30,
	2020				2019				% Change			2020				2019				% Change
Interest income
Loans and leases, including fees	$	103,249			$	126,786			(18.6)	%		$	324,924			$	376,207			(13.6)	%
Investment securities
Taxable	17,906				22,180				(19.3)	%		55,387				70,031				(20.9)	%
Tax-exempt	4,884				4,457				9.6	%		14,403				13,051				10.4	%
Total investment securities interest	22,790				26,637				(14.4)	%		69,790				83,082				(16.0)	%
Other earning assets	31				222				(86.0)	%		220				638				(65.5)	%
Total interest income	126,070				153,645				(17.9)	%		394,934				459,927				(14.1)	%
Interest expense
Deposits	7,886				20,151				(60.9)	%		36,002				60,006				(40.0)	%
Short-term borrowings	51				7,199				(99.3)	%		6,412				19,805				(67.6)	%
Long-term borrowings	5,953				4,760				25.1	%		14,482				14,764				(1.9)	%
Total interest expense	13,890				32,110				(56.7)	%		56,896				94,575				(39.8)	%
Net interest income	112,180				121,535				(7.7)	%		338,038				365,352				(7.5)	%
Provision for credit losses-loans and leases (1)	15,299				5,228				192.6	%		57,038				25,969				119.6	%
Provision for credit losses-unfunded commitments (1)	(1,925)				(216)				N/M			2,013				(342)				N/M
Net interest income after provision for credit losses	98,806				116,523				(15.2)	%		278,987				339,725				(17.9)	%
Noninterest income
Service charges on deposit accounts	7,356				9,874				(25.5)	%		21,792				28,596				(23.8)	%
Trust and wealth management fees	3,855				3,718				3.7	%		12,438				11,731				6.0	%
Bankcard income	3,124				3,316				(5.8)	%		8,666				15,399				(43.7)	%
Client derivative fees	2,203				4,859				(54.7)	%		8,292				11,468				(27.7)	%
Foreign exchange income	10,530				1,708				N/M			27,072				1,725				N/M
Net gains from sales of loans	18,594				4,806				286.9	%		38,087				10,128				276.1	%
Net gains (losses) on sale of investment securities	2				105				(98.1)	%		(55)				(110)				50.0	%
Other	3,835				4,754				(19.3)	%		11,316				15,668				(27.8)	%
Total noninterest income	49,499				33,140				49.4	%		127,608				94,605				34.9	%
Noninterest expenses
Salaries and employee benefits	63,769				53,212				19.8	%		174,516				155,109				12.5	%
Net occupancy	5,625				5,509				2.1	%		17,107				17,735				(3.5)	%
Furniture and equipment	3,638				4,120				(11.7)	%		11,372				11,758				(3.3)	%
Data processing	6,837				5,774				18.4	%		20,245				15,885				27.4	%
Marketing	1,856				1,346				37.9	%		4,415				4,928				(10.4)	%
Communication	855				910				(6.0)	%		2,652				2,385				11.2	%
Professional services	2,443				4,771				(48.8)	%		6,923				9,062				(23.6)	%
State intangible tax	1,514				1,445				4.8	%		4,544				4,062				11.9	%
FDIC assessments	1,350				(1,097)				223.1	%		4,045				918				340.6	%
Intangible amortization	2,779				2,432				14.3	%		8,362				6,521				28.2	%
Other	6,845				8,020				(14.7)	%		21,685				21,082				2.9	%
Total noninterest expenses	97,511				86,442				12.8	%		275,866				249,445				10.6	%
Income before income taxes	50,794				63,221				(19.7)	%		130,729				184,885				(29.3)	%
Income tax expense	9,317				12,365				(24.7)	%		23,231				35,487				(34.5)	%
Net income	$	41,477			$	50,856			(18.4)	%		$	107,498			$	149,398			(28.0)	%
ADDITIONAL DATA
Net earnings per share - basic	$	0.43			$	0.52						$	1.10			$	1.52
Net earnings per share - diluted	$	0.42			$	0.51						$	1.10			$	1.51
Dividends declared per share	$	0.23			$	0.23						$	0.69			$	0.67
Return on average assets	1.04		%		1.41		%					0.93		%		1.41		%
Return on average shareholders' equity	7.40		%		9.13		%					6.50		%		9.29		%
Interest income	$	126,070			$	153,645			(17.9)	%		$	394,934			$	459,927			(14.1)	%
Tax equivalent adjustment	1,628				1,759				(7.4)	%		4,916				4,698				4.6	%
Interest income - tax equivalent	127,698				155,404				(17.8)	%		399,850				464,625				(13.9)	%
Interest expense	13,890				32,110				(56.7)	%		56,896				94,575				(39.8)	%
Net interest income - tax equivalent	$	113,808			$	123,294			(7.7)	%		$	342,954			$	370,050			(7.3)	%
Net interest margin	3.32		%		3.91		%					3.46		%		3.98		%
Net interest margin (fully tax equivalent) (2)	3.36		%		3.96		%					3.52		%		4.03		%
Full-time equivalent employees	2,065				2,064
(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
	Third				Second				First				Year to				% Change
	Quarter				Quarter				Quarter				Date				Linked Qtr.
Interest income
Loans and leases, including fees	$	103,249			$	105,900			$	115,775			$	324,924			(2.5)	%
Investment securities
Taxable	17,906				18,476				19,005				55,387				(3.1)	%
Tax-exempt	4,884				4,937				4,582				14,403				(1.1)	%
Total investment securities interest	22,790				23,413				23,587				69,790				(2.7)	%
Other earning assets	31				47				142				220				(34.0)	%
Total interest income	126,070				129,360				139,504				394,934				(2.5)	%
Interest expense
Deposits	7,886				11,751				16,365				36,002				(32.9)	%
Short-term borrowings	51				1,274				5,087				6,412				(96.0)	%
Long-term borrowings	5,953				4,759				3,770				14,482				25.1	%
Total interest expense	13,890				17,784				25,222				56,896				(21.9)	%
Net interest income	112,180				111,576				114,282				338,038				0.5	%
Provision for credit losses-loans and leases (1)	15,299				17,859				23,880				57,038				(14.3)	%
Provision for credit losses-unfunded commitments (1)	(1,925)				2,370				1,568				2,013				(181.2)	%
Net interest income after provision for credit losses	98,806				91,347				88,834				278,987				8.2	%
Noninterest income
Service charges on deposit accounts	7,356				6,001				8,435				21,792				22.6	%
Trust and wealth management fees	3,855				4,114				4,469				12,438				(6.3)	%
Bankcard income	3,124				2,844				2,698				8,666				9.8	%
Client derivative fees	2,203				2,984				3,105				8,292				(26.2)	%
Foreign exchange income	10,530				6,576				9,966				27,072				60.1	%
Net gains from sales of loans	18,594				16,662				2,831				38,087				11.6	%
Net gains (losses) on sale of investment securities	2				2				(59)				(55)				0.0	%
Other	3,835				3,542				3,939				11,316				8.3	%
Total noninterest income	49,499				42,725				35,384				127,608				15.9	%
Noninterest expenses
Salaries and employee benefits	63,769				55,925				54,822				174,516				14.0	%
Net occupancy	5,625				5,378				6,104				17,107				4.6	%
Furniture and equipment	3,638				3,681				4,053				11,372				(1.2)	%
Data processing	6,837				7,019				6,389				20,245				(2.6)	%
Marketing	1,856				1,339				1,220				4,415				38.6	%
Communication	855				907				890				2,652				(5.7)	%
Professional services	2,443				2,205				2,275				6,923				10.8	%
State intangible tax	1,514				1,514				1,516				4,544				0.0	%
FDIC assessments	1,350				1,290				1,405				4,045				4.7	%
Intangible amortization	2,779				2,791				2,792				8,362				(0.4)	%
Other	6,845				6,640				8,200				21,685				3.1	%
Total noninterest expenses	97,511				88,689				89,666				275,866				9.9	%
Income before income taxes	50,794				45,383				34,552				130,729				11.9	%
Income tax expense	9,317				7,990				5,924				23,231				16.6	%
Net income	$	41,477			$	37,393			$	28,628			$	107,498			10.9	%
ADDITIONAL DATA
Net earnings per share - basic	$	0.43			$	0.38			$	0.29			$	1.10
Net earnings per share - diluted	$	0.42			$	0.38			$	0.29			$	1.10
Dividends declared per share	$	0.23			$	0.23			$	0.23			$	0.69
Return on average assets	1.04		%		0.96		%		0.79		%		0.93		%
Return on average shareholders' equity	7.40		%		6.88		%		5.21		%		6.50		%
Interest income	$	126,070			$	129,360			$	139,504			$	394,934			(2.5)	%
Tax equivalent adjustment	1,628				1,664				1,624				4,916				(2.2)	%
Interest income - tax equivalent	127,698				131,024				141,128				399,850				(2.5)	%
Interest expense	13,890				17,784				25,222				56,896				(21.9)	%
Net interest income - tax equivalent	$	113,808			$	113,240			$	115,906			$	342,954			0.5	%
Net interest margin	3.32		%		3.38		%		3.71		%		3.46		%
Net interest margin (fully tax equivalent) (2)	3.36		%		3.44		%		3.77		%		3.52		%
Full-time equivalent employees	2,065				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)
	Sep. 30,				June 30,				Mar. 31,				Dec. 31,				Sep. 30,				% Change			% Change
	2020				2020				2020				2019				2019				Linked Qtr.			Comp Qtr.
ASSETS
Cash and due from banks	$	207,128			$	283,639			$	261,892			$	200,691			$	242,482			(27.0)	%		(14.6)	%
Interest-bearing deposits with other banks	38,806				38,845				71,071				56,948				39,669				(0.1)	%		(2.2)	%
Investment securities available-for-sale	3,004,963				2,897,413				2,908,688				2,852,084				2,850,502				3.7	%		5.4	%
Investment securities held-to-maturity	118,072				127,347				136,744				142,862				148,778				(7.3)	%		(20.6)	%
Other investments	118,292				132,366				143,581				125,020				124,965				(10.6)	%		(5.3)	%
Loans held for sale	69,008				43,950				27,334				13,680				23,528				57.0	%		193.3	%
Loans and leases
Commercial and industrial	3,292,313				3,322,374				2,477,773				2,465,877				2,470,017				(0.9)	%		33.3	%
Lease financing	74,742				80,087				82,602				88,364				92,616				(6.7)	%		(19.3)	%
Construction real estate	575,648				506,085				500,311				493,182				515,960				13.7	%		11.6	%
Commercial real estate	4,347,125				4,343,702				4,278,257				4,194,651				4,015,908				0.1	%		8.2	%
Residential real estate	1,027,702				1,043,745				1,061,792				1,055,949				1,055,007				(1.5)	%		(2.6)	%
Home equity	754,743				764,171				781,243				771,869				776,885				(1.2)	%		(2.9)	%
Installment	84,629				79,150				80,085				82,589				88,275				6.9	%		(4.1)	%
Credit card	43,907				42,397				45,756				49,184				49,010				3.6	%		(10.4)	%
Total loans	10,200,809				10,181,711				9,307,819				9,201,665				9,063,678				0.2	%		12.5	%
Less:
Allowance for credit losses (1)	168,544				158,661				143,885				57,650				56,552				6.2	%		198.0	%
Net loans	10,032,265				10,023,050				9,163,934				9,144,015				9,007,126				0.1	%		11.4	%
Premises and equipment	209,474				211,164				212,787				214,506				213,681				(0.8)	%		(2.0)	%
Goodwill	937,771				937,771				937,771				937,771				937,689				0.0	%		0.0	%
Other intangibles	67,419				70,325				73,258				76,201				79,506				(4.1)	%		(15.2)	%
Accrued interest and other assets	1,122,449				1,105,020				1,120,507				747,847				812,519				1.6	%		38.1	%
Total Assets	$	15,925,647			$	15,870,890			$	15,057,567			$	14,511,625			$	14,480,445			0.3	%		10.0	%
LIABILITIES
Deposits
Interest-bearing demand	$	2,632,467			$	2,657,841			$	2,498,109			$	2,364,881			$	2,316,301			(1.0)	%		13.6	%
Savings	3,446,678				3,287,314				2,978,250				2,960,979				2,924,200				4.8	%		17.9	%
Time	1,935,392				2,241,212				2,435,858				2,240,441				2,308,617				(13.6)	%		(16.2)	%
Total interest-bearing deposits	8,014,537				8,186,367				7,912,217				7,566,301				7,549,118				(2.1)	%		6.2	%
Noninterest-bearing	3,552,893				3,515,048				2,723,341				2,643,928				2,534,739				1.1	%		40.2	%
Total deposits	11,567,430				11,701,415				10,635,558				10,210,229				10,083,857				(1.1)	%		14.7	%
Federal funds purchased and securities sold
under agreements to repurchase	247,658				154,347				215,824				165,181				85,286				60.5	%		190.4	%
FHLB short-term borrowings	0				0				1,181,900				1,151,000				1,128,900				N/M			(100.0)	%
Total short-term borrowings	247,658				154,347				1,397,724				1,316,181				1,214,186				60.5	%		(79.6)	%
Long-term debt	1,341,164				1,285,767				325,566				414,376				498,778				4.3	%		168.9	%
Total borrowed funds	1,588,822				1,440,114				1,723,290				1,730,557				1,712,964				10.3	%		(7.2)	%
Accrued interest and other liabilities	521,580				508,342				519,336				323,134				422,311				2.6	%		23.5	%
Total Liabilities	13,677,832				13,649,871				12,878,184				12,263,920				12,219,132				0.2	%		11.9	%
SHAREHOLDERS' EQUITY
Common stock	1,637,489				1,635,070				1,633,950				1,640,771				1,639,333				0.1	%		(0.1)	%
Retained earnings	694,484				675,532				660,653				711,249				685,368				2.8	%		1.3	%
Accumulated other comprehensive income (loss)	42,266				36,431				11,788				13,323				15,450				16.0	%		173.6	%
Treasury stock, at cost	(126,424)				(126,014)				(127,008)				(117,638)				(78,838)				0.3	%		60.4	%
Total Shareholders' Equity	2,247,815				2,221,019				2,179,383				2,247,705				2,261,313				1.2	%		(0.6)	%
Total Liabilities and Shareholders' Equity	$	15,925,647			$	15,870,890			$	15,057,567			$	14,511,625			$	14,480,445			0.3	%		10.0	%
(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.

 

 

FIRST FINANCIAL BANCORP.
AVERAGE CONSOLIDATED STATEMENTS OF CONDITION
(Dollars in thousands)
(Unaudited)
	Quarterly Averages																				Year-to-Date Averages
	Sep. 30,				June 30,				Mar. 31,				Dec. 31,				Sep. 30,				Sep. 30,
	2020				2020				2020				2019				2019				2020				2019
ASSETS
Cash and due from banks	$	233,216			$	284,726			$	235,696			$	221,060			$	191,000			$	251,147			$	182,025
Interest-bearing deposits with other banks	40,277				91,990				39,332				36,672				38,569				57,138				35,525
Investment securities	3,162,832				3,164,243				3,115,723				3,102,867				3,290,666				3,147,655				3,351,559
Loans held for sale	45,186				36,592				13,174				21,050				18,197				31,700				12,659
Loans and leases
Commercial and industrial	3,299,259				3,058,677				2,450,893				2,469,810				2,509,782				2,937,601				2,517,681
Lease financing	78,500				81,218				85,782				91,225				94,858				81,821				93,467
Construction real estate	536,870				495,407				501,471				501,892				509,742				511,343				488,002
Commercial real estate	4,364,708				4,381,647				4,209,345				4,102,288				3,925,028				4,318,735				3,841,178
Residential real estate	1,041,250				1,052,996				1,055,456				1,053,707				1,035,975				1,049,869				996,100
Home equity	759,994				772,424				773,082				773,119				781,340				768,469				792,635
Installment	82,016				79,016				81,234				85,515				88,760				80,760				89,927
Credit card	45,609				44,402				50,206				50,616				50,410				46,735				49,255
Total loans	10,208,206				9,965,787				9,207,469				9,128,172				8,995,895				9,795,333				8,868,245
Less:
Allowance for credit losses (1)	165,270				155,454				121,126				56,649				61,911				147,349				59,129
Net loans	10,042,936				9,810,333				9,086,343				9,071,523				8,933,984				9,647,984				8,809,116
Premises and equipment	211,454				213,903				215,545				215,171				215,671				213,626				213,540
Goodwill	937,771				937,771				937,771				937,710				899,888				937,771				886,130
Other intangibles	69,169				72,086				75,014				78,190				51,365				72,079				43,019
Accrued interest and other assets	1,099,169				1,098,560				805,824				776,045				681,174				1,001,542				593,042
Total Assets	$	15,842,010			$	15,710,204			$	14,524,422			$	14,460,288			$	14,320,514			$	15,360,642			$	14,126,615
LIABILITIES
Deposits
Interest-bearing demand	$	2,668,635			$	2,602,917			$	2,418,193			$	2,373,962			$	2,325,405			$	2,563,633			$	2,310,095
Savings	3,342,514				3,173,274				2,976,518				2,995,395				2,945,076				3,164,753				3,038,620
Time	2,015,933				2,619,038				2,196,080				2,214,174				2,234,227				2,276,064				2,226,548
Total interest-bearing deposits	8,027,082				8,395,229				7,590,791				7,583,531				7,504,708				8,004,450				7,575,263
Noninterest-bearing	3,535,432				3,335,866				2,643,240				2,638,908				2,513,458				3,172,841				2,485,291
Total deposits	11,562,514				11,731,095				10,234,031				10,222,439				10,018,166				11,177,291				10,060,554
Federal funds purchased and securities sold
under agreements to repurchase	150,088				145,291				164,093				206,800				185,156				153,146				138,692
FHLB short-term borrowings	30,868				548,183				1,189,765				952,625				1,112,091				587,566				1,003,745
Total short-term borrowings	180,956				693,474				1,353,858				1,159,425				1,297,247				740,712				1,142,437
Long-term debt	1,338,792				579,345				381,909				454,271				519,736				768,770				545,279
Total borrowed funds	1,519,748				1,272,819				1,735,767				1,613,696				1,816,983				1,509,482				1,687,716
Accrued interest and other liabilities	529,326				520,425				344,891				379,046				275,038				465,116				227,400
Total Liabilities	13,611,588				13,524,339				12,314,689				12,215,181				12,110,187				13,151,889				11,975,670
SHAREHOLDERS' EQUITY
Common stock	1,636,107				1,634,405				1,638,851				1,640,066				1,629,286				1,636,453				1,625,851
Retained earnings	679,980				658,312				660,108				691,236				662,899				666,184				636,613
Accumulated other comprehensive loss	40,697				19,888				31,200				13,986				11,985				30,632				(13,377)
Treasury stock, at cost	(126,362)				(126,740)				(120,426)				(100,181)				(93,843)				(124,516)				(98,142)
Total Shareholders' Equity	2,230,422				2,185,865				2,209,733				2,245,107				2,210,327				2,208,753				2,150,945
Total Liabilities and Shareholders' Equity	$	15,842,010			$	15,710,204			$	14,524,422			$	14,460,288			$	14,320,514			$	15,360,642			$	14,126,615
(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.

 

 

FIRST FINANCIAL BANCORP.
NET INTEREST MARGIN RATE/VOLUME ANALYSIS
(Dollars in thousands)
(Unaudited)
		Quarterly Averages																					Year-to-Date Averages
		September 30, 2020							June 30, 2020							September 30, 2019							September 30, 2020							September 30, 2019
		Balance				Yield			Balance				Yield			Balance				Yield			Balance				Yield			Balance				Yield
Earning assets
Investments:
Investment securities		$	3,162,832			2.86	%		$	3,164,243			2.97	%		$	3,290,666			3.21	%		$	3,147,655			2.96	%		$	3,351,559			3.31	%
Interest-bearing deposits with other banks		40,277				0.31	%		91,990				0.20	%		38,569				2.28	%		57,138				0.51	%		35,525				2.40	%
Gross loans (1)		10,253,392				4.00	%		10,002,379				4.25	%		9,014,092				5.58	%		9,827,033				4.42	%		8,880,904				5.66	%
Total earning assets		13,456,501				3.72	%		13,258,612				3.91	%		12,343,327				4.94	%		13,031,826				4.05	%		12,267,988				5.01	%
Nonearning assets
Allowance for credit losses		(165,270)							(155,454)							(61,911)							(147,349)							(59,129)
Cash and due from banks		233,216							284,726							191,000							251,147							182,025
Accrued interest and other assets		2,317,563							2,322,320							1,848,098							2,225,018							1,735,731
Total assets		$	15,842,010						$	15,710,204						$	14,320,514						$	15,360,642						$	14,126,615
Interest-bearing liabilities
Deposits:
Interest-bearing demand		$	2,668,635			0.08	%		$	2,602,917			0.11	%		$	2,325,405			0.56	%		$	2,563,633			0.21	%		$	2,310,095			0.55	%
Savings		3,342,514				0.14	%		3,173,274				0.17	%		2,945,076				0.69	%		3,164,753				0.25	%		3,038,620				0.74	%
Time		2,015,933				1.20	%		2,619,038				1.49	%		2,234,227				2.09	%		2,276,064				1.54	%		2,226,548				2.02	%
Total interest-bearing deposits		8,027,082				0.39	%		8,395,229				0.56	%		7,504,708				1.07	%		8,004,450				0.60	%		7,575,263				1.06	%
Borrowed funds
Short-term borrowings		180,956				0.11	%		693,474				0.74	%		1,297,247				2.20	%		740,712				1.16	%		1,142,437				2.32	%
Long-term debt		1,338,792				1.76	%		579,345				3.29	%		519,736				3.63	%		768,770				2.52	%		545,279				3.62	%
Total borrowed funds		1,519,748				1.57	%		1,272,819				1.90	%		1,816,983				2.61	%		1,509,482				1.85	%		1,687,716				2.74	%
Total interest-bearing liabilities		9,546,830				0.58	%		9,668,048				0.74	%		9,321,691				1.37	%		9,513,932				0.80	%		9,262,979				1.37	%
Noninterest-bearing liabilities
Noninterest-bearing demand deposits		3,535,432							3,335,866							2,513,458							3,172,841							2,485,291
Other liabilities		529,326							520,425							275,038							465,116							227,400
Shareholders' equity		2,230,422							2,185,865							2,210,327							2,208,753							2,150,945
Total liabilities & shareholders' equity		$	15,842,010						$	15,710,204						$	14,320,514						$	15,360,642						$	14,126,615
Net interest income		$	112,180						$	111,576						$	121,535						$	338,038						$	365,352
Net interest spread						3.14	%						3.17	%						3.57	%						3.25	%						3.64	%
Net interest margin						3.32	%						3.38	%						3.91	%						3.46	%						3.98	%
Tax equivalent adjustment						0.04	%						0.06	%						0.05	%						0.06	%						0.05	%
Net interest margin (fully tax equivalent)						3.36	%						3.44	%						3.96	%						3.52	%						4.03	%
(1) Loans held for sale and nonaccrual loans are included in gross loans.

 

 

FIRST FINANCIAL BANCORP.
NET INTEREST MARGIN RATE/VOLUME ANALYSIS  (1)
(Dollars in thousands)
(Unaudited)
		Linked Qtr. Income Variance												Comparable Qtr. Income Variance												Year-to-Date Income Variance
		Rate				Volume				Total				Rate				Volume				Total				Rate				Volume				Total
Earning assets
Investment securities		$	(861)			$	238			$	(623)			$	(2,926)			$	(921)			$	(3,847)			$	(8,771)			$	(4,521)			$	(13,292)
Interest-bearing deposits with other banks		23				(39)				(16)				(192)				1				(191)				(501)				83				(418)
Gross loans (2)		(6,273)				3,622				(2,651)				(36,016)				12,479				(23,537)				(82,566)				31,283				(51,283)
Total earning assets		(7,111)				3,821				(3,290)				(39,134)				11,559				(27,575)				(91,838)				26,845				(64,993)
Interest-bearing liabilities
Total interest-bearing deposits		$	(3,593)			$	(272)			$	(3,865)			$	(12,778)			$	513			$	(12,265)			$	(25,934)			$	1,930			$	(24,004)
Borrowed funds
Short-term borrowings		(1,081)				(142)				(1,223)				(6,833)				(315)				(7,148)				(9,915)				(3,478)				(13,393)
Long-term debt		(2,211)				3,405				1,194				(2,449)				3,642				1,193				(4,492)				4,210				(282)
Total borrowed funds		(3,292)				3,263				(29)				(9,282)				3,327				(5,955)				(14,407)				732				(13,675)
Total interest-bearing liabilities		(6,885)				2,991				(3,894)				(22,060)				3,840				(18,220)				(40,341)				2,662				(37,679)
Net interest income (1)		$	(226)			$	830			$	604			$	(17,074)			$	7,719			$	(9,355)			$	(51,497)			$	24,183			$	(27,314)
(1) Not tax equivalent.
(2) Loans held for sale and nonaccrual loans are included in gross loans.

 

 

FIRST FINANCIAL BANCORP.
CREDIT QUALITY
(Dollars in thousands)
(Unaudited)
																					Nine months ended
	Sep. 30,				June 30,				Mar. 31,				Dec. 31,				Sep. 30,				Sep. 30,				Sep. 30,
	2020				2020				2020				2019				2019				2020				2019
ALLOWANCE FOR CREDIT LOSS ACTIVITY
Balance at beginning of period	$	158,661			$	143,885			$	57,650			$	56,552			$	61,549			$	57,650			$	56,542
Day one adoption impact of ASC 326	0				0				61,505				0				0				61,505				0
Provision for credit losses	15,299				17,859				23,880				4,629				5,228				57,038				25,969
Gross charge-offs
Commercial and industrial	1,467				1,282				1,091				2,919				9,556				3,840				23,757
Lease financing	852				0				0				62				0				852				100
Construction real estate	0				0				0				0				0				0				0
Commercial real estate	3,789				2,037				4				1,854				535				5,830				1,835
Residential real estate	22				148				115				167				278				285				510
Home equity	460				428				267				807				627				1,155				1,784
Installment	59				7				61				31				65				127				192
Credit card	171				234				311				319				598				716				1,228
Total gross charge-offs	6,820				4,136				1,849				6,159				11,659				12,805				29,406
Recoveries
Commercial and industrial	265				275				2,000				1,796				556				2,540				1,087
Lease financing	6				0				0				0				0				6				0
Construction real estate	0				14				0				0				0				14				68
Commercial real estate	760				424				234				439				347				1,418				674
Residential real estate	91				93				52				72				64				236				201
Home equity	209				156				339				243				335				704				1,092
Installment	35				27				31				49				93				93				202
Credit card	38				64				43				29				39				145				123
Total recoveries	1,404				1,053				2,699				2,628				1,434				5,156				3,447
Total net charge-offs	5,416				3,083				(850)				3,531				10,225				7,649				25,959
Ending allowance for credit losses	$	168,544			$	158,661			$	143,885			$	57,650			$	56,552			$	168,544			$	56,552
NET CHARGE-OFFS TO AVERAGE LOANS AND LEASES (ANNUALIZED)
Commercial and industrial	0.14		%		0.13		%		(0.15)		%		0.18		%		1.42		%		0.06		%		1.20		%
Lease financing	4.29		%		0.00		%		0.00		%		0.27		%		0.00		%		1.38		%		0.14		%
Construction real estate	0.00		%		(0.01)		%		0.00		%		0.00		%		0.00		%		0.00		%		(0.02)		%
Commercial real estate	0.28		%		0.15		%		(0.02)		%		0.14		%		0.02		%		0.14		%		0.04		%
Residential real estate	(0.03)		%		0.02		%		0.02		%		0.04		%		0.08		%		0.01		%		0.04		%
Home equity	0.13		%		0.14		%		(0.04)		%		0.29		%		0.15		%		0.08		%		0.12		%
Installment	0.12		%		(0.10)		%		0.15		%		(0.08)		%		(0.13)		%		0.06		%		(0.01)		%
Credit card	1.16		%		1.54		%		2.15		%		2.27		%		4.40		%		1.63		%		3.00		%
Total net charge-offs	0.21		%		0.12		%		(0.04)		%		0.15		%		0.45		%		0.10		%		0.39		%
COMPONENTS OF NONPERFORMING LOANS, NONPERFORMING ASSETS, AND UNDERPERFORMING ASSETS
Nonaccrual loans (1)
Commercial and industrial	$	34,686			$	33,906			$	21,126			$	24,346			$	28,358			$	34,686			$	28,358
Lease financing	1,092				1,353				222				223				284				1,092				284
Construction real estate	0				0				0				0				5				0				5
Commercial real estate	24,521				14,002				10,050				7,295				14,889				24,521				14,889
Residential real estate	12,104				12,813				11,163				10,892				11,655				12,104				11,655
Home equity	5,374				5,604				5,821				5,242				5,427				5,374				5,427
Installment	153				201				145				167				75				153				75
Nonaccrual loans	77,930				67,879				48,527				48,165				60,693				77,930				60,693
Accruing troubled debt restructurings (TDRs)	7,759				8,377				22,206				11,435				18,450				7,759				18,450
Total nonperforming loans	85,689				76,256				70,733				59,600				79,143				85,689				79,143
Other real estate owned (OREO)	1,643				1,872				1,467				2,033				1,613				1,643				1,613
Total nonperforming assets	87,332				78,128				72,200				61,633				80,756				87,332				80,756
Accruing loans past due 90 days or more	79				124				120				201				287				79				287
Total underperforming assets	$	87,411			$	78,252			$	72,320			$	61,834			$	81,043			$	87,411			$	81,043
Total classified assets	$	134,002			$	125,543			$	124,510			$	89,250			$	132,500			$	134,002			$	132,500
CREDIT QUALITY RATIOS
Allowance for credit losses to
Nonaccrual loans	216.28		%		233.74		%		296.51		%		119.69		%		93.18		%		216.28		%		93.18		%
Nonperforming loans	196.69		%		208.06		%		203.42		%		96.73		%		71.46		%		196.69		%		71.46		%
Total ending loans	1.65		%		1.56		%		1.55		%		0.63		%		0.62		%		1.65		%		0.62		%
Nonperforming loans to total loans	0.84		%		0.75		%		0.76		%		0.65		%		0.87		%		0.84		%		0.87		%
Nonperforming assets to
Ending loans, plus OREO	0.86		%		0.77		%		0.78		%		0.67		%		0.89		%		0.86		%		0.89		%
Total assets	0.55		%		0.49		%		0.48		%		0.42		%		0.56		%		0.55		%		0.56		%
Nonperforming assets, excluding accruing TDRs to
Ending loans, plus OREO	0.78		%		0.68		%		0.54		%		0.55		%		0.69		%		0.78		%		0.69		%
Total assets	0.50		%		0.44		%		0.33		%		0.35		%		0.43		%		0.50		%		0.43		%
Classified assets to total assets	0.84		%		0.79		%		0.83		%		0.62		%		0.92		%		0.84		%		0.92		%
(1)  Nonaccrual loans include nonaccrual TDRs of $29.3  million, $32.7 million, $18.4 million, $18.5 million, and $21.5 million, as of September 30, 2020, June 30, 2020, March 31, 2020, December 31, 2019, and September 30, 2019, respectively.

 

 

FIRST FINANCIAL BANCORP.
CAPITAL ADEQUACY
(Dollars in thousands, except per share data)
(Unaudited)
																					Nine months ended,
	Sep. 30,				June 30,				Mar. 31,				Dec. 31,				Sep. 30,				Sep. 30,				Sep. 30,
	2020				2020				2020				2019				2019				2020				2019
PER COMMON SHARE
Market Price
High	$	15.15			$	16.38			$	25.52			$	26.04			$	25.49			$	25.52			$	28.56
Low	$	11.40			$	11.52			$	12.67			$	23.24			$	22.37			$	11.40			$	22.16
Close	$	12.01			$	13.89			$	14.91			$	25.44			$	24.48			$	12.01			$	24.48
Average shares outstanding - basic	97,247,080				97,220,748				97,736,690				98,684,706				98,517,025				97,400,942				98,177,802
Average shares outstanding - diluted	98,008,733				97,988,600				98,356,214				99,232,167				99,077,723				98,117,463				98,723,173
Ending shares outstanding	97,999,763				98,018,858				97,968,958				98,490,998				100,094,819				97,999,763				100,094,819
Total shareholders' equity	$	2,247,815			$	2,221,019			$	2,179,383			$	2,247,705			$	2,261,313			$	2,247,815			$	2,261,313
REGULATORY CAPITAL	Preliminary																				Preliminary
Common equity tier 1 capital	$	1,293,716			$	1,267,609			$	1,243,152			$	1,245,746			$	1,253,803			$	1,293,716			$	1,253,803
Common equity tier 1 capital ratio	11.63		%		11.49		%		11.27		%		11.30		%		11.52		%		11.63		%		11.52		%
Tier 1 capital	$	1,336,497			$	1,310,276			$	1,285,705			$	1,288,185			$	1,296,399			$	1,336,497			$	1,296,399
Tier 1 ratio	12.02		%		11.87		%		11.66		%		11.69		%		11.91		%		12.02		%		11.91		%
Total capital	$	1,708,817			$	1,676,532			$	1,493,100			$	1,475,813			$	1,482,708			$	1,708,817			$	1,482,708
Total capital ratio	15.37		%		15.19		%		13.54		%		13.39		%		13.62		%		15.37		%		13.62		%
Total capital in excess of minimum requirement	$	541,263			$	517,902			$	335,229			$	318,315			$	339,935			$	541,263			$	339,935
Total risk-weighted assets	$	11,119,560			$	11,034,570			$	11,027,347			$	11,023,795			$	10,883,554			$	11,119,560			$	10,883,554
Leverage ratio	9.55		%		8.98		%		9.49		%		9.58		%		9.75		%		9.55		%		9.75		%
OTHER CAPITAL RATIOS
Ending shareholders' equity to ending assets	14.11		%		13.99		%		14.47		%		15.49		%		15.62		%		14.11		%		15.62		%
Ending tangible shareholders' equity to ending tangible assets	8.25		%		8.09		%		8.25		%		9.07		%		9.17		%		8.25		%		9.17		%
Average shareholders' equity to average assets	14.08		%		13.91		%		15.21		%		15.53		%		15.43		%		14.38		%		15.23		%
Average tangible shareholders' equity to average tangible assets	8.18		%		7.94		%		8.79		%		9.07		%		9.35		%		8.29		%		9.19		%
REPURCHASE PROGRAM (1)
Shares repurchased	0				0				880,000				1,609,778				1,143,494				880,000				1,143,494
Average share repurchase price	N/A				N/A				$	18.96			$	24.13			$	23.94			$	18.96			$	23.94
Total cost of shares repurchased	N/A				N/A				$	16,686			$	38,846			$	27,372			$	16,686			$	27,372
(1) Represents share repurchases as part of publicly announced plans.
N/A = Not applicable

 

 

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SOURCE First Financial Bancorp.

FAQ

What were First Financial's Q3 2020 earnings results?

First Financial reported Q3 2020 net income of $41.5 million and earnings per diluted share of $0.42.

How did First Financial's earnings in Q3 2020 compare to Q2 2020?

Earnings increased from $37.4 million in Q2 2020 to $41.5 million in Q3 2020.

What is the provision for credit losses for First Financial in Q3 2020?

The provision for credit losses for Q3 2020 was $13.4 million.

What is First Financial's return on average assets for Q3 2020?

Return on average assets for Q3 2020 was 1.04%.

What drove the increase in First Financial's core fee income in Q3 2020?

The increase was driven by strong mortgage banking revenue and foreign exchange income, reaching a record $49.5 million.