EX-99.1 2 a8k3q18earningsreleaseex991.htm EXHIBIT 99.1 Document
Exhibit 99.1
yellowbar.jpgffbclogo.jpg                            
            
First Financial Bancorp Announces Third Quarter 2018 Results


Cincinnati, Ohio - October 18, 2018 - First Financial Bancorp. (Nasdaq: FFBC) (“First Financial” or the “Company”) announced financial results for the third quarter of 2018.

For the three months ended September 30, 2018, the Company reported net income of $50.7 million, or $0.51 per diluted common share. These results compare to net income of $36.4 million, or $0.37 per diluted common share, for the second quarter of 2018 and $24.8 million, or $0.40 per diluted common share, for the third quarter of 2017. Net income was negatively impacted during the quarter by $6.3 million of merger related items, which reduced earnings per diluted common share by $0.07. For the nine months ended September 30, 2018, First Financial had earnings per diluted common share of $1.36 compared to $1.16 for the same period in 2017.

Return on average assets for the third quarter of 2018 was 1.45% while return on average tangible common equity was 18.52%. These compare to a return on average assets of 1.05% and return on average tangible common equity of 13.75% in the second quarter of 2018 and a return on average assets of 1.13% and a return on average tangible common equity of 14.11% in the third quarter of 2017. On an adjusted(1) basis, third quarter 2018 return on average assets was 1.64% and return on average tangible common equity was 20.83%.

Third quarter 2018 highlights include:

After adjustments(1) for merger related items:
Net income of $0.58 per diluted common share
1.64% return on average assets
20.83% return on average tangible common equity

Total revenue of $152.8 million, as adjusted(1)
Net interest margin declined 3 basis points from the linked quarter to 4.12% on a fully tax equivalent basis(1)  
Noninterest income increased $0.7 million to $29.3 million, as adjusted(1) 

Noninterest expenses of $85.4 million, or $78.0 million as adjusted(1)
Efficiency ratio of 56.13% for the third quarter; 51.06% as adjusted(1) 

Improved loan origination activity
Loan fundings increased 9% compared to the linked quarter
Origination commitments increased 15% compared to the linked quarter

Stable credit performance with provision expense of $3.2 million; annualized net recoveries of 2 basis points as a percentage of average loans

Archie Brown, President and Chief Executive Officer, commented, “We are pleased with our third quarter performance as it demonstrates the earnings power of the Company. On an adjusted basis(1), earnings per share
____________________________________________________________________________________________

(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.

1



increased to $0.58 as our strong net interest margin, combined with improved efficiency, resulted in a top quartile return on assets and return on average tangible common equity.”
Mr. Brown continued, “We are encouraged with the increases in loan fundings and commitments, however lower than expected credit line utilization and elevated payoffs led to a slight decline in overall balances. During the quarter we added depth to our commercial banking and business banking teams in addition to wealth advisors and mortgage loan officers and are approaching planned staffing levels in our targeted growth markets. We are optimistic that these investments will contribute to our planned revenue growth in 2019.”

Mr. Brown concluded, “Our strong earnings for the quarter led to further strengthening of our capital ratios with tangible common equity increasing to 8.53% and tangible book value per share increasing to $11.25. As a result, in July our Board of Directors elected to increase the common dividend from $0.19 to $0.20 per share, which was the second dividend increase in 2018.”
Full detail of the Company’s third quarter and year to date performance is provided in the accompanying financial statements and slide presentation.

Teleconference / Webcast Information
First Financial’s executive management will host a conference call to discuss the Company’s financial and operating results on Friday, October 19, 2018 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 10124868. 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.




2


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

As with any forecast or projection, forward-looking statements are subject to inherent uncertainties, risks and changes in circumstances that may cause actual results to differ materially from those set forth in the forward-looking statements. Forward-looking statements are not historical facts but instead express only management’s beliefs regarding future results or events, many of which, by their nature, are inherently uncertain and outside of management’s control. It is possible that actual results and outcomes may differ, possibly materially, from the anticipated results or outcomes indicated in these forward-looking statements. Important factors that could cause actual results to differ materially from those in our forward-looking statements include the following, without limitation: (i) economic, market, liquidity, credit, interest rate, operational and technological risks associated with the Company’s business; (ii) the effect of and changes in policies and laws or regulatory agencies, including the Dodd-Frank Wall Street Reform and Consumer Protection Act and other legislation and regulation relating to the banking industry; (iii) management’s ability to effectively execute its business plans; (iv) mergers and acquisitions, including costs or difficulties related to the integration of acquired companies; (v) the possibility that any of the anticipated benefits of the Company’s recent merger with MainSource Financial Group, Inc. will not be realized or will not be realized within the expected time period; (vi) the effect of changes in accounting policies and practices; (vii) changes in consumer spending, borrowing and saving and changes in unemployment; (viii) changes in customers’ performance and creditworthiness; and (ix) the costs and effects of litigation and of unexpected or adverse outcomes in such litigation. Additional factors that may cause our actual results to differ materially from those described in our forward-looking statements can be found in the Form 10-K for the year ended December 31, 2017, as well as its 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, 2018, the Company had $13.8 billion in assets, $8.8 billion in loans, $9.8 billion in deposits and $2.0 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, 2018. The Company’s primary operating markets are located in Ohio, Indiana and Kentucky where it operated 159 banking centers as of September 30, 2018, 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.


Contact Information
Investors/Analysts                    Media
Jamie Anderson                        Lauren Ponti-Zins
Chief Financial Officer                    Marketing Specialist
(513) 887-5400                        (513) 246-2137
InvestorRelations@bankatfirst.com            media@bankatfirst.com    

3



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Selected Financial Information
September 30, 2018
(unaudited)


Contents
Page
Consolidated Financial Highlights
2
Consolidated Statements of Income
3
Consolidated Quarterly Statements of Income
4-5
Consolidated Statements of Condition
6
Average Consolidated Statements of Condition
7
Net Interest Margin Rate / Volume Analysis
8-9
Credit Quality
10
Capital Adequacy
11




    
FIRST FINANCIAL BANCORP.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Dollars in thousands, except per share data)
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended,
 
Nine months ended,
 
Sep. 30,
 
Jun. 30,
 
Mar. 31,
 
Dec. 31,
 
Sep. 30,
 
Sep. 30,
 
2018
 
2018
 
2018
 
2017
 
2017
 
2018
 
2017
RESULTS OF OPERATIONS
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
$
50,657

 
$
36,418

 
$
30,506

 
$
24,811

 
$
24,826

 
$
117,581

 
$
71,976

Net earnings per share - basic
$
0.52

 
$
0.37

 
$
0.49

 
$
0.40

 
$
0.40

 
$
1.37

 
$
1.17

Net earnings per share - diluted
$
0.51

 
$
0.37

 
$
0.49

 
$
0.40

 
$
0.40

 
$
1.36

 
$
1.16

Dividends declared per share
$
0.20

 
$
0.19

 
$
0.19

 
$
0.17

 
$
0.17

 
$
0.58

 
$
0.51

 
 
 
 
 
 
 
 
 
 
 
 
 
 
KEY FINANCIAL RATIOS
 
 
 
 
 
 
 
 
 
 
 
 
 
Return on average assets
1.45
 %
 
1.05
%
 
1.40
%
 
1.13
%
 
1.13
%
 
1.29
%
 
1.12
%
Return on average shareholders' equity
9.94
 %
 
7.36
%
 
13.31
%
 
10.70
%
 
10.85
%
 
9.50
%
 
10.82
%
Return on average tangible shareholders' equity
18.52
 %
 
13.75
%
 
17.18
%
 
13.85
%
 
14.11
%
 
16.42
%
 
14.16
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest margin
4.06
 %
 
4.10
%
 
3.80
%
 
3.75
%
 
3.50
%
 
4.01
%
 
3.54
%
Net interest margin (fully tax equivalent) (1)
4.12
 %
 
4.15
%
 
3.84
%
 
3.82
%
 
3.57
%
 
4.06
%
 
3.61
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending shareholders' equity as a percent of ending assets
14.70
 %
 
14.46
%
 
10.56
%
 
10.46
%
 
10.44
%
 
14.70
%
 
10.44
%
Ending tangible shareholders' equity as a percent of:
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending tangible assets
8.53
 %
 
8.30
%
 
8.41
%
 
8.30
%
 
8.25
%
 
8.53
%
 
8.25
%
Risk-weighted assets
10.77
 %
 
10.52
%
 
10.09
%
 
10.15
%
 
9.95
%
 
10.77
%
 
9.95
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average shareholders' equity as a percent of average assets
14.62
 %
 
14.33
%
 
10.53
%
 
10.54
%
 
10.42
%
 
13.54
%
 
10.38
%
Average tangible shareholders' equity as a percent of
 
 
 
 
 
 
 
 
 
 
 
 
 
    average tangible assets
8.42
 %
 
8.16
%
 
8.35
%
 
8.34
%
 
8.21
%
 
8.31
%
 
8.13
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Book value per share
$
20.79

 
$
20.56

 
$
15.11

 
$
14.99

 
$
14.74

 
$
20.79

 
$
14.74

Tangible book value per share
$
11.25

 
$
11.01

 
$
11.75

 
$
11.62

 
$
11.36

 
$
11.25

 
$
11.36

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common equity tier 1 ratio (2)
11.52
 %
 
11.15
%
 
10.77
%
 
10.63
%
 
10.53
%
 
11.52
%
 
10.53
%
Tier 1 ratio (2)
11.93
 %
 
11.55
%
 
10.77
%
 
10.63
%
 
10.53
%
 
11.93
%
 
10.53
%
Total capital ratio (2)
13.77
 %
 
13.36
%
 
13.17
%
 
13.07
%
 
12.98
%
 
13.77
%
 
12.98
%
Leverage ratio (2)
9.41
 %
 
9.06
%
 
9.00
%
 
8.84
%
 
8.74
%
 
9.41
%
 
8.74
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
AVERAGE BALANCE SHEET ITEMS
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans (3)
$
8,848,710

 
$
8,933,400

 
$
6,016,492

 
$
5,952,290

 
$
5,902,053

 
$
7,943,242

 
$
5,809,998

FDIC indemnification asset

 

 
1,502

 
7,413

 
8,932

 
495

 
10,250

Investment securities
3,168,044

 
3,157,339

 
2,042,781

 
2,020,040

 
2,041,785

 
2,793,510

 
1,995,101

Interest-bearing deposits with other banks
39,873

 
29,261

 
27,073

 
25,357

 
37,199

 
32,116

 
32,812

  Total earning assets
$
12,056,627

 
$
12,120,000

 
$
8,087,848

 
$
8,005,100

 
$
7,989,969

 
$
10,769,363

 
$
7,848,161

Total assets
$
13,822,675

 
$
13,956,360

 
$
8,830,176

 
$
8,731,956

 
$
8,716,917

 
$
12,221,358

 
$
8,570,777

Noninterest-bearing deposits
$
2,388,976

 
$
2,421,230

 
$
1,570,572

 
$
1,637,228

 
$
1,510,032

 
$
2,129,924

 
$
1,507,748

Interest-bearing deposits
7,499,112

 
7,961,405

 
5,332,740

 
5,202,412

 
5,170,365

 
6,939,021

 
5,057,285

  Total deposits
$
9,888,088

 
$
10,382,635

 
$
6,903,312

 
$
6,839,640

 
$
6,680,397

 
$
9,068,945

 
$
6,565,033

Borrowings
$
1,748,415

 
$
1,408,024

 
$
866,848

 
$
842,211

 
$
999,818

 
$
1,344,325

 
$
987,874

Shareholders' equity
$
2,021,400

 
$
2,000,093

 
$
929,474

 
$
920,194

 
$
908,057

 
$
1,654,322

 
$
889,760

 
 
 
 
 
 
 
 
 
 
 
 
 
 
CREDIT QUALITY RATIOS
 
 
 
 
 
 
 
 
 
 
 
 
Allowance to ending loans
0.65
 %
 
0.61
%
 
0.89
%
 
0.90
%
 
0.91
%
 
0.65
%
 
0.91
%
Allowance to nonaccrual loans
136.22
 %
 
133.65
%
 
179.57
%
 
224.32
%
 
181.07
%
 
136.22
%
 
181.07
%
Allowance to nonperforming loans
92.08
 %
 
86.80
%
 
120.24
%
 
129.77
%
 
109.48
%
 
92.08
%
 
109.48
%
Nonperforming loans to total loans
0.71
 %
 
0.70
%
 
0.74
%
 
0.69
%
 
0.83
%
 
0.71
%
 
0.83
%
Nonperforming assets to ending loans, plus OREO
0.73
 %
 
0.72
%
 
0.76
%
 
0.74
%
 
0.89
%
 
0.73
%
 
0.89
%
Nonperforming assets to total assets
0.47
 %
 
0.46
%
 
0.52
%
 
0.50
%
 
0.60
%
 
0.47
%
 
0.60
%
Classified assets to total assets
1.00
 %
 
1.00
%
 
0.98
%
 
0.98
%
 
1.08
%
 
1.00
%
 
1.08
%
Net charge-offs to average loans (annualized)
(0.02
)%
 
0.18
%
 
0.13
%
 
0.02
%
 
0.22
%
 
0.09
%
 
0.17
%

(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 for 2018 and a 35% tax rate for 2017. 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, 2018 regulatory capital ratios are preliminary.
(3) Includes loans held for sale.


2



FIRST FINANCIAL BANCORP.
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
(Unaudited)
 
 
 
 
 
Three months ended,
 
Nine months ended,
 
Sep. 30,
 
Sep. 30,
 
2018
 
2017
 
% Change
 
2018
 
2017
 
% Change
Interest income
 
 
 
 
 
 
 
 
 
 
 
  Loans and leases, including fees
$
123,397

 
$
71,148

 
73.4
 %
 
$
320,607

 
$
205,764

 
55.8
 %
  Investment securities

 
 
 
 
 
 
 
 
 
 
     Taxable
21,801

 
13,150

 
65.8
 %
 
56,315

 
37,356

 
50.8
 %
     Tax-exempt
3,807

 
1,537

 
147.7
 %
 
9,532

 
4,347

 
119.3
 %
        Total investment securities interest
25,608

 
14,687

 
74.4
 %
 
65,847

 
41,703

 
57.9
 %
  Other earning assets
215

 
(917
)
 
123.4
 %
 
499

 
(2,932
)
 
117.0
 %
       Total interest income
149,220

 
84,918

 
75.7
 %
 
386,953

 
244,535

 
58.2
 %
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense
 
 
 
 
 
 
 
 
 
 
 
  Deposits
14,672

 
10,335

 
42.0
 %
 
39,764

 
25,939

 
53.3
 %
  Short-term borrowings
6,052

 
2,566

 
135.9
 %
 
12,847

 
6,049

 
112.4
 %
  Long-term borrowings
5,011

 
1,538

 
225.8
 %
 
11,066

 
4,616

 
139.7
 %
      Total interest expense
25,735

 
14,439

 
78.2
 %
 
63,677

 
36,604

 
74.0
 %
      Net interest income
123,485

 
70,479

 
75.2
 %
 
323,276

 
207,931

 
55.5
 %
  Provision for loan and lease losses
3,238

 
2,953

 
9.7
 %
 
9,276

 
3,787

 
144.9
 %
      Net interest income after provision for loan and lease losses
120,247

 
67,526

 
78.1
 %
 
314,000

 
204,144

 
53.8
 %
 
 
 
 
 
 
 
 
 
 
 
 
Noninterest income
 
 
 
 
 
 
 
 
 
 
 
  Service charges on deposit accounts
10,316

 
5,169

 
99.6
 %
 
24,923

 
14,585

 
70.9
 %
  Trust and wealth management fees
3,728

 
3,324

 
12.2
 %
 
11,379

 
10,476

 
8.6
 %
  Bankcard income
5,261

 
3,272

 
60.8
 %
 
13,998

 
9,908

 
41.3
 %
  Client derivative fees
3,029

 
1,779

 
70.3
 %
 
6,249

 
4,371

 
43.0
 %
  Net gains from sales of loans
1,739

 
1,455

 
19.5
 %
 
4,643

 
3,998

 
16.1
 %
  Net gains (losses) on sale of investment securities
(167
)
 
276

 
(160.5
)%
 
(197
)
 
1,630

 
(112.1
)%
  Other
4,778

 
7,667

 
(37.7
)%
 
12,883

 
12,792

 
0.7
 %
      Total noninterest income
28,684

 
22,942

 
25.0
 %
 
73,878

 
57,760

 
27.9
 %
 
 
 
 
 
 
 
 
 
 
 
 
Noninterest expenses
 
 
 
 
 
 
 
 
 
 
 
  Salaries and employee benefits
50,852

 
33,827

 
50.3
 %
 
137,485

 
97,121

 
41.6
 %
  Net occupancy
6,765

 
4,328

 
56.3
 %
 
17,893

 
13,145

 
36.1
 %
  Furniture and equipment
4,072

 
2,161

 
88.4
 %
 
11,410

 
6,474

 
76.2
 %
  Data processing
4,502

 
3,455

 
30.3
 %
 
22,478

 
10,254

 
119.2
 %
  Marketing
2,502

 
649

 
285.5
 %
 
5,947

 
2,141

 
177.8
 %
  Communication
785

 
430

 
82.6
 %
 
2,362

 
1,345

 
75.6
 %
  Professional services
2,621

 
2,030

 
29.1
 %
 
10,478

 
5,257

 
99.3
 %
  State intangible tax
1,223

 
721

 
69.6
 %
 
3,066

 
2,163

 
41.7
 %
  FDIC assessments
734

 
1,051

 
(30.2
)%
 
2,951

 
3,001

 
(1.7
)%
  Loss (gain) - other real estate owned
538

 
237

 
127.0
 %
 
332

 
423

 
(21.5
)%
  Other
10,821

 
5,554

 
94.8
 %
 
26,056

 
15,720

 
65.8
 %
      Total noninterest expenses
85,415

 
54,443

 
56.9
 %
 
240,458

 
157,044

 
53.1
 %
Income before income taxes
63,516

 
36,025

 
76.3
 %
 
147,420

 
104,860

 
40.6
 %
Income tax expense
12,859

 
11,199

 
14.8
 %
 
29,839

 
32,884

 
(9.3
)%
      Net income
$
50,657

 
$
24,826

 
104.0
 %
 
$
117,581

 
$
71,976

 
63.4
 %
 
 
 
 
 
 
 
 
 
 
 
 
ADDITIONAL DATA
 
 
 
 
 
 
 
 
 
 
 
Net earnings per share - basic
$
0.52

 
$
0.40

 
 
 
$
1.37

 
$
1.17

 
 
Net earnings per share - diluted
$
0.51

 
$
0.40

 
 
 
$
1.36

 
$
1.16

 
 
Dividends declared per share
$
0.20

 
$
0.17

 
 
 
$
0.58

 
$
0.51

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Return on average assets
1.45
%
 
1.13
%
 
 
 
1.29
%
 
1.12
%
 
 
Return on average shareholders' equity
9.94
%
 
10.85
%
 
 
 
9.50
%
 
10.82
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest income
$
149,220

 
$
84,918

 
75.7
 %
 
$
386,953

 
$
244,535

 
58.2
 %
Tax equivalent adjustment
1,567

 
1,353

 
15.8
 %
 
3,705

 
3,872

 
(4.3
)%
   Interest income - tax equivalent
150,787

 
86,271

 
74.8
 %
 
390,658

 
248,407

 
57.3
 %
Interest expense
25,735

 
14,439

 
78.2
 %
 
63,677

 
36,604

 
74.0
 %
   Net interest income - tax equivalent
$
125,052

 
$
71,832

 
74.1
 %
 
$
326,981

 
$
211,803

 
54.4
 %
 
 
 
 
 
 
 
 
 
 
 
 
Net interest margin
4.06
%
 
3.50
%
 
 
 
4.01
%
 
3.54
%
 
 
Net interest margin (fully tax equivalent) (1)
4.12
%
 
3.57
%
 
 
 
4.06
%
 
3.61
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Full-time equivalent employees
2,028

 
1,363

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(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 for 2018 and a 35% tax rate for 2017. 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.
N/M = Not meaningful.
 
 
 
 
 
 
 
 
 
 
 

3


FIRST FINANCIAL BANCORP.
CONSOLIDATED QUARTERLY STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
2018
 
Third
 
Second
 
First
 
Full
 
% Change
 
Quarter
 
Quarter
 
Quarter
 
Year
 
Linked Qtr.
Interest income
 
 
 
 
 
 
 
 
 
  Loans and leases, including fees
$
123,397

 
$
122,290

 
$
74,920

 
$
320,607

 
0.9
 %
  Investment securities
 
 
 
 
 
 
 
 
 
     Taxable
21,801

 
20,844

 
13,670

 
56,315

 
4.6
 %
     Tax-exempt
3,807

 
4,068

 
1,657

 
9,532

 
(6.4
)%
        Total investment securities interest
25,608

 
24,912

 
15,327

 
65,847

 
2.8
 %
  Other earning assets
215

 
177

 
107

 
499

 
21.5
 %
       Total interest income
149,220

 
147,379

 
90,354

 
386,953

 
1.2
 %
 
 
 
 
 
 
 
 
 
 
Interest expense
 
 
 
 
 
 
 
 
 
  Deposits
14,672

 
14,794

 
10,298

 
39,764

 
(0.8
)%
  Short-term borrowings
6,052

 
4,132

 
2,663

 
12,847

 
46.5
 %
  Long-term borrowings
5,011

 
4,474

 
1,581

 
11,066

 
12.0
 %
      Total interest expense
25,735

 
23,400

 
14,542

 
63,677

 
10.0
 %
      Net interest income
123,485

 
123,979

 
75,812

 
323,276

 
(0.4
)%
  Provision for loan and lease losses
3,238

 
3,735

 
2,303

 
9,276

 
(13.3
)%
      Net interest income after provision for loan and lease losses
120,247

 
120,244

 
73,509

 
314,000

 
0.0
 %
 
 
 
 
 
 
 
 
 
 
Noninterest income
 
 
 
 
 
 
 
 
 
  Service charges on deposit accounts
10,316

 
9,568

 
5,039

 
24,923

 
7.8
 %
  Trust and wealth management fees
3,728

 
3,697

 
3,954

 
11,379

 
0.8
 %
  Bankcard income
5,261

 
5,343

 
3,394

 
13,998

 
(1.5
)%
  Client derivative fees
3,029

 
1,463

 
1,757

 
6,249

 
107.0
 %
  Net gains from sales of loans
1,739

 
2,316

 
588

 
4,643

 
(24.9
)%
  Net gains (losses) on sale of investment securities
(167
)
 
(30
)
 
0

 
(197
)
 
456.7
 %
  Other
4,778

 
5,899

 
2,206

 
12,883

 
(19.0
)%
      Total noninterest income
28,684

 
28,256

 
16,938

 
73,878

 
1.5
 %
 
 
 
 
 
 
 
 
 
 
Noninterest expenses
 
 
 
 
 
 
 
 
 
  Salaries and employee benefits
50,852

 
55,531

 
31,102

 
137,485

 
(8.4
)%
  Net occupancy
6,765

 
6,631

 
4,497

 
17,893

 
2.0
 %
  Furniture and equipment
4,072

 
5,298

 
2,040

 
11,410

 
(23.1
)%
  Data processing
4,502

 
14,304

 
3,672

 
22,478

 
(68.5
)%
  Marketing
2,502

 
2,644

 
801

 
5,947

 
(5.4
)%
  Communication
785

 
1,118

 
459

 
2,362

 
(29.8
)%
  Professional services
2,621

 
5,659

 
2,198

 
10,478

 
(53.7
)%
  State intangible tax
1,223

 
1,078

 
765

 
3,066

 
13.5
 %
  FDIC assessments
734

 
1,323

 
894

 
2,951

 
(44.5
)%
  Loss (gain) - other real estate owned
538

 
(283
)
 
77

 
332

 
(290.1
)%
  Other
10,821

 
9,452

 
5,783

 
26,056

 
14.5
 %
      Total noninterest expenses
85,415

 
102,755

 
52,288

 
240,458

 
(16.9
)%
Income before income taxes
63,516

 
45,745

 
38,159

 
147,420

 
38.8
 %
Income tax expense
12,859

 
9,327

 
7,653

 
29,839

 
37.9
 %
      Net income
$
50,657

 
$
36,418

 
$
30,506

 
$
117,581

 
39.1
 %
 
 
 
 
 
 
 
 
 
 
ADDITIONAL DATA
 
 
 
 
 
 
 
 
 
Net earnings per share - basic
$
0.52

 
$
0.37

 
$
0.49

 
$
1.37

 
 
Net earnings per share - diluted
$
0.51

 
$
0.37

 
$
0.49

 
$
1.36

 
 
Dividends declared per share
$
0.20

 
$
0.19

 
$
0.19

 
$
0.58

 
 
 
 
 
 
 
 
 
 
 
 
Return on average assets
1.45
%
 
1.05
%
 
1.40
%
 
1.29
%
 
 
Return on average shareholders' equity
9.94
%
 
7.36
%
 
13.31
%
 
9.50
%
 
 
 
 
 
 
 
 
 
 
 
 
Interest income
$
149,220

 
$
147,379

 
$
90,354

 
$
386,953

 
1.2
 %
Tax equivalent adjustment
1,567

 
1,420

 
718

 
3,705

 
10.4
 %
   Interest income - tax equivalent
150,787

 
148,799

 
91,072

 
390,658

 
1.3
 %
Interest expense
25,735

 
23,400

 
14,542

 
63,677

 
10.0
 %
   Net interest income - tax equivalent
$
125,052

 
$
125,399

 
$
76,530

 
$
326,981

 
(0.3
)%
 
 
 
 
 
 
 
 
 
 
Net interest margin
4.06
%
 
4.10
%
 
3.80
%
 
4.01
%
 
 
Net interest margin (fully tax equivalent) (1)
4.12
%
 
4.15
%
 
3.84
%
 
4.06
%
 
 
 
 
 
 
 
 
 
 
 
 
Full-time equivalent employees
2,028

 
2,118

 
1,289

 
 
 
 
 
 
 
 
 
 
 
 
 
 
(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 for 2018 and a 35% tax rate for 2017. 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.
N/M = Not meaningful.
 
 
 
 
 
 
 
 
 

4


FIRST FINANCIAL BANCORP.
CONSOLIDATED QUARTERLY STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
2017
 
Fourth
 
Third
 
Second
 
First
 
Full
 
Quarter
 
Quarter
 
Quarter
 
Quarter
 
Year
Interest income
 
 
 
 
 
 
 
 
 
  Loans and leases, including fees
$
74,347

 
$
71,148

 
$
67,748

 
$
66,868

 
$
280,111

  Investment securities
 
 
 
 
 
 
 
 
 
     Taxable
13,212

 
13,150

 
12,598

 
11,608

 
50,568

     Tax-exempt
1,571

 
1,537

 
1,457

 
1,353

 
5,918

        Total investment securities interest
14,783

 
14,687

 
14,055

 
12,961

 
56,486

  Other earning assets
(592
)
 
(917
)
 
(1,014
)
 
(1,001
)
 
(3,524
)
       Total interest income
88,538

 
84,918

 
80,789

 
78,828

 
333,073

 
 
 
 
 
 
 
 
 
 
Interest expense
 
 
 
 
 
 
 
 
 
  Deposits
9,243

 
10,335

 
8,679

 
6,925

 
35,182

  Short-term borrowings
2,144

 
2,566

 
2,051

 
1,432

 
8,193

  Long-term borrowings
1,537

 
1,538

 
1,539

 
1,539

 
6,153

      Total interest expense
12,924

 
14,439

 
12,269

 
9,896

 
49,528

      Net interest income
75,614

 
70,479

 
68,520

 
68,932

 
283,545

  Provision for loan and lease losses
(205
)
 
2,953

 
467

 
367

 
3,582

      Net interest income after provision for loan and lease losses
75,819

 
67,526

 
68,053

 
68,565

 
279,963

 
 
 
 
 
 
 
 
 


Noninterest income
 
 
 
 
 
 
 
 
 
  Service charges on deposit accounts
5,190

 
5,169

 
4,772

 
4,644

 
19,775

  Trust and wealth management fees
3,597

 
3,324

 
3,405

 
3,747

 
14,073

  Bankcard income
3,390

 
3,272

 
3,501

 
3,135

 
13,298

  Client derivative fees
2,047

 
1,779

 
1,489

 
1,103

 
6,418

  Net gains from sales of loans
1,171

 
1,455

 
1,327

 
1,216

 
5,169

  Net gains on sale of investment securities
19

 
276

 
838

 
516

 
1,649

  Other
2,968

 
7,667

 
2,122

 
3,003

 
15,760

      Total noninterest income
18,382

 
22,942

 
17,454

 
17,364

 
76,142

 
 
 
 
 
 
 
 
 
 
Noninterest expenses
 
 
 
 
 
 
 
 
 
  Salaries and employee benefits
35,439

 
33,827

 
31,544

 
31,750

 
132,560

  Net occupancy
4,252

 
4,328

 
4,302

 
4,515

 
17,397

  Furniture and equipment
1,969

 
2,161

 
2,136

 
2,177

 
8,443

  Data processing
3,768

 
3,455

 
3,501

 
3,298

 
14,022

  Marketing
1,060

 
649

 
982

 
510

 
3,201

  Communication
474

 
430

 
468

 
447

 
1,819

  Professional services
9,766

 
2,030

 
1,469

 
1,758

 
15,023

  State intangible tax
492

 
721

 
721

 
721

 
2,655

  FDIC assessments
943

 
1,051

 
1,018

 
932

 
3,944

  Loss (gain) - other real estate owned
219

 
237

 
162

 
24

 
642

  Other
24,516

 
5,554

 
5,253

 
4,913

 
40,236

      Total noninterest expenses
82,898

 
54,443

 
51,556

 
51,045

 
239,942

Income before income taxes
11,303

 
36,025

 
33,951

 
34,884

 
116,163

Income tax expense (benefit)
(13,508
)
 
11,199

 
11,215

 
10,470

 
19,376

      Net income
$
24,811

 
$
24,826

 
$
22,736

 
$
24,414

 
$
96,787

 
 
 
 
 
 
 
 
 


ADDITIONAL DATA
 
 
 
 
 
 
 
 
 
Net earnings per share - basic
$
0.40

 
$
0.40

 
$
0.37

 
$
0.40

 
$
1.57

Net earnings per share - diluted
$
0.40

 
$
0.40

 
$
0.37

 
$
0.39

 
$
1.56

Dividends declared per share
$
0.17

 
$
0.17

 
$
0.17

 
$
0.17

 
$
0.68

 
 
 
 
 
 
 
 
 
 
Return on average assets
1.13
%
 
1.13
%
 
1.06
%
 
1.18
%
 
1.12
%
Return on average shareholders' equity
10.70
%
 
10.85
%
 
10.25
%
 
11.36
%
 
10.78
%
 
 
 
 
 
 
 
 
 
 
Interest income
$
88,538

 
$
84,918

 
$
80,789

 
$
78,828

 
$
333,073

Tax equivalent adjustment
1,387

 
1,353

 
1,294

 
1,225

 
5,259

   Interest income - tax equivalent
89,925

 
86,271

 
82,083

 
80,053

 
338,332

Interest expense
12,924

 
14,439

 
12,269

 
9,896

 
49,528

   Net interest income - tax equivalent
$
77,001

 
$
71,832

 
$
69,814

 
$
70,157

 
$
288,804

 
 
 
 
 
 
 
 
 
 
Net interest margin
3.75
%
 
3.50
%
 
3.50
%
 
3.63
%
 
3.59
%
Net interest margin (fully tax equivalent) (1)
3.82
%
 
3.57
%
 
3.56
%
 
3.70
%
 
3.66
%
 
 
 
 
 
 
 
 
 
 
Full-time equivalent employees
1,304

 
1,363

 
1,429

 
1,424

 
 
 
 
 
 
 
 
 
 
 
 
(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 for 2018 and a 35% tax rate for 2017. 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.

5



FIRST FINANCIAL BANCORP.
CONSOLIDATED STATEMENTS OF CONDITION
(Dollars in thousands)
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Sep. 30,
 
Jun. 30,
 
Mar. 31,
 
Dec. 31,
 
Sep. 30,
 
% Change
 
% Change
 
2018
 
2018
 
2018
 
2017
 
2017
 
Linked Qtr.
 
Comparable Qtr.
ASSETS
 
 
 
 
 
 
 
 
 
 
 
 
 
     Cash and due from banks
$
193,288

 
$
216,667

 
$
116,581

 
$
150,650

 
$
117,840

 
(10.8
)%
 
64.0
 %
     Interest-bearing deposits with other banks
28,989

 
37,915

 
10,200

 
33,974

 
34,787

 
(23.5
)%
 
(16.7
)%
     Investment securities available-for-sale
2,626,726

 
2,654,909

 
1,359,381

 
1,349,408

 
1,286,770

 
(1.1
)%
 
104.1
 %
     Investment securities held-to-maturity
434,369

 
443,957

 
633,722

 
654,008

 
669,816

 
(2.2
)%
 
(35.2
)%
     Other investments
115,757

 
95,004

 
53,070

 
53,140

 
53,198

 
21.8
 %
 
117.6
 %
     Loans held for sale
13,277

 
15,821

 
8,048

 
11,502

 
16,466

 
(16.1
)%
 
(19.4
)%
     Loans and leases
 
 
 
 
 
 
 
 
 
 
 
 
 
       Commercial and industrial
2,426,590

 
2,440,596

 
1,943,741

 
1,912,743

 
1,886,093

 
(0.6
)%
 
28.7
 %
       Lease financing
95,317

 
96,198

 
81,617

 
89,347

 
86,014

 
(0.9
)%