First Financial Bancorp Announces First Quarter 2019 Results

Published

CINCINNATI, April 25, 2019 /PRNewswire/ -- First Financial Bancorp. (Nasdaq: FFBC) ("First Financial" or the "Company") announced financial results for the first quarter 2019 and a quarterly dividend of $0.22 per share, payable on June 17, 2019 to shareholders of record as of June 3, 2019.

For the three months ended March 31, 2019, the Company reported net income of $45.8 million, or $0.47 per diluted common share.  These results compare to net income of $55.0 million, or $0.56 per diluted common share, for the fourth quarter of 2018 and $30.5 million, or $0.49 per diluted common share, for the first quarter of 2018.   Income before taxes was negatively impacted by a $10.0 million charge-off related to a $16.8 million franchise lending relationship, as well as recognition of $1.8 million of primarily merger-related costs, the combination reducing earnings per diluted common share by $0.09 on a net basis.

Return on average assets for the first quarter of 2019 was 1.33% while return on average tangible common equity was 15.95%.  These compare to a return on average assets of 1.59% and return on average tangible common equity of 19.63% in the fourth quarter of 2018 and a return on average assets of 1.40% and a return on average tangible common equity of 17.18% in the first quarter of 2018.

First quarter 2019 highlights include:

  • After adjustments(1) for merger-related and nonrecurring items:
    • Net income of $0.48 per diluted common share
    • 1.38% return on average assets
    • 16.45% return on average tangible common equity
  • Net interest margin of 4.10% on a fully tax-equivalent basis(1)
    • 11 basis point reduction from the linked quarter driven by lower loan fees and moderated purchase accounting impact
  • Noninterest expenses of $78.5 million, or $76.7 million as adjusted(1)
    • Efficiency ratio of 52.9% for the first quarter; 51.7% as adjusted(1)
  • Stable loan  balances
    • 8% linked quarter increase in loan origination activity offset by prepayments 
    • Average loan balances increased $11.0 million compared to the linked quarter
  • Modest average deposit growth as an increase in time deposits offset seasonal declines in public funds and business demand deposit accounts
  • Annualized net charge-offs increased to 64 basis points as a percentage of average loans for the quarter driven by the previously mentioned $10.0 million charge-off resulting in provision expense of $14.1 million
  • Continued capital expansion
    • Total capital of 14.24%; Tier 1 common equity of 12.03%; Tangible common equity of 9.15%
    • Tangible book value increased to $12.19

 

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

Archie Brown, President and Chief Executive Officer, commented, "One year into operating as a combined company, we are encouraged that our core banking fundamentals and earnings power have met our initial expectations.  We are disappointed that a single credit loss muted what would have otherwise been a very profitable first quarter.  Aside from the $0.08 per share impact from the franchise loss, adjusted(1) earnings per share totaled $0.48 and our return on assets and average tangible common equity remained strong."

Mr. Brown continued, "We remain optimistic about the sustainability of our overall performance.  Our net interest margin was strong, despite expected declines in purchase accounting accretion and loan fee volatility.  Loan origination activity increased to its highest level post-merger, but we continue to face prepayment headwinds that are muting the impact of new production.  We are also pleased with modest deposit growth as higher time deposit balances offset expected seasonal declines in business DDA and public funds.  Our efficiency ratio continues to reflect disciplined expense management and we will look to maximize fee income opportunities going forward."

Mr. Brown concluded, "The Board announced a quarterly dividend of $0.22, which equates to an attractive 3.7% yield. Our strong and growing capital ratios reflect the Company's high level performance and give us flexibility to evaluate additional capital deployment opportunities such as executing on our share repurchase plan or making strategic acquisitions that enhance fee income or strengthen our market position."

Full detail of the Company's first quarter 2019 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, April 26, 2019 at 8:30 a.m. Eastern Time.  Members of the public who would like to listen to the conference call should dial (877) 506-6873 (U.S. toll free), (855) 669-9657 (Canada toll free) or +1 (412) 380-2003 (International) (no passcode required).  The number should be dialed five to ten minutes prior to the start of the conference call.  The conference call will also be accessible as an audio webcast via the Investor Relations section of the Company's website at www.bankatfirst.com.  A replay of the conference call will be available beginning one hour after the completion of the live call at (877) 344-7529 (U.S. toll free), (855) 669-9658 (Canada toll free) and +1 (412) 317-0088 (International); conference number 10130234.  The webcast will be archived on the Investor Relations section of the Company's website for 12 months.

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

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

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

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

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

About First Financial Bancorp.
First Financial Bancorp. is a Cincinnati, Ohio based bank holding company.  As of March 31, 2019, the Company had $14.1 billion in assets, $8.8 billion in loans, $10.1 billion in deposits and $2.1 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 $2.6 billion in assets under management as of March 31, 2019.  The Company operated 159 banking centers as of March 31, 2019, primarily in Ohio, Indiana and Kentucky, while the Commercial Finance business lends into targeted industry verticals on a nationwide basis.  Additional information about the Company, including its products, services and banking locations, is available at www.bankatfirst.com.

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. FIRST FINANCIAL BANCORP.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Ended,
Mar. 31, Dec. 31, Sep. 30, Jun. 30, Mar. 31,
2019 2018 2018 2018 2018
RESULTS OF OPERATIONS
Net income $ 45,839 $ 55,014 $ 50,657 $ 36,418 $ 30,506
Net earnings per share - basic $ 0.47 $ 0.56 $ 0.52 $ 0.37 $ 0.49
Net earnings per share - diluted $ 0.47 $ 0.56 $ 0.51 $ 0.37 $ 0.49
Dividends declared per share $ 0.22 $ 0.20 $ 0.20 $ 0.19 $ 0.19
KEY FINANCIAL RATIOS
Return on average assets 1.33 % 1.59 % 1.45 % 1.05 % 1.40 %
Return on average shareholders' equity 8.88 % 10.68 % 9.94 % 7.36 % 13.31 %
Return on average tangible shareholders' equity 15.95 % 19.63 % 18.52 % 13.75 % 17.18 %
Net interest margin 4.05 % 4.16 % 4.06 % 4.10 % 3.80 %
Net interest margin (fully tax equivalent) (1) 4.10 % 4.21 % 4.12 % 4.15 % 3.84 %
Ending shareholders' equity as a percent of ending assets 15.14 % 14.86 % 14.70 % 14.46 % 10.56 %
Ending tangible shareholders' equity as a percent of:
Ending tangible assets 9.15 % 8.79 % 8.53 % 8.30 % 8.41 %
Risk-weighted assets 11.61 % 11.20 % 10.77 % 10.52 % 10.09 %
Average shareholders' equity as a percent of average assets 15.01 % 14.84 % 14.62 % 14.33 % 10.53 %
Average tangible shareholders' equity as a percent of
    average tangible assets 8.95 % 8.66 % 8.42 % 8.16 % 8.35 %
Book value per share $ 21.60 $ 21.23 $ 20.79 $ 20.56 $ 15.11
Tangible book value per share $ 12.19 $ 11.72 $ 11.25 $ 11.01 $ 11.75
Common equity tier 1 ratio (2) 12.03 % 11.87 % 11.52 % 11.15 % 10.77 %
Tier 1 ratio (2) 12.43 % 12.28 % 11.93 % 11.55 % 10.77 %
Total capital ratio (2) 14.24 % 14.10 % 13.77 % 13.36 % 13.17 %
Leverage ratio (2) 9.84 % 9.71 % 9.41 % 9.06 % 9.00 %
AVERAGE BALANCE SHEET ITEMS
Loans (3) $ 8,773,310 $ 8,766,302 $ 8,848,710 $ 8,933,400 $ 6,016,492
FDIC indemnification asset 1,502
Investment securities 3,355,732 3,204,758 3,168,044 3,157,339 2,042,781
Interest-bearing deposits with other banks 34,709 32,013 39,873 29,261 27,073
  Total earning assets $ 12,163,751 $ 12,003,073 $ 12,056,627 $ 12,120,000 $ 8,087,848
Total assets $ 13,952,551 $ 13,768,958 $ 13,822,675 $ 13,956,360 $ 8,830,176
Noninterest-bearing deposits $ 2,457,587 $ 2,476,773 $ 2,388,976 $ 2,421,230 $ 1,570,572
Interest-bearing deposits 7,610,092 7,573,069 7,499,112 7,961,405 5,332,740
  Total deposits $ 10,067,679 $ 10,049,842 $ 9,888,088 $ 10,382,635 $ 6,903,312
Borrowings $ 1,587,068 $ 1,509,642 $ 1,748,415 $ 1,408,024 $ 866,848
Shareholders' equity $ 2,094,234 $ 2,042,884 $ 2,021,400 $ 2,000,093 $ 929,474
CREDIT QUALITY RATIOS
Allowance to ending loans 0.64 % 0.64 % 0.65 % 0.61 % 0.89 %
Allowance to nonaccrual loans 95.40 % 79.97 % 136.22 % 133.65 % 179.57 %
Allowance to nonperforming loans 68.94 % 65.13 % 92.08 % 86.80 % 120.24 %
Nonperforming loans to total loans 0.93 % 0.98 % 0.71 % 0.70 % 0.74 %
Nonperforming assets to ending loans, plus OREO 0.95 % 1.00 % 0.73 % 0.72 % 0.76 %
Nonperforming assets to total assets 0.60 % 0.63 % 0.47 % 0.46 % 0.52 %
Classified assets to total assets 1.01 % 0.94 % 1.00 % 1.00 % 0.98 %
Net charge-offs to average loans (annualized) 0.64 % 0.29 % (0.02) % 0.18 % 0.13 %
(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) March 31, 2019 regulatory capital ratios are preliminary.
(3) Includes loans held for sale.

 

 


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. FIRST FINANCIAL BANCORP. FIRST FINANCIAL BANCORP.
CONSOLIDATED FINANCIAL HIGHLIGHTS CONSOLIDATED QUARTERLY STATEMENTS OF INCOME
(Dollars in thousands, except per share data) (Dollars in thousands, except per share data)
(Unaudited) (Unaudited)
Three Months Ended, 2019 2018
Mar. 31, Dec. 31, Sep. 30, Jun. 30, Mar. 31, First Fourth Third Second First Full
2019 2018 2018 2018 2018 Quarter Quarter Quarter Quarter Quarter Year
RESULTS OF OPERATIONS Interest income
Net income $ 45,839 $ 55,014 $ 50,657 $ 36,418 $ 30,506   Loans and leases, including fees $ 123,056 $ 126,580 $ 123,397 $ 122,290 $ 74,920 $ 447,187
Net earnings per share - basic $ 0.47 $ 0.56 $ 0.52 $ 0.37 $ 0.49   Investment securities
Net earnings per share - diluted $ 0.47 $ 0.56 $ 0.51 $ 0.37 $ 0.49      Taxable 24,235 22,761 21,801 20,844 13,670 79,076
Dividends declared per share $ 0.22 $ 0.20 $ 0.20 $ 0.19 $ 0.19      Tax-exempt 4,258 3,896 3,807 4,068 1,657 13,428
        Total investment securities interest 28,493 26,657 25,608 24,912 15,327 92,504
KEY FINANCIAL RATIOS   Other earning assets 210 192 215 177 107 691
Return on average assets 1.33 % 1.59 % 1.45 % 1.05 % 1.40 %        Total interest income 151,759 153,429 149,220 147,379 90,354 540,382
Return on average shareholders' equity 8.88 % 10.68 % 9.94 % 7.36 % 13.31 %
Return on average tangible shareholders' equity 15.95 % 19.63 % 18.52 % 13.75 % 17.18 % Interest expense
  Deposits 19,243 17,198 14,672 14,794 10,298 56,962
Net interest margin 4.05 % 4.16 % 4.06 % 4.10 % 3.80 %   Short-term borrowings 5,960 5,186 6,052 4,132 2,663 18,033
Net interest margin (fully tax equivalent) (1) 4.10 % 4.21 % 4.12 % 4.15 % 3.84 %   Long-term borrowings 5,041 5,086 5,011 4,474 1,581 16,152
      Total interest expense 30,244 27,470 25,735 23,400 14,542 91,147
Ending shareholders' equity as a percent of ending assets 15.14 % 14.86 % 14.70 % 14.46 % 10.56 %       Net interest income 121,515 125,959 123,485 123,979 75,812 449,235
Ending tangible shareholders' equity as a percent of:   Provision for loan and lease losses 14,083 5,310 3,238 3,735 2,303 14,586
Ending tangible assets 9.15 % 8.79 % 8.53 % 8.30 % 8.41 %       Net interest income after provision for loan and lease losses 107,432 120,649 120,247 120,244 73,509 434,649
Risk-weighted assets 11.61 % 11.20 % 10.77 % 10.52 % 10.09 %
Noninterest income
Average shareholders' equity as a percent of average assets 15.01 % 14.84 % 14.62 % 14.33 % 10.53 %   Service charges on deposit accounts 8,903 10,185 10,316 9,568 5,039 35,108
Average tangible shareholders' equity as a percent of   Trust and wealth management fees 4,070 3,703 3,728 3,697 3,954 15,082
    average tangible assets 8.95 % 8.66 % 8.42 % 8.16 % 8.35 %   Bankcard income 5,586 6,247 5,261 5,343 3,394 20,245
  Client derivative fees 1,704 1,433 3,029 1,463 1,757 7,682
Book value per share $ 21.60 $ 21.23 $ 20.79 $ 20.56 $ 15.11   Net gains from sales of loans 1,890 1,428 1,739 2,316 588 6,071
Tangible book value per share $ 12.19 $ 11.72 $ 11.25 $ 11.01 $ 11.75   Net gains on sale of investment securities (178) 36 (167) (30) 0 (161)
  Other 4,852 6,472 4,778 5,899 2,206 19,355
Common equity tier 1 ratio (2) 12.03 % 11.87 % 11.52 % 11.15 % 10.77 %       Total noninterest income 26,827 29,504 28,684 28,256 16,938 103,382
Tier 1 ratio (2) 12.43 % 12.28 % 11.93 % 11.55 % 10.77 %
Total capital ratio (2) 14.24 % 14.10 % 13.77 % 13.36 % 13.17 % Noninterest expenses
Leverage ratio (2) 9.84 % 9.71 % 9.41 % 9.06 % 9.00 %   Salaries and employee benefits 47,912 51,505 50,852 55,531 31,102 188,990
  Net occupancy 6,630 6,322 6,765 6,631 4,497 24,215
AVERAGE BALANCE SHEET ITEMS   Furniture and equipment 3,416 3,498 4,072 5,298 2,040 14,908
Loans (3) $ 8,773,310 $ 8,766,302 $ 8,848,710 $ 8,933,400 $ 6,016,492   Data processing 5,127 5,599 4,502 14,304 3,672 28,077
FDIC indemnification asset 1,502   Marketing 1,606 1,651 2,502 2,644 801 7,598
Investment securities 3,355,732 3,204,758 3,168,044 3,157,339 2,042,781   Communication 728 805 785 1,118 459 3,167
Interest-bearing deposits with other banks 34,709 32,013 39,873 29,261 27,073   Professional services 2,252 1,794 2,621 5,659 2,198 12,272
  Total earning assets $ 12,163,751 $ 12,003,073 $ 12,056,627 $ 12,120,000 $ 8,087,848   State intangible tax 1,310 1,086 1,223 1,078 765 4,152
Total assets $ 13,952,551 $ 13,768,958 $ 13,822,675 $ 13,956,360 $ 8,830,176   FDIC assessments 950 1,018 734 1,323 894 3,969
Noninterest-bearing deposits $ 2,457,587 $ 2,476,773 $ 2,388,976 $ 2,421,230 $ 1,570,572   Loss (gain) - other real estate owned 70 41 538 (283) 77 373
Interest-bearing deposits 7,610,092 7,573,069 7,499,112 7,961,405 5,332,740   Intangible amortization 2,045 2,229 2,486 2,364 280 7,359
  Total deposits $ 10,067,679 $ 10,049,842 $ 9,888,088 $ 10,382,635 $ 6,903,312   Other 6,453 7,804 8,335 7,088 5,503 28,730
Borrowings $ 1,587,068 $ 1,509,642 $ 1,748,415 $ 1,408,024 $ 866,848       Total noninterest expenses 78,499 83,352 85,415 102,755 52,288 323,810
Shareholders' equity $ 2,094,234 $ 2,042,884 $ 2,021,400 $ 2,000,093 $ 929,474 Income before income taxes 55,760 66,801 63,516 45,745 38,159 214,221
Income tax expense (benefit) 9,921 11,787 12,859 9,327 7,653 41,626
CREDIT QUALITY RATIOS       Net income $ 45,839 $ 55,014 $ 50,657 $ 36,418 $ 30,506 $ 172,595
Allowance to ending loans 0.64 % 0.64 % 0.65 % 0.61 % 0.89 %
Allowance to nonaccrual loans 95.40 % 79.97 % 136.22 % 133.65 % 179.57 % ADDITIONAL DATA
Allowance to nonperforming loans 68.94 % 65.13 % 92.08 % 86.80 % 120.24 % Net earnings per share - basic $ 0.47 $ 0.56 $ 0.52 $ 0.37 $ 0.49 $ 1.95
Nonperforming loans to total loans 0.93 % 0.98 % 0.71 % 0.70 % 0.74 % Net earnings per share - diluted $ 0.47 $ 0.56 $ 0.51 $ 0.37 $ 0.49 $ 1.93
Nonperforming assets to ending loans, plus OREO 0.95 % 1.00 % 0.73 % 0.72 % 0.76 % Dividends declared per share $ 0.22 $ 0.20 $ 0.20 $ 0.19 $ 0.19 $ 0.78
Nonperforming assets to total assets 0.60 % 0.63 % 0.47 % 0.46 % 0.52 %
Classified assets to total assets 1.01 % 0.94 % 1.00 % 1.00 % 0.98 % Return on average assets 1.33 % 1.59 % 1.45 % 1.05 % 1.40 % 1.37 %
Net charge-offs to average loans (annualized) 0.64 % 0.29 % (0.02) % 0.18 % 0.13 % Return on average shareholders' equity 8.88 % 10.68 % 9.94 % 7.36 % 13.31 % 9.85 %
(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. Interest income $ 151,759 $ 153,429 $ 149,220 $ 147,379 $ 90,354 $ 540,382
(2) March 31, 2019 regulatory capital ratios are preliminary. Tax equivalent adjustment 1,523 1,442 1,567 1,420 718 5,147
(3) Includes loans held for sale.    Interest income - tax equivalent 153,282 154,871 150,787 148,799 91,072 545,529
Interest expense 30,244 27,470 25,735 23,400 14,542 91,147
   Net interest income - tax equivalent $ 123,038 $ 127,401 $ 125,052 $ 125,399 $ 76,530 $ 454,382
Net interest margin 4.05 % 4.16 % 4.06 % 4.10 % 3.80 % 4.05 %
Net interest margin (fully tax equivalent) (1) 4.10 % 4.21 % 4.12 % 4.15 % 3.84 % 4.10 %
Full-time equivalent employees 2,087 2,073 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. 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 toinvestors by allowing them to make peer comparisons.  Management also uses these measures to make peer comparisons.

 

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. FIRST FINANCIAL BANCORP. FIRST FINANCIAL BANCORP. FIRST FINANCIAL BANCORP.
CONSOLIDATED FINANCIAL HIGHLIGHTS CONSOLIDATED QUARTERLY STATEMENTS OF INCOME CONSOLIDATED STATEMENTS OF CONDITION
(Dollars in thousands, except per share data) (Dollars in thousands, except per share data) (Dollars in thousands)
(Unaudited) (Unaudited) (Unaudited)
Three Months Ended, 2019 2018 Mar. 31, Dec. 31, Sep. 30, Jun. 30, Mar. 31, % Change % Change
Mar. 31, Dec. 31, Sep. 30, Jun. 30, Mar. 31, First Fourth Third Second First Full 2019 2018 2018 2018 2018 Linked Qtr. Comparable Qtr.
2019 2018 2018 2018 2018 Quarter Quarter Quarter Quarter Quarter Year ASSETS
RESULTS OF OPERATIONS Interest income      Cash and due from banks $ 169,004 $ 236,221 $ 193,288 $ 216,667 $ 116,581 (28.5) % 45.0 %
Net income $ 45,839 $ 55,014 $ 50,657 $ 36,418 $ 30,506   Loans and leases, including fees $ 123,056 $ 126,580 $ 123,397 $ 122,290 $ 74,920 $ 447,187      Interest-bearing deposits with other banks 50,224 37,738 28,989 37,915 10,200 33.1 % 392.4 %
Net earnings per share - basic $ 0.47 $ 0.56 $ 0.52 $ 0.37 $ 0.49   Investment securities      Investment securities available-for-sale 3,113,811 2,779,255 2,626,726 2,654,909 1,359,381 12.0 % 129.1 %
Net earnings per share - diluted $ 0.47 $ 0.56 $ 0.51 $ 0.37 $ 0.49      Taxable 24,235 22,761 21,801 20,844 13,670 79,076      Investment securities held-to-maturity 158,305 429,328 434,369 443,957 633,722 (63.1) % (75.0) %
Dividends declared per share $ 0.22 $ 0.20 $ 0.20 $ 0.19 $ 0.19      Tax-exempt 4,258 3,896 3,807 4,068 1,657 13,428      Other investments 115,731 115,660 115,757 95,004 53,070 0.1 % 118.1 %
        Total investment securities interest 28,493 26,657 25,608 24,912 15,327 92,504      Loans held for sale 8,217 4,372 13,277 15,821 8,048 87.9 % 2.1 %
KEY FINANCIAL RATIOS   Other earning assets 210 192 215 177 107 691      Loans and leases
Return on average assets 1.33 % 1.59 % 1.45 % 1.05 % 1.40 %        Total interest income 151,759 153,429 149,220 147,379 90,354 540,382        Commercial and industrial 2,543,427 2,514,661 2,426,590 2,440,596 1,943,741 1.1 % 30.9 %
Return on average shareholders' equity 8.88 % 10.68 % 9.94 % 7.36 % 13.31 %        Lease financing 95,573 93,415 95,317 96,198 81,617 2.3 % 17.1 %
Return on average tangible shareholders' equity 15.95 % 19.63 % 18.52 % 13.75 % 17.18 % Interest expense        Construction real estate 458,113 548,935 565,077 555,468 494,665 (16.5) % (7.4) %
  Deposits 19,243 17,198 14,672 14,794 10,298 56,962        Commercial real estate 3,802,179 3,754,681 3,868,143 3,888,993 2,544,051 1.3 % 49.5 %
Net interest margin 4.05 % 4.16 % 4.06 % 4.10 % 3.80 %   Short-term borrowings 5,960 5,186 6,052 4,132 2,663 18,033        Residential real estate 975,120 955,646 932,962 918,904 468,584 2.0 % 108.1 %
Net interest margin (fully tax equivalent) (1) 4.10 % 4.21 % 4.12 % 4.15 % 3.84 %   Long-term borrowings 5,041 5,086 5,011 4,474 1,581 16,152        Home equity 797,118 817,282 816,133 835,031 483,643 (2.5) % 64.8 %
      Total interest expense 30,244 27,470 25,735 23,400 14,542 91,147        Installment 90,689 93,212 97,413 100,726 39,248 (2.7) % 131.1 %
Ending shareholders' equity as a percent of ending assets 15.14 % 14.86 % 14.70 % 14.46 % 10.56 %       Net interest income 121,515 125,959 123,485 123,979 75,812 449,235        Credit card 46,982 46,382 45,741 48,665 46,472 1.3 % 1.1 %
Ending tangible shareholders' equity as a percent of:   Provision for loan and lease losses 14,083 5,310 3,238 3,735 2,303 14,586           Total loans 8,809,201 8,824,214 8,847,376 8,884,581 6,102,021 (0.2) % 44.4 %
Ending tangible assets 9.15 % 8.79 % 8.53 % 8.30 % 8.41 %       Net interest income after provision for loan and lease losses 107,432 120,649 120,247 120,244 73,509 434,649        Less:
Risk-weighted assets 11.61 % 11.20 % 10.77 % 10.52 % 10.09 %           Allowance for loan and lease losses 56,722 56,542 57,715 54,076 54,380 0.3 % 4.3 %
Noninterest income                 Net loans 8,752,479 8,767,672 8,789,661 8,830,505 6,047,641 (0.2) % 44.7 %
Average shareholders' equity as a percent of average assets 15.01 % 14.84 % 14.62 % 14.33 % 10.53 %   Service charges on deposit accounts 8,903 10,185 10,316 9,568 5,039 35,108      Premises and equipment 210,676 215,652 219,940 223,950 127,046 (2.3) % 65.8 %
Average tangible shareholders' equity as a percent of   Trust and wealth management fees 4,070 3,703 3,728 3,697 3,954 15,082      Goodwill 879,727 880,251 881,033 883,025 204,083 (0.1) % 331.1 %
    average tangible assets 8.95 % 8.66 % 8.42 % 8.16 % 8.35 %   Bankcard income 5,586 6,247 5,261 5,343 3,394 20,245      Other intangibles 38,571 40,805 43,356 42,891 3,506 (5.5) % N/M
  Client derivative fees 1,704 1,433 3,029 1,463 1,757 7,682      Accrued interest and other assets 577,518 479,706 496,271 475,523 335,151 20.4 % 72.3 %
Book value per share $ 21.60 $ 21.23 $ 20.79 $ 20.56 $ 15.11   Net gains from sales of loans 1,890 1,428 1,739 2,316 588 6,071        Total Assets $ 14,074,263 $ 13,986,660 $ 13,842,667 $ 13,920,167 $ 8,898,429 0.6 % 58.2 %
Tangible book value per share $ 12.19 $ 11.72 $ 11.25 $ 11.01 $ 11.75   Net gains on sale of investment securities (178) 36 (167) (30) 0 (161)
  Other 4,852 6,472 4,778 5,899 2,206 19,355 LIABILITIES
Common equity tier 1 ratio (2) 12.03 % 11.87 % 11.52 % 11.15 % 10.77 %       Total noninterest income 26,827 29,504 28,684 28,256 16,938 103,382      Deposits
Tier 1 ratio (2) 12.43 % 12.28 % 11.93 % 11.55 % 10.77 %        Interest-bearing demand $ 2,235,036 $ 2,307,071 $ 2,284,271 $ 2,440,088 $ 1,442,399 (3.1) % 55.0 %
Total capital ratio (2) 14.24 % 14.10 % 13.77 % 13.36 % 13.17 % Noninterest expenses        Savings 3,100,894 3,167,325 3,134,944 3,087,683 2,450,196 (2.1) % 26.6 %
Leverage ratio (2) 9.84 % 9.71 % 9.41 % 9.06 % 9.00 %   Salaries and employee benefits 47,912 51,505 50,852 55,531 31,102 188,990        Time 2,309,810 2,173,564 1,957,574 2,104,044 1,545,273 6.3 % 49.5 %
  Net occupancy 6,630 6,322 6,765 6,631 4,497 24,215           Total interest-bearing deposits 7,645,740 7,647,960 7,376,789 7,631,815 5,437,868 0.0 % 40.6 %
AVERAGE BALANCE SHEET ITEMS   Furniture and equipment 3,416 3,498 4,072 5,298 2,040 14,908        Noninterest-bearing 2,488,157 2,492,434 2,375,845 2,471,932 1,572,636 (0.2) % 58.2 %
Loans (3) $ 8,773,310 $ 8,766,302 $ 8,848,710 $ 8,933,400 $ 6,016,492   Data processing 5,127 5,599 4,502 14,304 3,672 28,077           Total deposits 10,133,897 10,140,394 9,752,634 10,103,747 7,010,504 (0.1) % 44.6 %
FDIC indemnification asset 1,502   Marketing 1,606 1,651 2,502 2,644 801 7,598      Federal funds purchased and securities sold
Investment securities 3,355,732 3,204,758 3,168,044 3,157,339 2,042,781   Communication 728 805 785 1,118 459 3,167          under agreements to repurchase 95,015 183,591 123,452 88,070 56,732 (48.2) % 67.5 %
Interest-bearing deposits with other banks 34,709 32,013 39,873 29,261 27,073   Professional services 2,252 1,794 2,621 5,659 2,198 12,272      FHLB short-term borrowings 952,400 857,100 1,170,800 1,100,233 601,600 11.1 % 58.3 %
  Total earning assets $ 12,163,751 $ 12,003,073 $ 12,056,627 $ 12,120,000 $ 8,087,848   State intangible tax 1,310 1,086 1,223 1,078 765 4,152           Total short-term borrowings 1,047,415 1,040,691 1,294,252 1,188,303 658,332 0.6 % 59.1 %
Total assets $ 13,952,551 $ 13,768,958 $ 13,822,675 $ 13,956,360 $ 8,830,176   FDIC assessments 950 1,018 734 1,323 894 3,969      Long-term debt 546,423 570,739 570,037 469,423 169,695 (4.3) % 222.0 %
Noninterest-bearing deposits $ 2,457,587 $ 2,476,773 $ 2,388,976 $ 2,421,230 $ 1,570,572   Loss (gain) - other real estate owned 70 41 538 (283) 77 373           Total borrowed funds 1,593,838 1,611,430 1,864,289 1,657,726 828,027 (1.1) % 92.5 %
Interest-bearing deposits 7,610,092 7,573,069 7,499,112 7,961,405 5,332,740   Intangible amortization 2,045 2,229 2,486 2,364 280 7,359      Accrued interest and other liabilities 216,109 156,587 190,224 145,757 119,913 38.0 % 80.2 %
  Total deposits $ 10,067,679 $ 10,049,842 $ 9,888,088 $ 10,382,635 $ 6,903,312   Other 6,453 7,804 8,335 7,088 5,503 28,730        Total Liabilities 11,943,844 11,908,411 11,807,147 11,907,230 7,958,444 0.3 % 50.1 %
Borrowings $ 1,587,068 $ 1,509,642 $ 1,748,415 $ 1,408,024 $ 866,848       Total noninterest expenses 78,499 83,352 85,415 102,755 52,288 323,810
Shareholders' equity $ 2,094,234 $ 2,042,884 $ 2,021,400 $ 2,000,093 $ 929,474 Income before income taxes 55,760 66,801 63,516 45,745 38,159 214,221 SHAREHOLDERS' EQUITY
Income tax expense (benefit) 9,921 11,787 12,859 9,327 7,653 41,626      Common stock 1,622,554 1,633,256 1,633,828 1,632,572 571,457 (0.7) % 183.9 %
CREDIT QUALITY RATIOS       Net income $ 45,839 $ 55,014 $ 50,657 $ 36,418 $ 30,506 $ 172,595      Retained earnings 626,408 600,014 564,545 533,319 515,649 4.4 % 21.5 %
Allowance to ending loans 0.64 % 0.64 % 0.65 % 0.61 % 0.89 %      Accumulated other comprehensive loss (19,635) (44,408) (52,897) (43,008) (34,834) (55.8) % (43.6) %
Allowance to nonaccrual loans 95.40 % 79.97 % 136.22 % 133.65 % 179.57 % ADDITIONAL DATA      Treasury stock, at cost (98,908) (110,613) (109,956) (109,946) (112,287) (10.6) % (11.9) %
Allowance to nonperforming loans 68.94 % 65.13 % 92.08 % 86.80 % 120.24 % Net earnings per share - basic $ 0.47 $ 0.56 $ 0.52 $ 0.37 $ 0.49 $ 1.95        Total Shareholders' Equity 2,130,419 2,078,249 2,035,520 2,012,937 939,985 2.5 % 126.6 %
Nonperforming loans to total loans 0.93 % 0.98 % 0.71 % 0.70 % 0.74 % Net earnings per share - diluted $ 0.47 $ 0.56 $ 0.51 $ 0.37 $ 0.49 $ 1.93        Total Liabilities and Shareholders' Equity $ 14,074,263 $ 13,986,660 $ 13,842,667 $ 13,920,167 $ 8,898,429 0.6 % 58.2 %
Nonperforming assets to ending loans, plus OREO 0.95 % 1.00 % 0.73 % 0.72 % 0.76 % Dividends declared per share $ 0.22 $ 0.20 $ 0.20 $ 0.19 $ 0.19 $ 0.78
Nonperforming assets to total assets 0.60 % 0.63 % 0.47 % 0.46 % 0.52 %
Classified assets to total assets 1.01 % 0.94 % 1.00 % 1.00 % 0.98 % Return on average assets 1.33 % 1.59 % 1.45 % 1.05 % 1.40 % 1.37 %
Net charge-offs to average loans (annualized) 0.64 % 0.29 % (0.02) % 0.18 % 0.13 % Return on average shareholders' equity 8.88 % 10.68 % 9.94 % 7.36 % 13.31 % 9.85 %
(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. Interest income $ 151,759 $ 153,429 $ 149,220 $ 147,379 $ 90,354 $ 540,382
(2) March 31, 2019 regulatory capital ratios are preliminary. Tax equivalent adjustment 1,523 1,442 1,567 1,420 718 5,147
(3) Includes loans held for sale.    Interest income - tax equivalent 153,282 154,871 150,787 148,799 91,072 545,529
Interest expense 30,244 27,470 25,735 23,400 14,542 91,147
   Net interest income - tax equivalent $ 123,038 $ 127,401 $ 125,052 $ 125,399 $ 76,530 $ 454,382
Net interest margin 4.05 % 4.16 % 4.06 % 4.10 % 3.80 % 4.05 %
Net interest margin (fully tax equivalent) (1) 4.10 % 4.21 % 4.12 % 4.15 % 3.84 % 4.10 %
Full-time equivalent employees 2,087 2,073 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. 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 toinvestors by allowing them to make peer comparisons.  Management also uses these measures to make peer comparisons.

 

 

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. FIRST FINANCIAL BANCORP. FIRST FINANCIAL BANCORP. FIRST FINANCIAL BANCORP. FIRST FINANCIAL BANCORP.
CONSOLIDATED FINANCIAL HIGHLIGHTS CONSOLIDATED QUARTERLY STATEMENTS OF INCOME CONSOLIDATED STATEMENTS OF CONDITION AVERAGE CONSOLIDATED STATEMENTS OF CONDITION
(Dollars in thousands, except per share data) (Dollars in thousands, except per share data) (Dollars in thousands) (Dollars in thousands)
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Three Months Ended, 2019 2018 Mar. 31, Dec. 31, Sep. 30, Jun. 30, Mar. 31, % Change % Change Quarterly Averages
Mar. 31, Dec. 31, Sep. 30, Jun. 30, Mar. 31, First Fourth Third Second First Full 2019 2018 2018 2018 2018 Linked Qtr. Comparable Qtr. Mar. 31, Dec. 31, Sep. 30, Jun. 30, Mar. 31,
2019 2018 2018 2018 2018 Quarter Quarter Quarter Quarter Quarter Year ASSETS 2019 2018 2018 2018 2018
RESULTS OF OPERATIONS Interest income      Cash and due from banks $ 169,004 $ 236,221 $ 193,288 $ 216,667 $ 116,581 (28.5) % 45.0 % ASSETS
Net income $ 45,839 $ 55,014 $ 50,657 $ 36,418 $ 30,506   Loans and leases, including fees $ 123,056 $ 126,580 $ 123,397 $ 122,290 $ 74,920 $ 447,187      Interest-bearing deposits with other banks 50,224 37,738 28,989 37,915 10,200 33.1 % 392.4 %      Cash and due from banks $ 181,695 $ 213,927 $ 199,843 $ 224,824 $ 116,095
Net earnings per share - basic $ 0.47 $ 0.56 $ 0.52 $ 0.37 $ 0.49   Investment securities      Investment securities available-for-sale 3,113,811 2,779,255 2,626,726 2,654,909 1,359,381 12.0 % 129.1 %      Federal funds sold 0 0 0 786 0
Net earnings per share - diluted $ 0.47 $ 0.56 $ 0.51 $ 0.37 $ 0.49      Taxable 24,235 22,761 21,801 20,844 13,670 79,076      Investment securities held-to-maturity 158,305 429,328 434,369 443,957 633,722 (63.1) % (75.0) %      Interest-bearing deposits with other banks 34,709 32,013 39,873 28,475 27,073
Dividends declared per share $ 0.22 $ 0.20 $ 0.20 $ 0.19 $ 0.19      Tax-exempt 4,258 3,896 3,807 4,068 1,657 13,428      Other investments 115,731 115,660 115,757 95,004 53,070 0.1 % 118.1 %      Investment securities 3,355,732 3,204,758 3,168,044 3,157,339 2,042,781
        Total investment securities interest 28,493 26,657 25,608 24,912 15,327 92,504      Loans held for sale 8,217 4,372 13,277 15,821 8,048 87.9 % 2.1 %      Loans held for sale 6,392 10,411 15,270 14,462 9,171
KEY FINANCIAL RATIOS   Other earning assets 210 192 215 177 107 691      Loans and leases      Loans and leases
Return on average assets 1.33 % 1.59 % 1.45 % 1.05 % 1.40 %        Total interest income 151,759 153,429 149,220 147,379 90,354 540,382        Commercial and industrial 2,543,427 2,514,661 2,426,590 2,440,596 1,943,741 1.1 % 30.9 %        Commercial and industrial 2,509,274 2,402,296 2,392,229 2,421,244 1,897,726
Return on average shareholders' equity 8.88 % 10.68 % 9.94 % 7.36 % 13.31 %        Lease financing 95,573 93,415 95,317 96,198 81,617 2.3 % 17.1 %        Lease financing 91,043 94,111 94,030 94,431 86,755
Return on average tangible shareholders' equity 15.95 % 19.63 % 18.52 % 13.75 % 17.18 % Interest expense        Construction real estate 458,113 548,935 565,077 555,468 494,665 (16.5) % (7.4) %        Construction real estate 496,153 567,086 570,125 577,883 483,930
  Deposits 19,243 17,198 14,672 14,794 10,298 56,962        Commercial real estate 3,802,179 3,754,681 3,868,143 3,888,993 2,544,051 1.3 % 49.5 %        Commercial real estate 3,762,314 3,793,376 3,887,748 3,923,784 2,495,604
Net interest margin 4.05 % 4.16 % 4.06 % 4.10 % 3.80 %   Short-term borrowings 5,960 5,186 6,052 4,132 2,663 18,033        Residential real estate 975,120 955,646 932,962 918,904 468,584 2.0 % 108.1 %        Residential real estate 961,584 941,047 918,361 929,667 468,855
Net interest margin (fully tax equivalent) (1) 4.10 % 4.21 % 4.12 % 4.15 % 3.84 %   Long-term borrowings 5,041 5,086 5,011 4,474 1,581 16,152        Home equity 797,118 817,282 816,133 835,031 483,643 (2.5) % 64.8 %        Home equity 807,768 813,779 822,834 825,236 487,073
      Total interest expense 30,244 27,470 25,735 23,400 14,542 91,147        Installment 90,689 93,212 97,413 100,726 39,248 (2.7) % 131.1 %        Installment 91,270 95,779 99,907 99,896 40,409
Ending shareholders' equity as a percent of ending assets 15.14 % 14.86 % 14.70 % 14.46 % 10.56 %       Net interest income 121,515 125,959 123,485 123,979 75,812 449,235        Credit card 46,982 46,382 45,741 48,665 46,472 1.3 % 1.1 %        Credit card 47,512 48,417 48,206 46,797 46,969
Ending tangible shareholders' equity as a percent of:   Provision for loan and lease losses 14,083 5,310 3,238 3,735 2,303 14,586           Total loans 8,809,201 8,824,214 8,847,376 8,884,581 6,102,021 (0.2) % 44.4 %           Total loans 8,766,918 8,755,891 8,833,440 8,918,938 6,007,321
Ending tangible assets 9.15 % 8.79 % 8.53 % 8.30 % 8.41 %       Net interest income after provision for loan and lease losses 107,432 120,649 120,247 120,244 73,509 434,649        Less:        Less:
Risk-weighted assets 11.61 % 11.20 % 10.77 % 10.52 % 10.09 %           Allowance for loan and lease losses 56,722 56,542 57,715 54,076 54,380 0.3 % 4.3 %           Allowance for loan and lease losses 57,088 58,216 55,877 55,318 55,016
Noninterest income                 Net loans 8,752,479 8,767,672 8,789,661 8,830,505 6,047,641 (0.2) % 44.7 %                 Net loans 8,709,830 8,697,675 8,777,563 8,863,620 5,952,305
Average shareholders' equity as a percent of average assets 15.01 % 14.84 % 14.62 % 14.33 % 10.53 %   Service charges on deposit accounts 8,903 10,185 10,316 9,568 5,039 35,108      Premises and equipment 210,676 215,652 219,940 223,950 127,046 (2.3) % 65.8 %      Premises and equipment 213,208 218,430 222,718 230,475 126,016
Average tangible shareholders' equity as a percent of   Trust and wealth management fees 4,070 3,703 3,728 3,697 3,954 15,082      Goodwill 879,727 880,251 881,033 883,025 204,083 (0.1) % 331.1 %      Goodwill 878,541 878,669 882,917 883,179 204,083
    average tangible assets 8.95 % 8.66 % 8.42 % 8.16 % 8.35 %   Bankcard income 5,586 6,247 5,261 5,343 3,394 20,245      Other intangibles 38,571 40,805 43,356 42,891 3,506 (5.5) % N/M      Other intangibles 39,900 42,305 43,830 44,383 3,674
  Client derivative fees 1,704 1,433 3,029 1,463 1,757 7,682      Accrued interest and other assets 577,518 479,706 496,271 475,523 335,151 20.4 % 72.3 %      Accrued interest and other assets 532,544 470,770 472,617 508,817 348,978
Book value per share $ 21.60 $ 21.23 $ 20.79 $ 20.56 $ 15.11   Net gains from sales of loans 1,890 1,428 1,739 2,316 588 6,071        Total Assets $ 14,074,263 $ 13,986,660 $ 13,842,667 $ 13,920,167 $ 8,898,429 0.6 % 58.2 %        Total Assets $ 13,952,551 $ 13,768,958 $ 13,822,675 $ 13,956,360 $ 8,830,176
Tangible book value per share $ 12.19 $ 11.72 $ 11.25 $ 11.01 $ 11.75   Net gains on sale of investment securities (178) 36 (167) (30) 0 (161)
  Other 4,852 6,472 4,778 5,899 2,206 19,355 LIABILITIES LIABILITIES
Common equity tier 1 ratio (2) 12.03 % 11.87 % 11.52 % 11.15 % 10.77 %       Total noninterest income 26,827 29,504 28,684 28,256 16,938 103,382      Deposits      Deposits
Tier 1 ratio (2) 12.43 % 12.28 % 11.93 % 11.55 % 10.77 %        Interest-bearing demand $ 2,235,036 $ 2,307,071 $ 2,284,271 $ 2,440,088 $ 1,442,399 (3.1) % 55.0 %        Interest-bearing demand $ 2,269,948 $ 2,342,528 $ 2,334,305 $ 2,573,150 $ 1,415,603
Total capital ratio (2) 14.24 % 14.10 % 13.77 % 13.36 % 13.17 % Noninterest expenses        Savings 3,100,894 3,167,325 3,134,944 3,087,683 2,450,196 (2.1) % 26.6 %        Savings 3,115,557 3,156,789 3,149,871 3,196,059 2,450,697
Leverage ratio (2) 9.84 % 9.71 % 9.41 % 9.06 % 9.00 %   Salaries and employee benefits 47,912 51,505 50,852 55,531 31,102 188,990        Time 2,309,810 2,173,564 1,957,574 2,104,044 1,545,273 6.3 % 49.5 %        Time 2,224,587 2,073,752 2,014,936 2,192,196 1,466,440
  Net occupancy 6,630 6,322 6,765 6,631 4,497 24,215           Total interest-bearing deposits 7,645,740 7,647,960 7,376,789 7,631,815 5,437,868 0.0 % 40.6 %           Total interest-bearing deposits 7,610,092 7,573,069 7,499,112 7,961,405 5,332,740
AVERAGE BALANCE SHEET ITEMS   Furniture and equipment 3,416 3,498 4,072 5,298 2,040 14,908        Noninterest-bearing 2,488,157 2,492,434 2,375,845 2,471,932 1,572,636 (0.2) % 58.2 %        Noninterest-bearing 2,457,587 2,476,773 2,388,976 2,421,230 1,570,572
Loans (3) $ 8,773,310 $ 8,766,302 $ 8,848,710 $ 8,933,400 $ 6,016,492   Data processing 5,127 5,599 4,502 14,304 3,672 28,077           Total deposits 10,133,897 10,140,394 9,752,634 10,103,747 7,010,504 (0.1) % 44.6 %           Total deposits 10,067,679 10,049,842 9,888,088 10,382,635 6,903,312
FDIC indemnification asset 1,502   Marketing 1,606 1,651 2,502 2,644 801 7,598      Federal funds purchased and securities sold      Federal funds purchased and securities sold
Investment securities 3,355,732 3,204,758 3,168,044 3,157,339 2,042,781   Communication 728 805 785 1,118 459 3,167          under agreements to repurchase 95,015 183,591 123,452 88,070 56,732 (48.2) % 67.5 %           under agreements to repurchase 103,147 65,805 112,308 97,708 72,865
Interest-bearing deposits with other banks 34,709 32,013 39,873 29,261 27,073   Professional services 2,252 1,794 2,621 5,659 2,198 12,272      FHLB short-term borrowings 952,400 857,100 1,170,800 1,100,233 601,600 11.1 % 58.3 %      FHLB short-term borrowings 913,974 873,533 1,076,106 818,909 667,641
  Total earning assets $ 12,163,751 $ 12,003,073 $ 12,056,627 $ 12,120,000 $ 8,087,848   State intangible tax 1,310 1,086 1,223 1,078 765 4,152           Total short-term borrowings 1,047,415 1,040,691 1,294,252 1,188,303 658,332 0.6 % 59.1 %           Total short-term borrowings 1,017,121 939,338 1,188,414 916,617 740,506
Total assets $ 13,952,551 $ 13,768,958 $ 13,822,675 $ 13,956,360 $ 8,830,176   FDIC assessments 950 1,018 734 1,323 894 3,969      Long-term debt 546,423 570,739 570,037 469,423 169,695 (4.3) % 222.0 %      Long-term debt 569,947 570,304 560,001 491,407 126,342
Noninterest-bearing deposits $ 2,457,587 $ 2,476,773 $ 2,388,976 $ 2,421,230 $ 1,570,572   Loss (gain) - other real estate owned 70 41 538 (283) 77 373           Total borrowed funds 1,593,838 1,611,430 1,864,289 1,657,726 828,027 (1.1) % 92.5 %        Total borrowed funds 1,587,068 1,509,642 1,748,415 1,408,024 866,848
Interest-bearing deposits 7,610,092 7,573,069 7,499,112 7,961,405 5,332,740   Intangible amortization 2,045 2,229 2,486 2,364 280 7,359      Accrued interest and other liabilities 216,109 156,587 190,224 145,757 119,913 38.0 % 80.2 %      Accrued interest and other liabilities 203,570 166,590 164,772 165,608 130,542
  Total deposits $ 10,067,679 $ 10,049,842 $ 9,888,088 $ 10,382,635 $ 6,903,312   Other 6,453 7,804 8,335 7,088 5,503 28,730        Total Liabilities 11,943,844 11,908,411 11,807,147 11,907,230 7,958,444 0.3 % 50.1 %        Total Liabilities 11,858,317 11,726,074 11,801,275 11,956,267 7,900,702
Borrowings $ 1,587,068 $ 1,509,642 $ 1,748,415 $ 1,408,024 $ 866,848       Total noninterest expenses 78,499 83,352 85,415 102,755 52,288 323,810
Shareholders' equity $ 2,094,234 $ 2,042,884 $ 2,021,400 $ 2,000,093 $ 929,474 Income before income taxes 55,760 66,801 63,516 45,745 38,159 214,221 SHAREHOLDERS' EQUITY SHAREHOLDERS' EQUITY
Income tax expense (benefit) 9,921 11,787 12,859 9,327 7,653 41,626      Common stock 1,622,554 1,633,256 1,633,828 1,632,572 571,457 (0.7) % 183.9 %      Common stock 1,625,228 1,632,361 1,633,129 1,632,569 572,915
CREDIT QUALITY RATIOS       Net income $ 45,839 $ 55,014 $ 50,657 $ 36,418 $ 30,506 $ 172,595      Retained earnings 626,408 600,014 564,545 533,319 515,649 4.4 % 21.5 %      Retained earnings 610,737 576,145 542,835 517,548 503,140
Allowance to ending loans 0.64 % 0.64 % 0.65 % 0.61 % 0.89 %      Accumulated other comprehensive loss (19,635) (44,408) (52,897) (43,008) (34,834) (55.8) % (43.6) %      Accumulated other comprehensive loss (39,796) (55,161) (44,505) (39,117) (33,285)
Allowance to nonaccrual loans 95.40 % 79.97 % 136.22 % 133.65 % 179.57 % ADDITIONAL DATA      Treasury stock, at cost (98,908) (110,613) (109,956) (109,946) (112,287) (10.6) % (11.9) %      Treasury stock, at cost (101,935) (110,461) (110,059) (110,907) (113,296)
Allowance to nonperforming loans 68.94 % 65.13 % 92.08 % 86.80 % 120.24 % Net earnings per share - basic $ 0.47 $ 0.56 $ 0.52 $ 0.37 $ 0.49 $ 1.95        Total Shareholders' Equity 2,130,419 2,078,249 2,035,520 2,012,937 939,985 2.5 % 126.6 %        Total Shareholders' Equity 2,094,234 2,042,884 2,021,400 2,000,093 929,474
Nonperforming loans to total loans 0.93 % 0.98 % 0.71 % 0.70 % 0.74 % Net earnings per share - diluted $ 0.47 $ 0.56 $ 0.51 $ 0.37 $ 0.49 $ 1.93        Total Liabilities and Shareholders' Equity $ 14,074,263 $ 13,986,660 $ 13,842,667 $ 13,920,167 $ 8,898,429 0.6 % 58.2 %        Total Liabilities and Shareholders' Equity $ 13,952,551 $ 13,768,958 $ 13,822,675 $ 13,956,360 $ 8,830,176
Nonperforming assets to ending loans, plus OREO 0.95 % 1.00 % 0.73 % 0.72 % 0.76 % Dividends declared per share $ 0.22 $ 0.20 $ 0.20 $ 0.19 $ 0.19 $ 0.78
Nonperforming assets to total assets 0.60 % 0.63 % 0.47 % 0.46 % 0.52 %
Classified assets to total assets 1.01 % 0.94 % 1.00 % 1.00 % 0.98 % Return on average assets 1.33 % 1.59 % 1.45 % 1.05 % 1.40 % 1.37 %
Net charge-offs to average loans (annualized) 0.64 % 0.29 % (0.02) % 0.18 % 0.13 % Return on average shareholders' equity 8.88 % 10.68 % 9.94 % 7.36 % 13.31 % 9.85 %
(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. Interest income $ 151,759 $ 153,429 $ 149,220 $ 147,379 $ 90,354 $ 540,382
(2) March 31, 2019 regulatory capital ratios are preliminary. Tax equivalent adjustment 1,523 1,442 1,567 1,420 718 5,147
(3) Includes loans held for sale.    Interest income - tax equivalent 153,282 154,871 150,787 148,799 91,072 545,529
Interest expense 30,244 27,470 25,735 23,400 14,542 91,147
   Net interest income - tax equivalent $ 123,038 $ 127,401 $ 125,052 $ 125,399 $ 76,530 $ 454,382
Net interest margin 4.05 % 4.16 % 4.06 % 4.10 % 3.80 % 4.05 %
Net interest margin (fully tax equivalent) (1) 4.10 % 4.21 % 4.12 % 4.15 % 3.84 % 4.10 %
Full-time equivalent employees 2,087 2,073 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. 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 toinvestors by allowing them to make peer comparisons.  Management also uses these measures to make peer comparisons.

 

 

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. FIRST FINANCIAL BANCORP. FIRST FINANCIAL BANCORP. FIRST FINANCIAL BANCORP. FIRST FINANCIAL BANCORP. FIRST FINANCIAL BANCORP.
CONSOLIDATED FINANCIAL HIGHLIGHTS CONSOLIDATED QUARTERLY STATEMENTS OF INCOME CONSOLIDATED STATEMENTS OF CONDITION AVERAGE CONSOLIDATED STATEMENTS OF CONDITION NET INTEREST MARGIN RATE/VOLUME ANALYSIS
(Dollars in thousands, except per share data) (Dollars in thousands, except per share data) (Dollars in thousands) (Dollars in thousands) (Dollars in thousands)
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Three Months Ended, 2019 2018 Mar. 31, Dec. 31, Sep. 30, Jun. 30, Mar. 31, % Change % Change Quarterly Averages  Quarterly Averages
Mar. 31, Dec. 31, Sep. 30, Jun. 30, Mar. 31, First Fourth Third Second First Full 2019 2018 2018 2018 2018 Linked Qtr. Comparable Qtr. Mar. 31, Dec. 31, Sep. 30, Jun. 30, Mar. 31, March 31, 2019 December 31, 2018 March 31, 2018  Linked Qtr. Income Variance  Comparable Qtr. Income Variance
2019 2018 2018 2018 2018 Quarter Quarter Quarter Quarter Quarter Year ASSETS 2019 2018 2018 2018 2018 Balance Yield Balance Yield Balance Yield Rate Volume Total Rate Volume Total
RESULTS OF OPERATIONS Interest income      Cash and due from banks $ 169,004 $ 236,221 $ 193,288 $ 216,667 $ 116,581 (28.5) % 45.0 % ASSETS Earning assets
Net income $ 45,839 $ 55,014 $ 50,657 $ 36,418 $ 30,506   Loans and leases, including fees $ 123,056 $ 126,580 $ 123,397 $ 122,290 $ 74,920 $ 447,187      Interest-bearing deposits with other banks 50,224 37,738 28,989 37,915 10,200 33.1 % 392.4 %      Cash and due from banks $ 181,695 $ 213,927 $ 199,843 $ 224,824 $ 116,095     Investments:
Net earnings per share - basic $ 0.47 $ 0.56 $ 0.52 $ 0.37 $ 0.49   Investment securities      Investment securities available-for-sale 3,113,811 2,779,255 2,626,726 2,654,909 1,359,381 12.0 % 129.1 %      Federal funds sold 0 0 0 786 0       Investment securities $ 3,355,732 3.44 % $ 3,204,758 3.30 % $ 2,042,781 3.04 % $ 1,159 $ 677 $ 1,836 $ 2,018 $ 11,148 $ 13,166
Net earnings per share - diluted $ 0.47 $ 0.56 $ 0.51 $ 0.37 $ 0.49      Taxable 24,235 22,761 21,801 20,844 13,670 79,076      Investment securities held-to-maturity 158,305 429,328 434,369 443,957 633,722 (63.1) % (75.0) %      Interest-bearing deposits with other banks 34,709 32,013 39,873 28,475 27,073       Interest-bearing deposits with other banks 34,709 2.45 % 32,013 2.38 % 27,073 1.60 % 6 12 18 57 46 103
Dividends declared per share $ 0.22 $ 0.20 $ 0.20 $ 0.19 $ 0.19      Tax-exempt 4,258 3,896 3,807 4,068 1,657 13,428      Other investments 115,731 115,660 115,757 95,004 53,070 0.1 % 118.1 %      Investment securities 3,355,732 3,204,758 3,168,044 3,157,339 2,042,781     Gross loans (1) 8,773,310 5.69 % 8,766,302 5.73 % 6,017,994 5.05 % (890) (2,634) (3,524) 9,489 38,647 48,136
        Total investment securities interest 28,493 26,657 25,608 24,912 15,327 92,504      Loans held for sale 8,217 4,372 13,277 15,821 8,048 87.9 % 2.1 %      Loans held for sale 6,392 10,411 15,270 14,462 9,171        Total earning assets 12,163,751 5.06 % 12,003,073 5.07 % 8,087,848 4.53 % 275 (1,945) (1,670) 11,564 49,841 61,405
KEY FINANCIAL RATIOS   Other earning assets 210 192 215 177 107 691      Loans and leases      Loans and leases
Return on average assets 1.33 % 1.59 % 1.45 % 1.05 % 1.40 %        Total interest income 151,759 153,429 149,220 147,379 90,354 540,382        Commercial and industrial 2,543,427 2,514,661 2,426,590 2,440,596 1,943,741 1.1 % 30.9 %        Commercial and industrial 2,509,274 2,402,296 2,392,229 2,421,244 1,897,726 Nonearning assets
Return on average shareholders' equity 8.88 % 10.68 % 9.94 % 7.36 % 13.31 %        Lease financing 95,573 93,415 95,317 96,198 81,617 2.3 % 17.1 %        Lease financing 91,043 94,111 94,030 94,431 86,755     Allowance for loan and lease losses (57,088) (58,216) (55,016)
Return on average tangible shareholders' equity 15.95 % 19.63 % 18.52 % 13.75 % 17.18 % Interest expense        Construction real estate 458,113 548,935 565,077 555,468 494,665 (16.5) % (7.4) %        Construction real estate 496,153 567,086 570,125 577,883 483,930     Cash and due from banks 181,695 213,927 116,095
  Deposits 19,243 17,198 14,672 14,794 10,298 56,962        Commercial real estate 3,802,179 3,754,681 3,868,143 3,888,993 2,544,051 1.3 % 49.5 %        Commercial real estate 3,762,314 3,793,376 3,887,748 3,923,784 2,495,604     Accrued interest and other assets 1,664,193 1,610,174 681,249
Net interest margin 4.05 % 4.16 % 4.06 % 4.10 % 3.80 %   Short-term borrowings 5,960 5,186 6,052 4,132 2,663 18,033        Residential real estate 975,120 955,646 932,962 918,904 468,584 2.0 % 108.1 %        Residential real estate 961,584 941,047 918,361 929,667 468,855        Total assets $ 13,952,551 $ 13,768,958 $ 8,830,176
Net interest margin (fully tax equivalent) (1) 4.10 % 4.21 % 4.12 % 4.15 % 3.84 %   Long-term borrowings 5,041 5,086 5,011 4,474 1,581 16,152        Home equity 797,118 817,282 816,133 835,031 483,643 (2.5) % 64.8 %        Home equity 807,768 813,779 822,834 825,236 487,073
      Total interest expense 30,244 27,470 25,735 23,400 14,542 91,147        Installment 90,689 93,212 97,413 100,726 39,248 (2.7) % 131.1 %        Installment 91,270 95,779 99,907 99,896 40,409 Interest-bearing liabilities
Ending shareholders' equity as a percent of ending assets 15.14 % 14.86 % 14.70 % 14.46 % 10.56 %       Net interest income 121,515 125,959 123,485 123,979 75,812 449,235        Credit card 46,982 46,382 45,741 48,665 46,472 1.3 % 1.1 %        Credit card 47,512 48,417 48,206 46,797 46,969     Deposits:
Ending tangible shareholders' equity as a percent of:   Provision for loan and lease losses 14,083 5,310 3,238 3,735 2,303 14,586           Total loans 8,809,201 8,824,214 8,847,376 8,884,581 6,102,021 (0.2) % 44.4 %           Total loans 8,766,918 8,755,891 8,833,440 8,918,938 6,007,321       Interest-bearing demand $ 2,269,948 0.50 % $ 2,342,528 0.48 % $ 1,415,603 0.37 %
Ending tangible assets 9.15 % 8.79 % 8.53 % 8.30 % 8.41 %       Net interest income after provision for loan and lease losses 107,432 120,649 120,247 120,244 73,509 434,649        Less:        Less:       Savings 3,115,557 0.76 % 3,156,789 0.66 % 2,450,697 0.64 %
Risk-weighted assets 11.61 % 11.20 % 10.77 % 10.52 % 10.09 %           Allowance for loan and lease losses 56,722 56,542 57,715 54,076 54,380 0.3 % 4.3 %           Allowance for loan and lease losses 57,088 58,216 55,877 55,318 55,016       Time 2,224,587 1.94 % 2,073,752 1.75 % 1,466,440 1.41 %
Noninterest income                 Net loans 8,752,479 8,767,672 8,789,661 8,830,505 6,047,641 (0.2) % 44.7 %                 Net loans 8,709,830 8,697,675 8,777,563 8,863,620 5,952,305     Total interest-bearing deposits 7,610,092 1.03 % 7,573,069 0.90 % 5,332,740 0.78 % $ 2,377 $ (332) $ 2,045 $ 3,186 $ 5,759 $ 8,945
Average shareholders' equity as a percent of average assets 15.01 % 14.84 % 14.62 % 14.33 % 10.53 %   Service charges on deposit accounts 8,903 10,185 10,316 9,568 5,039 35,108      Premises and equipment 210,676 215,652 219,940 223,950 127,046 (2.3) % 65.8 %      Premises and equipment 213,208 218,430 222,718 230,475 126,016     Borrowed funds
Average tangible shareholders' equity as a percent of   Trust and wealth management fees 4,070 3,703 3,728 3,697 3,954 15,082      Goodwill 879,727 880,251 881,033 883,025 204,083 (0.1) % 331.1 %      Goodwill 878,541 878,669 882,917 883,179 204,083       Short-term borrowings 1,017,121 2.38 % 939,338 2.19 % 740,506 1.46 % 441 333 774 1,676 1,621 3,297
    average tangible assets 8.95 % 8.66 % 8.42 % 8.16 % 8.35 %   Bankcard income 5,586 6,247 5,261 5,343 3,394 20,245      Other intangibles 38,571 40,805 43,356 42,891 3,506 (5.5) % N/M      Other intangibles 39,900 42,305 43,830 44,383 3,674       Long-term debt 569,947 3.59 % 570,304 3.54 % 126,342 5.07 % 70 (115) (45) (464) 3,924 3,460
  Client derivative fees 1,704 1,433 3,029 1,463 1,757 7,682      Accrued interest and other assets 577,518 479,706 496,271 475,523 335,151 20.4 % 72.3 %      Accrued interest and other assets 532,544 470,770 472,617 508,817 348,978         Total borrowed funds 1,587,068 2.81 % 1,509,642 2.70 % 866,848 1.99 % 511 218 729 1,212 5,545 6,757
Book value per share $ 21.60 $ 21.23 $ 20.79 $ 20.56 $ 15.11   Net gains from sales of loans 1,890 1,428 1,739 2,316 588 6,071        Total Assets $ 14,074,263 $ 13,986,660 $ 13,842,667 $ 13,920,167 $ 8,898,429 0.6 % 58.2 %        Total Assets $ 13,952,551 $ 13,768,958 $ 13,822,675 $ 13,956,360 $ 8,830,176        Total interest-bearing liabilities 9,197,160 1.33 % 9,082,711 1.20 % 6,199,588 0.95 % 2,888 (114) 2,774 4,398 11,304 15,702
Tangible book value per share $ 12.19 $ 11.72 $ 11.25 $ 11.01 $ 11.75   Net gains on sale of investment securities (178) 36 (167) (30) 0 (161)
  Other 4,852 6,472 4,778 5,899 2,206 19,355 LIABILITIES LIABILITIES Noninterest-bearing liabilities
Common equity tier 1 ratio (2) 12.03 % 11.87 % 11.52 % 11.15 % 10.77 %       Total noninterest income 26,827 29,504 28,684 28,256 16,938 103,382      Deposits      Deposits     Noninterest-bearing demand deposits 2,457,587 2,476,773 1,570,572
Tier 1 ratio (2) 12.43 % 12.28 % 11.93 % 11.55 % 10.77 %        Interest-bearing demand $ 2,235,036 $ 2,307,071 $ 2,284,271 $ 2,440,088 $ 1,442,399 (3.1) % 55.0 %        Interest-bearing demand $ 2,269,948 $ 2,342,528 $ 2,334,305 $ 2,573,150 $ 1,415,603     Other liabilities 203,570 166,590 130,542
Total capital ratio (2) 14.24 % 14.10 % 13.77 % 13.36 % 13.17 % Noninterest expenses        Savings 3,100,894 3,167,325 3,134,944 3,087,683 2,450,196 (2.1) % 26.6 %        Savings 3,115,557 3,156,789 3,149,871 3,196,059 2,450,697     Shareholders' equity 2,094,234 2,042,884 929,474
Leverage ratio (2) 9.84 % 9.71 % 9.41 % 9.06 % 9.00 %   Salaries and employee benefits 47,912 51,505 50,852 55,531 31,102 188,990        Time 2,309,810 2,173,564 1,957,574 2,104,044 1,545,273 6.3 % 49.5 %        Time 2,224,587 2,073,752 2,014,936 2,192,196 1,466,440        Total liabilities & shareholders' equity $ 13,952,551 $ 13,768,958 $ 8,830,176
  Net occupancy 6,630 6,322 6,765 6,631 4,497 24,215           Total interest-bearing deposits 7,645,740 7,647,960 7,376,789 7,631,815 5,437,868 0.0 % 40.6 %           Total interest-bearing deposits 7,610,092 7,573,069 7,499,112 7,961,405 5,332,740
AVERAGE BALANCE SHEET ITEMS   Furniture and equipment 3,416 3,498 4,072 5,298 2,040 14,908        Noninterest-bearing 2,488,157 2,492,434