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Section 1: 8-K (8-K)

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0000708955false00007089552020-07-232020-07-230000708955exch:XNMS2020-07-232020-07-23


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
FORM 8-K
 

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported): July 23, 2020
 
FIRST FINANCIAL BANCORP.
(Exact name of registrant as specified in its charter)
 
Ohio001-34762 31-1042001
(State or other jurisdiction of
incorporation or organization)
(Commission File Number) (I.R.S. employer
identification number)
255 East Fifth Street, Suite 800Cincinnati,Ohio45202
(Address of principal executive offices)(Zip Code)
 
Registrant's telephone number, including area code: (877322-9530
 
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbolName of exchange on which registered
Common stock, No par valueFFBCThe NASDAQ Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  



Item 2.02 Results of Operations and Financial Condition.

On July 23, 2020, First Financial Bancorp. (the "Company") issued its earnings press release that included its results of operations and financial condition for the first six months and second quarter of 2020. A copy of the earnings press release is attached as Exhibit 99.1.

The Company also provided electronic presentation slides that will be used in connection with the earnings conference call. A copy of the electronic presentation slides is included in this Report as Exhibit 99.2 and will be available on the Company's website, www.bankatfirst.com.

The information set forth in this Current Report on Form 8-K (including the information in Exhibits 99.1 and 99.2 attached hereto) is being furnished to the Securities and Exchange Commission and is not deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act") , or otherwise subject to the liabilities under the Exchange Act. Such information shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.


 

Item 9.01 Financial Statements and Exhibits.

        (d) Exhibits:
         
The following exhibits shall not be deemed to be "filed" for purposes of the Exchange Act:
        Exhibit No. Description

        99.1 First Financial Bancorp. Press Release dated July 23, 2020
        99.2 First Financial Bancorp. presentation materials
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)







SIGNATURES


        Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

             FIRST FINANCIAL BANCORP.

By: /s/ James M. Anderson
James M. Anderson
Executive Vice President and Chief Financial Officer
Date:July 23, 2020

            



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Section 2: EX-99.1 (EX-99.1)

Document

            Exhibit 99.1
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First Financial Bancorp Announces Second Quarter 2020 Financial Results

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

Cincinnati, Ohio - July 23, 2020 - First Financial Bancorp. (Nasdaq: FFBC) (“First Financial” or the “Company”) announced financial results for the three and six months ended June 30, 2020.

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

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

Second quarter 2020 highlights include:

After adjustments(1) for certain nonrecurring and certain COVID-19 related items:
Net income of $0.40 per diluted common share
1.00% return on average assets
13.47% return on average tangible common equity

Adjustments(1) to net income include:
$0.7 million of costs directly related to COVID-19
$1.5 million of other nonrecurring costs such as branch consolidation costs

Total Allowance for Credit Losses of $175.3 million; Total quarterly provision for credit losses of $20.2 million
Loans and leases - ACL of $158.7 million, 1.56% of total loans; 1.71% of loans excluding PPP
Unfunded Commitments - ACL of $16.7 million; $2.4 million provision expense
Similar to first quarter, substantially all second quarter provision expense related to expected economic impact from COVID-19

Strong noninterest income of $42.7 million, an increase of 20.7% from the linked quarter
Mortgage banking revenue increased $13.8 million, or 488.6%
Continued strong client derivative fee income
Foreign exchange income of $6.6 million despite COVID-19 headwinds
Service charges on deposits, including overdrafts, declined $2.4 million, or 28.9%

Noninterest expenses of $88.7 million, or $86.5 million as adjusted(1)
Efficiency ratio of 57.5%; 56.1% as adjusted(1)

_________________________________________________________________________________________(1) Financial information in this release that is described as “adjusted” or that is presented on a fully tax equivalent basis is non-GAAP. For details on the calculation of these non-GAAP financial measures and a reconciliation to the GAAP financial measure, see the sections titled “Use of Non-GAAP Financial Measures” in this release and “Appendix: Non-GAAP to GAAP Reconciliation” in the accompanying slide presentation.
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Loan balances grew $873.9 million, or 37.8% on an annualized basis
Loan growth driven by $885.3 million of PPP loans, net of unearned fees

Net interest margin of 3.44% on a fully tax-equivalent basis(1)
33 basis point decline compared to the linked quarter; 62 basis point decline due to loan yields
3 basis points of dilution from PPP
Impact of downward movement in short term rates, including the normalization of LIBOR, partially offset by funding cost reductions, higher loan fees, and elevated purchase accounting accretion

Strong capital ratios
Total capital of 15.13%; bolstered by $150 million sub-debt issuance in early second quarter
Tier 1 common equity of 11.44%
Tangible common equity of 8.09%; 8.62% excluding PPP loans
Tangible book value per share of $12.26

In response to COVID-19, the Company has:

Introduced hardship relief programs that include payment deferrals, fee-waivers and suspension of foreclosures
Processed over $2.0 billion of commercial modifications
Modified over $126 million of consumer loans including $103 million in residential mortgages

Participated in CARES Act SBA Paycheck Protection Program
Received in excess of 8,200 PPP applications; over $1.2 billion in requests
Approximately 6,800 PPP requests, or 83% of applicants, approved by SBA
$912.9 million in PPP balances as of June 30; to date forgiveness has not been requested on any loan

Continued implementation of new processes and technologies to improve customer access to banking services

Updated existing internal processes and systems to react to high customer demand for relief

Donated $1.0 million to fund COVID-19 related relief in our geographic footprint in the first quarter

Archie Brown, President and Chief Executive Officer, remarked, “We are very pleased with our second quarter performance, especially when considering the unique circumstances in which we were operating due to COVID-19. While second quarter earnings were negatively impacted by pandemic-related events, we posted solid results as reflected in our adjusted(1) earnings per share of $0.40, adjusted(1) return on assets of 1.00% and adjusted(1) efficiency ratio of 56.1%. Additionally, credit trends remained stable while our allowance for credit losses increased to 1.71% of total loans, excluding PPP, and we recorded $20.2 million of provision expense in anticipation of credit deterioration in the latter part of the year and into 2021."
Mr. Brown continued, “The second quarter was our highest core fee income quarter on record and was the primary driver of our excellent performance. Our mortgage team had a sensational quarter as the hard work of our team combined with the historic low interest rate environment to drive an almost 500% increase in total mortgage banking revenue to $16.7 million. In addition, client derivative income remained steady during the quarter and Bannockburn revenue, while lower than the first quarter, was in line with our expectations given the challenges caused by business shutdowns. Additionally, total expenses declined during the quarter as we limited discretionary spending and implemented additional controls on hiring."

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

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

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


Teleconference / Webcast Information
First Financial’s executive management will host a conference call to discuss the Company’s financial and operating results on Friday, July 24, 2020 at 8:30 a.m. Eastern Time. Members of the public who would like to listen to the conference call should dial (877) 506-6873 (U.S. toll free), (855) 669-9657 (Canada toll free) or +1 (412) 380-2003 (International) (no passcode required). The number should be dialed five to ten minutes prior to the start of the conference call. The conference call will also be accessible as an audio webcast via the Investor Relations section of the Company’s website at www.bankatfirst.com. A replay of the conference call will be available beginning one hour after the completion of the live call at (877) 344-7529 (U.S. toll free), (855) 669-9658 (Canada toll free) and +1 (412) 317-0088 (International); conference number 10145789. The webcast will be archived on the Investor Relations section of the Company’s website for 12 months.

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

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



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Forward-Looking Statement

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

As with any forecast or projection, forward-looking statements are subject to inherent uncertainties, risks and changes in circumstances that may cause actual results to differ materially from those set forth in the forward-looking statements.  Forward-looking statements are not historical facts but instead express only management’s beliefs regarding future results or events, many of which, by their nature, are inherently uncertain and outside of management’s control. It is possible that actual results and outcomes may differ, possibly materially, from the anticipated results or outcomes indicated in these forward-looking statements.  Important factors that could cause actual results to differ materially from those in our forward-looking statements include the following, without limitation:

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

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Additional factors that may cause our actual results to differ materially from those described in our forward-looking statements can be found in our Form 10-K for the year ended December 31, 2019, as well as our other filings with the SEC, which are available on the SEC website at www.sec.gov

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

About First Financial Bancorp.
First Financial Bancorp. is a Cincinnati, Ohio based bank holding company. As of June 30, 2020, the Company had $15.9 billion in assets, $10.2 billion in loans, $11.7 billion in deposits and $2.2 billion in shareholders’ equity. The Company’s subsidiary, First Financial Bank, founded in 1863, provides banking and financial services products through its six lines of business: Commercial, Retail Banking, Investment Commercial Real Estate, Mortgage Banking, Commercial Finance and Wealth Management. These business units provide traditional banking services to business and retail clients. Wealth Management provides wealth planning, portfolio management, trust and estate, brokerage and retirement plan services and had approximately $2.8 billion in assets under management as of June 30, 2020. The Company operated 141 full service banking centers as of June 30, 2020, primarily in Ohio, Indiana and Kentucky, while the Commercial Finance business lends into targeted industry verticals on a nationwide basis. Additional information about the Company, including its products, services and banking locations, is available at www.bankatfirst.com.


Contact Information
Investors/Analysts     Media
Jamie Anderson      Tim Condron
Chief Financial Officer     Marketing Communications Manager
(513) 887-5400      (513) 979-5796
InvestorRelations@bankatfirst.com   media@bankatfirst.com 
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Selected Financial Information
June 30, 2020
(unaudited)

ContentsPage
Consolidated Financial Highlights2
Consolidated Statements of Income3
Consolidated Quarterly Statements of Income4-5
Consolidated Statements of Condition6
Average Consolidated Statements of Condition7
Net Interest Margin Rate / Volume Analysis8-9
Credit Quality10
Capital Adequacy11




        
FIRST FINANCIAL BANCORP.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Ended,Six months ended,
June 30,Mar. 31,Dec. 31,Sep. 30,June 30,June 30,
2020202020192019201920202019
RESULTS OF OPERATIONS
Net income$37,393  $28,628  $48,677  $50,856  $52,703  $66,021  $98,542  
Net earnings per share - basic$0.38  $0.29  $0.49  $0.52  $0.54  $0.68  $1.01  
Net earnings per share - diluted$0.38  $0.29  $0.49  $0.51  $0.53  $0.67  $1.00  
Dividends declared per share$0.23  $0.23  $0.23  $0.23  $0.22  $0.46  $0.44  
KEY FINANCIAL RATIOS
Return on average assets0.96 %0.79 %1.34 %1.41 %1.50 %0.88 %1.42 %
Return on average shareholders' equity6.88 %5.21 %8.60 %9.13 %9.85 %6.04 %9.37 %
Return on average tangible shareholders' equity12.90 %9.71 %15.84 %16.15 %17.33 %11.29 %16.66 %
Net interest margin3.38 %3.71 %3.84 %3.91 %3.99 %3.54 %4.02 %
Net interest margin (fully tax equivalent) (1)
3.44 %3.77 %3.89 %3.96 %4.04 %3.60 %4.07 %
Ending shareholders' equity as a percent of ending assets13.99 %14.47 %15.49 %15.62 %15.16 %13.99 %15.16 %
Ending tangible shareholders' equity as a percent of:
Ending tangible assets8.09 %8.25 %9.07 %9.17 %9.34 %8.09 %9.34 %
Risk-weighted assets10.85 %10.50 %11.09 %11.34 %11.82 %10.85 %11.82 %
Average shareholders' equity as a percent of average assets13.91 %15.21 %15.53 %15.43 %15.22 %14.54 %15.12 %
Average tangible shareholders' equity as a percent of
    average tangible assets7.94 %8.79 %9.07 %9.35 %9.26 %8.34 %9.11 %
Book value per share$22.66  $22.25  $22.82  $22.59  $22.18  $22.66  $22.18  
Tangible book value per share$12.26  $11.82  $12.42  $12.33  $12.79  $12.26  $12.79  
Common equity tier 1 ratio (2)
11.44 %11.27 %11.30 %11.52 %12.00 %11.44 %12.00 %
Tier 1 ratio (2)
11.83 %11.66 %11.69 %11.91 %12.40 %11.83 %12.40 %
Total capital ratio (2)
15.13 %13.54 %13.39 %13.62 %14.20 %15.13 %14.20 %
Leverage ratio (2)
8.98 %9.49 %9.58 %9.75 %10.02 %8.98 %10.02 %
AVERAGE BALANCE SHEET ITEMS
Loans (3)
$10,002,379  $9,220,643  $9,149,222  $9,014,092  $8,852,662  $9,611,511  $8,813,206  
Investment securities3,164,243  3,115,723  3,102,867  3,290,666  3,408,994  3,139,983  3,382,510  
Interest-bearing deposits with other banks91,990  39,332  36,672  38,569  33,255  65,661  33,978  
  Total earning assets$13,258,612  $12,375,698  $12,288,761  $12,343,327  $12,294,911  $12,817,155  $12,229,694  
Total assets$15,710,204  $14,524,422  $14,460,288  $14,320,514  $14,102,733  $15,117,313  $14,028,058  
Noninterest-bearing deposits$3,335,866  $2,643,240  $2,638,908  $2,513,458  $2,484,214  $2,989,553  $2,470,974  
Interest-bearing deposits8,395,229  7,590,791  7,583,531  7,504,708  7,612,146  7,993,010  7,611,125  
  Total deposits$11,731,095  $10,234,031  $10,222,439  $10,018,166  $10,096,360  $10,982,563  $10,082,099  
Borrowings$1,272,819  $1,735,767  $1,613,696  $1,816,983  $1,656,570  $1,504,293  $1,622,011  
Shareholders' equity$2,185,865  $2,209,733  $2,245,107  $2,210,327  $2,146,997  $2,197,799  $2,120,762  
CREDIT QUALITY RATIOS
Allowance to ending loans1.56 %1.55 %0.63 %0.62 %0.69 %1.56 %0.69 %
Allowance to nonaccrual loans233.74 %296.51 %119.69 %93.18 %119.86 %233.74 %119.86 %
Allowance to nonperforming loans208.06 %203.42 %96.73 %71.46 %69.33 %208.06 %69.33 %
Nonperforming loans to total loans0.75 %0.76 %0.65 %0.87 %0.99 %0.75 %0.99 %
Nonperforming assets to ending loans, plus OREO0.77 %0.78 %0.67 %0.89 %1.00 %0.77 %1.00 %
Nonperforming assets to total assets0.49 %0.48 %0.42 %0.56 %0.62 %0.49 %0.62 %
Classified assets to total assets0.79 %0.83 %0.62 %0.92 %1.02 %0.79 %1.02 %
Net charge-offs to average loans (annualized)0.12 %(0.04)%0.15 %0.45 %0.08 %0.05 %0.36 %

(1) The tax equivalent adjustment to net interest income recognizes the income tax savings when comparing taxable and tax-exempt assets and assumes a 21% tax rate. Management believes that it is a standard practice in the banking industry to present net interest margin and net interest income on a fully tax equivalent basis. Therefore, management believes these measures provide useful information to investors by allowing them to make peer comparisons. Management also uses these measures to make peer comparisons.
(2) June 30, 2020 regulatory capital ratios are preliminary.
(3) Includes loans held for sale.
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FIRST FINANCIAL BANCORP.
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
(Unaudited)
Three months ended,Six months ended,
June 30,June 30,
20202019% Change20202019% Change
Interest income
  Loans and leases, including fees$105,900  $126,365  (16.2)%$221,675  $249,421  (11.1)%
  Investment securities
     Taxable18,476  23,616  (21.8)%37,481  47,851  (21.7)%
     Tax-exempt4,937  4,336  13.9 %9,519  8,594  10.8 %
        Total investment securities interest23,413  27,952  (16.2)%47,000  56,445  (16.7)%
  Other earning assets47  206  (77.2)%189  416  (54.6)%
       Total interest income129,360  154,523  (16.3)%268,864  306,282  (12.2)%
Interest expense
  Deposits11,751  20,612  (43.0)%28,116  39,855  (29.5)%
  Short-term borrowings1,274  6,646  (80.8)%6,361  12,606  (49.5)%
  Long-term borrowings4,759  4,963  (4.1)%8,529  10,004  (14.7)%
      Total interest expense17,784  32,221  (44.8)%43,006  62,465  (31.2)%
      Net interest income111,576  122,302  (8.8)%225,858  243,817  (7.4)%
  Provision for credit losses-loans and leases (1)
17,859  6,658  168.2 %41,739  20,741  101.2 %
  Provision for credit losses-unfunded commitments (1)
2,370  (132) N/M3,938  (126) N/M
      Net interest income after provision for credit losses91,347  115,776  (21.1)%180,181  223,202  (19.3)%
Noninterest income
  Service charges on deposit accounts6,001  9,819  (38.9)%14,436  18,722  (22.9)%
  Trust and wealth management fees4,114  3,943  4.3 %8,583  8,013  7.1 %
  Bankcard income2,844  6,497  (56.2)%5,542  12,083  (54.1)%
  Client derivative fees2,984  4,905  (39.2)%6,089  6,609  (7.9)%
  Foreign exchange income6,576  17  N/M16,542  17  N/M
  Net gains from sales of loans16,662  3,432  385.5 %19,493  5,322  266.3 %
  Net gains (losses) on sale of investment securities (37) 105.4 %(57) (215) 73.5 %
  Other3,542  6,062  (41.6)%7,481  10,914  (31.5)%
      Total noninterest income42,725  34,638  23.3 %78,109  61,465  27.1 %
Noninterest expenses
  Salaries and employee benefits55,925  53,985  3.6 %110,747  101,897  8.7 %
  Net occupancy5,378  5,596  (3.9)%11,482  12,226  (6.1)%
  Furniture and equipment3,681  4,222  (12.8)%7,734  7,638  1.3 %
  Data processing7,019  4,984  40.8 %13,408  10,111  32.6 %
  Marketing1,339  1,976  (32.2)%2,559  3,582  (28.6)%
  Communication907  747  21.4 %1,797  1,475  21.8 %
  Professional services2,205  2,039  8.1 %4,480  4,291  4.4 %
  State intangible tax1,514  1,307  15.8 %3,030  2,617  15.8 %
  FDIC assessments1,290  1,065  21.1 %2,695  2,015  33.7 %
  Intangible amortization 2,791  2,044  36.5 %5,583  4,089  36.5 %
  Other6,640  6,545  1.5 %14,840  13,062  13.6 %
      Total noninterest expenses88,689  84,510  4.9 %178,355  163,003  9.4 %
Income before income taxes45,383  65,904  (31.1)%79,935  121,664  (34.3)%
Income tax expense7,990  13,201  (39.5)%13,914  23,122  (39.8)%
      Net income$37,393  $52,703  (29.0)%$66,021  $98,542  (33.0)%
ADDITIONAL DATA
Net earnings per share - basic$0.38  $0.54  $0.68  $1.01  
Net earnings per share - diluted$0.38  $0.53  $0.67  $1.00  
Dividends declared per share$0.23  $0.22  $0.46  $0.44  
Return on average assets0.96 %1.50 %0.88 %1.42 %
Return on average shareholders' equity6.88 %9.85 %6.04 %9.37 %
Interest income$129,360  $154,523  (16.3)%$268,864  $306,282  (12.2)%
Tax equivalent adjustment1,664  1,416  17.5 %3,288  2,939  11.9 %
   Interest income - tax equivalent131,024  155,939  (16.0)%272,152  309,221  (12.0)%
Interest expense17,784  32,221  (44.8)%43,006  62,465  (31.2)%
   Net interest income - tax equivalent$113,240  $123,718  (8.5)%$229,146  $246,756  (7.1)%
Net interest margin3.38 %3.99 %3.54 %4.02 %
Net interest margin (fully tax equivalent) (2)
3.44 %4.04 %3.60 %4.07 %
Full-time equivalent employees2,076  2,076  
(1) Beginning January 1,2020, calculation is based on current expected loss methodology. Prior to January 1, 2020, calculation was based on the incurred loss methodology.
(2) The tax equivalent adjustment to net interest income recognizes the income tax savings when comparing taxable and tax-exempt assets and assumes a 21% tax rate. Management believes that it is a standard practice in the banking industry to present net interest income on a fully tax equivalent basis. Therefore, management believes these measures provide useful information to investors by allowing them to make peer comparisons. Management also uses these measures to make peer comparisons.
3


FIRST FINANCIAL BANCORP.
CONSOLIDATED QUARTERLY STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
(Unaudited)
2020
SecondFirstFull% Change
QuarterQuarterYearLinked Qtr.
Interest income
  Loans and leases, including fees$105,900  $115,775  $221,675  (8.5)%
  Investment securities
     Taxable18,476  19,005  37,481  (2.8)%
     Tax-exempt4,937  4,582  9,519  7.7 %
        Total investment securities interest23,413  23,587  47,000  (0.7)%
  Other earning assets47  142  189  (66.9)%
       Total interest income129,360  139,504  268,864  (7.3)%
Interest expense
  Deposits11,751  16,365  28,116  (28.2)%
  Short-term borrowings1,274  5,087  6,361  (75.0)%
  Long-term borrowings4,759  3,770  8,529  26.2 %
      Total interest expense17,784  25,222  43,006  (29.5)%
      Net interest income111,576  114,282  225,858  (2.4)%
  Provision for credit losses-loans and leases (1)
17,859  23,880  41,739  (25.2)%
  Provision for credit losses-unfunded commitments (1)
2,370  1,568  3,938  51.1 %
      Net interest income after provision for credit losses91,347  88,834  180,181  2.8 %
Noninterest income
  Service charges on deposit accounts6,001  8,435  14,436  (28.9)%
  Trust and wealth management fees4,114  4,469  8,583  (7.9)%
  Bankcard income2,844  2,698  5,542  5.4 %
  Client derivative fees2,984  3,105  6,089  (3.9)%
  Foreign exchange income6,576  9,966  16,542  (34.0)%
  Net gains from sales of loans16,662  2,831  19,493  488.6 %
  Net gains (losses) on sale of investment securities (59) (57) 103.4 %
  Other3,542  3,939  7,481  (10.1)%
      Total noninterest income42,725  35,384  78,109  20.7 %
Noninterest expenses
  Salaries and employee benefits55,925  54,822  110,747  2.0 %
  Net occupancy5,378  6,104  11,482  (11.9)%
  Furniture and equipment3,681  4,053  7,734  (9.2)%
  Data processing7,019  6,389  13,408  9.9 %
  Marketing1,339  1,220  2,559  9.8 %
  Communication907  890  1,797  1.9 %
  Professional services2,205  2,275  4,480  (3.1)%
  State intangible tax1,514  1,516  3,030  (0.1)%
  FDIC assessments1,290  1,405  2,695  (8.2)%
  Intangible amortization 2,791  2,792  5,583  0.0 %
  Other6,640  8,200  14,840  (19.0)%
      Total noninterest expenses88,689  89,666  178,355  (1.1)%
Income before income taxes45,383  34,552  79,935  31.3 %
Income tax expense7,990  5,924  13,914  34.9 %
      Net income$37,393  $28,628  $66,021  30.6 %
ADDITIONAL DATA
Net earnings per share - basic$0.38  $0.29  $0.68  
Net earnings per share - diluted$0.38  $0.29  $0.67  
Dividends declared per share$0.23  $0.23  $0.46  
Return on average assets0.96 %0.79 %0.88 %
Return on average shareholders' equity6.88 %5.21 %6.04 %
Interest income$129,360  $139,504  $268,864  (7.3)%
Tax equivalent adjustment1,664  1,624  3,288  2.5 %
   Interest income - tax equivalent131,024  141,128  272,152  (7.2)%
Interest expense17,784  25,222  43,006  (29.5)%
   Net interest income - tax equivalent$113,240  $115,906  $229,146  (2.3)%
Net interest margin3.38 %3.71 %3.54 %
Net interest margin (fully tax equivalent) (2)
3.44 %3.77 %3.60 %
Full-time equivalent employees2,076  2,067  
(1) Beginning January 1,2020, calculation is based on current expected loss methodology. Prior to January 1, 2020, calculation was based on the incurred loss methodology.
(2) The tax equivalent adjustment to net interest income recognizes the income tax savings when comparing taxable and tax-exempt assets and assumes a 21% tax rate. Management believes that it is a standard practice in the banking industry to present net interest income on a fully tax equivalent basis. Therefore, management believes these measures provide useful information to investors by allowing them to make peer comparisons. Management also uses these measures to make peer comparisons.
4


FIRST FINANCIAL BANCORP.
CONSOLIDATED QUARTERLY STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
(Unaudited)
2019
FourthThirdSecondFirstFull
QuarterQuarterQuarterQuarterYear
Interest income
  Loans and leases, including fees$122,802  $126,786  $126,365  $123,056  $499,009  
  Investment securities
     Taxable20,137  22,180  23,616  24,235  90,168  
     Tax-exempt4,545  4,457  4,336  4,258  17,596  
        Total investment securities interest24,682  26,637  27,952  28,493  107,764  
  Other earning assets167  222  206  210  805  
       Total interest income147,651  153,645  154,523  151,759  607,578  
Interest expense
  Deposits19,026  20,151  20,612  19,243  79,032  
  Short-term borrowings5,430  7,199  6,646  5,960  25,235  
  Long-term borrowings4,293  4,760  4,963  5,041  19,057  
      Total interest expense28,749  32,110  32,221  30,244  123,324  
      Net interest income118,902  121,535  122,302  121,515  484,254  
  Provision for credit losses-loans and leases (1)
4,629  5,228  6,658  14,083  30,598  
  Provision for credit losses-unfunded commitments (1)
177  (216) (132)  (165) 
      Net interest income after provision for credit losses114,096  116,523  115,776  107,426  453,821  
Noninterest income
  Service charges on deposit accounts9,343  9,874  9,819  8,903  37,939  
  Trust and wealth management fees3,913  3,718  3,943  4,070  15,644  
  Bankcard income3,405  3,316  6,497  5,586  18,804  
  Client derivative fees4,194  4,859  4,905  1,704  15,662  
  Foreign exchange income6,014  1,708  17   7,739  
  Net gains from sales of loans4,723  4,806  3,432  1,890  14,851  
  Net gains on sale of investment securities(296) 105  (37) (178) (406) 
  Other5,472  4,754  6,062  4,852  21,140  
      Total noninterest income36,768  33,140  34,638  26,827  131,373  
Noninterest expenses
  Salaries and employee benefits53,952  53,212  53,985  47,912  209,061  
  Net occupancy6,334  5,509  5,596  6,630  24,069  
  Furniture and equipment4,145  4,120  4,222  3,416  15,903  
  Data processing5,996  5,774  4,984  5,127  21,881  
  Marketing1,980  1,346  1,976  1,606  6,908  
  Communication882  910  747  728  3,267  
  Professional services2,192  4,771  2,039  2,252  11,254  
  State intangible tax1,767  1,445  1,307  1,310  5,829  
  FDIC assessments1,055  (1,097) 1,065  950  1,973  
  Intangible amortization 3,150  2,432  2,044  2,045  9,671  
  Other11,434  8,020  6,545  6,517  32,516  
      Total noninterest expenses92,887  86,442  84,510  78,493  342,332  
Income before income taxes57,977  63,221  65,904  55,760  242,862  
Income tax expense (benefit)9,300  12,365  13,201  9,921  44,787  
      Net income$48,677  $50,856  $52,703  $45,839  $