First Financial Bancorp Announces First Quarter 2020 Financial Results

CINCINNATI, April 20, 2020 /PRNewswire/ -- First Financial Bancorp. (Nasdaq: FFBC) ("First Financial" or the "Company") announced financial results for the first quarter 2020.  In addition, the Company has highlighted client and associate outreach initiatives related to the COVID-19 pandemic.

For the three months ended March 31, 2020, the Company reported net income of $28.6 million, or $0.29 per diluted common share.  These results compare to net income of $48.7 million, or $0.49 per diluted common share, for the fourth quarter of 2019 and $45.8 million, or $0.47 per diluted common share, for the first quarter of 2019.

Return on average assets for the first quarter of 2020 was 0.79% while return on average tangible common equity was 9.71%.  These compare to returns on average assets of 1.34% and 1.33%, and returns on average tangible common equity of 15.84% and 15.95%, in the fourth quarter of 2019 and the first quarter of 2019, respectively.

First quarter 2020 highlights include:

• After adjustments⁽¹⁾ for merger-related, nonrecurring and certain COVID-19 related items:
• Net income of $0.31 per diluted common share
• 0.85% return on average assets; 10.41% return on average tangible common equity
• Adjustments⁽¹⁾ to net income include:
• $1.0 million contribution to First Financial Foundation for COVID-19 relief
• $1.5 million of other nonrecurring costs such as branch consolidation costs
• Total Allowance for Credit Losses of $158.2 million; Total quarterly provision for credit losses of $25.4 million
• Adopted CECL as of January 1
• Loans and leases - ACL of $143.9 million, 1.55% of total loans; $23.9 provision expense
• Unfunded Commitments - ACL of $14.3 million; $1.6 million provision expense
• Substantially all of first quarter provision expense related to expected economic impact from COVID-19
• Loan balances grew 4.6% on an annualized basis
• $106.2 million increase compared to the linked quarter driven by commercial real estate
• Net interest margin of 3.77% on a fully tax-equivalent basis⁽¹⁾
• 12 basis point reduction from the linked quarter
• Impact of lower interest rates on asset yields, lower loan fees and lower purchase accounting accretion partially offset by funding cost reductions
• Noninterest income of $35.4 million
• $4.0 million, or 65.7% increase in foreign exchange income
• Continued strong client derivative fee income
• Record trust and wealth management fees; increased $0.6 million, or 14.2%

• Noninterest expenses of $89.7 million, or $87.2 million as adjusted⁽¹⁾
• Efficiency ratio of 59.9%; 58.2% as adjusted⁽¹⁾
• $1.0 million contribution to First Financial Foundation for COVID-19 relief
• Elevated healthcare costs, seasonal increases in payroll taxes and incentive compensation related to the increase in foreign exchange income drove higher salary and benefits expense
• Strong capital ratios
• Total capital of 13.54%; Tier 1 common equity of 11.27%; Tangible common equity of 8.25%
• Tangible book value per share of $11.82

To date, the Company has performed the following In response to COVID-19:

• Introduced hardship relief programs that include payment deferrals, fee-waivers and suspension of foreclosures
• Processed modifications for over $950 million, or 10% of total loans
• Successfully modified over $45 million in consumer loans
• Participant in CARES Act SBA Paycheck Protection Program
• Received in excess of 5,700 PPP applications; over $1 billion in requests
• Approximately 3,600 PPP requests, or 63% of applicants, approved by SBA
• Accelerated adoption of new processes and technologies to ease customer access to banking services

Archie Brown, President and Chief Executive Officer, commented, "The first quarter of 2020 proved to be one of the most unique and challenging quarters in our industry's history.  While the first half of the quarter was marked by strong financial performance, March was characterized by economic, logistical and social upheaval.  In a rapidly changing operational and economic landscape, we successfully implemented a comprehensive business continuity plan without sacrificing the performance and service our borrowers and shareholders have come to expect and were pleased that pre-provision financial results exceeded our expectations, despite a 150 basis point drop in interest rates."

Mr. Brown continued, "First quarter earnings were solid, although they were obviously negatively impacted by COVID's influence on our CECL model.  To date, credit stress on the loan portfolio has been limited, evidenced by net recoveries during the period, however the quarterly provision expense reflects our expectation for that to change during the remainder of the year.  We were pleased with our ability to manage the margin despite strong interest rate headwinds, as we successfully lowered deposit costs to help alleviate the pressure from declining asset yields, fewer loan fees and lower purchase accounting accretion.  In addition, a record quarter from Bannockburn combined with a relatively flat expense base to offset expected seasonal declines in noninterest income to result in a sub-60% adjusted efficiency ratio."

Mr. Brown further remarked, "We began monitoring the pandemic early and preparing in the event it affected our markets.  As a result, in response to the pandemic, our executive committee was able to immediately shift to crisis management, working to develop plans and products to assist our clients and communities in a meaningful way.  This included the development of our Hardship Relief program, which includes various payment deferral options for borrowers, as well as making a $1.0 million contribution to help fund COVID-19 relief efforts in communities throughout our footprint.  We are also actively engaged in extending loans under the U.S. Government's Paycheck Protection Program to our loan and deposit customers.  We continue to actively monitor the actions of the federal and state governments, and are proactively assisting our clients to ensure they are aware of every program and level of financial assistance available to them."

Mr. Brown concluded, "The end of the first quarter was certainly unprecedented, and one we will never forget.  Our agile response to these trying circumstances has truly highlighted our strength as a Company.  In the face of a pandemic, we were able to deliver solid financial performance while maintaining focus on our customers and communities.  Although certain performance metrics are difficult to forecast for the remainder of the year, we pledge to remain diligent and manage the Company in a way that continues to deliver maximum shareholder value while prioritizing the physical and financial well-being of our clients and associates."

Full detail of the Company's first 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 Tuesday, April 21, 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 10141642.  The webcast will be archived on the Investor Relations section of the Company's website for 12 months.

Press Release and Additional Information on Website

This press release as well as supplemental information are available to the public through the Investor Relations section of First Financial's website at www.bankatfirst.com.

Use of Non-GAAP Financial Measures

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

Forward-Looking Statement

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

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

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

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

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

About First Financial Bancorp.

First Financial Bancorp. is a Cincinnati, Ohio based bank holding company.  As of March 31, 2020, the Company had $15.1 billion in assets, $9.3 billion in loans, $10.6 billion in deposits and $2.2 billion in shareholders' equity.  The Company's subsidiary, First Financial Bank, founded in 1863, provides banking and financial services products through its six lines of business: Commercial, Retail Banking, Investment Commercial Real Estate, Mortgage Banking, Commercial Finance and Wealth Management.  These business units provide traditional banking services to business and retail clients.  Wealth Management provides wealth planning, portfolio management, trust and estate, brokerage and retirement plan services and had approximately $2.6 billion in assets under management as of March 31, 2020.  The Company operated 145 full service banking centers as of March 31, 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.

SOURCE First Financial Bancorp.

Related Links

http://www.bankatfirst.com