First Financial Bancorp Reports Second Quarter 2012 Financial Results
CINCINNATI, July 24, 2012 /PRNewswire/ -- First Financial Bancorp (Nasdaq: FFBC) ("First Financial" or the "Company") announced today financial and operational results for the second quarter 2012.
Second quarter 2012 net income was $17.8 million and earnings per diluted common share were $0.30. This compares with first quarter 2012 net income of $17.0 million and earnings per diluted common share of $0.29 and second quarter 2011 net income of $16.0 million and earnings per diluted common share of $0.27.
The board of directors has authorized a regular dividend of $0.15 per common share and a variable dividend of $0.15 per common share for the next regularly scheduled dividend, payable on October 1, 2012 to shareholders of record as of August 31, 2012. This is a continuation of the 100% dividend payout ratio first announced in the second quarter 2011 and is expected to continue through 2013 unless the Company's capital position materially changes or capital deployment opportunities arise.
- 87th consecutive quarter of profitability
- Quarterly adjusted pre-tax, pre-provision income remains solid, totaling $30.2 million, or 1.92% of average assets
- Continued strong quarterly performance
- Return on average assets of 1.13%
- Return on average risk-weighted assets of 1.92%
- Return on average shareholders' equity of 9.98%
- Capital ratios remain high
- Tangible common equity to tangible assets of 9.91%
- Tier 1 capital ratio of 17.14%
- Total risk-based capital ratio of 18.42%
- Quarterly net interest margin remains strong at 4.49%, benefitting from the continued decline in deposit funding costs resulting from strategic initiatives
- Total uncovered loan portfolio growth of 6.7% on an annualized basis
- Strong growth in commercial real estate loan balances
- Increasing contribution from specialty finance product lines
- Total classified assets declined $9.1 million, or 5.9%, compared to the linked quarter and $39.2 million, or 21.2%, compared to June 30, 2011
During the quarter, the Company incurred certain pre-tax expenses that are not expected to recur of $2.2 million, or $0.02 per diluted common share after taxes, primarily related to employee benefit and exit costs associated with the banking center consolidation and closure plans effective late in the second quarter 2012 and for those planned for August 2012. Additionally, the Company recognized pre-tax gains of approximately $5.0 million, or $0.05 per diluted common share after taxes, associated with the settlement of litigation related to a subsidiary.
Claude Davis, President and Chief Executive Officer, commented, "Our financial results for the second quarter reflected continued solid performance despite ongoing challenges in our operating environment. While earnings were impacted by certain significant one-time items and an increase in credit costs related to our uncovered loan portfolio, we continued to execute on our community bank business model and leverage our increased presence in the Indianapolis and Dayton markets. We were especially pleased with the continued positive impact of our deposit pricing and rationalization strategies on both earnings and net interest margin. Non-core time deposits declined over 10% during the quarter and our cost of deposits declined 8 basis points to 0.49%, helping us to maintain one of the stronger net interest margins among banks in our peer group.
"Our uncovered loan portfolio increased 6.7% on an annualized basis during the quarter, driven primarily by commercial real estate activity. Additionally, we continued to gain traction with our specialty finance product lines as evidenced by the growth in our equipment finance portfolio. Our pipeline at the end of the first quarter translated into strong second quarter originations and renewals, which increased almost 30% compared to the linked quarter. The impact was muted, however, as we experienced payoffs on some larger credits during the quarter. Our pipeline at the end of the second quarter remained strong and consistent with levels at March 31. While there is still economic uncertainty in our strategic markets, we are optimistic that our sales efforts and client-centered approach to building long-term relationships will drive strong future revenue growth.
"We also remain firmly committed to increasing our efficiency and ensuring that sufficient resources are focused on markets and product offerings that provide the greatest opportunities for maximizing growth and shareholder value. We completed the consolidation or market exit of 10 locations during the quarter and have announced that we will be consolidating another two Indiana-based banking centers and exiting four other Indiana markets where we have a limited presence, effective August 2012. Net of the anticipated impact on revenue from expected deposit attrition, the estimated annual pre-tax operating expenses associated with all of these closures are approximately $3.0 million. This will provide us the flexibility to channel greater resources into our metropolitan markets of Cincinnati, Dayton and Indianapolis. Additionally, we will be initiating an in-depth analysis of our cost structure during the third quarter to ensure that we achieve our stated strategic operating efficiency ratio target of 55% - 60%."
NET INTEREST INCOME
Net interest income for the second quarter 2012 was $64.8 million as compared to $66.7 million for the first quarter 2012 and $65.9 million as compared to the year-over-year period. Compared to the linked quarter, total interest income decreased $3.2 million, or 4.2%, during the second quarter 2012 as a result of lower interest income earned on loans. The lower interest income earned on loans was driven primarily by a 6.9% decline in the average balance of covered loans outstanding and, to a lesser extent, a decrease in the yield earned on uncovered loans. Total interest expense declined $1.3 million, or 15.6%, compared to the first quarter 2012 due primarily to lower interest expense on deposits.
NET INTEREST MARGIN
Net interest margin was 4.49% for the second quarter 2012 as compared to 4.51% for the first quarter 2012 and 4.61% for the second quarter 2011. Net interest margin continued to benefit from the impact of deposit pricing and rationalization strategies as the average balance of interest-bearing deposits declined 7.4% and the cost of funds related to these deposits decreased 7 bps compared to the linked quarter. The improvement in deposit funding costs offset the continued negative impact of amortization and paydowns in the Company's high-yielding covered loan portfolio as well as the effect of lower yields earned on uncovered loans and a decline in loan fees. Additionally, net interest margin benefitted from the impact of a lower earning asset base.
NONINTEREST INCOME
The following table presents noninterest income for the three months ended June 30, 2012, March 31, 2012 and June 30, 2011 highlighting the estimated impact of covered loan activity and other transition items on the Company's reported balance.
Table I |
||||||||
For the Three Months Ended |
||||||||
June 30, |
March 31, |
June 30, |
||||||
(Dollars in thousands) |
2012 |
2012 |
2011 |
|||||
Total noninterest income |
$ 33,545 |
$ 31,925 |
$ 41,118 |
|||||
Certain significant components of noninterest income |
||||||||
Items likely to recur: |
||||||||
Accelerated discount on covered loans 1, 2 |
3,764 |
3,645 |
4,756 |
|||||
FDIC loss sharing income |
8,280 |
12,816 |
21,643 |
|||||
Income (loss) related to transition/non-strategic operations |
91 |
(10) |
(485) |
|||||
Items not expected to recur: |
||||||||
Other items not expected to recur |
5,000 |
209 |
(152) |
|||||
Total noninterest income excluding items noted above |
$ 16,410 |
$ 15,265 |
$ 15,356 |
|||||
1 See Selected Financial Information for additional information |
||||||||
2 Net of the corresponding valuation adjustment on the FDIC indemnification asset |
Excluding the items highlighted in Table I, noninterest income earned in the second quarter 2012 was $16.4 million as compared to $15.3 million in the first quarter 2012 and $15.4 million in the second quarter 2011. The increase of $1.1 million was driven by an increase in service charges on deposits, client derivative fees and gain on sale of loans from mortgage originations and franchise loan sales, partially offset by lower trust and wealth management fees. During the quarter, the Company recognized a $5.0 million gain associated with the settlement of litigation related to a subsidiary.
NONINTEREST EXPENSE
The following table presents noninterest expense for the three months ended June 30, 2012, March 31, 2012 and June 30, 2011 including the estimated effect of covered asset activity, acquired-non-strategic operations, acquisition-related costs and other transition items.
Table II |
||||||||
For the Three Months Ended |
||||||||
June 30, |
March 31, |
June 30, |
||||||
(Dollars in thousands) |
2012 |
2012 |
2011 |
|||||
Total noninterest expense |
$ 57,459 |
$ 55,778 |
$ 52,497 |
|||||
Certain significant components of noninterest expense |
||||||||
Items likely to recur: |
||||||||
Loss share and covered asset expense |
4,317 |
3,043 |
3,376 |
|||||
FDIC loss share support |
1,014 |
1,163 |
1,369 |
|||||
Acquired-non-strategic operating expenses1 |
19 |
(146) |
2,673 |
|||||
Transition-related items1 |
- |
- |
161 |
|||||
Items not expected to recur: |
||||||||
Acquisition-related costs1 |
78 |
188 |
76 |
|||||
Other items not expected to recur |
2,870 |
2,797 |
1,140 |
|||||
Total noninterest expense excluding items noted above |
$ 49,161 |
$ 48,733 |
$ 43,702 |
|||||
1 See Selected Financial Information for additional information |
Excluding the items highlighted in Table II, noninterest expense in the second quarter 2012 was $49.2 million as compared to $48.7 million in the first quarter 2012 and $43.7 million in the second quarter 2011. The increase of $0.4 million compared to the linked quarter was due to modestly higher data processing costs, collection expenses, uncovered OREO expenses and other miscellaneous expenses, partially offset by lower occupancy costs. Loss share and covered asset expense includes $1.2 million of losses on covered OREO and $3.1 million of other credit-related expenses. Included in other items not expected to recur are $2.2 million of employee benefit and exit costs primarily associated with announced banking center consolidation and closure plans.
INCOME TAXES
For the second quarter 2012, income tax expense was $8.7 million, resulting in an effective tax rate of 32.8%, compared with income tax expense of $9.6 million and an effective tax rate of 36.2% during the first quarter 2012 and $8.9 million and an effective tax rate of 35.7% during the comparable year-over-year period. The decrease in the effective tax rate during the second quarter 2012 was driven by a one-time provision to return adjustment related to state income taxes at the subsidiary level.
CREDIT QUALITY – EXCLUDING COVERED ASSETS
The following table presents certain credit quality metrics related to the Company's uncovered loan portfolio as of June 30, 2012 and for the trailing four quarters.
Table III |
||||||||||||
As of or for the Three Months Ended |
||||||||||||
June 30, |
March 31, |
December 31, |
September 30, |
June 30, |
||||||||
(Dollars in thousands) |
2012 |
2012 |
2011 |
2011 |
2011 |
|||||||
Total nonaccrual loans |
$ 63,093 |
$ 55,945 |
$ 54,299 |
$ 59,150 |
$ 56,536 |
|||||||
Troubled debt restructurings - accruing |
9,909 |
9,495 |
4,009 |
4,712 |
3,039 |
|||||||
Troubled debt restructurings - nonaccrual |
10,185 |
17,205 |
18,071 |
12,571 |
14,443 |
|||||||
Total troubled debt restructurings |
20,094 |
26,700 |
22,080 |
17,283 |
17,482 |
|||||||
Total nonperforming loans |
83,187 |
82,645 |
76,379 |
76,433 |
74,018 |
|||||||
Total nonperforming assets |
98,875 |
97,681 |
87,696 |
88,436 |
90,331 |
|||||||
Nonperforming assets as a % of: |
||||||||||||
Period-end loans plus OREO |
3.27% |
3.28% |
2.94% |
3.00% |
3.22% |
|||||||
Total assets |
1.57% |
1.52% |
1.31% |
1.40% |
1.50% |
|||||||
Nonperforming assets ex. accruing TDRs as a % of: |
||||||||||||
Period-end loans plus OREO |
2.94% |
2.96% |
2.81% |
2.84% |
3.11% |
|||||||
Total assets |
1.42% |
1.37% |
1.25% |
1.32% |
1.44% |
|||||||
Nonperforming loans as a % of total loans |
2.76% |
2.79% |
2.57% |
2.60% |
2.65% |
|||||||
Provision for loan and lease losses - uncovered |
$ 8,364 |
$ 3,258 |
$ 5,164 |
$ 7,643 |
$ 5,756 |
|||||||
Allowance for uncovered loan & lease losses |
$ 50,952 |
$ 49,437 |
$ 52,576 |
$ 54,537 |
$ 53,671 |
|||||||
Allowance for loan & lease losses as a % of: |
||||||||||||
Period-end loans |
1.69% |
1.67% |
1.77% |
1.86% |
1.92% |
|||||||
Nonaccrual loans |
80.8% |
88.4% |
96.8% |
92.2% |
94.9% |
|||||||
Nonaccrual loans plus nonaccrual TDRs |
69.5% |
67.6% |
72.7% |
76.0% |
75.6% |
|||||||
Nonperforming loans |
61.3% |
59.8% |
68.8% |
71.4% |
72.5% |
|||||||
Total net charge-offs |
$ 6,849 |
$ 6,397 |
$ 7,125 |
$ 6,777 |
$ 5,730 |
|||||||
Annualized net-charge-offs as a % of average loans & leases |
0.93% |
0.87% |
0.95% |
0.96% |
0.83% |
|||||||
Net Charge-offs
Significant items driving net charge-offs for the quarter included $2.0 million related to the dispositions of a commercial real estate credit and a construction and land development credit and $1.2 million related to valuation adjustments of two commercial real estate credits.
Nonperforming Assets
Nonaccrual loans, including nonaccrual troubled debt restructurings, totaled $73.3 million as of June 30, 2012 compared to $73.2 million as of March 31, 2012 as total additions during the quarter slightly outweighed credits removed from nonaccrual status due to the finalization of resolution strategies, including transfers to OREO, dispositions and net charge-offs. Nonaccrual troubled debt restructurings declined $7.0 million during the quarter, driven primarily by the sale of a $4.4 million construction and land development credit.
OREO increased $0.7 million to $15.7 million during the second quarter as additions of $1.8 million exceeded resolutions and valuation adjustments during the quarter of $1.1 million. There were no individually significant items included in either the additions or resolutions for the quarter.
Classified assets as of June 30, 2012 totaled $145.6 million as compared to $154.7 million for the linked quarter and $184.8 million as of June 30, 2011, representing declines of 5.9% and 21.2%, respectively. Classified assets, which have declined for seven consecutive quarters, are defined by the Company as nonperforming assets plus performing loans internally rated substandard or worse.
Delinquent Loans
As of June 30, 2012, loans 30-to-89 days past due increased to $26.0 million, or 0.86% of period end loans, as compared to $20.2 million, or 0.68%, as of March 31, 2012 and $26.8 million, or 0.96%, as of June 30, 2011. The increase compared to the linked quarter resulted from increased delinquencies in the commercial real estate and residential real estate portfolios.
Provision for Loan & Lease Losses
Second quarter 2012 provision expense related to uncovered loans and leases was $8.4 million as compared to $3.3 million during the linked quarter and $5.8 million during the comparable year-over-year quarter. Provision expense is a result of the Company's modeling efforts to estimate the period end allowance for loan and lease losses. The increase relative to the linked quarter was due primarily to either establishing or adding to specific reserves totaling $6.1 million in the aggregate on three separate commercial and commercial real estate credits, offset partially by the continued positive migration trends in classified assets as well as the finalization of resolution strategies on certain loans during the quarter. As a percentage of net charge-offs, second quarter 2012 provision expense equaled 122.1%.
LOANS (EXCLUDING COVERED LOANS)
The following table presents the loan portfolio, not including covered loans, as of June 30, 2012, March 31, 2012 and June 30, 2011.
Table IV |
||||||||||||||
As of |
||||||||||||||
June 30, 2012 |
March 31, 2012 |
June 30, 2011 |
||||||||||||
Percent |
Percent |
Percent |
||||||||||||
(Dollars in thousands) |
Balance |
of Total |
Balance |
of Total |
Balance |
of Total |
||||||||
Commercial |
$ 823,890 |
27.3% |
$ 831,101 |
28.0% |
$ 798,552 |
28.6% |
||||||||
Real estate - construction |
86,173 |
2.9% |
104,305 |
3.5% |
142,682 |
5.1% |
||||||||
Real estate - commercial |
1,321,446 |
43.9% |
1,262,775 |
42.6% |
1,144,368 |
41.0% |
||||||||
Real estate - residential |
292,503 |
9.7% |
288,922 |
9.7% |
256,788 |
9.2% |
||||||||
Installment |
61,590 |
2.0% |
63,793 |
2.2% |
63,799 |
2.3% |
||||||||
Home equity |
365,413 |
12.1% |
359,711 |
12.1% |
344,457 |
12.3% |
||||||||
Credit card |
31,486 |
1.0% |
31,149 |
1.1% |
28,618 |
1.0% |
||||||||
Lease financing |
30,109 |
1.0% |
21,794 |
0.7% |
9,890 |
0.4% |
||||||||
Total |
$ 3,012,610 |
100.0% |
$ 2,963,550 |
100.0% |
$ 2,789,154 |
100.0% |
||||||||
Loans, excluding covered loans, totaled $3.0 billion as of June 30, 2012, increasing $49.1 million, or 6.7% on an annualized basis, compared to the linked quarter and $223.5 million, or 8.0%, compared to the second quarter 2011.
INVESTMENTS
The following table presents a summary of the total investment portfolio at June 30, 2012.
Table V |
|||||||||||||||||
As of June 30, 2012 |
|||||||||||||||||
Securities |
Securities |
Other |
Total |
Percent |
Tax Equiv. |
Effective |
|||||||||||
(Dollars in thousands) |
HTM |
AFS |
Investments |
Securities |
of Portfolio |
Yield |
Duration |
||||||||||
Agencies |
$ 21,080 |
$ 26,117 |
$ - |
$ 47,197 |
2.8% |
2.80% |
3.1 |
||||||||||
CMO - fixed rate |
534,662 |
105,671 |
- |
640,333 |
38.4% |
2.24% |
1.6 |
||||||||||
CMO - variable rate |
- |
210,900 |
- |
210,900 |
12.6% |
0.74% |
1.0 |
||||||||||
MBS - fixed rate |
130,481 |
249,857 |
- |
380,338 |
22.8% |
2.92% |
1.7 |
||||||||||
MBS - variable rate |
185,166 |
72,539 |
- |
257,705 |
15.4% |
2.66% |
2.3 |
||||||||||
Municipal |
2,149 |
7,663 |
- |
9,812 |
0.6% |
7.14% |
0.4 |
||||||||||
Corporate |
- |
40,315 |
- |
40,315 |
2.4% |
6.26% |
7.8 |
||||||||||
Other AFS securities |
- |
11,456 |
- |
11,456 |
0.7% |
2.61% |
0.1 |
||||||||||
Regulatory stock |
- |
- |
71,492 |
71,492 |
4.3% |
3.83% |
- |
||||||||||
$ 873,538 |
$ 724,518 |
$ 71,492 |
$ 1,669,548 |
100.0% |
2.48% |
1.8 |
|||||||||||
The investment portfolio decreased $56.0 million, or 3.2%, during the second quarter 2012 as $39.5 million of purchases during the quarter were offset by amortizations and paydowns in the portfolio. The purchases consisted primarily of agency MBS with a weighted average yield of 2.39% and duration of 3.8 years. As of June 30, 2012, the overall duration of the investment portfolio decreased to 1.8 years compared to 2.6 years as of March 31, 2012 due to increased prepayment speeds resulting from the continued decline in interest rates. The yield earned on the portfolio during the quarter declined to 2.46% from 2.57% for the linked quarter. As of June 30, 2012, the market value of the portfolio classified as available-for-sale resulted in a net unrealized gain of $17.8 million which is included in other comprehensive income. With regard to increased prepayment speeds and premium risk inherent in the investment portfolio, the Company has partially mitigated its refinancing and premium risk by capping the premium at which it has purchased securities and by selectively purchasing agency MBS collateralized by assets less subject to refinancing in this interest rate environment.
DEPOSITS
Non-time deposit balances totaled $3.8 billion as of June 30, 2012, representing a decrease of $139.8 million, or 3.6%, compared to March 31, 2012. The decline was driven by a $162.2 million decrease in public fund interest-bearing demand and money market balances and a $54.5 million decrease in retail balances resulting primarily from the branch consolidation plan occurring during the quarter. Offsetting this activity was an increase of $64.5 million in core noninterest-bearing accounts.
Total time deposit balances decreased $159.4 million, or 10.7%, compared to the linked quarter as the Company continued to focus on reducing non-core relationship deposits in connection with its deposit rationalization strategies.
The Company's rationalization strategies related to deposit pricing continued to have a positive impact as the cost of funds related to interest bearing deposits declined to 61 bps for the second quarter compared to 68 bps for the linked quarter and 98 bps for the second quarter 2011. The Company's total cost of deposit funding declined to 49 bps for the quarter, a decrease of 14.0% compared to the prior quarter and 41.7% compared to the second quarter 2011.
CAPITAL MANAGEMENT
The following table presents First Financial's regulatory and other capital ratios as of June 30, 2012, March 31, 2012 and June 30, 2011.
Table VI |
||||||||||
As of |
||||||||||
June 30, |
March 31, |
June 30, |
"Well-Capitalized" |
|||||||
2012 |
2012 |
2011 |
Minimum |
|||||||
Leverage Ratio |
10.21% |
9.94% |
11.01% |
5.00% |
||||||
Tier 1 Capital Ratio |
17.14% |
17.18% |
20.14% |
6.00% |
||||||
Total Risk-Based Capital Ratio |
18.42% |
18.45% |
21.42% |
10.00% |
||||||
Ending tangible shareholders' equity |
||||||||||
to ending tangible assets |
9.91% |
9.66% |
11.11% |
N/A |
||||||
Ending tangible common shareholders' |
||||||||||
equity to ending tangible assets |
9.91% |
9.66% |
11.11% |
N/A |
||||||
The Company's leverage and tangible common equity ratios increased during the quarter as total tangible assets declined and tangible common equity remained essentially unchanged compared to balances as of March 31, 2012. As of June 30, 2012, tangible book value per common share was $10.47 compared to $10.41 as of March 31, 2012 and $11.42 as of June 30, 2011. Regulatory capital ratios as of June 30, 2012 are considered preliminary pending the filing of the Company's regulatory reports.
Teleconference / Webcast Information
First Financial's senior management will host a conference call to discuss the Company's financial and operating results on Wednesday, July 25, 2012 at 9:00 a.m. Eastern Time. Members of the public who would like to listen to the conference call should dial (877) 317-6789 (U.S. toll free), (866) 605-3852 (Canada toll free) or +1 (412) 317-6789 (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 through August 9, 2012 at (877) 344-7529 (U.S. toll free) and +1 (412) 317-0088 (International); conference number 10016666. The webcast will be archived on the Investor Relations section of the Company's website through July 25, 2013.
Press Release and Additional Information on Website
This press release as well as supplemental information and any non-GAAP reconciliations related to this release is available to the public through the Investor Relations section of First Financial's website at www.bankatfirst.com/investor.
Forward-Looking Statement
Certain statements contained in this news release which are not statements of historical fact constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act (the ''Act''). In addition, certain statements in future filings by First Financial with the SEC, in press releases, and in oral and written statements made by or with the approval of First Financial which are not statements of historical fact constitute forward-looking statements within the meaning of the Act. Examples of forward-looking statements include, but are not limited to, projections of revenues, income or loss, earnings or loss per share, the payment or non-payment of dividends, capital structure and other financial items, statements of plans and objectives of First Financial or its management or board of directors, and statements of future economic performances and statements of assumptions underlying such statements. Words such as ''believes,'' ''anticipates,'' "likely," "expected," ''intends,'' and other similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements. Management's analysis contains forward-looking statements that are provided to assist in the understanding of anticipated future financial performance. However, such performance involves risks and uncertainties that may cause actual results to differ materially. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to:
- management's ability to effectively execute its business plan;
- the risk that the strength of the United States economy in general and the strength of the local economies in which we conduct operations may continue to deteriorate resulting in, among other things, a further deterioration in credit quality or a reduced demand for credit, including the resultant effect on our loan portfolio, allowance for loan and lease losses and overall financial performance;
- U.S. fiscal debt and budget matters;
- the ability of financial institutions to access sources of liquidity at a reasonable cost;
- the impact of recent upheaval in the financial markets and the effectiveness of domestic and international governmental actions taken in response, and the effect of such governmental actions on us, our competitors and counterparties, financial markets generally and availability of credit specifically, and the U.S. and international economies, including potentially higher FDIC premiums arising from increased payments from FDIC insurance funds as a result of depository institution failures;
- the effect of and changes in policies and laws or regulatory agencies (notably the recently enacted Dodd-Frank Wall Street Reform and Consumer Protection Act);
- the effect of the current low interest rate environment or changes in interest rates on our net interest margin and our loan originations and securities holdings;
- our ability to keep up with technological changes;
- failure or breach of our operational or security systems or infrastructure, or those of our third party vendors or other service providers;
- our ability to comply with the terms of loss sharing agreements with the FDIC;
- mergers and acquisitions, including costs or difficulties related to the integration of acquired companies and the wind-down of non-strategic operations that may be greater than expected, such as the risks and uncertainties associated with the Irwin Mortgage Corporation bankruptcy proceedings and other acquired subsidiaries;
- the risk that exploring merger and acquisition opportunities may detract from management's time and ability to successfully manage our Company;
- expected cost savings in connection with the consolidation of recent acquisitions may not be fully realized or realized within the expected time frames, and deposit attrition, customer loss and revenue loss following completed acquisitions may be greater than expected;
- our ability to increase market share and control expenses;
- the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies as well as the Financial Accounting Standards Board and the SEC;
- adverse changes in the securities, debt and/or derivative markets;
- our success in recruiting and retaining the necessary personnel to support business growth and expansion and maintain sufficient expertise to support increasingly complex products and services;
- monetary and fiscal policies of the Board of Governors of the Federal Reserve System (Federal Reserve) and the U.S. government and other governmental initiatives affecting the financial services industry;
- our ability to manage loan delinquency and charge-off rates and changes in estimation of the adequacy of the allowance for loan and lease losses; and
- the costs and effects of litigation and of unexpected or adverse outcomes in such litigation.
In addition, please refer to our Annual Report on Form 10-K for the year ended December 31, 2011, as well as our other filings with the SEC, for a more detailed discussion of these risks and uncertainties and other factors. Such forward-looking statements are meaningful only on the date when such statements are made, and First Financial undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such a statement is made to reflect the occurrence of unanticipated events.
About First Financial Bancorp
First Financial Bancorp is a Cincinnati, Ohio based bank holding company. As of June 30, 2012, the Company had $6.3 billion in assets, $3.9 billion in loans, $5.1 billion in deposits and $717 million in shareholders' equity. The Company's subsidiary, First Financial Bank, N.A., founded in 1863, provides banking and financial services products through its three lines of business: commercial, retail and wealth management. The commercial and retail units provide traditional banking services to business and consumer clients. First Financial Wealth Management provides wealth planning, portfolio management, trust and estate, brokerage and retirement plan services and had approximately $2.3 billion in assets under management as of June 30, 2012. The Company's strategic operating markets are located in Ohio, Indiana and Kentucky where it operates 129 banking centers. Additional information about the Company, including its products, services and banking locations is available at www.bankatfirst.com.
FIRST FINANCIAL BANCORP. CONSOLIDATED FINANCIAL HIGHLIGHTS (Dollars in thousands, except per share) (Unaudited) |
|||||||||||||||
Three months ended, |
Six months ended, |
||||||||||||||
Jun. 30, |
Mar. 31, |
Dec. 31, |
Sep. 30, |
Jun. 30, |
Jun. 30, |
||||||||||
2012 |
2012 |
2011 |
2011 |
2011 |
2012 |
2011 |
|||||||||
RESULTS OF OPERATIONS |
|||||||||||||||
Net income |
$17,802 |
$16,994 |
$17,941 |
$15,618 |
$15,973 |
$34,796 |
$33,180 |
||||||||
Net earnings per share - basic |
$0.31 |
$0.29 |
$0.31 |
$0.27 |
$0.28 |
$0.60 |
$0.58 |
||||||||
Net earnings per share - diluted |
$0.30 |
$0.29 |
$0.31 |
$0.27 |
$0.27 |
$0.59 |
$0.57 |
||||||||
Dividends declared per share |
$0.29 |
$0.31 |
$0.27 |
$0.27 |
$0.12 |
$0.60 |
$0.24 |
||||||||
KEY FINANCIAL RATIOS |
|||||||||||||||
Return on average assets |
1.13% |
1.05% |
1.09% |
1.01% |
1.03% |
1.09% |
1.07% |
||||||||
Return on average shareholders' equity |
9.98% |
9.67% |
9.89% |
8.54% |
9.05% |
9.83% |
9.54% |
||||||||
Return on average tangible shareholders' equity |
11.68% |
11.37% |
11.59% |
9.56% |
9.84% |
11.52% |
10.38% |
||||||||
Net interest margin |
4.49% |
4.51% |
4.32% |
4.55% |
4.61% |
4.50% |
4.67% |
||||||||
Net interest margin (fully tax equivalent) (1) |
4.50% |
4.52% |
4.34% |
4.57% |
4.62% |
4.51% |
4.69% |
||||||||
Ending shareholders' equity as a percent of ending assets |
11.41% |
11.14% |
10.68% |
11.47% |
11.95% |
11.41% |
11.95% |
||||||||
Ending tangible shareholders' equity as a percent of: |
|||||||||||||||
Ending tangible assets |
9.91% |
9.66% |
9.23% |
10.38% |
11.11% |
9.91% |
11.11% |
||||||||
Risk-weighted assets |
16.39% |
16.42% |
16.63% |
18.47% |
19.65% |
16.39% |
19.65% |
||||||||
Average shareholders' equity as a percent of average assets |
11.32% |
10.91% |
11.05% |
11.83% |
11.38% |
11.11% |
11.24% |
||||||||
Average tangible shareholders' equity as a percent of |
|||||||||||||||
average tangible assets |
9.84% |
9.43% |
9.58% |
10.70% |
10.56% |
9.64% |
10.42% |
||||||||
Book value per share |
$12.25 |
$12.21 |
$12.22 |
$12.48 |
$12.39 |
$12.25 |
$12.39 |
||||||||
Tangible book value per share |
$10.47 |
$10.41 |
$10.41 |
$11.15 |
$11.42 |
$10.47 |
$11.42 |
||||||||
Tier 1 Ratio(2) |
17.14% |
17.18% |
17.47% |
18.81% |
20.14% |
17.14% |
20.14% |
||||||||
Total Capital Ratio(2) |
18.42% |
18.45% |
18.74% |
20.08% |
21.42% |
18.42% |
21.42% |
||||||||
Leverage Ratio(2) |
10.21% |
9.94% |
9.87% |
10.87% |
11.01% |
10.21% |
11.01% |
||||||||
AVERAGE BALANCE SHEET ITEMS |
|||||||||||||||
Loans (3) |
$2,995,296 |
$2,979,508 |
$2,983,354 |
$2,800,466 |
$2,782,947 |
$2,987,402 |
$2,802,092 |
||||||||
Covered loans and FDIC indemnification asset |
1,100,014 |
1,179,670 |
1,287,776 |
1,380,128 |
1,481,353 |
1,139,842 |
1,554,592 |
||||||||
Investment securities |
1,713,503 |
1,664,643 |
1,257,574 |
1,199,473 |
1,093,870 |
1,689,073 |
1,069,715 |
||||||||
Interest-bearing deposits with other banks |
4,454 |
126,330 |
485,432 |
306,969 |
375,434 |
65,392 |
326,408 |
||||||||
Total earning assets |
$5,813,267 |
$5,950,151 |
$6,014,136 |
$5,687,036 |
$5,733,604 |
$5,881,709 |
$5,752,807 |
||||||||
Total assets |
$6,334,973 |
$6,478,931 |
$6,515,756 |
$6,136,815 |
$6,219,754 |
$6,406,952 |
$6,242,952 |
||||||||
Noninterest-bearing deposits |
$1,044,405 |
$931,347 |
$860,863 |
$735,621 |
$734,674 |
$987,876 |
$733,962 |
||||||||
Interest-bearing deposits |
4,210,079 |
4,545,151 |
4,630,412 |
4,366,827 |
4,402,103 |
4,377,615 |
4,416,732 |
||||||||
Total deposits |
$5,254,484 |
$5,476,498 |
$5,491,275 |
$5,102,448 |
$5,136,777 |
$5,365,491 |
$5,150,694 |
||||||||
Borrowings |
$234,995 |
$161,911 |
$174,939 |
$195,140 |
$218,196 |
$198,453 |
$224,109 |
||||||||
Shareholders' equity |
$717,111 |
$706,547 |
$719,964 |
$725,809 |
$707,750 |
$711,829 |
$701,441 |
||||||||
CREDIT QUALITY RATIOS (excluding covered assets) |
|||||||||||||||
Allowance to ending loans |
1.69% |
1.67% |
1.77% |
1.86% |
1.92% |
1.69% |
1.92% |
||||||||
Allowance to nonaccrual loans |
80.76% |
88.37% |
96.83% |
92.20% |
94.93% |
80.76% |
94.93% |
||||||||
Allowance to nonperforming loans |
61.25% |
59.82% |
68.84% |
71.35% |
72.51% |
61.25% |
72.51% |
||||||||
Nonperforming loans to total loans |
2.76% |
2.79% |
2.57% |
2.60% |
2.65% |
2.76% |
2.65% |
||||||||
Nonperforming assets to ending loans, plus OREO |
3.27% |
3.28% |
2.94% |
3.00% |
3.22% |
3.27% |
3.22% |
||||||||
Nonperforming assets to total assets |
1.57% |
1.52% |
1.31% |
1.40% |
1.50% |
1.57% |
1.50% |
||||||||
Net charge-offs to average loans (annualized) |
0.93% |
0.87% |
0.95% |
0.96% |
0.83% |
0.90% |
0.72% |
||||||||
(1)The tax equivalent adjustment to net interest income recognizes the income tax savings when comparing taxable and tax-exempt assets and assumes a 35% 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, 2012 regulatory capital ratios are preliminary. |
|||||||||||||||
(3) Includes loans held for sale. |
|||||||||||||||
FIRST FINANCIAL BANCORP. CONSOLIDATED STATEMENTS OF INCOME (Dollars in thousands, except per share) (Unaudited) |
||||||||||||
Three months ended, |
Six months ended, |
|||||||||||
Jun. 30, |
Jun. 30, |
|||||||||||
2012 |
2011 |
% Change |
2012 |
2011 |
% Change |
|||||||
Interest income |
||||||||||||
Loans, including fees |
$63,390 |
$71,929 |
(11.9%) |
$129,826 |
$145,945 |
(11.0%) |
||||||
Investment securities |
||||||||||||
Taxable |
10,379 |
7,080 |
46.6% |
20,896 |
13,883 |
50.5% |
||||||
Tax-exempt |
121 |
192 |
(37.0%) |
255 |
390 |
(34.6%) |
||||||
Total investment securities interest |
10,500 |
7,272 |
44.4% |
21,151 |
14,273 |
48.2% |
||||||
Other earning assets |
(1,967) |
(1,384) |
42.1% |
(3,957) |
(2,338) |
69.2% |
||||||
Total interest income |
71,923 |
77,817 |
(7.6%) |
147,020 |
157,880 |
(6.9%) |
||||||
Interest expense |
||||||||||||
Deposits |
6,381 |
10,767 |
(40.7%) |
14,097 |
22,167 |
(36.4%) |
||||||
Short-term borrowings |
37 |
49 |
(24.5%) |
49 |
94 |
(47.9%) |
||||||
Long-term borrowings |
675 |
937 |
(28.0%) |
1,355 |
2,026 |
(33.1%) |
||||||
Subordinated debentures and capital securities |
0 |
197 |
(100.0%) |
0 |
391 |
(100.0%) |
||||||
Total interest expense |
7,093 |
11,950 |
(40.6%) |
15,501 |
24,678 |
(37.2%) |
||||||
Net interest income |
64,830 |
65,867 |
(1.6%) |
131,519 |
133,202 |
(1.3%) |
||||||
Provision for loan and lease losses - uncovered |
8,364 |
5,756 |
45.3% |
11,622 |
6,403 |
81.5% |
||||||
Provision for loan and lease losses - covered |
6,047 |
23,895 |
(74.7%) |
18,998 |
49,911 |
(61.9%) |
||||||
Net interest income after provision for loan and lease losses |
50,419 |
36,216 |
39.2% |
100,899 |
76,888 |
31.2% |
||||||
Noninterest income |
||||||||||||
Service charges on deposit accounts |
5,376 |
4,883 |
10.1% |
10,285 |
9,493 |
8.3% |
||||||
Trust and wealth management fees |
3,377 |
3,507 |
(3.7%) |
7,168 |
7,432 |
(3.6%) |
||||||
Bankcard income |
2,579 |
2,328 |
10.8% |
5,115 |
4,483 |
14.1% |
||||||
Net gains from sales of loans |
1,132 |
854 |
32.6% |
2,072 |
1,843 |
12.4% |
||||||
FDIC loss sharing income |
8,280 |
21,643 |
(61.7%) |
21,096 |
45,078 |
(53.2%) |
||||||
Accelerated discount on covered loans |
3,764 |
4,756 |
(20.9%) |
7,409 |
10,539 |
(29.7%) |
||||||
Other |
9,037 |
3,147 |
187.2% |
12,325 |
5,908 |
108.6% |
||||||
Total noninterest income |
33,545 |
41,118 |
(18.4%) |
65,470 |
84,776 |
(22.8%) |
||||||
Noninterest expenses |
||||||||||||
Salaries and employee benefits |
29,048 |
25,123 |
15.6% |
57,909 |
52,693 |
9.9% |
||||||
Net occupancy |
5,025 |
4,493 |
11.8% |
10,407 |
11,353 |
(8.3%) |
||||||
Furniture and equipment |
2,323 |
2,581 |
(10.0%) |
4,567 |
5,134 |
(11.0%) |
||||||
Data processing |
2,076 |
1,453 |
42.9% |
3,977 |
2,691 |
47.8% |
||||||
Marketing |
1,238 |
1,402 |
(11.7%) |
2,392 |
2,643 |
(9.5%) |
||||||
Communication |
913 |
753 |
21.2% |
1,807 |
1,567 |
15.3% |
||||||
Professional services |
2,151 |
3,095 |
(30.5%) |
4,298 |
5,322 |
(19.2%) |
||||||
State intangible tax |
970 |
1,236 |
(21.5%) |
1,996 |
2,601 |
(23.3%) |
||||||
FDIC assessments |
1,270 |
1,152 |
10.2% |
2,433 |
3,273 |
(25.7%) |
||||||
Other |
12,445 |
11,209 |
11.0% |
23,451 |
23,010 |
1.9% |
||||||
Total noninterest expenses |
57,459 |
52,497 |
9.5% |
113,237 |
110,287 |
2.7% |
||||||
Income before income taxes |
26,505 |
24,837 |
6.7% |
53,132 |
51,377 |
3.4% |
||||||
Income tax expense |
8,703 |
8,864 |
(1.8%) |
18,336 |
18,197 |
0.8% |
||||||
Net income |
17,802 |
15,973 |
11.5% |
34,796 |
33,180 |
4.9% |
||||||
ADDITIONAL DATA |
||||||||||||
Net earnings per share - basic |
$0.31 |
$0.28 |
$0.60 |
$0.58 |
||||||||
Net earnings per share - diluted |
$0.30 |
$0.27 |
$0.59 |
$0.57 |
||||||||
Dividends declared per share |
$0.29 |
$0.12 |
$0.60 |
$0.24 |
||||||||
Return on average assets |
1.13% |
1.03% |
1.09% |
1.07% |
||||||||
Return on average shareholders' equity |
9.98% |
9.05% |
9.83% |
9.54% |
||||||||
Interest income |
$71,923 |
$77,817 |
(7.6%) |
$147,020 |
$157,880 |
(6.9%) |
||||||
Tax equivalent adjustment |
216 |
240 |
(10.0%) |
434 |
478 |
(9.2%) |
||||||
Interest income - tax equivalent |
72,139 |
78,057 |
(7.6%) |
147,454 |
158,358 |
(6.9%) |
||||||
Interest expense |
7,093 |
11,950 |
(40.6%) |
15,501 |
24,678 |
(37.2%) |
||||||
Net interest income - tax equivalent |
$65,046 |
$66,107 |
(1.6%) |
$131,953 |
$133,680 |
(1.3%) |
||||||
Net interest margin |
4.49% |
4.61% |
4.50% |
4.67% |
||||||||
Net interest margin (fully tax equivalent) (1) |
4.50% |
4.62% |
4.51% |
4.69% |
||||||||
Full-time equivalent employees |
1,525 |
1,374 |
||||||||||
(1)The tax equivalent adjustment to net interest income recognizes the income tax savings when comparing taxable and tax-exempt assets and assumes a 35% 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 provided useful information to investors by allowing them to make peer comparisons. Management also uses these measures to make peer comparisons. |
||||||||||||
FIRST FINANCIAL BANCORP. CONSOLIDATED QUARTERLY STATEMENTS OF INCOME (Dollars in thousands, except per share) (Unaudited)
|
||||||||
2012 |
||||||||
Second |
First |
% Change |
||||||
Quarter |
Quarter |
YTD |
Linked Qtr. |
|||||
Interest income |
||||||||
Loans, including fees |
$63,390 |
$66,436 |
$129,826 |
(4.6%) |
||||
Investment securities |
||||||||
Taxable |
10,379 |
10,517 |
20,896 |
(1.3%) |
||||
Tax-exempt |
121 |
134 |
255 |
(9.7%) |
||||
Total investment securities interest |
10,500 |
10,651 |
21,151 |
(1.4%) |
||||
Other earning assets |
(1,967) |
(1,990) |
(3,957) |
(1.2%) |
||||
Total interest income |
71,923 |
75,097 |
147,020 |
(4.2%) |
||||
Interest expense |
||||||||
Deposits |
6,381 |
7,716 |
14,097 |
(17.3%) |
||||
Short-term borrowings |
37 |
12 |
49 |
208.3% |
||||
Long-term borrowings |
675 |
680 |
1,355 |
(0.7%) |
||||
Total interest expense |
7,093 |
8,408 |
15,501 |
(15.6%) |
||||
Net interest income |
64,830 |
66,689 |
131,519 |
(2.8%) |
||||
Provision for loan and lease losses - uncovered |
8,364 |
3,258 |
11,622 |
156.7% |
||||
Provision for loan and lease losses - covered |
6,047 |
12,951 |
18,998 |
(53.3%) |
||||
Net interest income after provision for loan and lease losses |
50,419 |
50,480 |
100,899 |
(0.1%) |
||||
Noninterest income |
||||||||
Service charges on deposit accounts |
5,376 |
4,909 |
10,285 |
9.5% |
||||
Trust and wealth management fees |
3,377 |
3,791 |
7,168 |
(10.9%) |
||||
Bankcard income |
2,579 |
2,536 |
5,115 |
1.7% |
||||
Net gains from sales of loans |
1,132 |
940 |
2,072 |
20.4% |
||||
FDIC loss sharing income |
8,280 |
12,816 |
21,096 |
(35.4%) |
||||
Accelerated discount on covered loans |
3,764 |
3,645 |
7,409 |
3.3% |
||||
Other |
9,037 |
3,288 |
12,325 |
174.8% |
||||
Total noninterest income |
33,545 |
31,925 |
65,470 |
5.1% |
||||
Noninterest expenses |
||||||||
Salaries and employee benefits |
29,048 |
28,861 |
57,909 |
0.6% |
||||
Net occupancy |
5,025 |
5,382 |
10,407 |
(6.6%) |
||||
Furniture and equipment |
2,323 |
2,244 |
4,567 |
3.5% |
||||
Data processing |
2,076 |
1,901 |
3,977 |
9.2% |
||||
Marketing |
1,238 |
1,154 |
2,392 |
7.3% |
||||
Communication |
913 |
894 |
1,807 |
2.1% |
||||
Professional services |
2,151 |
2,147 |
4,298 |
0.2% |
||||
State intangible tax |
970 |
1,026 |
1,996 |
(5.5%) |
||||
FDIC assessments |
1,270 |
1,163 |
2,433 |
9.2% |
||||
Other |
12,445 |
11,006 |
23,451 |
13.1% |
||||
Total noninterest expenses |
57,459 |
55,778 |
113,237 |
3.0% |
||||
Income before income taxes |
26,505 |
26,627 |
53,132 |
(0.5%) |
||||
Income tax expense |
8,703 |
9,633 |
18,336 |
(9.7%) |
||||
Net income |
$17,802 |
$16,994 |
$34,796 |
4.8% |
||||
ADDITIONAL DATA |
||||||||
Net earnings per share - basic |
$0.31 |
$0.29 |
$0.60 |
|||||
Net earnings per share - diluted |
$0.30 |
$0.29 |
$0.59 |
|||||
Dividends declared per share |
$0.29 |
$0.31 |
$0.60 |
|||||
Return on average assets |
1.13% |
1.05% |
1.09% |
|||||
Return on average shareholders' equity |
9.98% |
9.67% |
9.83% |
|||||
Interest income |
$71,923 |
$75,097 |
$147,020 |
(4.2%) |
||||
Tax equivalent adjustment |
216 |
218 |
434 |
(0.9%) |
||||
Interest income - tax equivalent |
72,139 |
75,315 |
147,454 |
(4.2%) |
||||
Interest expense |
7,093 |
8,408 |
15,501 |
(15.6%) |
||||
Net interest income - tax equivalent |
$65,046 |
$66,907 |
$131,953 |
(2.8%) |
||||
Net interest margin |
4.49% |
4.51% |
4.50% |
|||||
Net interest margin (fully tax equivalent) (1) |
4.50% |
4.52% |
4.51% |
|||||
Full-time equivalent employees |
1,525 |
1,513 |
||||||
(1)The tax equivalent adjustment to net interest income recognizes the income tax savings when comparing taxable and tax-exempt assets and assumes a 35% 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 provided useful information to investors by allowing them to make peer comparisons. Management also uses these measures to make peer comparisons. |
||||||||
FIRST FINANCIAL BANCORP. CONSOLIDATED QUARTERLY STATEMENTS OF INCOME (Dollars in thousands, except per share) (Unaudited) |
||||||||||
2011 |
||||||||||
Fourth |
Third |
Second |
First |
Full |
||||||
Quarter |
Quarter |
Quarter |
Quarter |
Year |
||||||
Interest income |
||||||||||
Loans, including fees |
$69,658 |
$70,086 |
$71,929 |
$74,016 |
$285,689 |
|||||
Investment securities |
||||||||||
Taxable |
6,945 |
7,411 |
7,080 |
6,803 |
28,239 |
|||||
Tax-exempt |
201 |
176 |
192 |
198 |
767 |
|||||
Total investment securities interest |
7,146 |
7,587 |
7,272 |
7,001 |
29,006 |
|||||
Other earning assets |
(1,819) |
(1,721) |
(1,384) |
(954) |
(5,878) |
|||||
Total interest income |
74,985 |
75,952 |
77,817 |
80,063 |
308,817 |
|||||
Interest expense |
||||||||||
Deposits |
8,791 |
9,823 |
10,767 |
11,400 |
40,781 |
|||||
Short-term borrowings |
25 |
44 |
49 |
45 |
163 |
|||||
Long-term borrowings |
693 |
867 |
937 |
1,089 |
3,586 |
|||||
Subordinated debentures and capital securities |
0 |
0 |
197 |
194 |
391 |
|||||
Total interest expense |
9,509 |
10,734 |
11,950 |
12,728 |
44,921 |
|||||
Net interest income |
65,476 |
65,218 |
65,867 |
67,335 |
263,896 |
|||||
Provision for loan and lease losses - uncovered |
5,164 |
7,643 |
5,756 |
647 |
19,210 |
|||||
Provision for loan and lease losses - covered |
6,910 |
7,260 |
23,895 |
26,016 |
64,081 |
|||||
Net interest income after provision for loan and lease losses |
53,402 |
50,315 |
36,216 |
40,672 |
180,605 |
|||||
Noninterest income |
||||||||||
Service charges on deposit accounts |
4,920 |
4,793 |
4,883 |
4,610 |
19,206 |
|||||
Trust and wealth management fees |
3,531 |
3,377 |
3,507 |
3,925 |
14,340 |
|||||
Bankcard income |
2,490 |
2,318 |
2,328 |
2,155 |
9,291 |
|||||
Net gains from sales of loans |
1,172 |
1,243 |
854 |
989 |
4,258 |
|||||
FDIC loss sharing income |
7,433 |
8,377 |
21,643 |
23,435 |
60,888 |
|||||
Accelerated discount on covered loans |
4,775 |
5,207 |
4,756 |
5,783 |
20,521 |
|||||
Gain on sale of investment securities |
2,541 |
0 |
0 |
0 |
2,541 |
|||||
Other |
2,778 |
2,800 |
3,147 |
2,761 |
11,486 |
|||||
Total noninterest income |
29,640 |
28,115 |
41,118 |
43,658 |
142,531 |
|||||
Noninterest expenses |
||||||||||
Salaries and employee benefits |
26,447 |
27,774 |
25,123 |
27,570 |
106,914 |
|||||
Net occupancy |
5,893 |
4,164 |
4,493 |
6,860 |
21,410 |
|||||
Furniture and equipment |
2,425 |
2,386 |
2,581 |
2,553 |
9,945 |
|||||
Data processing |
1,559 |
1,466 |
1,453 |
1,238 |
5,716 |
|||||
Marketing |
1,567 |
1,584 |
1,402 |
1,241 |
5,794 |
|||||
Communication |
864 |
772 |
753 |
814 |
3,203 |
|||||
Professional services |
2,252 |
2,062 |
3,095 |
2,227 |
9,636 |
|||||
State intangible tax |
436 |
546 |
1,236 |
1,365 |
3,583 |
|||||
FDIC assessments |
1,192 |
1,211 |
1,152 |
2,121 |
5,676 |
|||||
Other |
12,033 |
11,177 |
11,209 |
11,801 |
46,220 |
|||||
Total noninterest expenses |
54,668 |
53,142 |
52,497 |
57,790 |
218,097 |
|||||
Income before income taxes |
28,374 |
25,288 |
24,837 |
26,540 |
105,039 |
|||||
Income tax expense |
10,433 |
9,670 |
8,864 |
9,333 |
38,300 |
|||||
Net income |
$17,941 |
$15,618 |
$15,973 |
$17,207 |
$66,739 |
|||||
ADDITIONAL DATA |
||||||||||
Net earnings per share - basic |
$0.31 |
$0.27 |
$0.28 |
$0.30 |
$1.16 |
|||||
Net earnings per share - diluted |
$0.31 |
$0.27 |
$0.27 |
$0.29 |
$1.14 |
|||||
Dividends declared per share |
$0.27 |
$0.27 |
$0.12 |
$0.12 |
$0.78 |
|||||
Return on average assets |
1.09% |
1.01% |
1.03% |
1.11% |
1.06% |
|||||
Return on average shareholders' equity |
9.89% |
8.54% |
9.05% |
10.04% |
9.37% |
|||||
Interest income |
$74,985 |
$75,952 |
$77,817 |
$80,063 |
$308,817 |
|||||
Tax equivalent adjustment |
265 |
236 |
240 |
238 |
979 |
|||||
Interest income - tax equivalent |
75,250 |
76,188 |
78,057 |
80,301 |
309,796 |
|||||
Interest expense |
9,509 |
10,734 |
11,950 |
12,728 |
44,921 |
|||||
Net interest income - tax equivalent |
$65,741 |
$65,454 |
$66,107 |
$67,573 |
$264,875 |
|||||
Net interest margin |
4.32% |
4.55% |
4.61% |
4.73% |
4.55% |
|||||
Net interest margin (fully tax equivalent) (1) |
4.34% |
4.57% |
4.62% |
4.75% |
4.57% |
|||||
Full-time equivalent employees |
1,508 |
1,377 |
1,374 |
1,483 |
||||||
(1)The tax equivalent adjustment to net interest income recognizes the income tax savings when comparing taxable and tax-exempt assets and assumes a 35% 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 provided useful information to investors by allowing them to make peer comparisons. Management also uses these measures to make peer comparisons. |
||||||||||
FIRST FINANCIAL BANCORP. CONSOLIDATED STATEMENTS OF CONDITION (Dollars in thousands) (Unaudited) |
|||||||||||||
Jun. 30, |
Mar. 31, |
Dec. 31, |
Sep. 30, |
Jun. 30, |
% Change |
% Change |
|||||||
2012 |
2012 |
2011 |
2011 |
2011 |
Linked Qtr. |
Comparable Qtr. |
|||||||
ASSETS |
|||||||||||||
Cash and due from banks |
$126,392 |
$125,949 |
$149,653 |
$108,253 |
$104,150 |
0.4% |
21.4% |
||||||
Interest-bearing deposits with other banks |
9,187 |
24,101 |
375,398 |
369,130 |
147,108 |
(61.9%) |
(93.8%) |
||||||
Investment securities available-for-sale |
724,518 |
736,309 |
1,441,846 |
1,120,179 |
1,134,114 |
(1.6%) |
(36.1%) |
||||||
Investment securities held-to-maturity |
873,538 |
917,758 |
2,664 |
2,724 |
3,001 |
(4.8%) |
29008.2% |
||||||
Other investments |
71,492 |
71,492 |
71,492 |
71,492 |
71,492 |
0.0% |
0.0% |
||||||
Loans held for sale |
20,971 |
21,052 |
24,834 |
14,259 |
8,824 |
(0.4%) |
137.7% |
||||||
Loans |
|||||||||||||
Commercial |
823,890 |
831,101 |
856,981 |
822,552 |
798,552 |
(0.9%) |
3.2% |
||||||
Real estate - construction |
86,173 |
104,305 |
114,974 |
136,651 |
142,682 |
(17.4%) |
(39.6%) |
||||||
Real estate - commercial |
1,321,446 |
1,262,775 |
1,233,067 |
1,202,035 |
1,144,368 |
4.6% |
15.5% |
||||||
Real estate - residential |
292,503 |
288,922 |
287,980 |
300,165 |
256,788 |
1.2% |
13.9% |
||||||
Installment |
61,590 |
63,793 |
67,543 |
70,034 |
63,799 |
(3.5%) |
(3.5%) |
||||||
Home equity |
365,413 |
359,711 |
358,960 |
362,919 |
344,457 |
1.6% |
6.1% |
||||||
Credit card |
31,486 |
31,149 |
31,631 |
30,435 |
28,618 |
1.1% |
10.0% |
||||||
Lease financing |
30,109 |
21,794 |
17,311 |
12,870 |
9,890 |
38.2% |
204.4% |
||||||
Total loans, excluding covered loans |
3,012,610 |
2,963,550 |
2,968,447 |
2,937,661 |
2,789,154 |
1.7% |
8.0% |
||||||
Less |
|||||||||||||
Allowance for loan and lease losses |
50,952 |
49,437 |
52,576 |
54,537 |
53,671 |
3.1% |
(5.1%) |
||||||
Net loans - uncovered |
2,961,658 |
2,914,113 |
2,915,871 |
2,883,124 |
2,735,483 |
1.6% |
8.3% |
||||||
Covered loans |
903,862 |
986,619 |
1,053,244 |
1,151,066 |
1,242,730 |
(8.4%) |
(27.3%) |
||||||
Less |
|||||||||||||
Allowance for loan and lease losses |
48,327 |
46,156 |
42,835 |
48,112 |
51,044 |
4.7% |
(5.3%) |
||||||
Net loans - covered |
855,535 |
940,463 |
1,010,409 |
1,102,954 |
1,191,686 |
(9.0%) |
(28.2%) |
||||||
Net loans |
3,817,193 |
3,854,576 |
3,926,280 |
3,986,078 |
3,927,169 |
(1.0%) |
(2.8%) |
||||||
Premises and equipment |
142,744 |
141,664 |
138,096 |
120,325 |
114,797 |
0.8% |
24.3% |
||||||
Goodwill |
95,050 |
95,050 |
95,050 |
68,922 |
51,820 |
0.0% |
83.4% |
||||||
Other intangibles |
9,195 |
10,193 |
10,844 |
8,436 |
4,847 |
(9.8%) |
89.7% |
||||||
FDIC indemnification asset |
146,765 |
156,397 |
173,009 |
177,814 |
193,113 |
(6.2%) |
(24.0%) |
||||||
Accrued interest and other assets |
245,632 |
262,027 |
262,345 |
290,117 |
281,172 |
(6.3%) |
(12.6%) |
||||||
Total Assets |
$6,282,677 |
$6,416,568 |
$6,671,511 |
$6,337,729 |
$6,041,607 |
(2.1%) |
4.0% |
||||||
LIABILITIES |
|||||||||||||
Deposits |
|||||||||||||
Interest-bearing demand |
$1,154,852 |
$1,289,490 |
$1,317,339 |
$1,288,721 |
$1,021,519 |
(10.4%) |
13.1% |
||||||
Savings |
1,543,619 |
1,613,244 |
1,724,659 |
1,537,420 |
1,643,110 |
(4.3%) |
(6.1%) |
||||||
Time |
1,331,758 |
1,491,132 |
1,654,662 |
1,658,031 |
1,581,603 |
(10.7%) |
(15.8%) |
||||||
Total interest-bearing deposits |
4,030,229 |
4,393,866 |
4,696,660 |
4,484,172 |
4,246,232 |
(8.3%) |
(5.1%) |
||||||
Noninterest-bearing |
1,071,520 |
1,007,049 |
946,180 |
814,928 |
728,178 |
6.4% |
47.2% |
||||||
Total deposits |
5,101,749 |
5,400,915 |
5,642,840 |
5,299,100 |
4,974,410 |
(5.5%) |
2.6% |
||||||
Short-term borrowings |
|||||||||||||
Federal funds purchased and securities sold |
|||||||||||||
under agreements to repurchase |
73,919 |
78,619 |
99,431 |
95,451 |
105,291 |
(6.0%) |
(29.8%) |
||||||
FHLB short-term borrowings |
176,000 |
0 |
0 |
0 |
0 |
N/M |
N/M |
||||||
Total short-term borrowings |
249,919 |
78,619 |
99,431 |
95,451 |
105,291 |
217.9% |
137.4% |
||||||
Long-term debt |
75,120 |
75,745 |
76,544 |
76,875 |
102,255 |
(0.8%) |
(26.5%) |
||||||
Total borrowed funds |
325,039 |
154,364 |
175,975 |
172,326 |
207,546 |
110.6% |
56.6% |
||||||
Accrued interest and other liabilities |
139,101 |
146,596 |
140,475 |
139,171 |
137,889 |
(5.1%) |
0.9% |
||||||
Total Liabilities |
5,565,889 |
5,701,875 |
5,959,290 |
5,610,597 |
5,319,845 |
(2.4%) |
4.6% |
||||||
SHAREHOLDERS' EQUITY |
|||||||||||||
Common stock |
576,929 |
575,675 |
579,871 |
578,974 |
577,856 |
0.2% |
(0.2%) |
||||||
Retained earnings |
331,315 |
330,563 |
331,351 |
329,243 |
329,455 |
0.2% |
0.6% |
||||||
Accumulated other comprehensive loss |
(18,172) |
(18,687) |
(21,490) |
(3,388) |
(7,902) |
(2.8%) |
130.0% |
||||||
Treasury stock, at cost |
(173,284) |
(172,858) |
(177,511) |
(177,697) |
(177,647) |
0.2% |
(2.5%) |
||||||
Total Shareholders' Equity |
716,788 |
714,693 |
712,221 |
727,132 |
721,762 |
0.3% |
(0.7%) |
||||||
Total Liabilities and Shareholders' Equity |
$6,282,677 |
$6,416,568 |
$6,671,511 |
$6,337,729 |
$6,041,607 |
(2.1%) |
4.0% |
||||||
N/M = Not meaningful. |
FIRST FINANCIAL BANCORP. AVERAGE CONSOLIDATED STATEMENTS OF CONDITION (Dollars in thousands) (Unaudited) |
|||||||||||||
Quarterly Averages |
Year-to-Date Averages |
||||||||||||
Jun. 30, |
Mar. 31, |
Dec. 31, |
Sep. 30, |
Jun. 30, |
Jun. 30, |
||||||||
2012 |
2012 |
2011 |
2011 |
2011 |
2012 |
2011 |
|||||||
ASSETS |
|||||||||||||
Cash and due from banks |
$121,114 |
$123,634 |
$121,603 |
$110,336 |
$118,829 |
$122,374 |
$115,410 |
||||||
Interest-bearing deposits with other banks |
4,454 |
126,330 |
485,432 |
306,969 |
375,434 |
65,392 |
326,408 |
||||||
Investment securities |
1,713,503 |
1,664,643 |
1,257,574 |
1,199,473 |
1,093,870 |
1,689,073 |
1,069,715 |
||||||
Loans held for sale |
19,554 |
19,722 |
21,067 |
9,497 |
8,530 |
19,638 |
12,304 |
||||||
Loans |
|||||||||||||
Commercial |
827,722 |
850,092 |
851,006 |
794,447 |
797,158 |
838,907 |
800,035 |
||||||
Real estate - construction |
99,087 |
112,945 |
135,825 |
141,791 |
139,255 |
106,016 |
148,776 |
||||||
Real estate - commercial |
1,279,869 |
1,235,613 |
1,206,678 |
1,145,195 |
1,132,662 |
1,257,741 |
1,134,138 |
||||||
Real estate - residential |
290,335 |
287,749 |
293,158 |
258,377 |
260,920 |
289,042 |
263,211 |
||||||
Installment |
62,846 |
65,302 |
68,945 |
63,672 |
65,568 |
64,074 |
66,628 |
||||||
Home equity |
361,166 |
358,360 |
360,389 |
346,486 |
341,876 |
359,763 |
341,085 |
||||||
Credit card |
31,383 |
31,201 |
30,759 |
29,505 |
28,486 |
31,292 |
28,404 |
||||||
Lease financing |
23,334 |
18,524 |
15,527 |
11,496 |
8,492 |
20,929 |
7,511 |
||||||
Total loans, excluding covered loans |
2,975,742 |
2,959,786 |
2,962,287 |
2,790,969 |
2,774,417 |
2,967,764 |
2,789,788 |
||||||
Less |
|||||||||||||
Allowance for loan and lease losses |
50,353 |
53,513 |
55,157 |
55,146 |
55,132 |
51,933 |
57,431 |
||||||
Net loans - uncovered |
2,925,389 |
2,906,273 |
2,907,130 |
2,735,823 |
2,719,285 |
2,915,831 |
2,732,357 |
||||||
Covered loans |
950,226 |
1,020,220 |
1,113,876 |
1,196,327 |
1,295,228 |
985,223 |
1,357,367 |
||||||
Less |
|||||||||||||
Allowance for loan and lease losses |
47,964 |
47,152 |
51,330 |
51,955 |
39,070 |
47,558 |
31,278 |
||||||
Net loans - covered |
902,262 |
973,068 |
1,062,546 |
1,144,372 |
1,256,158 |
937,665 |
1,326,089 |
||||||
Net loans |
3,827,651 |
3,879,341 |
3,969,676 |
3,880,195 |
3,975,443 |
3,853,496 |
4,058,446 |
||||||
Premises and equipment |
143,261 |
140,377 |
128,168 |
116,070 |
115,279 |
141,819 |
117,132 |
||||||
Goodwill |
95,050 |
95,050 |
77,158 |
52,004 |
51,820 |
95,050 |
51,820 |
||||||
Other intangibles |
9,770 |
10,506 |
9,094 |
4,697 |
5,031 |
10,138 |
5,225 |
||||||
FDIC indemnification asset |
149,788 |
159,450 |
173,900 |
183,801 |
186,125 |
154,619 |
197,225 |
||||||
Accrued interest and other assets |
250,828 |
259,878 |
272,084 |
273,773 |
289,393 |
255,353 |
289,267 |
||||||
Total Assets |
$6,334,973 |
$6,478,931 |
$6,515,756 |
$6,136,815 |
$6,219,754 |
$6,406,952 |
$6,242,952 |
||||||
LIABILITIES |
|||||||||||||
Deposits |
|||||||||||||
Interest-bearing demand |
$1,192,868 |
$1,285,196 |
$1,388,903 |
$1,153,178 |
$1,130,503 |
$1,239,032 |
$1,109,762 |
||||||
Savings |
1,610,411 |
1,682,507 |
1,617,588 |
1,659,152 |
1,636,821 |
1,646,459 |
1,611,086 |
||||||
Time |
1,406,800 |
1,577,448 |
1,623,921 |
1,554,497 |
1,634,779 |
1,492,124 |
1,695,884 |
||||||
Total interest-bearing deposits |
4,210,079 |
4,545,151 |
4,630,412 |
4,366,827 |
4,402,103 |
4,377,615 |
4,416,732 |
||||||
Noninterest-bearing |
1,044,405 |
931,347 |
860,863 |
735,621 |
734,674 |
987,876 |
733,962 |
||||||
Total deposits |
5,254,484 |
5,476,498 |
5,491,275 |
5,102,448 |
5,136,777 |
5,365,491 |
5,150,694 |
||||||
Short-term borrowings |
|||||||||||||
Federal funds purchased and securities sold |
|||||||||||||
under agreements to repurchase |
80,715 |
85,891 |
98,268 |
100,990 |
95,297 |
83,303 |
92,432 |
||||||
Federal Home Loan Bank short-term borrowings |
78,966 |
0 |
0 |
0 |
0 |
39,483 |
0 |
||||||
Total short-term borrowings |
159,681 |
85,891 |
98,268 |
100,990 |
95,297 |
122,786 |
92,432 |
||||||
Long-term debt |
75,314 |
76,020 |
76,671 |
94,150 |
102,506 |
75,667 |
111,171 |
||||||
Other long-term debt |
0 |
0 |
0 |
0 |
20,393 |
0 |
20,506 |
||||||
Total borrowed funds |
234,995 |
161,911 |
174,939 |
195,140 |
218,196 |
198,453 |
224,109 |
||||||
Accrued interest and other liabilities |
128,383 |
133,975 |
129,578 |
113,418 |
157,031 |
131,179 |
166,708 |
||||||
Total Liabilities |
5,617,862 |
5,772,384 |
5,795,792 |
5,411,006 |
5,512,004 |
5,695,123 |
5,541,511 |
||||||
SHAREHOLDERS' EQUITY |
|||||||||||||
Common stock |
576,276 |
578,514 |
579,321 |
578,380 |
577,417 |
577,395 |
578,597 |
||||||
Retained earnings |
332,280 |
324,370 |
323,624 |
331,107 |
318,466 |
328,325 |
313,680 |
||||||
Accumulated other comprehensive loss |
(18,242) |
(20,344) |
(5,396) |
(6,013) |
(10,488) |
(19,293) |
(11,862) |
||||||
Treasury stock, at cost |
(173,203) |
(175,993) |
(177,585) |
(177,665) |
(177,645) |
(174,598) |
(178,974) |
||||||
Total Shareholders' Equity |
717,111 |
706,547 |
719,964 |
725,809 |
707,750 |
711,829 |
701,441 |
||||||
Total Liabilities and Shareholders' Equity |
$6,334,973 |
$6,478,931 |
$6,515,756 |
$6,136,815 |
$6,219,754 |
$6,406,952 |
$6,242,952 |
||||||
FIRST FINANCIAL BANCORP. NET INTEREST MARGIN RATE/VOLUME ANALYSIS (Dollars in thousands) (Unaudited)
|
||||||||||||||||||||
Quarterly Averages |
Year-to-Date Averages |
|||||||||||||||||||
Jun. 30, 2012 |
Mar. 31, 2012 |
Jun. 30, 2011 |
Jun. 30, 2012 |
Jun. 30, 2011 |
||||||||||||||||
Balance |
Yield |
Balance |
Yield |
Balance |
Yield |
Balance |
Yield |
Balance |
Yield |
|||||||||||
Earning assets |
||||||||||||||||||||
Investment securities |
$1,713,503 |
2.46% |
$1,664,643 |
2.57% |
$1,093,870 |
2.67% |
$1,689,073 |
2.53% |
$1,069,715 |
2.69% |
||||||||||
Interest-bearing deposits with other banks |
4,454 |
0.18% |
126,330 |
0.28% |
375,434 |
0.35% |
65,392 |
0.28% |
326,408 |
0.38% |
||||||||||
Gross loans(2) |
4,095,310 |
6.02% |
4,159,178 |
6.21% |
4,264,300 |
6.60% |
4,127,244 |
6.15% |
4,356,684 |
6.62% |
||||||||||
Total earning assets |
5,813,267 |
4.96% |
5,950,151 |
5.06% |
5,733,604 |
5.44% |
5,881,709 |
5.04% |
5,752,807 |
5.53% |
||||||||||
Nonearning assets |
||||||||||||||||||||
Allowance for loan and lease losses |
(98,317) |
(100,665) |
(94,202) |
(99,491) |
(88,709) |
|||||||||||||||
Cash and due from banks |
121,114 |
123,634 |
118,829 |
122,374 |
115,410 |
|||||||||||||||
Accrued interest and other assets |
498,909 |
505,811 |
461,523 |
502,360 |
463,444 |
|||||||||||||||
Total assets |
$6,334,973 |
$6,478,931 |
$6,219,754 |
$6,406,952 |
$6,242,952 |
|||||||||||||||
Interest-bearing liabilities |
||||||||||||||||||||
Total interest-bearing deposits |
$4,210,079 |
0.61% |
$4,545,151 |
0.68% |
$4,402,103 |
0.98% |
$4,377,615 |
0.65% |
$4,416,732 |
1.01% |
||||||||||
Borrowed funds |
||||||||||||||||||||
Short-term borrowings |
159,681 |
0.09% |
85,891 |
0.06% |
95,297 |
0.21% |
122,786 |
0.08% |
92,432 |
0.21% |
||||||||||
Long-term debt |
75,314 |
3.59% |
76,020 |
3.59% |
102,506 |
3.67% |
75,667 |
3.61% |
111,171 |
3.68% |
||||||||||
Other long-term debt |
0 |
N/M |
0 |
N/M |
20,393 |
3.87% |
0 |
N/M |
20,506 |
3.85% |
||||||||||
Total borrowed funds |
234,995 |
1.22% |
161,911 |
1.71% |
218,196 |
2.17% |
198,453 |
1.43% |
224,109 |
2.26% |
||||||||||
Total interest-bearing liabilities |
4,445,074 |
0.64% |
4,707,062 |
0.72% |
4,620,299 |
1.04% |
4,576,068 |
0.68% |
4,640,841 |
1.07% |
||||||||||
Noninterest-bearing liabilities |
||||||||||||||||||||
Noninterest-bearing demand deposits |
1,044,405 |
931,347 |
734,674 |
987,876 |
733,962 |
|||||||||||||||
Other liabilities |
128,383 |
133,975 |
157,031 |
131,179 |
166,708 |
|||||||||||||||
Shareholders' equity |
717,111 |
706,547 |
707,750 |
711,829 |
701,441 |
|||||||||||||||
Total liabilities & shareholders' equity |
$6,334,973 |
$6,478,931 |
$6,219,754 |
$6,406,952 |
$6,242,952 |
|||||||||||||||
Net interest income(1) |
$64,830 |
$66,689 |
$65,867 |
$131,519 |
$133,202 |
|||||||||||||||
Net interest spread(1) |
4.32% |
4.34% |
4.40% |
4.36% |
4.46% |
|||||||||||||||
Net interest margin(1) |
4.49% |
4.51% |
4.61% |
4.50% |
4.67% |
|||||||||||||||
(1)Not tax equivalent. |
||||||||||||||||||||
(2)Loans held for sale, nonaccrual loans, covered loans, and indemnification asset are included in gross loans. |
||||||||||||||||||||
N/M = Not meaningful. |
FIRST FINANCIAL BANCORP. NET INTEREST MARGIN RATE/VOLUME ANALYSIS (Dollars in thousands) (Unaudited) |
||||||||||||||||||
Linked Qtr. Income Variance |
Comparable Qtr. Income Variance |
Year-to-Date Income Variance |
||||||||||||||||
Rate |
Volume |
Total |
Rate |
Volume |
Total |
Rate |
Volume |
Total |
||||||||||
Earning assets |
||||||||||||||||||
Investment securities |
$ (450) |
$ 299 |
$ (151) |
$ (569) |
$ 3,797 |
$ 3,228 |
$ (878) |
$ 7,756 |
$ 6,878 |
|||||||||
Interest-bearing deposits with other banks |
(32) |
(55) |
(87) |
(159) |
(167) |
(326) |
(156) |
(363) |
(519) |
|||||||||
Gross loans(2) |
(1,978) |
(958) |
(2,936) |
(6,262) |
(2,534) |
(8,796) |
(10,227) |
(6,992) |
(17,219) |
|||||||||
Total earning assets |
(2,460) |
(714) |
(3,174) |
(6,990) |
1,096 |
(5,894) |
(11,261) |
401 |
(10,860) |
|||||||||
Interest-bearing liabilities |
||||||||||||||||||
Total interest-bearing deposits |
$ (827) |
$ (508) |
$ (1,335) |
$ (4,095) |
(291) |
$ (4,386) |
$ (7,944) |
$ (126) |
$ (8,070) |
|||||||||
Borrowed funds |
||||||||||||||||||
Short-term borrowings |
8 |
17 |
25 |
(27) |
15 |
(12) |
(57) |
12 |
(45) |
|||||||||
Long-term debt |
1 |
(6) |
(5) |
(18) |
(244) |
(262) |
(35) |
(636) |
(671) |
|||||||||
Other long-term debt |
0 |
0 |
0 |
(197) |
0 |
(197) |
(391) |
0 |
(391) |
|||||||||
Total borrowed funds |
9 |
11 |
20 |
(242) |
(229) |
(471) |
(483) |
(624) |
(1,107) |
|||||||||
Total interest-bearing liabilities |
(818) |
(497) |
(1,315) |
(4,337) |
(520) |
(4,857) |
(8,427) |
(750) |
(9,177) |
|||||||||
Net interest income(1) |
$ (1,642) |
$ (217) |
$ (1,859) |
$ (2,653) |
$ 1,616 |
$ (1,037) |
$ (2,834) |
$ 1,151 |
$ (1,683) |
|||||||||
(1)Not tax equivalent. |
||||||||||||||||||
(2)Loans held for sale, nonaccrual loans, covered loans, and indemnification asset are included in gross loans. |
||||||||||||||||||
FIRST FINANCIAL BANCORP. CREDIT QUALITY (excluding covered assets) (Dollars in thousands) (Unaudited) |
|||||||||||||
Six months ended, |
|||||||||||||
Jun. 30, |
Mar 31, |
Dec. 31, |
Sep. 30, |
Jun. 30, |
Jun. 30, |
Jun. 30, |
|||||||
2012 |
2012 |
2011 |
2011 |
2011 |
2012 |
2011 |
|||||||
ALLOWANCE FOR LOAN AND LEASE LOSS ACTIVITY |
|||||||||||||
Balance at beginning of period |
$49,437 |
$52,576 |
$54,537 |
$53,671 |
$53,645 |
$52,576 |
$57,235 |
||||||
Provision for uncovered loan and lease losses |
8,364 |
3,258 |
5,164 |
7,643 |
5,756 |
11,622 |
6,403 |
||||||
Gross charge-offs |
|||||||||||||
Commercial |
1,129 |
1,186 |
1,742 |
879 |
383 |
2,315 |
815 |
||||||
Real estate - construction |
717 |
1,787 |
2,105 |
1,771 |
1,213 |
2,504 |
2,403 |
||||||
Real estate - commercial |
3,811 |
2,244 |
2,505 |
2,997 |
2,791 |
6,055 |
4,880 |
||||||
Real estate - residential |
191 |
604 |
473 |
564 |
406 |
795 |
514 |
||||||
Installment |
116 |
60 |
115 |
162 |
177 |
176 |
249 |
||||||
Home equity |
915 |
644 |
488 |
510 |
923 |
1,559 |
1,185 |
||||||
Other |
259 |
297 |
363 |
291 |
339 |
556 |
787 |
||||||
Total gross charge-offs |
7,138 |
6,822 |
7,791 |
7,174 |
6,232 |
13,960 |
10,833 |
||||||
Recoveries |
|||||||||||||
Commercial |
48 |
72 |
348 |
92 |
222 |
120 |
322 |
||||||
Real estate - construction |
0 |
0 |
5 |
0 |
27 |
0 |
27 |
||||||
Real estate - commercial |
68 |
113 |
68 |
168 |
38 |
181 |
73 |
||||||
Real estate - residential |
9 |
28 |
3 |
4 |
29 |
37 |
38 |
||||||
Installment |
75 |
123 |
96 |
87 |
82 |
198 |
180 |
||||||
Home equity |
28 |
24 |
71 |
9 |
12 |
52 |
37 |
||||||
Other |
61 |
65 |
75 |
37 |
92 |
126 |
189 |
||||||
Total recoveries |
289 |
425 |
666 |
397 |
502 |
714 |
866 |
||||||
Total net charge-offs |
6,849 |
6,397 |
7,125 |
6,777 |
5,730 |
13,246 |
9,967 |
||||||
Ending allowance for uncovered loan and lease losses |
$50,952 |
$49,437 |
$52,576 |
$54,537 |
$53,671 |
$50,952 |
$53,671 |
||||||
NET CHARGE-OFFS TO AVERAGE LOANS AND LEASES (ANNUALIZED) |
|||||||||||||
Commercial |
0.53% |
0.53% |
0.65% |
0.39% |
0.08% |
0.53% |
0.12% |
||||||
Real estate - construction |
2.91% |
6.36% |
6.13% |
4.96% |
3.42% |
4.75% |
3.22% |
||||||
Real estate - commercial |
1.18% |
0.69% |
0.80% |
0.98% |
0.97% |
0.94% |
0.85% |
||||||
Real estate - residential |
0.25% |
0.81% |
0.64% |
0.86% |
0.58% |
0.53% |
0.36% |
||||||
Installment |
0.26% |
(0.39%) |
0.11% |
0.47% |
0.58% |
(0.07%) |
0.21% |
||||||
Home equity |
0.99% |
0.70% |
0.46% |
0.57% |
1.07% |
0.84% |
0.68% |
||||||
Other |
1.46% |
1.88% |
2.47% |
2.46% |
2.68% |
1.66% |
3.36% |
||||||
Total net charge-offs |
0.93% |
0.87% |
0.95% |
0.96% |
0.83% |
0.90% |
0.72% |
||||||
COMPONENTS OF NONPERFORMING LOANS, NONPERFORMING ASSETS, AND UNDERPERFORMING ASSETS |
|||||||||||||
Nonaccrual loans |
|||||||||||||
Commercial |
$12,065 |
$5,936 |
$7,809 |
$10,792 |
$9,811 |
$12,065 |
$9,811 |
||||||
Real estate - construction |
7,243 |
7,005 |
10,005 |
13,844 |
13,237 |
7,243 |
13,237 |
||||||
Real estate - commercial |
36,116 |
35,581 |
28,349 |
26,408 |
26,213 |
36,116 |
26,213 |
||||||
Real estate - residential |
5,069 |
5,131 |
5,692 |
5,507 |
4,564 |
5,069 |
4,564 |
||||||
Installment |
319 |
377 |
371 |
322 |
335 |
319 |
335 |
||||||
Home equity |
2,281 |
1,915 |
2,073 |
2,277 |
2,376 |
2,281 |
2,376 |
||||||
Nonaccrual loans |
63,093 |
55,945 |
54,299 |
59,150 |
56,536 |
63,093 |
56,536 |
||||||
Troubled debt restructurings (TDRs) |
|||||||||||||
Accruing |
9,909 |
9,495 |
4,009 |
4,712 |
3,039 |
9,909 |
3,039 |
||||||
Nonaccrual |
10,185 |
17,205 |
18,071 |
12,571 |
14,443 |
10,185 |
14,443 |
||||||
Total TDRs |
20,094 |
26,700 |
22,080 |
17,283 |
17,482 |
20,094 |
17,482 |
||||||
Total nonperforming loans |
83,187 |
82,645 |
76,379 |
76,433 |
74,018 |
83,187 |
74,018 |
||||||
Other real estate owned (OREO) |
15,688 |
15,036 |
11,317 |
12,003 |
16,313 |
15,688 |
16,313 |
||||||
Total nonperforming assets |
98,875 |
97,681 |
87,696 |
88,436 |
90,331 |
98,875 |
90,331 |
||||||
Accruing loans past due 90 days or more |
143 |
203 |
191 |
235 |
149 |
143 |
149 |
||||||
Total underperforming assets |
$99,018 |
$97,884 |
$87,887 |
$88,671 |
$90,480 |
$99,018 |
$90,480 |
||||||
Total classified assets |
$145,621 |
$154,684 |
$162,372 |
$172,581 |
$184,786 |
$145,621 |
$184,786 |
||||||
CREDIT QUALITY RATIOS (excluding covered assets) |
|||||||||||||
Allowance for loan and lease losses to |
|||||||||||||
Nonaccrual loans |
80.76% |
88.37% |
96.83% |
92.20% |
94.93% |
80.76% |
94.93% |
||||||
Nonaccrual loans plus nonaccrual TDRs |
69.53% |
67.58% |
72.65% |
76.04% |
75.62% |
69.53% |
75.62% |
||||||
Nonperforming loans |
61.25% |
59.82% |
68.84% |
71.35% |
72.51% |
61.25% |
72.51% |
||||||
Total ending loans |
1.69% |
1.67% |
1.77% |
1.86% |
1.92% |
1.69% |
1.92% |
||||||
Nonperforming loans to total loans |
2.76% |
2.79% |
2.57% |
2.60% |
2.65% |
2.76% |
2.65% |
||||||
Nonperforming assets to |
|||||||||||||
Ending loans, plus OREO |
3.27% |
3.28% |
2.94% |
3.00% |
3.22% |
3.27% |
3.22% |
||||||
Total assets |
1.57% |
1.52% |
1.31% |
1.40% |
1.50% |
1.57% |
1.50% |
||||||
Nonperforming assets, excluding accruing TDRs to |
|||||||||||||
Ending loans, plus OREO |
2.94% |
2.96% |
2.81% |
2.84% |
3.11% |
2.94% |
3.11% |
||||||
Total assets |
1.42% |
1.37% |
1.25% |
1.32% |
1.44% |
1.42% |
1.44% |
||||||
FIRST FINANCIAL BANCORP. CAPITAL ADEQUACY (Dollars in thousands, except per share) (Unaudited) |
||||||||||||||
Six months ended, |
||||||||||||||
Jun. 30, |
Mar. 31, |
Dec. 31, |
Sep. 30, |
Jun. 30, |
Jun. 30, |
Jun. 30, |
||||||||
2012 |
2012 |
2011 |
2011 |
2011 |
2012 |
2011 |
||||||||
PER COMMON SHARE |
||||||||||||||
Market Price |
||||||||||||||
High |
$17.70 |
$18.28 |
$17.06 |
$17.12 |
$17.20 |
$18.28 |
$18.91 |
|||||||
Low |
$14.88 |
$16.11 |
$13.40 |
$13.34 |
$15.04 |
$14.88 |
$15.04 |
|||||||
Close |
$15.98 |
$17.30 |
$16.64 |
$13.80 |
$16.69 |
$15.98 |
$16.69 |
|||||||
Average shares outstanding - basic |
57,933,281 |
57,795,258 |
57,744,662 |
57,735,811 |
57,694,792 |
57,864,269 |
57,642,970 |
|||||||
Average shares outstanding - diluted |
58,958,279 |
58,881,043 |
58,672,575 |
58,654,099 |
58,734,662 |
58,921,689 |
58,722,448 |
|||||||
Ending shares outstanding |
58,513,393 |
58,539,458 |
58,267,054 |
58,256,136 |
58,259,440 |
58,513,393 |
58,259,440 |
|||||||
REGULATORY CAPITAL |
Preliminary |
|||||||||||||
Tier 1 Capital |
$640,644 |
$637,612 |
$636,836 |
$661,838 |
$681,492 |
$640,644 |
$681,492 |
|||||||
Tier 1 Ratio |
17.14% |
17.18% |
17.47% |
18.81% |
20.14% |
17.14% |
20.14% |
|||||||
Total Capital |
$688,401 |
$684,838 |
$683,255 |
$706,570 |
$724,763 |
$688,401 |
$724,763 |
|||||||
Total Capital Ratio |
18.42% |
18.45% |
18.74% |
20.08% |
21.42% |
18.42% |
21.42% |
|||||||
Total Capital in excess of minimum |
||||||||||||||
requirement |
$389,367 |
$387,954 |
$391,623 |
$425,128 |
$454,034 |
$389,367 |
$454,034 |
|||||||
Total Risk-Weighted Assets |
$3,737,920 |
$3,711,053 |
$3,645,403 |
$3,518,026 |
$3,384,115 |
$3,737,920 |
$3,384,115 |
|||||||
Leverage Ratio |
10.21% |
9.94% |
9.87% |
10.87% |
11.01% |
10.21% |
11.01% |
|||||||
OTHER CAPITAL RATIOS |
||||||||||||||
Ending shareholders' equity to ending |
||||||||||||||
assets |
11.41% |
11.14% |
10.68% |
11.47% |
11.95% |
11.41% |
11.95% |
|||||||
Ending tangible shareholders' equity |
||||||||||||||
to ending tangible assets |
9.91% |
9.66% |
9.23% |
10.38% |
11.11% |
9.91% |
11.11% |
|||||||
Average shareholders' equity to |
||||||||||||||
average assets |
11.32% |
10.91% |
11.05% |
11.83% |
11.38% |
11.11% |
11.24% |
|||||||
Average tangible shareholders' equity |
||||||||||||||
to average tangible assets |
9.84% |
9.43% |
9.58% |
10.70% |
10.56% |
9.64% |
10.42% |
SUPPLEMENTAL INFORMATION ON COVERED ASSETS AND ACQUISITION-RELATED ITEMS
To assist in analyzing the effect of the Company's 2009 FDIC assisted transactions and 2011 branch transactions on its financial results, supplemental information that segregates the estimated impact on pre-tax earnings of certain acquisition-related items and provides additional detail on the covered loan portfolio follows.
SUMMARY OF SIGNIFICANT ACQUISITION-RELATED ITEMS
The following table illustrates the estimated income and expense effects of certain direct acquisition-related items for the three months ended June 30, 2012, March 31, 2012 and June 30, 2011.
Table VII |
||||||||
For the Three Months Ended |
||||||||
June 30, |
March 31, |
June 30, |
||||||
(Dollars in thousands) |
2012 |
2012 |
2011 |
|||||
Income effect: |
||||||||
Accelerated discount on covered loans1, 2 |
$ 3,764 |
$ 3,645 |
$ 4,756 |
|||||
Acquired-non-strategic net interest income |
7,117 |
7,428 |
8,821 |
|||||
FDIC loss sharing income 1 |
8,280 |
12,816 |
21,643 |
|||||
Service charges on deposit accounts related to |
||||||||
acquired-non-strategic operations |
42 |
37 |
108 |
|||||
Other income (loss) related to transition/non-strategic operations |
49 |
(47) |
(593) |
|||||
Total income effect |
$ 19,252 |
$ 23,879 |
$ 34,735 |
|||||
Expense effect: |
||||||||
Provision for loan and lease losses - covered |
$ 6,047 |
$ 12,951 |
$ 23,895 |
|||||
Loss share and covered asset expense 3 |
4,317 |
3,043 |
3,376 |
|||||
FDIC loss share support3 |
1,014 |
1,163 |
1,369 |
|||||
Acquired-non-strategic operating expenses: 3 |
19 |
(146) |
2,673 |
|||||
Acquisition-related costs:3 |
78 |
188 |
76 |
|||||
Transition-related items:3 |
- |
- |
161 |
|||||
Total expense effect |
$ 11,475 |
$ 17,199 |
$ 31,550 |
|||||
1 Included in noninterest income |
||||||||
2 Net of the corresponding valuation adjustment on the FDIC indemnification asset |
||||||||
3 Included in noninterest expense |
ACCELERATED DISCOUNT ON LOAN PREPAYMENTS AND DISPOSITIONS
During the second quarter 2012, First Financial recognized approximately $3.8 million in accelerated discount from acquired loans, net of the corresponding adjustment on the FDIC indemnification asset. Accelerated discount is recognized when acquired loans, which are recorded on the Company's balance sheet at an amount less than the unpaid principal balance, prepay at an amount greater than their recorded book value. Prepayments can occur through either customer driven payments before the maturity date or loan sales. The amount of discount attributable to the credit loss component of each loan varies and the recognized amount is offset by a related reduction in the FDIC indemnification asset. Accelerated discount recognized during the quarter resulted primarily from loan prepayments.
OPERATING EXPENSES AND OTHER ACQUISITION-RELATED COSTS
Acquired-non-strategic operating expenses, acquisition-related costs and transition-related items have declined significantly as costs associated with acquisitions, including market exit costs and professional services and other resolution expenses related to non-strategic acquired subsidiaries, have continued to wind down over the past several quarters.
NET INTEREST MARGIN IMPACT
Net interest margin is affected by certain activity related to the acquired loan portfolio. The majority of these loans are accounted for under ASC Topic 310-30 and, as such, the Company is required to periodically update its forecast of expected cash flows from these loans. Impairment, as a result of a decrease in expected cash flows, is recognized as provision expense in the period it is measured and has no impact on net interest margin. Improvements in expected cash flows, in excess of any prior impairment, are recognized on a prospective basis through an upward adjustment to the yield earned on the portfolio. Impairment and improvement are both partially offset by the impact of changes in the value of the FDIC indemnification asset. Impairment is partially offset by an increase to the FDIC indemnification asset as a result of FDIC loss sharing income. Improvement, which is reflected as a higher yield, is partially offset by a lower yield earned on the FDIC indemnification asset until the next periodic valuation of the loans and the indemnification asset. The weighted average yield of the acquired loan portfolio may also be subject to change as loans with higher yields pay down more quickly or slowly than loans with lower yields.
The following table shows the estimated yield earned by the Company on its covered and uncovered loan portfolios and the FDIC indemnification asset for the three months ended June 30, 2012.
Table VIII |
For the Three Months Ended |
||||||
June 30, 2012 |
|||||||
Average |
|||||||
(Dollars in thousands) |
Balance |
Yield |
|||||
Loans, excluding covered loans 1 |
$ 2,995,296 |
4.88% |
|||||
Covered loan portfolio accounted for under ASC Topic 310-302 |
863,609 |
11.03% |
|||||
Covered loan portfolio accounted for under ASC Topic 310-203 |
86,617 |
15.12% |
|||||
FDIC indemnification asset2 |
149,788 |
(5.29%) |
|||||
Total |
$ 4,095,310 |
6.02% |
|||||
1 Includes loans with loss share coverage removed |
|||||||
2 Future yield adjustments subject to change based on required, periodic valuation procedures |
|||||||
3 Includes loans with revolving privileges which are scoped out of ASC Topic 310-30 and certain loans which the Company elected to treat under the cost recovery method of accounting |
|||||||
As part of its on-going valuation procedures, the Company experienced a $0.8 million improvement in the cash flow expectations related to certain loan pools. During the quarter, the average yield earned on covered loans accounted for under ASC Topic 310-30 was 11.03%. On a prospective basis and until its next periodic valuation, the Company expects the yield on covered loans to be 11.54%.
This projected improvement in cash flow expectations on loans is partially offset by a related decline in cash flow expectations on the FDIC indemnification asset which is recognized through its yield. The average yield earned on the indemnification asset during the second quarter 2012 was -5.29%. On a prospective basis and until its next periodic valuation, the Company expects the yield on the indemnification asset to be -5.45%.
LOSS SHARE AGREEMENTS
As of June 30, 2012, 23.1% of the Company's total loans were covered loans. As required under the loss-share arrangements, First Financial must file monthly certifications with the FDIC on single-family residential loans and quarterly certifications on all other loans. To date, all certifications have been filed in a timely manner and without significant issues.
COVERED LOAN PORTFOLIO
The following table presents estimated activity in the covered loan portfolio by loan type during the second quarter 2012.
Table IX |
||||||||||||||||
Covered Loan Activity - Second Quarter 2012 |
||||||||||||||||
Reduction in Recorded Investment Due to: |
||||||||||||||||
March 31, |
Contractual |
Net |
Loans With |
June 30, |
||||||||||||
(Dollars in thousands) |
2012 |
Sales |
Prepayments |
Activity1 |
Charge-Offs2 |
Coverage Removed |
2012 |
|||||||||
Commercial |
$ 164,933 |
$ - |
$ 14,360 |
$ 7,365 |
$ 1,199 |
$ - |
$ 142,009 |
|||||||||
Real estate - construction |
16,727 |
- |
35 |
566 |
793 |
- |
15,333 |
|||||||||
Real estate - commercial |
609,141 |
1,285 |
35,579 |
13,159 |
1,399 |
1,046 |
556,673 |
|||||||||
Real estate - residential |
115,428 |
- |
2,667 |
939 |
102 |
- |
111,720 |
|||||||||
Installment |
12,079 |
- |
333 |
99 |
6 |
- |
11,641 |
|||||||||
Home equity |
64,824 |
- |
3,155 |
(1,870) |
377 |
- |
63,162 |
|||||||||
Other covered loans |
3,487 |
- |
- |
163 |
- |
- |
3,324 |
|||||||||
Total covered loans |
$ 986,619 |
$ 1,285 |
$ 56,129 |
$ 20,421 |
$ 3,876 |
$ 1,046 |
$ 903,862 |
|||||||||
1 Includes partial paydowns, accretion of the valuation discount and advances on revolving loans |
||||||||||||||||
2 Indemnified at 80% from the FDIC |
During the second quarter 2012, the total balance of covered loans decreased $82.8 million, or 8.4%, as compared to the previous quarter.
ALLOWANCE FOR LOAN AND LEASE LOSSES - COVERED
Under the applicable accounting guidance, the allowance for loan losses related to covered loans is a result of impairment identified in on-going valuation procedures and is generally recognized in the current period as provision expense. However, if improvement is noted in a loan pool that had previously experienced impairment, the amount of improvement is recognized as a reduction to the applicable period's provision expense. Additional improvement beyond previously recorded impairment is reflected as a yield adjustment on a prospective basis. The timing inherent in this accounting treatment may result in earnings volatility in future periods.
The following table presents activity in the allowance for loan losses related to covered loans for the three months ended June 30, 2012, March 31, 2012, December 31, 2011 and September 30, 2011.
Table X |
||||||||||
As of or for the Three Months Ended |
||||||||||
June 30, |
March 31, |
December 31, |
September 30, |
|||||||
(Dollars in thousands) |
2012 |
2012 |
2011 |
2011 |
||||||
Balance at beginning of period |
$ 46,156 |
$ 42,835 |
$ 48,112 |
$ 51,044 |
||||||
Provision for loan and lease losses - covered |
6,047 |
12,951 |
6,910 |
7,260 |
||||||
Total gross charge-offs |
(5,163) |
(10,118) |
(13,513) |
(10,609) |
||||||
Total recoveries |
1,287 |
488 |
1,326 |
417 |
||||||
Total net charge-offs |
(3,876) |
(9,630) |
(12,187) |
(10,192) |
||||||
Ending allowance for loan and lease losses - covered |
$ 48,327 |
$ 46,156 |
$ 42,835 |
$ 48,112 |
||||||
The Company has established an allowance for loan losses associated with covered loans based on estimated valuation procedures performed each quarter. The allowance for covered loan losses increased $2.2 million, or 4.7%, during the second quarter. As a percentage of total covered loans, the allowance for loan losses totaled 5.35% as of June 30, 2012 compared to 4.68% as of March 31, 2012.
Net charge-offs on covered loans during the second quarter 2012 were $3.9 million compared to $9.6 million for the first quarter 2012, a decrease of $5.8 million, or 59.8%. During the second quarter 2012, the Company recognized a provision expense of $6.0 million, representing a decrease of $6.9 million, or 53.3%, compared to the linked quarter. The difference between provision expense and net charge-offs primarily relates to the quarterly re-estimation of cash flow expectations required under ASC Topic 310-30. The net present value of expected cash flows is influenced by both the amount and timing of such cash flows. The Company continues to refine its expectations with respect to both factors as the covered portfolio ages.
In addition to the provision expense, the Company incurred loss share and covered asset expenses of $4.3 million, including $1.2 million of losses related to covered OREO and $3.1 million of other credit expenses related to covered assets. The receivable due from the FDIC under loss share agreements of $8.3 million related to total credit costs incurred was recognized as FDIC loss share income and a corresponding increase to the FDIC indemnification asset.
SOURCE First Financial Bancorp
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