First Financial Bancorp Reports Second Quarter 2014 Financial Results and Announces Regulatory Approval of The First Bexley Bank and Insight Bank Transactions
CINCINNATI, July 24, 2014 /PRNewswire/ -- First Financial Bancorp (Nasdaq: FFBC) ("First Financial" or the "Company") announced today financial and operational results for the second quarter 2014.
Second quarter net income was $16.0 million and earnings per diluted common share were $0.28. This compares with first quarter net income of $15.1 million and earnings per diluted common share of $0.26 and second quarter 2013 net income of $15.8 million and earnings per diluted common share of $0.27.
- Continued solid quarterly performance
- Quarterly results included several items which reduced pre-tax income by $0.5 million
- Return on average assets of 0.99%; 1.01% as adjusted for the items noted below
- Return on average tangible common equity of 10.73%; 10.94% as adjusted for the items noted below
- Capital ratios remain strong
- Tangible common equity to tangible assets of 9.39%
- Tier 1 capital ratio of 14.34%
- Total risk-based capital ratio of 15.59%
- Annualized total uncovered loan growth on a period-end and average basis of 5.4% and 11.6%, respectively
- Strong performance in specialty finance and residential mortgage lending
- Solid growth in traditional C&I / owner-occupied CRE and franchise lending
- Annualized total deposit growth on a period-end and average basis of 4.6% and 12.7%, respectively
- Annualized transaction deposit growth on a period-end and average basis of 3.9% and 15.1%, respectively
- Quarterly net interest margin of 3.70%, a decline of 12 bps compared to the linked quarter
- Covered loan balance decline negatively impacted margin by 7 bps
- Uncovered loan growth and higher fee income contributed to a 2 bp improvement to margin
- Yield on investment portfolio declined 5 bps to 2.47%
- Cost of interest-bearing deposits increased 2 bps to 38 bps
- Continued improvement in asset quality metrics
- Total nonperforming assets declined $3.1 million, or 5.0%, and represent 0.89% of total assets compared to 0.95% for the linked quarter
- Net charge-offs declined $0.9 million, or 47.8%, compared to the linked quarter and totaled 11 bps of average uncovered loans on an annualized basis
During the quarter, the Company incurred pre-tax acquisition-related expenses of $0.5 million. The Company also recognized a $0.2 million pre-tax gain related to the sale of a closed banking center, which was partially offset by $0.1 million of other costs associated with the execution of its efficiency initiatives during the period. In the aggregate, these items reduced pre-tax earnings by $0.5 million.
The board of directors has authorized a dividend of $0.15 per common share for the next regularly scheduled dividend, payable on October 1, 2014 to shareholders of record as of August 29, 2014.
First Financial did not repurchase shares under the previously announced share repurchase plan during the second quarter 2014 due to the Company's pending merger agreements and the increasingly active M&A environment industry-wide. The Company expects to continue the suspension of its share repurchase plan for the third quarter 2014.
Claude Davis, President and Chief Executive Officer, commented, "Our operating results for the quarter improved modestly as noninterest income recovered from the seasonal impact of the prior quarter and, combined with lower credit costs related to the uncovered loan portfolio, offset the impact of a decrease in net interest income driven primarily by the continued decline in covered loan balances.
"Loan production remained solid during the quarter as average uncovered loan balances increased $101.6 million, or 11.6% on an annualized basis, and end of period balances increased $48.5 million, or 5.4% on an annualized basis. The combination of an increase in payoffs and some anticipated late quarter production that slid into July impacted the quarter end balances. Our pipeline of commercial originations for the third quarter looks strong and our specialty finance pipeline was at an all-time high at the end of the second quarter with approximately half of the volume expected to close in July. Additionally, residential mortgage originations have rebounded with client receptivity to our portfolio product growing.
"Improvement in credit quality continued its strong trend as nonperforming loans declined $3.7 million, or 7.6%, compared to the linked quarter and are down almost 40% compared to June 30, 2013. We were especially pleased with our charge-off and recovery activity as net charge-offs dropped to 11 bps of average loan balances for the quarter and contributed to the decline in the provision for loan losses.
"And finally, we are extremely pleased to announce that we have received regulatory approval for the First Bexley Bank and Insight Bank transactions and are excited to formally launch the First Financial brand in the growth-oriented Columbus, Ohio market. Further, the integration process related to Guernsey Bancorp is well underway and we expect to close that transaction during the fourth quarter."
NET INTEREST INCOME AND NET INTEREST MARGIN
Net interest income for the second quarter was $54.3 million as compared to $54.8 million for the first quarter 2014 and $58.1 million for the second quarter 2013. Compared to the linked quarter, total interest income decreased $0.3 million, or 0.4%, and total interest expense increased $0.3 million, or 6.1%. Net interest margin was 3.70% for the second quarter as compared to 3.82% for the first quarter 2014 and 4.02% for the second quarter 2013.
Interest income earned on loans decreased $0.3 million, or 0.5%, compared to the prior quarter. The decrease in interest income earned on loans was driven primarily by a decline of $46.9 million, or 10.8%, in average covered loan balances. Growth in average uncovered loan balances of $101.6 million, or 2.9% on a linked quarter basis, as well as modestly higher loan fees during the period helped to partially offset the impact on net interest income from covered loan activity during the quarter. The yield earned on the uncovered portfolio during the quarter was approximately 4.26%, an 8 bp decrease compared to the linked quarter.
Interest income earned from investment securities declined $0.1 million, or 0.9%, compared to the prior quarter as an increase in average balances of $3.6 million, or 0.2%, was offset by a decline in the yield earned on the portfolio of 5 bps to 2.47%.
The slight increase in total interest expense was due to an increase in deposit costs associated with deposit growth as well as changes in the composition of deposits during the period. Average time deposit balances increased $7.0 million, or 0.7%, with the portfolio's cost of funds increasing 4 bps compared to the linked quarter. Average savings deposits increased $68.6 million, or 4.2%, with the related cost of funds increasing 3 bps compared to the linked quarter. The cost of funds on total interest-bearing deposits increased 2 bp to 38 bps compared to the first quarter 2014. As a result of deposit growth during the period, average short-term borrowing balances declined $96.0 million, or 12.3%, while the related cost of funds was unchanged compared to the linked quarter.
NONINTEREST INCOME
The following table presents noninterest income for the three months ended June 30, 2014 and for the trailing four quarters, adjusted to exclude the impact of covered loan activity and other select items on the Company's reported balance.
| Table I |
|||||||||||||
| For the Three Months Ended |
|||||||||||||
| June 30, |
March 31, |
December 31, |
September 30, |
June 30, |
|||||||||
| (Dollars in thousands) |
2014 |
2014 |
2013 |
2013 |
2013 |
||||||||
| Total noninterest income |
$ 16,337 |
$ 14,175 |
$ 13,043 |
$ 22,291 |
$ 11,615 |
||||||||
| Selected components of noninterest income |
|||||||||||||
| Accelerated discount on covered loans 1 |
621 |
1,015 |
1,572 |
1,711 |
1,935 |
||||||||
| FDIC loss sharing income |
1,108 |
(508) |
(3,385) |
5,555 |
(7,384) |
||||||||
| Gain on sale of investment securities |
- |
50 |
- |
- |
188 |
||||||||
| Other items not expected to recur |
- |
- |
- |
- |
442 |
||||||||
| Total noninterest income excluding items noted above |
$ 14,608 |
$ 13,618 |
$ 14,856 |
$ 15,025 |
$ 16,434 |
||||||||
| 1 Net of the related valuation adjustment on the FDIC indemnification asset |
|||||||||||||
Excluding the items highlighted in Table I, noninterest income earned in the second quarter was $14.6 million compared to $13.6 million in the first quarter 2014 and $16.4 million in the second quarter 2013. The increase of $1.0 million compared to the linked quarter was driven by a rebound from seasonal and weather related declines experienced in service charges on deposit accounts and bankcard income during the first quarter as well as higher net gains on sales of residential mortgages and portfolio valuations related to client derivatives during the second quarter. This activity was partially offset by a decline in trust and wealth management fees during the second quarter.
NONINTEREST EXPENSE
The following table presents noninterest expense for the three months ended June 30, 2014 and for the trailing four quarters, adjusted to exclude the impact of covered asset activity and other select items on the Company's reported balance.
| Table II |
||||||||||||
| For the Three Months Ended |
||||||||||||
| June 30, |
March 31, |
December 31, |
September 30, |
June 30, |
||||||||
| (Dollars in thousands) |
2014 |
2014 |
2013 |
2013 |
2013 |
|||||||
| Total noninterest expense |
$ 47,111 |
$ 47,842 |
$ 70,285 |
$ 48,801 |
$ 53,283 |
|||||||
| Selected components of noninterest expense |
||||||||||||
| Loss (gain) - covered real estate owned |
398 |
33 |
946 |
204 |
(2,212) |
|||||||
| Loss sharing expense |
1,465 |
1,569 |
1,495 |
1,724 |
1,578 |
|||||||
| Pension settlement charges |
- |
- |
462 |
1,396 |
4,316 |
|||||||
| Expenses associated with efficiency initiative |
(59) |
350 |
1,450 |
1,051 |
1,518 |
|||||||
| FDIC indemnification asset valuation adjustment |
- |
- |
22,417 |
- |
- |
|||||||
| Acquisition-related expenses |
517 |
620 |
284 |
- |
- |
|||||||
| Other items not expected to recur |
- |
465 |
- |
- |
- |
|||||||
| Total noninterest expense excluding items noted above |
$ 44,790 |
$ 44,805 |
$ 43,231 |
$ 44,426 |
$ 48,083 |
|||||||
| FDIC loss share support 1 |
$ 630 |
$ 862 |
$ 844 |
$ 841 |
$ 795 |
|||||||
| 1 Represents direct expenses associated with credit management and loan administration related to covered assets as well as compliance with FDIC loss sharing agreements; included in total noninterest expense excluding the items noted above and comprised of several noninterest expense line items |
||||||||||||
Excluding the items highlighted in Table II, noninterest expense was $44.8 million in both the first and second quarters of 2014 and $48.1 million in the second quarter 2013. Noninterest expense, as adjusted in Table II above, was unchanged from the linked quarter as higher salaries and employee benefit costs and other expense were offset by lower net occupancy and professional service costs during the period. Acquisition-related expenses during the period included $0.3 million of professional services expenses, $0.1 million of marketing costs and $0.1 million of other miscellaneous expenses.
INCOME TAXES
For the second quarter, income tax expense was $8.0 million, resulting in an effective tax rate of 33.3%, compared with income tax expense of $7.1 million and an effective tax rate of 31.9% during the first quarter 2014 and income tax expense of $6.5 million and an effective tax rate of 29.0% during the second quarter 2013. The increase in the effective tax rate as compared to the linked quarter is primarily related to a first quarter adjustment to deferred tax liabilities resulting from a favorable change in state tax laws. While the effective tax rate may fluctuate from quarter to quarter due to tax jurisdiction changes and the level of tax-enhanced assets, the overall effective tax rate for the full year is expected to be in the range of approximately 32.0% - 34.0%.
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, 2014 and 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) |
2014 |
2014 |
2013 |
2013 |
2013 |
|||||||
| Total nonaccrual loans 1 |
$ 32,418 |
$ 35,334 |
$ 37,605 |
$ 57,926 |
$ 62,011 |
|||||||
| Troubled debt restructurings - accruing |
12,607 |
13,400 |
15,094 |
16,278 |
12,924 |
|||||||
| Total nonperforming loans |
45,025 |
48,734 |
52,699 |
74,204 |
74,935 |
|||||||
| Total nonperforming assets |
58,395 |
61,477 |
72,505 |
86,008 |
86,733 |
|||||||
| Nonperforming assets as a % of: |
||||||||||||
| Period-end loans plus OREO |
1.59% |
1.70% |
2.06% |
2.50% |
2.56% |
|||||||
| Total assets |
0.89% |
0.95% |
1.13% |
1.38% |
1.38% |
|||||||
| Nonperforming assets ex. accruing TDRs as a % of: |
||||||||||||
| Period-end loans plus OREO |
1.25% |
1.33% |
1.63% |
2.03% |
2.17% |
|||||||
| Total assets |
0.70% |
0.74% |
0.89% |
1.12% |
1.18% |
|||||||
| Nonperforming loans as a % of total loans |
1.23% |
1.35% |
1.50% |
2.16% |
2.22% |
|||||||
| Provision for loan and lease losses - uncovered |
$ 29 |
$ 1,159 |
$ 1,851 |
$ 1,413 |
$ 2,409 |
|||||||
| Allowance for uncovered loan & lease losses |
$ 42,027 |
$ 43,023 |
$ 43,829 |
$ 45,514 |
$ 47,047 |
|||||||
| Allowance for loan & lease losses as a % of: |
||||||||||||
| Total loans |
1.15% |
1.19% |
1.25% |
1.33% |
1.39% |
|||||||
| Nonaccrual loans |
129.6% |
121.8% |
116.6% |
78.6% |
75.9% |
|||||||
| Nonperforming loans |
93.3% |
88.3% |
83.2% |
61.3% |
62.8% |
|||||||
| Total net charge-offs |
$ 1,025 |
$ 1,965 |
$ 3,536 |
$ 2,946 |
$ 3,668 |
|||||||
| Annualized net-charge-offs as a % of average |
||||||||||||
| loans & leases |
0.11% |
0.23% |
0.41% |
0.34% |
0.45% |
|||||||
| 1 Includes nonaccrual troubled debt restructurings |
||||||||||||
Net Charge-offs
For the second quarter, net charge-offs totaled $1.0 million, a decline of $0.9 million, or 47.8%, compared to the linked quarter.
Nonperforming Assets
Nonaccrual loans, including nonaccrual troubled debt restructurings, decreased $2.9 million, or 8.3%, to $32.4 million as of June 30, 2014 from $35.3 million as of March 31, 2014. Contributing to the decline were four commercial and commercial real estate credits totaling $8.0 million in the aggregate that paid off during the period. This activity was partially offset by other activity during the period, including the addition of two commercial and three commercial real estate credits totaling $5.5 million in the aggregate.
Accruing troubled debt restructurings decreased $0.8 million, or 5.9%, to $12.6 million as of June 30, 2014 from $13.4 million as of March 31, 2014. This decline was primarily related to a $0.5 million commercial credit that paid off during the second quarter.
OREO increased $0.6 million, or 4.9%, to $13.4 million during the second quarter as $1.5 million of additions exceeded resolutions and valuation adjustments of $0.9 million. Additions during the second quarter included a $0.6 million residential property and a $0.3 million commercial property.
Classified assets increased $0.3 million, or 0.3%, to $103.8 million as of June 30, 2014 from $103.5 million as of March 31, 2014 but declined $26.0 million, or 20.1%, from $129.8 million as of June 30, 2013. Classified assets are defined by the Company as nonperforming assets plus performing loans internally rated substandard or worse.
Delinquent Loans
As of June 30, 2014, loans 30-to-89 days past due totaled $5.7 million, or 0.16% of period-end loans, compared to $13.9 million, or 0.38%, as of March 31, 2014 and $13.4 million, or 0.40%, as of June 30, 2013. The $8.2 million, or 58.8%, decline during the second quarter was driven primarily by a $7.5 million decrease in delinquent commercial real estate loans during the period.
LOANS (EXCLUDING COVERED LOANS)
The following table presents the loan portfolio, excluding covered loans, as of June 30, 2014, March 31, 2014 and June 30, 2013.
| Table IV |
||||||||||||||
| As of |
||||||||||||||
| June 30, 2014 |
March 31, 2014 |
June 30, 2013 |
||||||||||||
| Percent |
Percent |
Percent |
||||||||||||
| (Dollars in thousands) |
Balance |
of Total |
Balance |
of Total |
Balance |
of Total |
||||||||
| Commercial |
$ 1,143,693 |
31.2% |
$ 1,118,057 |
30.9% |
940,420 |
27.8% |
||||||||
| Real estate - construction |
113,682 |
3.1% |
87,996 |
2.4% |
97,246 |
2.9% |
||||||||
| Real estate - commercial |
1,491,731 |
40.7% |
1,513,891 |
41.9% |
1,477,226 |
43.7% |
||||||||
| Real estate - residential |
372,601 |
10.2% |
360,671 |
10.0% |
343,016 |
10.1% |
||||||||
| Installment |
43,338 |
1.2% |
44,911 |
1.2% |
50,781 |
1.5% |
||||||||
| Home equity |
380,746 |
10.4% |
374,427 |
10.4% |
370,206 |
10.9% |
||||||||
| Credit card |
35,656 |
1.0% |
34,458 |
1.0% |
33,222 |
1.0% |
||||||||
| Lease financing |
81,212 |
2.2% |
79,792 |
2.2% |
70,011 |
2.1% |
||||||||
| Total |
$ 3,662,659 |
100.0% |
$ 3,614,203 |
100.0% |
$ 3,382,128 |
100.0% |
||||||||
Loans, excluding covered loans, totaled $3.7 billion as of June 30, 2014, increasing $48.5 million, or 5.4% on an annualized basis, compared to the linked quarter and $280.5 million, or 8.3%, compared to June 30, 2013. The increase relative to the linked quarter was driven by strong growth in specialty finance and residential mortgage balances as well as traditional C&I / owner-occupied commercial real estate and franchise finance during the period.
INVESTMENTS
The following table presents a summary of the total investment portfolio at June 30, 2014.
| Table V |
|||||||||||||
| As of June 30, 2014 |
|||||||||||||
| Held-to- |
Available-for- |
Percent of |
|||||||||||
| (Dollars in thousands) |
Maturity |
Sale |
Other |
Total |
Portfolio |
||||||||
| Debt obligations of the U.S. Government |
$ - |
$ 20,734 |
$ - |
$ 20,734 |
1.1% |
||||||||
| Debt obligations of U.S. Government Agency |
18,308 |
9,552 |
- |
27,860 |
1.5% |
||||||||
| Residential Mortgage Backed Securities |
|||||||||||||
| Pass-through securities: |
|||||||||||||
| Agency fixed rate |
80,232 |
101,413 |
- |
181,645 |
9.9% |
||||||||
| Agency adjustable rate |
152,463 |
39,759 |
- |
192,222 |
10.4% |
||||||||
| Non-Agency fixed rate |
- |
9,287 |
- |
9,287 |
0.5% |
||||||||
| Collateralized mortgage obligations: |
|||||||||||||
| Agency fixed rate |
341,497 |
266,679 |
- |
608,176 |
33.0% |
||||||||
| Agency variable rate |
- |
109,879 |
- |
109,879 |
6.0% |
||||||||
| Agency collateralized and insured municipal securities |
78,812 |
111,328 |
- |
190,140 |
10.3% |
||||||||
| Commercial mortgage backed securities |
222,280 |
115,448 |
- |
337,728 |
18.3% |
||||||||
| Municipal bond securities |
1,115 |
1,391 |
- |
2,506 |
0.1% |
||||||||
| Corporate securities |
4,795 |
56,019 |
- |
60,814 |
3.3% |
||||||||
| Asset-backed securities |
- |
47,996 |
- |
47,996 |
2.6% |
||||||||
| Regulatory stock |
- |
- |
42,576 |
42,576 |
2.3% |
||||||||
| Other |
- |
8,230 |
5,064 |
13,294 |
0.7% |
||||||||
| $ 899,502 |
$ 897,715 |
$ 47,640 |
$ 1,844,857 |
100.0% |
|||||||||
The investment portfolio increased $43.9 million, or 2.4%, to $1.8 billion during the second quarter as $81.9 million of purchases were partially offset by amortizations and other portfolio reductions. As of June 30, 2014, the overall duration of the investment portfolio decreased to 3.9 years compared to 4.2 years as of March 31, 2014. The yield earned on the portfolio during the quarter decreased 5 bps to 2.47% from 2.52% for the linked quarter, driven by lower reinvestment rates and higher prepayments speeds on mortgage-related assets. Due primarily to improved asset pricing at quarter-end, the net unrealized loss included in accumulated other comprehensive loss related to the investment portfolio improved $6.5 million to $6.0 million as of June 30, 2014.
DEPOSITS
Non-time deposit balances totaled $3.9 billion as of June 30, 2014, increasing $37.7 million, or 1.0%, compared to the linked quarter. The average balance of non-time deposits totaled $4.0 billion as of June 30, 2014, increasing $144.3 million, or 3.8%, compared to the linked quarter due to a seasonal inflow of public fund deposits and, to a lesser extent, an increase in commercial transaction deposits.
Time deposit balances increased $17.1 million, or 1.8%, to $973.1 million as of June 30, 2014. Average time deposit balances totaled $960.4 million as of June 30, 2014, increasing $7.0 million, or 0.7%, compared to the linked quarter due to an increase in consumer balances.
The Company's total cost of deposit funding, inclusive of noninterest-bearing balances, was 29 bps for the quarter, representing an increase of 1 bp compared to the prior quarter and 2 bps compared to the second quarter 2013.
CAPITAL MANAGEMENT
The following table presents First Financial's regulatory and other capital ratios as of June 30, 2014, March 31, 2014 and June 30, 2013.
| Table VI |
||||||||
| As of |
||||||||
| June 30, |
March 31, |
June 30, |
||||||
| 2014 |
2014 |
2013 |
||||||
| Leverage Ratio |
9.99% |
9.94% |
10.12% |
|||||
| Tier 1 Capital Ratio |
14.34% |
14.42% |
15.41% |
|||||
| Total Risk-Based Capital Ratio |
15.59% |
15.67% |
16.68% |
|||||
| Ending tangible shareholders' equity |
||||||||
| to ending tangible assets |
9.39% |
9.23% |
9.62% |
|||||
| Ending tangible common shareholders' |
||||||||
| equity to ending tangible assets |
9.39% |
9.23% |
9.62% |
|||||
| Tangible book value per share |
$10.49 |
$10.24 |
$10.29 |
|||||
Shareholders' equity increased $14.5 million during the quarter due to net income for the quarter and a decline in the unrealized loss related to the investment portfolio, partially offset by declared dividends. The Company's Tier I and total risk-based capital ratios declined during the quarter due primarily to an increase in risk-weighted assets resulting from uncovered loan growth. The Company's tangible common equity ratio and leverage ratio increased during the quarter as the increase in tangible common equity outweighed the increase in tangible assets. Regulatory capital ratios as of June 30, 2014 are considered preliminary pending the filing of the Company's regulatory reports.
Teleconference / Webcast Information
First Financial's executive management will host a conference call to discuss the Company's financial and operating results on Friday, July 25, 2014 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 through August 11, 2014 at (877) 344-7529 (U.S. toll free), (855) 669-9658 (Canada toll free) and +1 (412) 317-0088 (International); conference number 10045038. The webcast will be archived on the Investor Relations section of the Company's website through July 25, 2015.
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.
About First Financial Bancorp
First Financial Bancorp is a Cincinnati, Ohio based bank holding company. As of June 30, 2014, the Company had $6.5 billion in assets, $4.0 billion in loans, $4.9 billion in deposits and $706 million in shareholders' equity. The Company's subsidiary, First Financial Bank, N.A., founded in 1863, provides banking and financial services products through its four lines of business: commercial, consumer, wealth management and mortgage. The commercial, consumer and mortgage units provide traditional banking services to business and retail clients. First Financial Wealth Management provides wealth planning, portfolio management, trust and estate, brokerage and retirement plan services and had approximately $2.5 billion in assets under management as of June 30, 2014. The Company's strategic operating markets are located in Ohio, Indiana and Kentucky where it operates 105 banking centers. Additional information about the Company, including its products, services and banking locations is available at www.bankatfirst.com.
Important Information for Investors and Shareholders
This communication does not constitute an offer of any securities for sale. This communication is being made in respect of the proposed transactions involving First Financial, The First Bexley Bank and Insight Bank. In connection with the proposed transactions, the Company filed with the SEC registration statements on Form S-4 that included proxy statements/prospectuses for the shareholders of First Bexley and Insight. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE PROXY STATEMENTS/PROSPECTUSES AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC IN CONNECTION WITH THE PROPOSED TRANSACTIONS BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT FIRST FINANCIAL, FIRST BEXLEY AND INSIGHT AND THE PROPOSED TRANSACTIONS. Investors and security holders may obtain free copies of these documents through the website maintained by the SEC at http://www.sec.gov. Investors may also obtain these documents, without charge, from First Financial's website at http://www.bankatfirst.com or by contacting First Financial's investor relations department at (877) 322-9530.
Forward-Looking Statement
Certain statements contained in this release which are not statements of historical fact constitute forward-looking statements within the meaning of the Private Securities Litigation Reform 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. These factors include, but are not limited to: economic, market, liquidity, credit, interest rate, operational and technological risks associated with the Company's business; 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); management's ability to effectively execute its business plan; mergers and acquisitions, including costs or difficulties related to the integration of acquired companies, including the recently announced acquisitions of The First Bexley Bank, Insight Bank and Guernsey Bancorp; the Company's ability to comply with the terms of loss sharing agreements with the FDIC; the effect of changes in accounting policies and practices; and the costs and effects of litigation and of unexpected or adverse outcomes in such litigation. Please refer to the Company's Annual Report on Form 10-K for the year ended December 31, 2013, as well as its other filings with the SEC, for a more detailed discussion of these risks, uncertainties and other factors that could cause actual results to differ from those discussed in the forward-looking statements. Such forward-looking statements are meaningful only on the date when such statements are made, and the Company 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.
| 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, |
||||||||
| 2014 |
2014 |
2013 |
2013 |
2013 |
2014 |
2013 |
|||||||
| RESULTS OF OPERATIONS |
|||||||||||||
| Net income |
$15,953 |
$15,104 |
$3,785 |
$14,911 |
$15,829 |
$31,057 |
$29,653 |
||||||
| Net earnings per share - basic |
$0.28 |
$0.26 |
$0.07 |
$0.26 |
$0.28 |
$0.54 |
$0.52 |
||||||
| Net earnings per share - diluted |
$0.28 |
$0.26 |
$0.07 |
$0.26 |
$0.27 |
$0.54 |
$0.51 |
||||||
| Dividends declared per share |
$0.15 |
$0.15 |
$0.15 |
$0.27 |
$0.24 |
$0.30 |
$0.52 |
||||||
| KEY FINANCIAL RATIOS |
|||||||||||||
| Return on average assets |
0.99% |
0.96% |
0.24% |
0.96% |
1.01% |
0.97% |
0.94% |
||||||
| Return on average shareholders' equity |
9.19% |
8.95% |
2.15% |
8.53% |
9.02% |
9.07% |
8.47% |
||||||
| Return on average tangible shareholders' equity |
10.73% |
10.49% |
2.51% |
10.00% |
10.54% |
10.61% |
9.89% |
||||||
| Net interest margin |
3.70% |
3.82% |
3.90% |
3.91% |
4.02% |
3.76% |
4.03% |
||||||
| Net interest margin (fully tax equivalent) (1) |
3.76% |
3.87% |
3.94% |
3.95% |
4.06% |
3.81% |
4.07% |
||||||
| Ending shareholders' equity as a percent of ending assets |
10.78% |
10.64% |
10.63% |
11.07% |
11.08% |
10.78% |
11.08% |
||||||
| Ending tangible shareholders' equity as a percent of: |
|||||||||||||
| Ending tangible assets |
9.39% |
9.23% |
9.20% |
9.60% |
9.62% |
9.39% |
9.62% |
||||||
| Risk-weighted assets |
13.56% |
13.50% |
13.59% |
14.27% |
14.50% |
13.56% |
14.50% |
||||||
| Average shareholders' equity as a percent of average assets |
10.79% |
10.69% |
11.23% |
11.19% |
11.15% |
10.74% |
11.12% |
||||||
| Average tangible shareholders' equity as a percent of |
|||||||||||||
| average tangible assets |
9.38% |
9.27% |
9.77% |
9.71% |
9.70% |
9.33% |
9.68% |
||||||
| Book value per share |
$12.23 |
$11.98 |
$11.86 |
$11.99 |
$12.05 |
$12.23 |
$12.05 |
||||||
| Tangible book value per share |
$10.49 |
$10.24 |
$10.10 |
$10.24 |
$10.29 |
$10.49 |
$10.29 |
||||||
| Tier 1 Ratio(2) |
14.34% |
14.42% |
14.61% |
15.26% |
15.41% |
14.34% |
15.41% |
||||||
| Total Capital Ratio(2) |
15.59% |
15.67% |
15.88% |
16.53% |
16.68% |
15.59% |
16.68% |
||||||
| Leverage Ratio(2) |
9.99% |
9.94% |
10.11% |
10.29% |
10.12% |
9.99% |
10.12% |
||||||
| AVERAGE BALANCE SHEET ITEMS |
|||||||||||||
| Loans (3) |
$3,637,458 |
$3,532,311 |
$3,450,069 |
$3,410,102 |
$3,313,731 |
$3,585,175 |
$3,260,054 |
||||||
| Covered loans and FDIC indemnification asset |
421,603 |
478,326 |
568,385 |
655,654 |
758,875 |
449,808 |
799,308 |
||||||
| Investment securities |
1,811,175 |
1,807,571 |
1,654,374 |
1,589,666 |
1,705,219 |
1,809,383 |
1,771,632 |
||||||
| Interest-bearing deposits with other banks |
10,697 |
2,922 |
4,906 |
4,010 |
13,890 |
6,831 |
8,503 |
||||||
| Total earning assets |
$5,880,933 |
$5,821,130 |
$5,677,734 |
$5,659,432 |
$5,791,715 |
$5,851,197 |
$5,839,497 |
||||||
| Total assets |
$6,454,252 |
$6,399,235 |
$6,232,971 |
$6,193,722 |
$6,310,602 |
$6,426,895 |
$6,350,604 |
||||||
| Noninterest-bearing deposits |
$1,110,697 |
$1,096,509 |
$1,129,097 |
$1,072,259 |
$1,063,102 |
$1,103,642 |
$1,056,559 |
||||||
| Interest-bearing deposits |
3,832,295 |
3,695,177 |
3,720,809 |
3,654,311 |
3,792,891 |
3,764,115 |
3,789,167 |
||||||
| Total deposits |
$4,942,992 |
$4,791,686 |
$4,849,906 |
$4,726,570 |
$4,855,993 |
$4,867,757 |
$4,845,726 |
||||||
| Borrowings |
$745,990 |
$842,479 |
$583,522 |
$667,706 |
$644,058 |
$793,968 |
$689,441 |
||||||
| Shareholders' equity |
$696,609 |
$684,332 |
$700,063 |
$693,158 |
$703,804 |
$690,504 |
$706,319 |
||||||
| CREDIT QUALITY RATIOS (excluding covered assets) |
|||||||||||||
| Allowance to ending loans |
1.15% |
1.19% |
1.25% |
1.33% |
1.39% |
1.15% |
1.39% |
||||||
| Allowance to nonaccrual loans |
129.64% |
121.76% |
116.55% |
78.57% |
75.87% |
129.64% |
75.87% |
||||||
| Allowance to nonperforming loans |
93.34% |
88.28% |
83.17% |
61.34% |
62.78% |
93.34% |
62.78% |
||||||
| Nonperforming loans to total loans |
1.23% |
1.35% |
1.50% |
2.16% |
2.22% |
1.23% |
2.22% |
||||||
| Nonperforming assets to ending loans, plus OREO |
1.59% |
1.70% |
2.06% |
2.50% |
2.56% |
1.59% |
2.56% |
||||||
| Nonperforming assets to total assets |
0.89% |
0.95% |
1.13% |
1.38% |
1.38% |
0.89% |
1.38% |
||||||
| Net charge-offs to average loans (annualized) |
0.11% |
0.23% |
0.41% |
0.34% |
0.45% |
0.17% |
0.38% |
||||||
| (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, 2014 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, |
||||||||||
| 2014 |
2013 |
% Change |
2014 |
2013 |
% Change |
||||||
| Interest income |
|||||||||||
| Loans, including fees |
$48,877 |
$55,022 |
(11.2%) |
$98,024 |
$111,047 |
(11.7%) |
|||||
| Investment securities |
|||||||||||
| Taxable |
10,355 |
8,295 |
24.8% |
20,792 |
16,671 |
24.7% |
|||||
| Tax-exempt |
796 |
560 |
42.1% |
1,606 |
1,140 |
40.9% |
|||||
| Total investment securities interest |
11,151 |
8,855 |
25.9% |
22,398 |
17,811 |
25.8% |
|||||
| Other earning assets |
(1,301) |
(1,556) |
(16.4%) |
(2,707) |
(3,028) |
(10.6%) |
|||||
| Total interest income |
58,727 |
62,321 |
(5.8%) |
117,715 |
125,830 |
(6.4%) |
|||||
| Interest expense |
|||||||||||
| Deposits |
3,606 |
3,284 |
9.8% |
6,922 |
7,144 |
(3.1%) |
|||||
| Short-term borrowings |
292 |
305 |
(4.3%) |
621 |
634 |
(2.1%) |
|||||
| Long-term borrowings |
525 |
654 |
(19.7%) |
1,049 |
1,308 |
(19.8%) |
|||||
| Total interest expense |
4,423 |
4,243 |
4.2% |
8,592 |
9,086 |
(5.4%) |
|||||
| Net interest income |
54,304 |
58,078 |
(6.5%) |
109,123 |
116,744 |
(6.5%) |
|||||
| Provision for loan and lease losses - uncovered |
29 |
2,409 |
(98.8%) |
1,188 |
5,450 |
(78.2%) |
|||||
| Provision for loan and lease losses - covered |
(413) |
(8,283) |
(95.0%) |
(2,605) |
759 |
(443.2%) |
|||||
| Net interest income after provision for loan and lease losses |
54,688 |
63,952 |
(14.5%) |
110,540 |
110,535 |
0.0% |
|||||
| Noninterest income |
|||||||||||
| Service charges on deposit accounts |
5,137 |
5,205 |
(1.3%) |
9,909 |
9,922 |
(0.1%) |
|||||
| Trust and wealth management fees |
3,305 |
3,497 |
(5.5%) |
7,051 |
7,447 |
(5.3%) |
|||||
| Bankcard income |
2,809 |
3,145 |
(10.7%) |
5,242 |
5,578 |
(6.0%) |
|||||
| Net gains from sales of loans |
737 |
1,089 |
(32.3%) |
1,133 |
1,795 |
(36.9%) |
|||||
| Gain on sale of investment securities |
0 |
188 |
(100.0%) |
50 |
1,724 |
(97.1%) |
|||||
| FDIC loss sharing income |
1,108 |
(7,384) |
115.0% |
600 |
1,550 |
(61.3%) |
|||||
| Accelerated discount on covered loans |
621 |
1,935 |
(67.9%) |
1,636 |
3,870 |
(57.7%) |
|||||
| Other |
2,620 |
3,940 |
(33.5%) |
4,891 |
6,427 |
(23.9%) |
|||||
| Total noninterest income |
16,337 |
11,615 |
40.7% |
30,512 |
38,313 |
(20.4%) |
|||||
| Noninterest expenses |
|||||||||||
| Salaries and employee benefits |
25,615 |
26,216 |
(2.3%) |
50,876 |
53,545 |
(5.0%) |
|||||
| Pension settlement charges |
0 |
4,316 |
(100.0%) |
0 |
4,316 |
(100.0%) |
|||||
| Net occupancy |
4,505 |
5,384 |
(16.3%) |
9,804 |
11,549 |
(15.1%) |
|||||
| Furniture and equipment |
1,983 |
2,250 |
(11.9%) |
4,060 |
4,621 |
(12.1%) |
|||||
| Data processing |
2,770 |
2,559 |
8.2% |
5,628 |
5,028 |
11.9% |
|||||
| Marketing |
830 |
1,182 |
(29.8%) |
1,616 |
2,079 |
(22.3%) |
|||||
| Communication |
562 |
781 |
(28.0%) |
1,185 |
1,614 |
(26.6%) |
|||||
| Professional services |
1,449 |
1,764 |
(17.9%) |
3,173 |
3,567 |
(11.0%) |
|||||
| State intangible tax |
644 |
1,004 |
(35.9%) |
1,288 |
2,018 |
(36.2%) |
|||||
| FDIC assessments |
1,074 |
1,148 |
(6.4%) |
2,208 |
2,273 |
(2.9%) |
|||||
| Loss (gain) - other real estate owned |
313 |
216 |
44.9% |
731 |
718 |
1.8% |
|||||
| Loss (gain) - covered other real estate owned |
398 |
(2,212) |
118.0% |
431 |
(2,369) |
118.2% |
|||||
| Loss sharing expense |
1,465 |
1,578 |
(7.2%) |
3,034 |
3,864 |
(21.5%) |
|||||
| Other |
5,503 |
7,097 |
(22.5%) |
10,919 |
13,566 |
(19.5%) |
|||||
| Total noninterest expenses |
47,111 |
53,283 |
(11.6%) |
94,953 |
106,389 |
(10.7%) |
|||||
| Income before income taxes |
23,914 |
22,284 |
7.3% |
46,099 |
42,459 |
8.6% |
|||||
| Income tax expense |
7,961 |
6,455 |
23.3% |
15,042 |
12,806 |
17.5% |
|||||
| Net income |
15,953 |
15,829 |
0.8% |
31,057 |
29,653 |
4.7% |
|||||
| ADDITIONAL DATA |
|||||||||||
| Net earnings per share - basic |
$0.28 |
$0.28 |
$0.54 |
$0.52 |
|||||||
| Net earnings per share - diluted |
$0.28 |
$0.27 |
$0.54 |
$0.51 |
|||||||
| Dividends declared per share |
$0.15 |
$0.24 |
$0.30 |
$0.52 |
|||||||
| Return on average assets |
0.99% |
1.01% |
0.97% |
0.94% |
|||||||
| Return on average shareholders' equity |
9.19% |
9.02% |
9.07% |
8.47% |
|||||||
| Interest income |
$58,727 |
$62,321 |
(5.8%) |
$117,715 |
$125,830 |
(6.4%) |
|||||
| Tax equivalent adjustment |
758 |
514 |
47.5% |
1,460 |
991 |
47.3% |
|||||
| Interest income - tax equivalent |
59,485 |
62,835 |
(5.3%) |
119,175 |
126,821 |
(6.0%) |
|||||
| Interest expense |
4,423 |
4,243 |
4.2% |
8,592 |
9,086 |
(5.4%) |
|||||
| Net interest income - tax equivalent |
$55,062 |
$58,592 |
(6.0%) |
$110,583 |
$117,735 |
(6.1%) |
|||||
| Net interest margin |
3.70% |
4.02% |
3.76% |
4.03% |
|||||||
| Net interest margin (fully tax equivalent) (1) |
3.76% |
4.06% |
3.81% |
4.07% |
|||||||
| Full-time equivalent employees |
1,296 |
1,338 |
|||||||||
| (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) |
|||||||
| 2014 |
|||||||
| Second |
First |
% Change |
|||||
| Quarter |
Quarter |
YTD |
Linked Qtr. |
||||
| Interest income |
|||||||
| Loans, including fees |
$48,877 |
$49,147 |
$98,024 |
(0.5%) |
|||
| Investment securities |
|||||||
| Taxable |
10,355 |
10,437 |
20,792 |
(0.8%) |
|||
| Tax-exempt |
796 |
810 |
1,606 |
(1.7%) |
|||
| Total investment securities interest |
11,151 |
11,247 |
22,398 |
(0.9%) |
|||
| Other earning assets |
(1,301) |
(1,406) |
(2,707) |
(7.5%) |
|||
| Total interest income |
58,727 |
58,988 |
117,715 |
(0.4%) |
|||
| Interest expense |
|||||||
| Deposits |
3,606 |
3,316 |
6,922 |
8.7% |
|||
| Short-term borrowings |
292 |
329 |
621 |
(11.2%) |
|||
| Long-term borrowings |
525 |
524 |
1,049 |
0.2% |
|||
| Total interest expense |
4,423 |
4,169 |
8,592 |
6.1% |
|||
| Net interest income |
54,304 |
54,819 |
109,123 |
(0.9%) |
|||
| Provision for loan and lease losses - uncovered |
29 |
1,159 |
1,188 |
(97.5%) |
|||
| Provision for loan and lease losses - covered |
(413) |
(2,192) |
(2,605) |
(81.2%) |
|||
| Net interest income after provision for loan and lease losses |
54,688 |
55,852 |
110,540 |
(2.1%) |
|||
| Noninterest income |
|||||||
| Service charges on deposit accounts |
5,137 |
4,772 |
9,909 |
7.6% |
|||
| Trust and wealth management fees |
3,305 |
3,746 |
7,051 |
(11.8%) |
|||
| Bankcard income |
2,809 |
2,433 |
5,242 |
15.5% |
|||
| Net gains from sales of loans |
737 |
396 |
1,133 |
86.1% |
|||
| Gain on sale of investment securities |
0 |
50 |
50 |
(100.0%) |
|||
| FDIC loss sharing income |
1,108 |
(508) |
600 |
318.1% |
|||
| Accelerated discount on covered loans |
621 |
1,015 |
1,636 |
(38.8%) |
|||
| Other |
2,620 |
2,271 |
4,891 |
15.4% |
|||
| Total noninterest income |
16,337 |
14,175 |
30,512 |
15.3% |
|||
| Noninterest expenses |
|||||||
| Salaries and employee benefits |
25,615 |
25,261 |
50,876 |
1.4% |
|||
| Net occupancy |
4,505 |
5,299 |
9,804 |
(15.0%) |
|||
| Furniture and equipment |
1,983 |
2,077 |
4,060 |
(4.5%) |
|||
| Data processing |
2,770 |
2,858 |
5,628 |
(3.1%) |
|||
| Marketing |
830 |
786 |
1,616 |
5.6% |
|||
| Communication |
562 |
623 |
1,185 |
(9.8%) |
|||
| Professional services |
1,449 |
1,724 |
3,173 |
(16.0%) |
|||
| State intangible tax |
644 |
644 |
1,288 |
0.0% |
|||
| FDIC assessments |
1,074 |
1,134 |
2,208 |
(5.3%) |
|||
| Loss (gain) - other real estate owned |
313 |
418 |
731 |
(25.1%) |
|||
| Loss (gain) - covered other real estate owned |
398 |
33 |
431 |
1106.1% |
|||
| Loss sharing expense |
1,465 |
1,569 |
3,034 |
(6.6%) |
|||
| Other |
5,503 |
5,416 |
10,919 |
1.6% |
|||
| Total noninterest expenses |
47,111 |
47,842 |
94,953 |
(1.5%) |
|||
| Income before income taxes |
23,914 |
22,185 |
46,099 |
7.8% |
|||
| Income tax expense |
7,961 |
7,081 |
15,042 |
12.4% |
|||
| Net income |
$15,953 |
$15,104 |
$31,057 |
5.6% |
|||
| ADDITIONAL DATA |
|||||||
| Net earnings per share - basic |
$0.28 |
$0.26 |
$0.54 |
||||
| Net earnings per share - diluted |
$0.28 |
$0.26 |
$0.54 |
||||
| Dividends declared per share |
$0.15 |
$0.15 |
$0.30 |
||||
| Return on average assets |
0.99% |
0.96% |
0.97% |
||||
| Return on average shareholders' equity |
9.19% |
8.95% |
9.07% |
||||
| Interest income |
$58,727 |
$58,988 |
$117,715 |
(0.4%) |
|||
| Tax equivalent adjustment |
758 |
702 |
1,460 |
8.0% |
|||
| Interest income - tax equivalent |
59,485 |
59,690 |
119,175 |
(0.3%) |
|||
| Interest expense |
4,423 |
4,169 |
8,592 |
6.1% |
|||
| Net interest income - tax equivalent |
$55,062 |
$55,521 |
$110,583 |
(0.8%) |
|||
| Net interest margin |
3.70% |
3.82% |
3.76% |
||||
| Net interest margin (fully tax equivalent) (1) |
3.76% |
3.87% |
3.81% |
||||
| Full-time equivalent employees |
1,296 |
1,286 |
|||||
| (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) |
|||||||||
| 2013 |
|||||||||
| Fourth |
Third |
Second |
First |
Full |
|||||
| Quarter |
Quarter |
Quarter |
Quarter |
Year |
|||||
| Interest income |
|||||||||
| Loans, including fees |
$52,351 |
$52,908 |
$55,022 |
$56,025 |
$216,306 |
||||
| Investment securities |
|||||||||
| Taxable |
9,209 |
8,267 |
8,295 |
8,376 |
34,147 |
||||
| Tax-exempt |
719 |
541 |
560 |
580 |
2,400 |
||||
| Total investment securities interest |
9,928 |
8,808 |
8,855 |
8,956 |
36,547 |
||||
| Other earning assets |
(2,432) |
(2,185) |
(1,556) |
(1,472) |
(7,645) |
||||
| Total interest income |
59,847 |
59,531 |
62,321 |
63,509 |
245,208 |
||||
| Interest expense |
|||||||||
| Deposits |
3,247 |
2,856 |
3,284 |
3,860 |
13,247 |
||||
| Short-term borrowings |
257 |
286 |
305 |
329 |
1,177 |
||||
| Long-term borrowings |
539 |
617 |
654 |
654 |
2,464 |
||||
| Total interest expense |
4,043 |
3,759 |
4,243 |
4,843 |
16,888 |
||||
| Net interest income |
55,804 |
55,772 |
58,078 |
58,666 |
228,320 |
||||
| Provision for loan and lease losses - uncovered |
1,851 |
1,413 |
2,409 |
3,041 |
8,714 |
||||
| Provision for loan and lease losses - covered |
(5,857) |
5,293 |
(8,283) |
9,042 |
195 |
||||
| Net interest income after provision for loan and lease losses |
59,810 |
49,066 |
63,952 |
46,583 |
219,411 |
||||
| Noninterest income |
|||||||||
| Service charges on deposit accounts |
5,226 |
5,447 |
5,205 |
4,717 |
20,595 |
||||
| Trust and wealth management fees |
3,506 |
3,366 |
3,497 |
3,950 |
14,319 |
||||
| Bankcard income |
2,699 |
2,637 |
3,145 |
2,433 |
10,914 |
||||
| Net gains from sales of loans |
604 |
751 |
1,089 |
706 |
3,150 |
||||
| Gain on sale of investment securities |
0 |
0 |
188 |
1,536 |
1,724 |
||||
| FDIC loss sharing income |
(3,385) |
5,555 |
(7,384) |
8,934 |
3,720 |
||||
| Accelerated discount on covered loans |
1,572 |
1,711 |
1,935 |
1,935 |
7,153 |
||||
| Other |
2,821 |
2,824 |
3,940 |
2,487 |
12,072 |
||||
| Total noninterest income |
13,043 |
22,291 |
11,615 |
26,698 |
73,647 |
||||
| Noninterest expenses |
|||||||||
| Salaries and employee benefits |
24,023 |
23,834 |
26,216 |
27,329 |
101,402 |
||||
| Pension settlement charges |
462 |
1,396 |
4,316 |
0 |
6,174 |
||||
| Net occupancy |
4,557 |
5,101 |
5,384 |
6,165 |
21,207 |
||||
| Furniture and equipment |
2,136 |
2,213 |
2,250 |
2,371 |
8,970 |
||||
| Data processing |
2,617 |
2,584 |
2,559 |
2,469 |
10,229 |
||||
| Marketing |
999 |
1,192 |
1,182 |
897 |
4,270 |
||||
| Communication |
728 |
865 |
781 |
833 |
3,207 |
||||
| Professional services |
1,781 |
1,528 |
1,764 |
1,803 |
6,876 |
||||
| State intangible tax |
901 |
1,010 |
1,004 |
1,014 |
3,929 |
||||
| FDIC assessments |
1,121 |
1,107 |
1,148 |
1,125 |
4,501 |
||||
| Loss (gain) - other real estate owned |
348 |
184 |
216 |
502 |
1,250 |
||||
| Loss (gain) - covered other real estate owned |
946 |
204 |
(2,212) |
(157) |
(1,219) |
||||
| Loss sharing expense |
1,495 |
1,724 |
1,578 |
2,286 |
7,083 |
||||
| FDIC indemnification impairment |
22,417 |
0 |
0 |
0 |
22,417 |
||||
| Other |
5,754 |
5,859 |
7,097 |
6,469 |
25,179 |
||||
| Total noninterest expenses |
70,285 |
48,801 |
53,283 |
53,106 |
225,475 |
||||
| Income before income taxes |
2,568 |
22,556 |
22,284 |
20,175 |
67,583 |
||||
| Income tax expense |
(1,217) |
7,645 |
6,455 |
6,351 |
19,234 |
||||
| Net income |
$3,785 |
$14,911 |
$15,829 |
$13,824 |
$48,349 |
||||
| ADDITIONAL DATA |
|||||||||
| Net earnings per share - basic |
$0.07 |
$0.26 |
$0.28 |
$0.24 |
$0.84 |
||||
| Net earnings per share - diluted |
$0.07 |
$0.26 |
$0.27 |
$0.24 |
$0.83 |
||||
| Dividends declared per share |
$0.15 |
$0.27 |
$0.24 |
$0.28 |
$0.94 |
||||
| Return on average assets |
0.24% |
0.96% |
1.01% |
0.88% |
0.77% |
||||
| Return on average shareholders' equity |
2.15% |
8.53% |
9.02% |
7.91% |
6.89% |
||||
| Interest income |
$59,847 |
$59,531 |
$62,321 |
$63,509 |
$245,208 |
||||
| Tax equivalent adjustment |
635 |
516 |
514 |
477 |
2,142 |
||||
| Interest income - tax equivalent |
60,482 |
60,047 |
62,835 |
63,986 |
247,350 |
||||
| Interest expense |
4,043 |
3,759 |
4,243 |
4,843 |
16,888 |
||||
| Net interest income - tax equivalent |
$56,439 |
$56,288 |
$58,592 |
$59,143 |
$230,462 |
||||
| Net interest margin |
3.90% |
3.91% |
4.02% |
4.04% |
3.97% |
||||
| Net interest margin (fully tax equivalent) (1) |
3.94% |
3.95% |
4.06% |
4.07% |
4.01% |
||||
| Full-time equivalent employees |
1,306 |
1,292 |
1,338 |
1,385 |
|||||
| (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 |
|||||||
| 2014 |
2014 |
2013 |
2013 |
2013 |
Linked Qtr. |
Comparable Qtr. |
|||||||
| ASSETS |
|||||||||||||
| Cash and due from banks |
$123,160 |
$161,515 |
$117,620 |
$177,698 |
$114,745 |
(23.7%) |
7.3% |
||||||
| Interest-bearing deposits with other banks |
39,237 |
9,681 |
25,830 |
10,414 |
2,671 |
305.3% |
1369.0% |
||||||
| Investment securities available-for-sale |
897,715 |
862,526 |
913,601 |
854,747 |
884,694 |
4.1% |
1.5% |
||||||
| Investment securities held-to-maturity |
899,502 |
890,806 |
837,272 |
669,093 |
670,246 |
1.0% |
34.2% |
||||||
| Other investments |
47,640 |
47,659 |
47,427 |
75,945 |
75,645 |
(0.0%) |
(37.0%) |
||||||
| Loans held for sale |
13,108 |
6,171 |
8,114 |
10,704 |
18,650 |
112.4% |
(29.7%) |
||||||
| Loans |
|||||||||||||
| Commercial |
1,143,693 |
1,118,057 |
1,035,668 |
960,016 |
940,420 |
2.3% |
21.6% |
||||||
| Real estate - construction |
113,682 |
87,996 |
80,741 |
90,089 |
97,246 |
29.2% |
16.9% |
||||||
| Real estate - commercial |
1,491,731 |
1,513,891 |
1,496,987 |
1,493,969 |
1,477,226 |
(1.5%) |
1.0% |
||||||
| Real estate - residential |
372,601 |
360,671 |
352,931 |
352,830 |
343,016 |
3.3% |
8.6% |
||||||
| Installment |
43,338 |
44,911 |
47,133 |
49,273 |
50,781 |
(3.5%) |
(14.7%) |
||||||
| Home equity |
380,746 |
374,427 |
376,454 |
373,839 |
370,206 |
1.7% |
2.8% |
||||||
| Credit card |
35,656 |
34,458 |
35,592 |
34,285 |
33,222 |
3.5% |
7.3% |
||||||
| Lease financing |
81,212 |
79,792 |
80,135 |
76,615 |
70,011 |
1.8% |
16.0% |
||||||
| Total loans, excluding covered loans |
3,662,659 |
3,614,203 |
3,505,641 |
3,430,916 |
3,382,128 |
1.3% |
8.3% |
||||||
| Less |
|||||||||||||
| Allowance for loan and lease losses |
42,027 |
43,023 |
43,829 |
45,514 |
47,047 |
(2.3%) |
(10.7%) |
||||||
| Net loans - uncovered |
3,620,632 |
3,571,180 |
3,461,812 |
3,385,402 |
3,335,081 |
1.4% |
8.6% |
||||||
| Covered loans |
365,603 |
409,405 |
457,873 |
518,524 |
622,265 |
(10.7%) |
(41.2%) |
||||||
| Less |
|||||||||||||
| Allowance for loan and lease losses |
12,425 |
10,573 |
18,901 |
23,259 |
32,961 |
17.5% |
(62.3%) |
||||||
| Net loans - covered |
353,178 |
398,832 |
438,972 |
495,265 |
589,304 |
(11.4%) |
(40.1%) |
||||||
| Net loans |
3,973,810 |
3,970,012 |
3,900,784 |
3,880,667 |
3,924,385 |
0.1% |
1.3% |
||||||
| Premises and equipment |
133,418 |
135,105 |
137,110 |
139,125 |
142,675 |
(1.2%) |
(6.5%) |
||||||
| Goodwill |
95,050 |
95,050 |
95,050 |
95,050 |
95,050 |
0.0% |
0.0% |
||||||
| Other intangibles |
5,344 |
5,566 |
5,924 |
6,249 |
6,620 |
(4.0%) |
(19.3%) |
||||||
| FDIC indemnification asset |
30,420 |
39,003 |
45,091 |
78,132 |
88,966 |
(22.0%) |
(65.8%) |
||||||
| Accrued interest and other assets |
287,340 |
275,995 |
283,390 |
255,617 |
250,228 |
4.1% |
14.8% |
||||||
| Total assets |
$6,545,744 |
$6,499,089 |
$6,417,213 |
$6,253,441 |
$6,274,575 |
0.7% |
4.3% |
||||||
| LIABILITIES |
|||||||||||||
| Deposits |
|||||||||||||
| Interest-bearing demand |
$1,105,031 |
$1,102,029 |
$1,125,723 |
$1,068,067 |
$1,131,466 |
0.3% |
(2.3%) |
||||||
| Savings |
1,656,798 |
1,639,495 |
1,612,005 |
1,593,895 |
1,601,122 |
1.1% |
3.5% |
||||||
| Time |
973,100 |
956,049 |
952,327 |
926,029 |
978,680 |
1.8% |
(0.6%) |
||||||
| Total interest-bearing deposits |
3,734,929 |
3,697,573 |
3,690,055 |
3,587,991 |
3,711,268 |
1.0% |
0.6% |
||||||
| Noninterest-bearing |
1,140,198 |
1,122,816 |
1,147,452 |
1,141,016 |
1,059,368 |
1.5% |
7.6% |
||||||
| Total deposits |
4,875,127 |
4,820,389 |
4,837,507 |
4,729,007 |
4,770,636 |
1.1% |
2.2% |
||||||
| Short-term borrowings |
|||||||||||||
| Federal funds purchased and securities sold |
|||||||||||||
| under agreements to repurchase |
128,013 |
112,293 |
94,749 |
105,472 |
114,030 |
14.0% |
12.3% |
||||||
| FHLB short-term borrowings |
686,300 |
722,800 |
654,000 |
518,200 |
505,900 |
(5.0%) |
35.7% |
||||||
| Total short-term borrowings |
814,313 |
835,093 |
748,749 |
623,672 |
619,930 |
(2.5%) |
31.4% |
||||||
| Long-term debt |
59,693 |
60,163 |
60,780 |
61,088 |
73,957 |
(0.8%) |
(19.3%) |
||||||
| Total borrowed funds |
874,006 |
895,256 |
809,529 |
684,760 |
693,887 |
(2.4%) |
26.0% |
||||||
| Accrued interest and other liabilities |
90,780 |
92,097 |
88,016 |
147,635 |
114,600 |
(1.4%) |
(20.8%) |
||||||
| Total liabilities |
5,839,913 |
5,807,742 |
5,735,052 |
5,561,402 |
5,579,123 |
0.6% |
4.7% |
||||||
| SHAREHOLDERS' EQUITY |
|||||||||||||
| Common stock |
574,206 |
573,243 |
577,076 |
577,429 |
576,641 |
0.2% |
(0.4%) |
||||||
| Retained earnings |
337,971 |
330,672 |
324,192 |
328,993 |
329,633 |
2.2% |
2.5% |
||||||
| Accumulated other comprehensive loss |
(21,569) |
(27,648) |
(31,281) |
(29,294) |
(25,645) |
(22.0%) |
(15.9%) |
||||||
| Treasury stock, at cost |
(184,777) |
(184,920) |
(187,826) |
(185,089) |
(185,177) |
(0.1%) |
(0.2%) |
||||||
| Total shareholders' equity |
705,831 |
691,347 |
682,161 |
692,039 |
695,452 |
2.1% |
1.5% |
||||||
| Total liabilities and shareholders' equity |
$6,545,744 |
$6,499,089 |
$6,417,213 |
$6,253,441 |
$6,274,575 |
0.7% |
4.3% |
||||||
| 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, |
June. 30, |
||||||||
| 2014 |
2014 |
2013 |
2013 |
2013 |
2014 |
2013 |
|||||||
| ASSETS |
|||||||||||||
| Cash and due from banks |
$118,947 |
$123,583 |
$110,246 |
$120,154 |
$119,909 |
$121,252 |
$115,777 |
||||||
| Interest-bearing deposits with other banks |
10,697 |
2,922 |
4,906 |
4,010 |
13,890 |
6,831 |
8,503 |
||||||
| Investment securities |
1,811,175 |
1,807,571 |
1,654,374 |
1,589,666 |
1,705,219 |
1,809,383 |
1,771,632 |
||||||
| Loans held for sale |
8,464 |
4,924 |
7,990 |
13,349 |
19,722 |
6,704 |
20,405 |
||||||
| Loans |
|||||||||||||
| Commercial |
1,117,483 |
1,062,225 |
986,438 |
937,939 |
904,029 |
1,090,006 |
883,840 |
||||||
| Real estate - construction |
97,052 |
83,095 |
79,194 |
93,103 |
93,813 |
90,112 |
87,527 |
||||||
| Real estate - commercial |
1,511,769 |
1,491,569 |
1,489,858 |
1,488,047 |
1,445,626 |
1,501,725 |
1,428,791 |
||||||
| Real estate - residential |
365,118 |
355,593 |
351,929 |
347,110 |
334,652 |
360,382 |
329,240 |
||||||
| Installment |
43,786 |
45,642 |
47,733 |
50,130 |
52,313 |
44,709 |
53,492 |
||||||
| Home equity |
378,010 |
374,503 |
374,919 |
371,072 |
367,408 |
376,266 |
366,493 |
||||||
| Credit card |
35,321 |
34,663 |
35,673 |
34,176 |
33,785 |
34,994 |
33,544 |
||||||
| Lease financing |
80,455 |
80,097 |
76,335 |
75,176 |
62,383 |
80,277 |
56,722 |
||||||
| Total loans, excluding covered loans |
3,628,994 |
3,527,387 |
3,442,079 |
3,396,753 |
3,294,009 |
3,578,471 |
3,239,649 |
||||||
| Less |
|||||||||||||
| Allowance for loan and lease losses |
43,559 |
44,273 |
46,531 |
49,451 |
50,172 |
43,914 |
49,792 |
||||||
| Net loans - uncovered |
3,585,435 |
3,483,114 |
3,395,548 |
3,347,302 |
3,243,837 |
3,534,557 |
3,189,857 |
||||||
| Covered loans |
387,616 |
434,527 |
490,072 |
573,243 |
653,892 |
410,942 |
689,173 |
||||||
| Less |
|||||||||||||
| Allowance for loan and lease losses |
11,590 |
17,629 |
21,733 |
31,208 |
41,861 |
14,593 |
43,971 |
||||||
| Net loans - covered |
376,026 |
416,898 |
468,339 |
542,035 |
612,031 |
396,349 |
645,202 |
||||||
| Net loans |
3,961,461 |
3,900,012 |
3,863,887 |
3,889,337 |
3,855,868 |
3,930,906 |
3,835,059 |
||||||
| Premises and equipment |
134,522 |
136,624 |
138,644 |
141,498 |
144,759 |
135,567 |
146,050 |
||||||
| Goodwill |
95,050 |
95,050 |
95,050 |
95,050 |
95,050 |
95,050 |
95,050 |
||||||
| Other intangibles |
5,445 |
5,723 |
6,075 |
6,428 |
6,831 |
5,583 |
7,087 |
||||||
| FDIC indemnification asset |
33,987 |
43,799 |
78,313 |
82,411 |
104,983 |
38,866 |
110,135 |
||||||
| Accrued interest and other assets |
274,504 |
279,027 |
273,486 |
251,819 |
244,371 |
276,753 |
240,906 |
||||||
| Total assets |
$6,454,252 |
$6,399,235 |
$6,232,971 |
$6,193,722 |
$6,310,602 |
$6,426,895 |
$6,350,604 |
||||||
| LIABILITIES |
|||||||||||||
| Deposits |
|||||||||||||
| Interest-bearing demand |
$1,169,350 |
$1,107,844 |
$1,150,275 |
$1,098,524 |
$1,141,767 |
$1,138,767 |
$1,127,296 |
||||||
| Savings |
1,702,521 |
1,633,910 |
1,637,657 |
1,608,351 |
1,639,834 |
1,668,405 |
1,629,096 |
||||||
| Time |
960,424 |
953,423 |
932,877 |
947,436 |
1,011,290 |
956,943 |
1,032,775 |
||||||
| Total interest-bearing deposits |
3,832,295 |
3,695,177 |
3,720,809 |
3,654,311 |
3,792,891 |
3,764,115 |
3,789,167 |
||||||
| Noninterest-bearing |
1,110,697 |
1,096,509 |
1,129,097 |
1,072,259 |
1,063,102 |
1,103,642 |
1,056,559 |
||||||
| Total deposits |
4,942,992 |
4,791,686 |
4,849,906 |
4,726,570 |
4,855,993 |
4,867,757 |
4,845,726 |
||||||
| Short-term borrowings |
|||||||||||||
| Federal funds purchased and securities sold |
|||||||||||||
| under agreements to repurchase |
123,682 |
110,533 |
107,738 |
114,505 |
105,299 |
117,144 |
119,923 |
||||||
| Federal Home Loan Bank short-term borrowings |
562,466 |
671,579 |
414,892 |
483,937 |
464,630 |
616,721 |
495,085 |
||||||
| Total short-term borrowings |
686,148 |
782,112 |
522,630 |
598,442 |
569,929 |
733,865 |
615,008 |
||||||
| Long-term debt |
59,842 |
60,367 |
60,892 |
69,264 |
74,129 |
60,103 |
74,433 |
||||||
| Total borrowed funds |
745,990 |
842,479 |
583,522 |
667,706 |
644,058 |
793,968 |
689,441 |
||||||
| Accrued interest and other liabilities |
68,661 |
80,738 |
99,480 |
106,288 |
106,747 |
74,666 |
109,118 |
||||||
| Total liabilities |
5,757,643 |
5,714,903 |
5,532,908 |
5,500,564 |
5,606,798 |
5,736,391 |
5,644,285 |
||||||
| SHAREHOLDERS' EQUITY |
|||||||||||||
| Common stock |
573,716 |
575,828 |
577,851 |
576,953 |
576,391 |
574,766 |
577,416 |
||||||
| Retained earnings |
332,944 |
324,875 |
337,034 |
329,518 |
329,795 |
328,932 |
330,334 |
||||||
| Accumulated other comprehensive loss |
(25,189) |
(29,251) |
(28,380) |
(28,232) |
(19,204) |
(27,209) |
(19,389) |
||||||
| Treasury stock, at cost |
(184,862) |
(187,120) |
(186,442) |
(185,081) |
(183,178) |
(185,985) |
(182,042) |
||||||
| Total shareholders' equity |
696,609 |
684,332 |
700,063 |
693,158 |
703,804 |
690,504 |
706,319 |
||||||
| Total liabilities and shareholders' equity |
$6,454,252 |
$6,399,235 |
$6,232,971 |
$6,193,722 |
$6,310,602 |
$6,426,895 |
$6,350,604 |
||||||
| FIRST FINANCIAL BANCORP. |
||||||||||||||||||||
| NET INTEREST MARGIN RATE/VOLUME ANALYSIS (1) |
||||||||||||||||||||
| (Dollars in thousands) |
||||||||||||||||||||
| (Unaudited) |
||||||||||||||||||||
| Quarterly Averages |
Year-to-Date Averages |
|||||||||||||||||||
| Jun. 30, 2014 |
Mar. 31, 2014 |
Jun. 30, 2013 |
Jun. 30, 2014 |
Jun. 30, 2013 |
||||||||||||||||
| Balance |
Yield |
Balance |
Yield |
Balance |
Yield |
Balance |
Yield |
Balance |
Yield |
|||||||||||
| Earning assets |
||||||||||||||||||||
| Investments: |
||||||||||||||||||||
| Investment securities |
$ 1,811,175 |
2.47% |
$ 1,807,571 |
2.52% |
$ 1,705,219 |
2.08% |
$ 1,809,383 |
2.50% |
$ 1,771,632 |
2.03% |
||||||||||
| Interest-bearing deposits with other banks |
10,697 |
0.45% |
2,922 |
1.39% |
13,890 |
0.32% |
6,831 |
0.65% |
8,503 |
0.36% |
||||||||||
| Gross loans(2) |
4,059,061 |
4.70% |
4,010,637 |
4.83% |
4,072,606 |
5.26% |
4,034,983 |
4.76% |
4,059,362 |
5.37% |
||||||||||
| Total earning assets |
5,880,933 |
4.01% |
5,821,130 |
4.11% |
5,791,715 |
4.32% |
5,851,197 |
4.06% |
5,839,497 |
4.35% |
||||||||||
| Nonearning assets |
||||||||||||||||||||
| Allowance for loan and lease losses |
(55,149) |
(61,902) |
(92,033) |
(58,507) |
(93,763) |
|||||||||||||||
| Cash and due from banks |
118,947 |
123,583 |
119,909 |
121,252 |
115,777 |
|||||||||||||||
| Accrued interest and other assets |
509,521 |
516,424 |
491,011 |
512,953 |
489,093 |
|||||||||||||||
| Total assets |
$ 6,454,252 |
$ 6,399,235 |
$ 6,310,602 |
$ 6,426,895 |
$ 6,350,604 |
|||||||||||||||
| Interest-bearing liabilities |
||||||||||||||||||||
| Deposits: |
||||||||||||||||||||
| Interest-bearing demand |
$ 1,169,350 |
0.11% |
$ 1,107,844 |
0.12% |
$ 1,141,767 |
0.09% |
$ 1,138,767 |
0.11% |
$ 1,127,296 |
0.10% |
||||||||||
| Savings |
1,702,521 |
0.23% |
1,633,910 |
0.20% |
1,639,834 |
0.10% |
1,668,405 |
0.21% |
1,629,096 |
0.10% |
||||||||||
| Time |
960,424 |
0.98% |
953,423 |
0.94% |
1,011,290 |
1.04% |
956,943 |
0.96% |
1,032,775 |
1.12% |
||||||||||
| Total interest-bearing deposits |
3,832,295 |
0.38% |
3,695,177 |
0.36% |
3,792,891 |
0.35% |
3,764,115 |
0.37% |
3,789,167 |
0.38% |
||||||||||
| Borrowed funds |
||||||||||||||||||||
| Short-term borrowings |
686,148 |
0.17% |
782,112 |
0.17% |
569,929 |
0.21% |
733,865 |
0.17% |
615,008 |
0.21% |
||||||||||
| Long-term debt |
59,842 |
3.52% |
60,367 |
3.52% |
74,129 |
3.54% |
60,103 |
3.52% |
74,433 |
3.54% |
||||||||||
| Total borrowed funds |
745,990 |
0.44% |
842,479 |
0.41% |
644,058 |
0.60% |
793,968 |
0.42% |
689,441 |
0.57% |
||||||||||
| Total interest-bearing liabilities |
4,578,285 |
0.39% |
4,537,656 |
0.37% |
4,436,949 |
0.38% |
4,558,083 |
0.38% |
4,478,608 |
0.41% |
||||||||||
| Noninterest-bearing liabilities |
||||||||||||||||||||
| Noninterest-bearing demand deposits |
1,110,697 |
1,096,509 |
1,063,102 |
1,103,642 |
1,056,559 |
|||||||||||||||
| Other liabilities |
68,661 |
80,738 |
106,747 |
74,666 |
109,118 |
|||||||||||||||
| Shareholders' equity |
696,609 |
684,332 |
703,804 |
690,504 |
706,319 |
|||||||||||||||
| Total liabilities & shareholders' equity |
$ 6,454,252 |
$ 6,399,235 |
$ 6,310,602 |
$ 6,426,895 |
$ 6,350,604 |
|||||||||||||||
| Net interest income(1) |
$ 54,304 |
$ 54,819 |
$ 58,078 |
$ 109,123 |
$ 116,744 |
|||||||||||||||
| Net interest spread(1) |
3.62% |
3.74% |
3.94% |
3.68% |
3.94% |
|||||||||||||||
| Net interest margin(1) |
3.70% |
3.82% |
4.02% |
3.76% |
4.03% |
|||||||||||||||
| (1)Not tax equivalent. |
||||||||||||||||||||
| (2)Loans held for sale, nonaccrual loans, covered loans, and |
||||||||||||||||||||
| FIRST FINANCIAL BANCORP. |
||||||||||||||||||
| NET INTEREST MARGIN RATE/VOLUME ANALYSIS (1) |
||||||||||||||||||
| (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 |
$ (240) |
$ 144 |
$ (96) |
$ 1,644 |
$ 652 |
$ 2,296 |
$ 4,120 |
$ 467 |
$ 4,587 |
|||||||||
| Interest-bearing deposits with other banks |
(7) |
9 |
2 |
5 |
(4) |
1 |
12 |
(5) |
7 |
|||||||||
| Gross loans(2) |
(1,251) |
1,084 |
(167) |
(5,732) |
(159) |
(5,891) |
(12,133) |
(576) |
(12,709) |
|||||||||
| Total earning assets |
(1,498) |
1,237 |
(261) |
(4,083) |
489 |
(3,594) |
(8,001) |
(114) |
(8,115) |
|||||||||
| Interest-bearing liabilities |
||||||||||||||||||
| Total interest-bearing deposits |
$ 123 |
$ 167 |
$ 290 |
$ 285 |
$ 37 |
$ 322 |
$ (176) |
$ (46) |
$ (222) |
|||||||||
| Borrowed funds |
||||||||||||||||||
| Short-term borrowings |
0 |
(37) |
(37) |
(62) |
49 |
(13) |
(114) |
101 |
(13) |
|||||||||
| Long-term debt |
0 |
1 |
1 |
(4) |
(125) |
(129) |
(9) |
(250) |
(259) |
|||||||||
| Total borrowed funds |
0 |
(36) |
(36) |
(66) |
(76) |
(142) |
(123) |
(149) |
(272) |
|||||||||
| Total interest-bearing liabilities |
123 |
131 |
254 |
219 |
(39) |
180 |
(299) |
(195) |
(494) |
|||||||||
| Net interest income(1) |
$ (1,621) |
$ 1,106 |
$ (515) |
$ (4,302) |
$ 528 |
$ (3,774) |
$ (7,702) |
$ 81 |
$ (7,621) |
|||||||||
| (1)Not tax equivalent. |
||||||||||||||||||
| (2)Loans held for sale, nonaccrual loans, covered 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, |
|||||||
| 2014 |
2014 |
2013 |
2013 |
2013 |
2014 |
2013 |
|||||||
| ALLOWANCE FOR LOAN AND LEASE LOSS ACTIVITY |
|||||||||||||
| Balance at beginning of period |
$43,023 |
$43,829 |
$45,514 |
$47,047 |
$48,306 |
$43,829 |
$47,777 |
||||||
| Provision for uncovered loan and lease losses |
29 |
1,159 |
1,851 |
1,413 |
2,409 |
1,188 |
5,450 |
||||||
| Gross charge-offs |
|||||||||||||
| Commercial |
571 |
656 |
293 |
1,482 |
859 |
1,227 |
1,640 |
||||||
| Real estate - construction |
0 |
0 |
1 |
0 |
0 |
0 |
0 |
||||||
| Real estate - commercial |
699 |
543 |
3,113 |
2,174 |
2,044 |
1,242 |
3,039 |
||||||
| Real estate - residential |
283 |
257 |
218 |
249 |
326 |
540 |
549 |
||||||
| Installment |
14 |
128 |
39 |
99 |
97 |
142 |
197 |
||||||
| Home equity |
383 |
544 |
706 |
411 |
591 |
927 |
1,292 |
||||||
| Other |
237 |
296 |
398 |
696 |
277 |
533 |
687 |
||||||
| Total gross charge-offs |
2,187 |
2,424 |
4,768 |
5,111 |
4,194 |
4,611 |
7,404 |
||||||
| Recoveries |
|||||||||||||
| Commercial |
580 |
39 |
194 |
92 |
67 |
619 |
386 |
||||||
| Real estate - construction |
0 |
0 |
46 |
490 |
0 |
0 |
136 |
||||||
| Real estate - commercial |
334 |
114 |
634 |
1,264 |
57 |
448 |
96 |
||||||
| Real estate - residential |
100 |
27 |
96 |
98 |
5 |
127 |
9 |
||||||
| Installment |
50 |
77 |
66 |
57 |
110 |
127 |
187 |
||||||
| Home equity |
37 |
103 |
136 |
95 |
225 |
140 |
277 |
||||||
| Other |
61 |
99 |
60 |
69 |
62 |
160 |
133 |
||||||
| Total recoveries |
1,162 |
459 |
1,232 |
2,165 |
526 |
1,621 |
1,224 |
||||||
| Total net charge-offs |
1,025 |
1,965 |
3,536 |
2,946 |
3,668 |
2,990 |
6,180 |
||||||
| Ending allowance for uncovered loan and lease losses |
$42,027 |
$43,023 |
$43,829 |
$45,514 |
$47,047 |
$42,027 |
$47,047 |
||||||
| NET CHARGE-OFFS TO AVERAGE LOANS AND LEASES (ANNUALIZED) |
|||||||||||||
| Commercial |
0.00% |
0.24% |
0.04% |
0.59% |
0.35% |
0.11% |
0.29% |
||||||
| Real estate - construction |
0.00% |
0.00% |
(0.23%) |
(2.09%) |
0.00% |
0.00% |
(0.31%) |
||||||
| Real estate - commercial |
0.10% |
0.12% |
0.66% |
0.24% |
0.55% |
0.11% |
0.42% |
||||||
| Real estate - residential |
0.20% |
0.26% |
0.14% |
0.17% |
0.38% |
0.23% |
0.33% |
||||||
| Installment |
(0.33%) |
0.45% |
(0.22%) |
0.33% |
(0.10%) |
0.07% |
0.04% |
||||||
| Home equity |
0.37% |
0.48% |
0.60% |
0.34% |
0.40% |
0.42% |
0.56% |
||||||
| Other |
0.61% |
0.70% |
1.20% |
2.27% |
0.90% |
0.65% |
1.24% |
||||||
| Total net charge-offs |
0.11% |
0.23% |
0.41% |
0.34% |
0.45% |
0.17% |
0.38% |
||||||
| COMPONENTS OF NONPERFORMING LOANS, NONPERFORMING ASSETS, AND UNDERPERFORMING ASSETS |
|||||||||||||
| Nonaccrual loans(1) |
|||||||||||||
| Commercial |
$7,077 |
$7,097 |
$7,934 |
$8,554 |
$12,925 |
$7,077 |
$12,925 |
||||||
| Real estate - construction |
223 |
223 |
223 |
1,099 |
1,104 |
223 |
1,104 |
||||||
| Real estate - commercial |
15,288 |
16,758 |
17,286 |
35,549 |
35,055 |
15,288 |
35,055 |
||||||
| Real estate - residential |
6,806 |
8,157 |
8,606 |
9,346 |
9,369 |
6,806 |
9,369 |
||||||
| Installment |
459 |
399 |
574 |
421 |
249 |
459 |
249 |
||||||
| Home equity |
2,565 |
2,700 |
2,982 |
2,871 |
2,813 |
2,565 |
2,813 |
||||||
| Lease financing |
0 |
0 |
0 |
86 |
496 |
0 |
496 |
||||||
| Nonaccrual loans |
32,418 |
35,334 |
37,605 |
57,926 |
62,011 |
32,418 |
62,011 |
||||||
| Accruing troubled debt restructurings (TDRs) |
12,607 |
13,400 |
15,094 |
16,278 |
12,924 |
12,607 |
12,924 |
||||||
| Total nonperforming loans |
45,025 |
48,734 |
52,699 |
74,204 |
74,935 |
45,025 |
74,935 |
||||||
| Other real estate owned (OREO) |
13,370 |
12,743 |
19,806 |
11,804 |
11,798 |
13,370 |
11,798 |
||||||
| Total nonperforming assets |
58,395 |
61,477 |
72,505 |
86,008 |
86,733 |
58,395 |
86,733 |
||||||
| Accruing loans past due 90 days or more |
256 |
208 |
218 |
265 |
158 |
256 |
158 |
||||||
| Total underperforming assets |
$58,651 |
$61,685 |
$72,723 |
$86,273 |
$86,891 |
$58,651 |
$86,891 |
||||||
| Total classified assets |
$103,799 |
$103,471 |
$110,509 |
$120,423 |
$129,832 |
$103,799 |
$129,832 |
||||||
| CREDIT QUALITY RATIOS (excluding covered assets) |
|||||||||||||
| Allowance for loan and lease losses to |
|||||||||||||
| Nonaccrual loans |
129.64% |
121.76% |
116.55% |
78.57% |
75.87% |
129.64% |
75.87% |
||||||
| Nonperforming loans |
93.34% |
88.28% |
83.17% |
61.34% |
62.78% |
93.34% |
62.78% |
||||||
| Total ending loans |
1.15% |
1.19% |
1.25% |
1.33% |
1.39% |
1.15% |
1.39% |
||||||
| Nonperforming loans to total loans |
1.23% |
1.35% |
1.50% |
2.16% |
2.22% |
1.23% |
2.22% |
||||||
| Nonperforming assets to |
|||||||||||||
| Ending loans, plus OREO |
1.59% |
1.70% |
2.06% |
2.50% |
2.56% |
1.59% |
2.56% |
||||||
| Total assets |
0.89% |
0.95% |
1.13% |
1.38% |
1.38% |
0.89% |
1.38% |
||||||
| Nonperforming assets, excluding accruing TDRs to |
|||||||||||||
| Ending loans, plus OREO |
1.25% |
1.33% |
1.63% |
2.03% |
2.17% |
1.25% |
2.17% |
||||||
| Total assets |
0.70% |
0.74% |
0.89% |
1.12% |
1.18% |
0.70% |
1.18% |
||||||
| (1) Nonaccrual loans include nonaccrual TDRs of $11.0 million, $14.6 million, $13.0 million, $13.0 million, and $19.9 million, as of June 30, 2014, March 31, 2014, December 31, 2013, September 30, 2013, and June 30, 2013, respectively. |
|||||||||||||
| 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, |
||||||||
| 2014 |
2014 |
2013 |
2013 |
2013 |
2014 |
2013 |
||||||||
| PER COMMON SHARE |
||||||||||||||
| Market Price |
||||||||||||||
| High |
$18.43 |
$18.20 |
$17.59 |
$16.47 |
$16.05 |
$18.43 |
$16.07 |
|||||||
| Low |
$15.51 |
$15.98 |
$14.56 |
$14.89 |
$14.52 |
$15.51 |
$14.46 |
|||||||
| Close |
$17.21 |
$17.98 |
$17.43 |
$15.17 |
$14.90 |
$17.21 |
$14.90 |
|||||||
| Average shares outstanding - basic |
57,201,494 |
57,091,604 |
57,152,425 |
57,201,390 |
57,291,994 |
57,146,853 |
57,365,105 |
|||||||
| Average shares outstanding - diluted |
57,951,636 |
57,828,179 |
57,863,433 |
58,012,588 |
58,128,349 |
57,890,268 |
58,206,503 |
|||||||
| Ending shares outstanding |
57,718,317 |
57,709,937 |
57,533,046 |
57,702,444 |
57,698,344 |
57,718,317 |
57,698,344 |
|||||||
| REGULATORY CAPITAL |
Preliminary |
Preliminary |
||||||||||||
| Tier 1 Capital |
$640,237 |
$631,099 |
$624,850 |
$631,846 |
$630,819 |
$640,237 |
$630,819 |
|||||||
| Tier 1 Ratio |
14.34% |
14.42% |
14.61% |
15.26% |
15.41% |
14.34% |
15.41% |
|||||||
| Total Capital |
$696,014 |
$685,926 |
$679,074 |
$684,363 |
$682,927 |
$696,014 |
$682,927 |
|||||||
| Total Capital Ratio |
15.59% |
15.67% |
15.88% |
16.53% |
16.68% |
15.59% |
16.68% |
|||||||
| Total Capital in excess of minimum |
||||||||||||||
| requirement |
$338,848 |
$335,806 |
$336,982 |
$353,118 |
$355,435 |
$338,848 |
$355,435 |
|||||||
| Total Risk-Weighted Assets |
$4,464,578 |
$4,376,505 |
$4,276,152 |
$4,140,561 |
$4,093,644 |
$4,464,578 |
$4,093,644 |
|||||||
| Leverage Ratio |
9.99% |
9.94% |
10.11% |
10.29% |
10.12% |
9.99% |
10.12% |
|||||||
| OTHER CAPITAL RATIOS |
||||||||||||||
| Ending shareholders' equity to ending |
||||||||||||||
| assets |
10.78% |
10.64% |
10.63% |
11.07% |
11.08% |
10.78% |
11.08% |
|||||||
| Ending tangible shareholders' equity |
||||||||||||||
| to ending tangible assets |
9.39% |
9.23% |
9.20% |
9.60% |
9.62% |
9.39% |
9.62% |
|||||||
| Average shareholders' equity to |
||||||||||||||
| average assets |
10.79% |
10.69% |
11.23% |
11.19% |
11.15% |
10.74% |
11.12% |
|||||||
| Average tangible shareholders' equity |
||||||||||||||
| to average tangible assets |
9.38% |
9.27% |
9.77% |
9.71% |
9.70% |
9.33% |
9.68% |
|||||||
| REPURCHASE PROGRAM(1) |
||||||||||||||
| Shares repurchased |
0 |
40,255 |
209,745 |
0 |
291,400 |
40,255 |
540,400 |
|||||||
| Average share repurchase price |
N/A |
$17.32 |
$16.39 |
N/A |
$15.47 |
$17.32 |
$15.43 |
|||||||
| Total cost of shares repurchased |
N/A |
$697 |
$3,438 |
N/A |
$4,508 |
$697 |
$8,339 |
|||||||
| (1)Represents share repurchases as part of publicly announced plans. |
||||||||||||||
| N/A=Not applicable |
||||||||||||||
SUPPLEMENTAL INFORMATION ON COVERED ASSETS
ACCELERATED DISCOUNT ON LOAN PREPAYMENTS AND DISPOSITIONS
During the second quarter, First Financial recognized approximately $0.6 million in accelerated discount on covered loans, net of the related adjustment on the FDIC indemnification asset. Accelerated discount is recognized when covered 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 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.
NET INTEREST MARGIN IMPACT
Net interest margin is affected by certain activity related to the covered loan portfolio. The majority of these loans are accounted for under FASB 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, 2014.
| Table VII |
For the Three Months Ended |
||||||
| June 30, 2014 |
|||||||
| Average |
|||||||
| (Dollars in thousands) |
Balance |
Yield |
|||||
| Loans, excluding covered loans 1 |
$ 3,637,458 |
4.26% |
|||||
| Covered loan portfolio accounted for under ASC Topic 310-302 |
333,612 |
10.20% |
|||||
| Covered loan portfolio accounted for under ASC Topic 310-203 |
54,004 |
13.26% |
|||||
| FDIC indemnification asset2 |
33,987 |
(15.49%) |
|||||
| Total |
$ 4,059,061 |
4.70% |
|||||
| Yield earned on total covered loans |
10.63% |
||||||
| Yield earned on total covered loans and FDIC indemnification asset |
8.52% |
||||||
| 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 |
|||||||
COVERED ASSETS
The following table presents the covered loan portfolio as of June 30, 2014, March 31, 2014 and June 30, 2013.
| Table VIII |
||||||||||||||
| As of |
||||||||||||||
| June 30, 2014 |
March 31, 2014 |
June 30, 2013 |
||||||||||||
| Percent |
Percent |
Percent |
||||||||||||
| (Dollars in thousands) |
Balance |
of Total |
Balance |
of Total |
Balance |
of Total |
||||||||
| Commercial |
$ 27,488 |
7.5% |
$ 34,385 |
8.4% |
$ 69,562 |
11.2% |
||||||||
| Real estate - construction |
2,021 |
0.6% |
8,480 |
2.1% |
9,647 |
1.6% |
||||||||
| Real estate - commercial |
208,338 |
57.0% |
234,797 |
57.4% |
389,282 |
62.6% |
||||||||
| Real estate - residential |
74,960 |
20.5% |
77,768 |
19.0% |
90,707 |
14.6% |
||||||||
| Installment |
4,415 |
1.2% |
5,106 |
1.2% |
7,057 |
1.1% |
||||||||
| Home equity |
46,100 |
12.6% |
46,319 |
11.3% |
53,214 |
8.6% |
||||||||
| Other |
2,281 |
0.6% |
2,550 |
0.6% |
2,796 |
0.4% |
||||||||
| Total |
$ 365,603 |
100.0% |
$ 409,405 |
100.0% |
$ 622,265 |
100.0% |
||||||||
As of June 30, 2014, 9.1% of the Company's total loans were covered loans. During the second quarter, the total balance of covered loans decreased $43.8 million, or 10.7%, compared to the prior quarter. Included in the decrease in covered loan balances during the second quarter was a $21.2 million, or 24.4%, decline in the balance of covered loans classified as likely to exit resulting from the continued successful execution of resolution strategies.
Covered OREO decreased $3.6 million, or 15.7%, during the second quarter to $19.4 million as of June 30, 2014, as additions of $3.5 million were offset by resolutions and valuation adjustments of $7.1 million. The Company recognized a net loss on sales of covered OREO of $0.4 million during the quarter, which was offset by a corresponding increase in FDIC loss sharing income of approximately 80% of the net loss recognized.
As required under the loss sharing agreements, First Financial must file quarterly certifications with the FDIC on all covered loans. The payment of claims is subject to the FDIC's review for compliance with the loss sharing agreements and to date, all certifications have been filed in a timely manner and without significant issues. The Company's loss sharing agreements with the FDIC related to non-single-family loans expire during the third quarter 2014, while the agreements related to single-family loans expire in the third quarter 2019.
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 ongoing 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, 2014 and for the trailing three quarters.
| Table IX |
||||||||||
| As of or for the Three Months Ended |
||||||||||
| June 30, |
March 31, |
December 31, |
September 30, |
|||||||
| (Dollars in thousands) |
2014 |
2014 |
2013 |
2013 |
||||||
| Balance at beginning of period |
$ 10,573 |
$ 18,901 |
$ 23,259 |
$ 32,961 |
||||||
| Provision for loan and lease losses - covered |
(413) |
(2,192) |
(5,857) |
5,293 |
||||||
| Total gross charge-offs |
(3,485) |
(7,240) |
(3,850) |
(21,009) |
||||||
| Total recoveries |
5,750 |
1,104 |
5,349 |
6,014 |
||||||
| Total net (charge-offs) / recoveries |
2,265 |
(6,136) |
1,499 |
(14,995) |
||||||
| Ending allowance for loan and lease losses - covered |
$ 12,425 |
$ 10,573 |
$ 18,901 |
$ 23,259 |
||||||
As a percentage of total covered loans, the allowance for loan losses totaled 3.40% as of June 30, 2014 compared to 2.58% as of March 31, 2014.
Net recoveries on covered loans during the second quarter were $2.3 million compared to net charge-offs of $6.1 million for the first quarter 2014. During the second quarter, the Company recognized negative provision expense of $0.4 million compared to negative provision expense of $2.2 million for the linked quarter. The difference between provision expense and net charge-offs / recoveries primarily relates to the quarterly re-estimation of cash flow expectations required under FASB ASC Topic 310-30.
In addition to the provision expense, the Company incurred loss sharing and covered asset expenses of $1.9 million, consisting primarily of credit and collection-related expenses as well as losses on the disposition of covered OREO. The FDIC loss sharing income of $1.1 million for the quarter represents the corresponding offset to provision expense, loss sharing and covered asset expenses for reimbursements due from the FDIC under loss sharing agreements.
SOURCE First Financial Bancorp
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