First Financial Bancorp Reports First Quarter 2016 Financial Results

CINCINNATI, April 21, 2016 /PRNewswire/ -- First Financial Bancorp (Nasdaq: FFBC) ("First Financial" or the "Company") announced financial results for the first quarter 2016.  For the three months ended March 31, 2016, the Company reported net income of $19.8 million, or $0.32 per diluted common share, compared to net income of $19.8 million, or $0.32 per diluted common share, in the fourth quarter of 2015 and $17.6 million, or $0.29 per diluted common share, in the first quarter of 2015. 

Return on average assets for the first quarter of 2016 was 0.98% while return on average tangible common equity was 13.06%.  These compare to a return on average assets of 0.99% and return on average tangible common equity of 12.98% in the fourth quarter of 2015 and a return on average assets of 0.99% and a return on average tangible common equity of 11.12% in the first quarter of 2015.

First quarter 2016 results included approximately $0.5 million of pre-tax, non-operating expenses which were primarily related to the consolidation of six branch locations during the period.  Excluding these items, net income was $20.1 million, or $0.33 per diluted common share, return on average assets was 1.00% and return on average tangible common equity was 13.27%.  Excluding $1.0 million of pre-tax, non-operating expenses, fourth quarter 2015 net income was $20.5 million, or $0.33 per diluted common share, return on average assets was 1.02% and return on average tangible common equity was 13.40%.

Claude Davis, Chief Executive Officer, commented, "We are pleased with another strong quarter of operating results, which produced our 102^nd consecutive quarter of profitability.  Continuing on the momentum from 2015, loan production remained strong during the first quarter, with balance growth of 8.6% on an annualized basis.  Loan balances grew in the first quarter as our metropolitan markets continued to exhibit high demand, while specialty finance lending, which includes our two nationwide lending platforms, also contributed to loan growth during the period."

"Net interest margin remained stable, reflecting the impact from the interest rate increase late in 2015 as well as higher yields on the investment portfolio.  We are well positioned to take advantage of rising rates and are excited about the growth opportunities throughout our footprint.  Additionally, we remain focused on growing fee income and reducing funding costs through targeted initiatives across the organization."

"As we look forward, our focus remains centered on serving the financial needs of our commercial, small business, consumer and wealth management clients while remaining disciplined in our approach to further our progress toward top-quartile performance."

NET INTEREST INCOME AND NET INTEREST MARGIN

Net interest income for the first quarter was $66.6 million as compared to $66.1 million for the fourth quarter 2015 and $58.6 million for the first quarter 2015.  Compared to the linked quarter, total interest income increased $1.6 million, or 2.1%, while total interest expense increased $1.1 million, or 15.3%.  Net interest margin on a fully tax equivalent basis was 3.68% for the first quarter compared to 3.69% for the fourth quarter 2015 and 3.67% for the first quarter 2015.

Interest income on loans increased $0.9 million compared to the prior quarter, as average loan balances increased $174.8 million during the period.  The effective yield on the loan portfolio was consistent with fourth quarter results, declining slightly to 4.59% for the first quarter 2016 compared to 4.62% in the fourth quarter of 2015.  The increase in interest income on loans compared to first quarter of 2015 was related to organic loan growth as well as the Oak Street acquisition, which closed during the third quarter of 2015.

Interest income on investment securities increased $0.6 million compared to the prior quarter due to the higher yield earned on the portfolio as average balances were relatively unchanged.  The effective yield on the investment portfolio increased 15 bps to 2.59%, reflecting efforts to re-balance the portfolio into higher yielding securities, the recent interest rate increase and a modest decline in prepayment speeds during the quarter.

Interest expense increased $1.1 million compared to the prior quarter, due primarily to the fourth quarter increase in interest rates, as well as a $206.5 million increase in average interest bearing liabilities during the period.

The effective cost of borrowed funds decreased by 1 bp to 1.02%, while the cost of deposit funding increased 3 bps from 33 bps in the fourth quarter 2015 to 36 bps during the first quarter 2016 primarily due to the impact of higher interest rates on indexed deposits.

NONINTEREST INCOME

The Company's noninterest income was $15.5 million for the first quarter of 2016 compared to $15.8 million for the fourth quarter of 2015 and $17.6 million for the first quarter of 2015.  The $0.3 million decrease versus the linked quarter was primarily related to a $0.4 million decrease in FDIC loss sharing income, as well as seasonal declines of $0.4 million in deposit service charges and $0.2 million in bankcard income. These declines were partially offset by a $0.4 million seasonal increase in trust and wealth management fees and a $0.2 million increase in accelerated discount on covered / formerly covered loans during the period.  The comparable quarter decline was primarily due to higher accelerated discount on covered / formerly covered loans as well as the recapture of a previously accrued liability due to the favorable resolution of a former Irwin subsidiary matter during the first quarter of 2015.

NONINTEREST EXPENSE

The Company's noninterest expense was $50.7 million for the first quarter of 2016 compared to $51.3 million for the fourth quarter of 2015 and $48.1 million for the first quarter of 2015.  The $0.6 million decrease was primarily related to $0.2 million of gains on the sale of OREO properties during the period, compared to $0.8 million of losses during the fourth quarter.  The decline in losses on sale of OREO was partially offset by a $0.6 million increase in occupancy expenses primarily related to branch consolidation activity during the period.  The increase in noninterest expense compared to first quarter of 2015 was primarily related to the Oak Street acquisition, which closed during the third quarter of 2015.

BALANCE SHEET & CAPITAL

Total assets were $8.2 billion, total loans were $5.5 billion and investment securities were $1.9 billion as of March 31, 2016.  Total assets increased by $46.1 million, or 2.3% annualized, from the prior quarter and by $947.8 million, or 13.1%, compared to the prior year.  Total loans increased by $115.8 million, or 8.6% annualized, from the prior quarter and by $741.1 million, or 15.6%, over the prior year.  Investment securities decreased by $50.7 million, or 10.4% annualized, from the prior quarter and increased by $134.7 million, or 7.5%, over the prior year.

Total deposits were $6.2 billion as of March 31, 2016, a decrease of $2.8 million, or 0.2% annualized, compared to the prior quarter and increased $462.2 million, or 8.1%, compared to first quarter 2015.  Borrowed funds were $1.1 billion as of March 31, 2016 and December 31, 2015 compared to $639.2 million as of March 31, 2015.

As of March 31, 2016, the Company had total shareholders' equity of $826.6 million, an increase of $17.2 million, or 8.6% annualized, over the prior quarter and an increase of $30.8 million, or 3.9%, over the prior year.  The linked quarter increase in total shareholders' equity was primarily related to quarterly retained earnings as well as the impact to Other Comprehensive Income from unrealized gains on the investment securities portfolio during the period.

The Company's regulatory capital ratios remain strong and, as of March 31, 2016, were as follows:  leverage ratio of 8.27%, total capital ratio of 12.84%, tier 1 capital ratio of 10.16% and tangible common equity ratio of 7.71%.  The Company's tangible book value per share was $9.94 as of March 31, 2016.

ASSET QUALITY

First quarter provision expense was $1.7 million and the total allowance for loan and lease losses as of March 31, 2016 was $53.7 million.  The allowance as a percentage of period-end loans was 0.98% at the end of the first quarter which represents a 1 bp decline from 0.99% at the end of the fourth quarter.  The balance of the Company's total allowance and loan marks, net of the indemnification asset, was 1.08% of total loans and leases as of March 31, 2016 which represents a 3 bp decline from 1.11% as of December 31, 2015.  This change is largely attributable to strong organic loan growth during the first quarter as well as the decline in nonaccrual loans and other asset quality improvements during the period.

For the first quarter, net charge-offs totaled $1.3 million, a decrease of $0.5 million, or 26.5% compared to the linked quarter, and were 0.10% of average loans on an annualized basis.  Nonaccrual loans decreased $6.0 million, or 21.4%, to $22.0 million as of March 31, 2016.  Total classified assets increased slightly to $133.9 million as of March 31, 2016 compared to $132.4 million as of December 31, 2015.

Teleconference / Webcast Information

First Financial's executive management will host a conference call to discuss the Company's financial and operating results on Friday, April 22, 2016 at 8:30 a.m. Eastern Standard Time.  Members of the public who would like to listen to the conference call should dial (877) 506-6873 (U.S. toll free), (855) 669-9657 (Canada toll free) or +1 (412) 380-2003 (International) (no passcode required).  The number should be dialed five to ten minutes prior to the start of the conference call.  The conference call will also be accessible as an audio webcast via the Investor Relations section of the Company's website at www.bankatfirst.com.  A replay of the conference call will be available beginning one hour after the completion of the live call at (877) 344-7529 (U.S. toll free), (855) 669-9658 (Canada toll free) and +1 (412) 317-0088 (International); conference number 10084369.  The webcast will be archived on the Investor Relations section of the Company's website for 12 months.

Press Release and Additional Information on Website

This press release as well as supplemental information 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.

About First Financial Bancorp

First Financial Bancorp is a Cincinnati, Ohio based bank holding company.  As of March 31, 2016, the Company had $8.2 billion in assets, $5.5 billion in loans, $6.2 billion in deposits and $826.6 million in shareholders' equity.  The Company's subsidiary, First Financial Bank, N.A., founded in 1863, provides banking and financial services products through its five lines of business: commercial, consumer, wealth management, specialty finance and mortgage.  The commercial, consumer, specialty finance 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 $2.3 billion in assets under management as of March 31, 2016.  The Company's strategic operating markets are located in Ohio, Indiana and Kentucky where it operates 101 banking centers.  Additional information about the Company, including its products, services and banking locations is available at www.bankatfirst.com.

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; 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, 2015, 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.