First Financial Bancorp Reports Fourth Quarter and Full Year 2013 Financial Results
CINCINNATI, Ohio, Jan. 30, 2014 /PRNewswire/ -- First Financial Bancorp (Nasdaq: FFBC) ("First Financial" or the "Company") announced today financial and operational results for the fourth quarter 2013 and for the twelve month period ended December 31, 2013.
Fourth quarter net income was $3.8 million and earnings per diluted common share were $0.07. This compares with third quarter net income of $14.9 million and earnings per diluted common share of $0.26 and fourth quarter 2012 net income of $16.3 million and earnings per diluted common share of $0.28.
For the twelve month period ended December 31, 2013, net income was $48.3 million and earnings per diluted common share were $0.83 as compared to net income of $67.3 million and earnings per diluted common share of $1.14 for the twelve month period ended December 31, 2012.
- Quarterly adjusted pre-tax, pre-provision income increased 4.0% to $27.4 million, or 1.75% of average assets
- Continued solid quarterly performance
- Quarterly results included several items which reduced earnings per diluted share by approximately $0.24 on a net basis
- Return on average assets of 0.24%; 1.14% as adjusted for the items noted below
- Return on average tangible common equity of 2.51%; 11.88% as adjusted for the items noted below
- Capital ratios remain strong
- Tangible common equity to tangible assets of 9.20%
- Tier 1 capital ratio of 14.61%
- Total risk-based capital ratio of 15.88%
- Total uncovered loan growth for the quarter of 8.6% on an annualized basis
- Strong performance in traditional C&I / owner-occupied CRE and franchise lending
- Continued growth in specialty finance balances
- Quarterly net interest margin of 3.90%
- Excluding the impact from loans that returned to accrual status, net interest margin was 3.86% for the quarter
- Adjusted yield on the uncovered loan increased 2 bps during the quarter
- Yield on investment securities increased 18 bps to 2.38%
- Continued improvement in asset quality metrics
- Total nonperforming loans declined $21.5 million, or 29.0%, and represent 1.50% of total loans compared to 2.16% for the linked quarter
- Total nonperforming assets declined $13.5 million, or 15.7%, and represent 1.13% of total assets compared to 1.38% for the linked quarter
During the quarter, the Company incurred certain pre-tax expenses of $1.5 million resulting from its efficiency initiatives. Approximately $1.3 million was related to employee benefit expenses associated with staffing reductions and $0.2 million was related to expenses associated with real estate consolidation and closure plans. Additionally, the Company incurred pre-tax pension settlement charges of $0.5 million resulting from employee-driven activity as well as acquisition-related expenses of $0.3 million. In the aggregate, these items reduced pre-tax earnings by $2.2 million, or approximately $0.02 per diluted share after taxes.
As previously disclosed in the press release dated January 22, 2014, the Company recognized a $22.4 million pre-tax non-cash valuation adjustment on its FDIC indemnification asset during the quarter which reduced the fourth quarter's diluted earnings per share after taxes by $0.26.
The Company recognized an income tax benefit for the quarter resulting from favorable state tax adjustments as well as lower income for the quarter primarily due to the FDIC indemnification asset valuation adjustment. In the aggregate, these items increased quarterly after-tax net income by $2.1 million, or $0.04 per diluted share.
The board of directors has authorized a dividend of $0.15 per common share for the next regularly scheduled dividend, payable on April 1, 2014 to shareholders of record as of February 28, 2014.
Under the announced share repurchase plan, the Company repurchased 209,745 shares of common stock during the fourth quarter at an average price of $16.39 per share. For the full year 2013, the Company repurchased 750,145 shares at an average price of $15.70 per share. When combined with the regular and variable dividends paid during the year, First Financial returned 151.4% of 2013 full year net income to shareholders during the year. Additionally, the Company has repurchased 40,255 shares during the first quarter 2014 at an average price of $17.32 per share.
The Company continued to execute on its efficiency initiative during the quarter. Adjusting for expenses covered under loss sharing agreements, noninterest expense items discussed above and OREO costs, noninterest expense declined $1.4 million during the quarter. Based on operating performance during the year, the Company estimates that it surpassed its original goal of 85% realization of announced cost savings and achieved 100% of its annual target of $17.1 million during 2013. All initiatives related to the original plan are fully implemented and annualized run rate savings are expected to exceed the original target. As previously announced, the Company identified additional initiatives that it implemented during the fourth quarter. These initiatives are expected to produce $5.0 million of added cost savings that will be realized in 2014 full year results across multiple expense categories.
Claude Davis, President and Chief Executive Officer, commented, "We ended 2013 on a positive note as the fourth quarter's results represent our best operating quarter of the year. Adjusted pre-tax, pre-provision income increased 4% as we were able to maintain a consistent level of operating revenue while operating expenses continued to decline.
"We were able to execute on strategic initiatives late in the year and early in 2014 with the announced acquisitions of The First Bexley Bank and Insight Bank in Columbus, Ohio, and the hiring of strong commercial and residential mortgage lending teams in Fort Wayne, Indiana – two markets we had previously identified as presenting strong prospects for future growth. In Columbus, we are working hard on the operational and cultural integration of these two outstanding institutions and our new team in Fort Wayne is actively calling on new clients and prospects with the wider product set and resources at their disposal as part of First Financial.
"We were also very pleased with our ability to execute on the efficiency initiative and deliver announced cost savings ahead of schedule. Our associates worked very hard throughout the year to carry out these initiatives and as a result of their efforts we expect to realize savings in 2014 beyond the annual target of $17.1 million related to the original plan. When combined with the additional initiatives we implemented during the fourth quarter, we have made significant progress in right-sizing the expense base and are positioned to deliver positive operating leverage in future periods as organic growth increasingly outweighs the impact of the declining covered loan portfolio and we capitalize on our new market expansion activities.
"The fourth quarter represented our seventh consecutive quarter of growth in the uncovered loan portfolio, increasing $74.7 million, or 8.6% on an annualized basis, compared to the linked quarter and $326.6 million, or 10.3%, compared to the fourth quarter 2012. Additionally, uncovered loan growth exceeded the decline in the covered loan portfolio, making this the fourth out of the last five quarters we achieved this milestone. As loan originations and renewals were particularly strong in December and forecasted production for the first quarter 2014 looks solid, we feel encouraged about our asset generation capabilities and momentum heading into the new year."
NET INTEREST INCOME AND NET INTEREST MARGIN
Net interest income for the fourth quarter was $55.8 million as compared to $55.8 million for the third quarter and $62.0 million for the fourth quarter 2012. Compared to the linked quarter, total interest income increased $0.3 million, or 0.5%, and total interest expense increased $0.3 million, or 7.6%. Net interest margin was 3.90% for the fourth quarter as compared to 3.91% for the third quarter and 4.27% for the fourth quarter 2012.
Interest income earned on loans decreased $0.6 million, or 1.1%, compared to the prior quarter. Included in the fourth quarter's interest income on loans was the recognition of $0.6 million of previously reserved interest related to loans that returned to accrual status. Excluding this amount, net interest margin was 3.86%, a decline of 5 bps compared to the linked quarter. Net of the interest income related to loans that returned to accrual status, the lower interest income earned on loans was driven primarily by a decline of $83.2 million, or 14.5%, in average covered loan balances, partially offset by a 37 bp increase in the yield earned on the portfolio. Amortization of the FDIC indemnification asset increased $0.2 million during the quarter despite the average balance declining $4.1 million as the negative yield on the asset increased 182 bps to -12.36%, negatively impacting net interest income and net interest margin.
Growth in average uncovered loan balances of $45.3 million, or 1.3% on a linked quarter basis, helped to partially offset the impact on net interest income and net interest margin from covered loan and FDIC indemnification asset activity during the quarter. Excluding the impact of interest income related to loans that returned to accrual status, the yield earned on the uncovered portfolio during the quarter was approximately 4.45%, a 2 bp increase compared to the linked quarter.
Interest income earned from investment securities increased $1.1 million, or 12.7%, compared to the prior quarter as average balances increased $64.7 million, or 4.1%, and the yield earned on the portfolio increased 18 bps to 2.38%.
The increase in total interest expense was due to an increase in deposit costs. Average interest-bearing deposit balances increased $66.5 million, or 1.8%, during the quarter driven primarily by growth in interest-bearing checking and money market balances. The cost of funds related to interest-bearing deposits increased 4 bps to 35 bps compared to 31 bps for the linked quarter.
NONINTEREST INCOME
The following table presents noninterest income for the three months ended December 31, 2013 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 |
|||||||||||||
December 31, |
September 30, |
June 30, |
March 31, |
December 31, |
|||||||||
(Dollars in thousands) |
2013 |
2013 |
2013 |
2013 |
2012 |
||||||||
Total noninterest income |
$ 13,043 |
$ 22,291 |
$ 11,615 |
$ 26,698 |
$ 26,121 |
||||||||
Selected components of noninterest income |
|||||||||||||
Accelerated discount on covered loans 1 |
1,572 |
1,711 |
1,935 |
1,935 |
2,455 |
||||||||
FDIC loss sharing income |
(3,385) |
5,555 |
(7,384) |
8,934 |
5,754 |
||||||||
Gain on sale of investment securities |
- |
- |
188 |
1,536 |
1,011 |
||||||||
Other items not expected to recur |
- |
- |
442 |
- |
- |
||||||||
Total noninterest income excluding items noted above |
$ 14,856 |
$ 15,025 |
$ 16,434 |
$ 14,293 |
$ 16,901 |
||||||||
1 Net of the corresponding valuation adjustment on the FDIC indemnification asset |
|||||||||||||
Excluding the items highlighted in Table I, noninterest income earned in the fourth quarter was $14.9 million compared to $15.0 million in the third quarter and $16.9 million in the fourth quarter 2012. The decrease of $0.2 million compared to the linked quarter was driven by lower service charges on deposit accounts and net gains on sales of residential mortgages, partially offset by higher trust and wealth management fees.
NONINTEREST EXPENSE
The following table presents noninterest expense for the three months ended December 31, 2013 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 |
|||||||||||||
December 31, |
September 30, |
June 30, |
March 31, |
December 31, |
|||||||||
(Dollars in thousands) |
2013 |
2013 |
2013 |
2013 |
2012 |
||||||||
Total noninterest expense |
$ 70,285 |
$ 48,801 |
$ 53,283 |
$ 53,106 |
$ 53,474 |
||||||||
Selected components of noninterest expense |
|||||||||||||
Loss (gain) - covered real estate owned |
946 |
204 |
(2,212) |
(157) |
(54) |
||||||||
Loss sharing expense |
1,495 |
1,724 |
1,578 |
2,286 |
2,305 |
||||||||
Pension settlement charges |
462 |
1,396 |
4,316 |
- |
- |
||||||||
Expenses associated with efficiency initiative |
1,450 |
1,051 |
1,518 |
2,878 |
952 |
||||||||
FDIC indemnification asset valuation adjustment |
22,417 |
- |
- |
- |
- |
||||||||
Acquisition-related expenses |
284 |
- |
- |
- |
- |
||||||||
Other items not expected to recur |
- |
- |
- |
390 |
- |
||||||||
Total noninterest expense excluding items noted above |
$ 43,231 |
$ 44,426 |
$ 48,083 |
$ 47,709 |
$ 50,271 |
||||||||
FDIC loss share support 1 |
$ 844 |
$ 841 |
$ 795 |
$ 776 |
$ 798 |
||||||||
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 in the fourth quarter was $43.2 million as compared to $44.4 million in the third quarter and $50.3 million in the fourth quarter 2012. The decrease of $1.2 million compared to the linked quarter was due primarily to lower salaries and employee benefits expense, occupancy costs and marketing and communications expenses. Expenses associated with the efficiency initiative and other staffing-related changes include $1.3 million of employee benefit expenses related to staffing reductions and $0.2 million of expenses associated with real estate consolidation and closure plans.
During the quarter, the Company recognized $0.5 million of pension settlement charges associated with recent employee-driven actions and the resulting lump-sum distributions from its pension plan. Pension settlement charges are an acceleration of previously deferred costs that would have been recognized in future periods and are determined in accordance with FASB ASC Topic 715, Compensation - Retirement Benefits. First Financial exceeded the annual accounting threshold for lump-sum distributions during 2013 and has recognized a proportionate share of lump-sum distributions from its pension plan as pension settlement charges during the year. The annual threshold for recognizing lump-sum distributions as pension settlement charges resets on January 1, 2014.
INCOME TAXES
For the fourth quarter, the Company recognized an income tax benefit of $1.2 million, resulting in an effective tax rate of -47.4%, compared with income tax expense of $7.6 million and an effective tax rate of 33.9% during the third quarter and income tax expense of $9.2 million and an effective tax rate of 36.1% during the fourth quarter 2012. The fourth quarter income tax benefit resulted from favorable state tax adjustments as well as lower net income for the quarter primarily related to the FDIC indemnification asset valuation adjustment. The Company recognized favorable state tax adjustments, net of federal taxes, of approximately $1.0 million during the fourth quarter resulting from the completion of its 2012 state tax returns and other related adjustments. While adjustments related to the completion of federal and state tax returns are typical late in the year, 2013 activity was made more significant by the impact of a favorable state tax rate change on the Company's deferred taxes. For the full year 2013, the Company's effective tax rate was 28.5%. A normalized effective tax rate in future periods is estimated to be 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 December 31, 2013 and the trailing four quarters.
Table III |
|||||||||||||
As of or for the Three Months Ended |
|||||||||||||
December 31, |
September 30, |
June 30, |
March 31, |
December 31, |
|||||||||
(Dollars in thousands) |
2013 |
2013 |
2013 |
2013 |
2012 |
||||||||
Total nonaccrual loans 1 |
$ 37,605 |
$ 57,926 |
$ 62,011 |
$ 64,452 |
$ 65,041 |
||||||||
Troubled debt restructurings - accruing |
15,094 |
16,278 |
12,924 |
12,757 |
10,856 |
||||||||
Total nonperforming loans |
52,699 |
74,204 |
74,935 |
77,209 |
75,897 |
||||||||
Total nonperforming assets |
72,505 |
86,008 |
86,733 |
89,202 |
88,423 |
||||||||
Nonperforming assets as a % of: |
|||||||||||||
Period-end loans plus OREO |
2.06% |
2.50% |
2.56% |
2.74% |
2.77% |
||||||||
Total assets |
1.13% |
1.38% |
1.38% |
1.40% |
1.36% |
||||||||
Nonperforming assets ex. accruing TDRs as a % of: |
|||||||||||||
Period-end loans plus OREO |
1.63% |
2.03% |
2.17% |
2.34% |
2.43% |
||||||||
Total assets |
0.89% |
1.12% |
1.18% |
1.20% |
1.19% |
||||||||
Nonperforming loans as a % of total loans |
1.50% |
2.16% |
2.22% |
2.38% |
2.39% |
||||||||
Provision for loan and lease losses - uncovered |
$ 1,851 |
$ 1,413 |
$ 2,409 |
$ 3,041 |
$ 3,882 |
||||||||
Allowance for uncovered loan & lease losses |
$ 43,829 |
$ 45,514 |
$ 47,047 |
$ 48,306 |
$ 47,777 |
||||||||
Allowance for loan & lease losses as a % of: |
|||||||||||||
Total loans |
1.25% |
1.33% |
1.39% |
1.49% |
1.50% |
||||||||
Nonaccrual loans |
116.6% |
78.6% |
75.9% |
75.0% |
73.5% |
||||||||
Nonperforming loans |
83.2% |
61.3% |
62.8% |
62.6% |
63.0% |
||||||||
Total net charge-offs |
$ 3,536 |
$ 2,946 |
$ 3,668 |
$ 2,512 |
$ 5,297 |
||||||||
Annualized net-charge-offs as a % of average |
|||||||||||||
loans & leases |
0.41% |
0.34% |
0.45% |
0.32% |
0.68% |
||||||||
1 Includes nonaccrual troubled debt restructurings |
Net Charge-offs
For the fourth quarter, net charge-offs increased $0.6 million to $3.5 million compared to the linked quarter. Significant charge-offs during the quarter included $1.8 million related to a commercial real estate credit that was transferred to OREO as well as $0.9 million associated with an unrelated commercial real estate credit.
Nonperforming Assets
Nonaccrual loans, including nonaccrual troubled debt restructurings, decreased $20.3 million, or 35.1%, to $37.6 million as of December 31, 2013 from $57.9 million as of September 30, 2013. Contributing to the decline were three commercial real estate credits totaling $7.5 million in the aggregate that returned to accrual status, $1.2 million in payoffs related to commercial and construction real estate credits and a $9.1 million commercial real estate credit that was charged down and transferred to OREO. Other activity included the addition to nonaccrual loans of a $0.6 million commercial credit and a $1.2 million commercial real estate credit. Included in the $7.5 million of loans that returned to accrual status was a single credit totaling $4.9 million that paid in full during January 2014.
Accruing troubled debt restructurings decreased $1.2 million, or 7.3%, to $15.1 million as of December 31, 2013 compared to the linked quarter. The decline was primarily driven by the transfer of a $1.2 million commercial credit to OREO during the quarter.
OREO increased $8.0 million, or 67.8%, on a net basis to $19.8 million during the fourth quarter as additions of $9.4 million exceeded resolutions and valuation adjustments of $1.4 million during the quarter. Additions were driven by four properties totaling $9.2 million in the aggregate, while resolutions included one property totaling $0.6 million.
Classified assets as of December 31, 2013 declined $9.9 million, or 8.2%, to $110.5 million from $120.4 million for the linked quarter and decreased $18.5 million, or 14.4%, from $129.0 million as of December 31, 2012. Classified assets are defined by the Company as nonperforming assets plus performing loans internally rated substandard or worse.
Delinquent Loans
As of December 31, 2013, loans 30-to-89 days past due totaled $13.6 million, or 0.39% of period-end loans, as compared to $10.4 million, or 0.30%, as of September 30, 2013 and $16.3 million, or 0.51%, as of December 31, 2012. The increase of $3.2 million, or 31.1%, during the fourth quarter was driven primarily by a $3.3 million increase in delinquent commercial real estate credits during the period.
Provision for Loan & Lease Losses
Fourth quarter provision expense related to uncovered loans and leases was $1.9 million as compared to $1.4 million for the linked quarter and $3.9 million for the fourth quarter 2012. Provision expense is a result of the Company's modeling efforts to estimate the period-end allowance for loan and lease losses. The allowance for loan and lease losses as a percent of period end loans was 1.25% as of December 31, 2013.
LOANS (EXCLUDING COVERED LOANS)
The following table presents the loan portfolio, excluding covered loans, as of December 31, 2013, September 30, 2013 and December 31, 2012.
Table IV |
|||||||||||||||
As of |
|||||||||||||||
December 31, 2013 |
September 30, 2013 |
December 31, 2012 |
|||||||||||||
Percent |
Percent |
Percent |
|||||||||||||
(Dollars in thousands) |
Balance |
of Total |
Balance |
of Total |
Balance |
of Total |
|||||||||
Commercial |
$ 1,035,668 |
29.5% |
$ 960,016 |
28.0% |
$ 861,033 |
27.1% |
|||||||||
Real estate - construction |
80,741 |
2.3% |
90,089 |
2.6% |
73,517 |
2.3% |
|||||||||
Real estate - commercial |
1,496,987 |
42.7% |
1,493,969 |
43.5% |
1,417,008 |
44.6% |
|||||||||
Real estate - residential |
352,931 |
10.1% |
352,830 |
10.3% |
318,210 |
10.0% |
|||||||||
Installment |
47,133 |
1.3% |
49,273 |
1.4% |
56,810 |
1.8% |
|||||||||
Home equity |
376,454 |
10.7% |
373,839 |
10.9% |
367,500 |
11.6% |
|||||||||
Credit card |
35,592 |
1.0% |
34,285 |
1.0% |
34,198 |
1.1% |
|||||||||
Lease financing |
80,135 |
2.3% |
76,615 |
2.2% |
50,788 |
1.6% |
|||||||||
Total |
$ 3,505,641 |
100.0% |
$ 3,430,916 |
100.0% |
$ 3,179,064 |
100.0% |
|||||||||
Loans, excluding covered loans, totaled $3.5 billion as of December 31, 2013, increasing $74.7 million, or 8.6% on an annualized basis, compared to the linked quarter and $326.6 million, or 10.3%, compared to December 31, 2012. The increase relative to the linked quarter was driven by growth in traditional C&I and owner-occupied commercial real estate lending, franchise finance and specialty finance.
INVESTMENTS
The following table presents a summary of the total investment portfolio at December 31, 2013.
Table V |
||||||||||||||
As of December 31, 2013 |
||||||||||||||
Held-to- |
Available-for- |
% of |
||||||||||||
(Dollars in thousands) |
Maturity |
Sale |
Other |
Total |
Portfolio |
|||||||||
Debt obligations of the U.S. Government |
$ - |
$ 21,223 |
$ - |
$ 21,223 |
1.2% |
|||||||||
Debt obligations of U.S. Government Agency |
18,981 |
9,571 |
- |
28,552 |
1.6% |
|||||||||
Residential Mortgage Backed Securities |
||||||||||||||
Pass-through securities: |
||||||||||||||
Agency fixed rate |
86,819 |
109,398 |
- |
196,217 |
10.9% |
|||||||||
Agency adjustable rate |
145,019 |
41,667 |
- |
186,686 |
10.4% |
|||||||||
Collateralized mortgage obligations: |
||||||||||||||
Agency fixed rate |
370,303 |
253,938 |
- |
624,241 |
34.7% |
|||||||||
Agency variable rate |
- |
82,137 |
- |
82,137 |
4.6% |
|||||||||
Agency collateralized and insured municipal securities |
68,888 |
103,974 |
- |
172,862 |
9.6% |
|||||||||
Commercial mortgage backed securities |
145,977 |
119,275 |
- |
265,252 |
14.8% |
|||||||||
Municipal bond securities |
1,285 |
3,358 |
- |
4,643 |
0.3% |
|||||||||
Corporate securities |
- |
110,513 |
- |
110,513 |
6.1% |
|||||||||
Asset-backed securities |
- |
50,554 |
- |
50,554 |
2.8% |
|||||||||
Regulatory stock |
- |
- |
42,576 |
42,576 |
2.4% |
|||||||||
Other |
- |
7,993 |
4,851 |
12,844 |
0.7% |
|||||||||
$ 837,272 |
$ 913,601 |
$ 47,427 |
$ 1,798,300 |
100.0% |
||||||||||
The investment portfolio increased $198.5 million, or 12.4%, during the fourth quarter as $289.1 million of purchases were offset by amortizations and other portfolio reductions. As of December 31, 2013, the overall duration of the investment portfolio increased to 4.3 years compared to 4.1 years as of September 30, 2013. The yield earned on the portfolio during the quarter increased 18 bps to 2.38% from 2.20% for the linked quarter, driven by the increase in interest rates and continued stabilization in premium amortization. Due primarily to the increase in interest rates during the quarter, the net unrealized loss included in accumulated other comprehensive loss related to the investment portfolio increased $6.5 million to $16.3 million as of December 31, 2013.
DEPOSITS
Non-time deposit balances totaled $3.9 billion as of December 31, 2013, increasing $82.2 million, or 2.2%, on a linked quarter basis. The Company experienced growth across multiple lines of business as public fund balances increased $38.8 million, consumer balances increased $26.4 million and commercial balances increased $15.2 million.
Time deposit balances increased $26.3 million, or 2.8%, compared to the linked quarter due primarily to an increase in consumer balances of $23.9 million driven by sales of a CD product celebrating the Company's 150th anniversary which offers incentives for opening additional checking or money market accounts.
The Company's total cost of deposit funding, inclusive of noninterest-bearing balances, was 27 bps for the quarter, an increase of 3 bps compared to the prior quarter and a decrease of 11 bps compared to the fourth quarter 2012.
CAPITAL MANAGEMENT
The following table presents First Financial's regulatory and other capital ratios as of December 31, 2013, September 30, 2013 and December 31, 2012.
Table VI |
|||||||||
As of |
|||||||||
December 31, |
September 30, |
December 31, |
|||||||
2013 |
2013 |
2012 |
|||||||
Leverage Ratio |
10.11% |
10.29% |
10.25% |
||||||
Tier 1 Capital Ratio |
14.61% |
15.26% |
16.32% |
||||||
Total Risk-Based Capital Ratio |
15.88% |
16.53% |
17.60% |
||||||
Ending tangible shareholders' equity |
|||||||||
to ending tangible assets |
9.20% |
9.60% |
9.50% |
||||||
Ending tangible common shareholders' |
|||||||||
equity to ending tangible assets |
9.20% |
9.60% |
9.50% |
||||||
Tangible book value per share |
$10.10 |
$10.24 |
$10.47 |
||||||
Shareholders' equity decreased $9.9 million during the quarter due primarily to the change in the unrealized gain/loss related to the investment portfolio, the excess of dividends paid over net income for the quarter and share repurchases. The decline in shareholders' equity combined with increases in both tangible assets and risk-weighted assets resulted in lower tangible common equity and regulatory capital ratios compared to the linked quarter. Regulatory capital ratios as of December 31, 2013 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, January 31, 2014 at 8:30 a.m. Eastern Time. Members of the public who would like to listen to the conference call should dial (888) 317-6016 (U.S. toll free), (855) 669-9657 (Canada toll free) or +1 (412) 317-6016 (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 February 17, 2014 at (877) 344-7529 (U.S. toll free), (855) 669-9658 (Canada toll free) and +1 (412) 317-0088 (International); conference number 10039964. The webcast will be archived on the Investor Relations section of the Company's website through January 31, 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 December 31, 2013, the Company had $6.4 billion in assets, $4.0 billion in loans, $4.8 billion in deposits and $682 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 December 31, 2013. The Company's strategic operating markets are located in Ohio, Indiana and Kentucky where it operates 110 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, including the recently announced proposed acquisitions of The First Bexley Bank and Insight Bank; 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, 2012, 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, |
Twelve months ended, |
||||||||||||
Dec. 31, |
Sep. 30, |
Jun. 30, |
Mar. 31, |
Dec. 31, |
Dec. 31, |
||||||||
2013 |
2013 |
2013 |
2013 |
2012 |
2013 |
2012 |
|||||||
RESULTS OF OPERATIONS |
|||||||||||||
Net income |
$3,785 |
$14,911 |
$15,829 |
$13,824 |
$16,265 |
$48,349 |
$67,303 |
||||||
Net earnings per share - basic |
$0.07 |
$0.26 |
$0.28 |
$0.24 |
$0.28 |
$0.84 |
$1.16 |
||||||
Net earnings per share - diluted |
$0.07 |
$0.26 |
$0.27 |
$0.24 |
$0.28 |
$0.83 |
$1.14 |
||||||
Dividends declared per share |
$0.15 |
$0.27 |
$0.24 |
$0.28 |
$0.28 |
$0.94 |
$1.18 |
||||||
KEY FINANCIAL RATIOS |
|||||||||||||
Return on average assets |
0.24% |
0.96% |
1.01% |
0.88% |
1.03% |
0.77% |
1.07% |
||||||
Return on average shareholders' equity |
2.15% |
8.53% |
9.02% |
7.91% |
9.06% |
6.89% |
9.43% |
||||||
Return on average tangible shareholders' equity |
2.51% |
10.00% |
10.54% |
9.24% |
10.58% |
8.05% |
11.01% |
||||||
Net interest margin |
3.90% |
3.91% |
4.02% |
4.04% |
4.27% |
3.97% |
4.37% |
||||||
Net interest margin (fully tax equivalent) (1) |
3.94% |
3.95% |
4.06% |
4.07% |
4.29% |
4.01% |
4.39% |
||||||
Ending shareholders' equity as a percent of ending assets |
10.63% |
11.07% |
11.08% |
11.05% |
10.93% |
10.63% |
10.93% |
||||||
Ending tangible shareholders' equity as a percent of: |
|||||||||||||
Ending tangible assets |
9.20% |
9.60% |
9.62% |
9.60% |
9.50% |
9.20% |
9.50% |
||||||
Risk-weighted assets |
13.59% |
14.27% |
14.50% |
15.05% |
15.57% |
13.59% |
15.57% |
||||||
Average shareholders' equity as a percent of average assets |
11.23% |
11.19% |
11.15% |
11.09% |
11.35% |
11.17% |
11.30% |
||||||
Average tangible shareholders' equity as a percent of |
|||||||||||||
average tangible assets |
9.77% |
9.71% |
9.70% |
9.65% |
9.88% |
9.72% |
9.83% |
||||||
Book value per share |
$11.86 |
$11.99 |
$12.05 |
$12.09 |
$12.24 |
$11.86 |
$12.24 |
||||||
Tangible book value per share |
$10.10 |
$10.24 |
$10.29 |
$10.33 |
$10.47 |
$10.10 |
$10.47 |
||||||
Tier 1 Ratio(2) |
14.61% |
15.26% |
15.41% |
15.87% |
16.32% |
14.61% |
16.32% |
||||||
Total Capital Ratio(2) |
15.88% |
16.53% |
16.68% |
17.15% |
17.60% |
15.88% |
17.60% |
||||||
Leverage Ratio(2) |
10.11% |
10.29% |
10.12% |
10.00% |
10.25% |
10.11% |
10.25% |
||||||
AVERAGE BALANCE SHEET ITEMS |
|||||||||||||
Loans (3) |
$3,450,069 |
$3,410,102 |
$3,313,731 |
$3,205,781 |
$3,107,760 |
$3,345,768 |
$3,030,308 |
||||||
Covered loans and FDIC indemnification asset |
568,385 |
655,654 |
758,875 |
840,190 |
920,102 |
704,894 |
1,050,114 |
||||||
Investment securities |
1,654,374 |
1,589,666 |
1,705,219 |
1,838,783 |
1,746,961 |
1,696,211 |
1,682,821 |
||||||
Interest-bearing deposits with other banks |
4,906 |
4,010 |
13,890 |
3,056 |
5,146 |
6,464 |
36,674 |
||||||
Total earning assets |
$5,677,734 |
$5,659,432 |
$5,791,715 |
$5,887,810 |
$5,779,969 |
$5,753,337 |
$5,799,917 |
||||||
Total assets |
$6,232,971 |
$6,193,722 |
$6,310,602 |
$6,391,049 |
$6,294,084 |
$6,281,411 |
$6,318,181 |
||||||
Noninterest-bearing deposits |
$1,129,097 |
$1,072,259 |
$1,063,102 |
$1,049,943 |
$1,112,072 |
$1,078,800 |
$1,035,319 |
||||||
Interest-bearing deposits |
3,720,809 |
3,654,311 |
3,792,891 |
3,785,402 |
3,912,854 |
3,737,946 |
4,169,175 |
||||||
Total deposits |
$4,849,906 |
$4,726,570 |
$4,855,993 |
$4,835,345 |
$5,024,926 |
$4,816,746 |
$5,204,494 |
||||||
Borrowings |
$583,522 |
$667,706 |
$644,058 |
$735,327 |
$439,308 |
$657,265 |
$273,798 |
||||||
Shareholders' equity |
$700,063 |
$693,158 |
$703,804 |
$708,862 |
$714,373 |
$701,425 |
$713,717 |
||||||
CREDIT QUALITY RATIOS (excluding covered assets) |
|||||||||||||
Allowance to ending loans |
1.25% |
1.33% |
1.39% |
1.49% |
1.50% |
1.25% |
1.50% |
||||||
Allowance to nonaccrual loans |
116.55% |
78.57% |
75.87% |
74.95% |
73.46% |
116.55% |
73.46% |
||||||
Allowance to nonperforming loans |
83.17% |
61.34% |
62.78% |
62.57% |
62.95% |
83.17% |
62.95% |
||||||
Nonperforming loans to total loans |
1.50% |
2.16% |
2.22% |
2.38% |
2.39% |
1.50% |
2.39% |
||||||
Nonperforming assets to ending loans, plus OREO |
2.06% |
2.50% |
2.56% |
2.74% |
2.77% |
2.06% |
2.77% |
||||||
Nonperforming assets to total assets |
1.13% |
1.38% |
1.38% |
1.40% |
1.36% |
1.13% |
1.36% |
||||||
Net charge-offs to average loans (annualized) |
0.41% |
0.34% |
0.45% |
0.32% |
0.68% |
0.38% |
0.79% |
||||||
(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)December 31, 2013 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, |
Twelve months ended, |
||||||||||
Dec. 31, |
Dec. 31, |
||||||||||
2013 |
2012 |
% Change |
2013 |
2012 |
% Change |
||||||
Interest income |
|||||||||||
Loans, including fees |
$52,351 |
$60,389 |
(13.3%) |
$216,306 |
$249,751 |
(13.4%) |
|||||
Investment securities |
|||||||||||
Taxable |
9,209 |
8,410 |
9.5% |
34,147 |
37,664 |
(9.3%) |
|||||
Tax-exempt |
719 |
370 |
94.3% |
2,400 |
736 |
226.1% |
|||||
Total investment securities interest |
9,928 |
8,780 |
13.1% |
36,547 |
38,400 |
(4.8%) |
|||||
Other earning assets |
(2,432) |
(1,564) |
55.5% |
(7,645) |
(7,221) |
5.9% |
|||||
Total interest income |
59,847 |
67,605 |
(11.5%) |
245,208 |
280,930 |
(12.7%) |
|||||
Interest expense |
|||||||||||
Deposits |
3,247 |
4,798 |
(32.3%) |
13,247 |
24,625 |
(46.2%) |
|||||
Short-term borrowings |
257 |
159 |
61.6% |
1,177 |
262 |
349.2% |
|||||
Long-term borrowings |
539 |
672 |
(19.8%) |
2,464 |
2,702 |
(8.8%) |
|||||
Total interest expense |
4,043 |
5,629 |
(28.2%) |
16,888 |
27,589 |
(38.8%) |
|||||
Net interest income |
55,804 |
61,976 |
(10.0%) |
228,320 |
253,341 |
(9.9%) |
|||||
Provision for loan and lease losses - uncovered |
1,851 |
3,882 |
(52.3%) |
8,714 |
19,117 |
(54.4%) |
|||||
Provision for loan and lease losses - covered |
(5,857) |
5,283 |
(210.9%) |
195 |
30,903 |
(99.4%) |
|||||
Net interest income after provision for loan and lease losses |
59,810 |
52,811 |
13.3% |
219,411 |
203,321 |
7.9% |
|||||
Noninterest income |
|||||||||||
Service charges on deposit accounts |
5,226 |
5,431 |
(3.8%) |
20,595 |
21,215 |
(2.9%) |
|||||
Trust and wealth management fees |
3,506 |
3,409 |
2.8% |
14,319 |
13,951 |
2.6% |
|||||
Bankcard income |
2,699 |
2,526 |
6.8% |
10,914 |
10,028 |
8.8% |
|||||
Net gains from sales of loans |
604 |
1,179 |
(48.8%) |
3,150 |
4,570 |
(31.1%) |
|||||
Gain on sale of investment securities |
0 |
1,011 |
(100.0%) |
1,724 |
3,628 |
(52.5%) |
|||||
FDIC loss sharing income |
(3,385) |
5,754 |
(158.8%) |
3,720 |
35,346 |
(89.5%) |
|||||
Accelerated discount on covered loans |
1,572 |
2,455 |
(36.0%) |
7,153 |
13,662 |
(47.6%) |
|||||
Other |
2,821 |
4,356 |
(35.2%) |
12,072 |
20,021 |
(39.7%) |
|||||
Total noninterest income |
13,043 |
26,121 |
(50.1%) |
73,647 |
122,421 |
(39.8%) |
|||||
Noninterest expenses |
|||||||||||
Salaries and employee benefits |
24,023 |
28,033 |
(14.3%) |
101,402 |
113,154 |
(10.4%) |
|||||
Pension settlement charges |
462 |
0 |
N/M |
6,174 |
0 |
N/M |
|||||
Net occupancy |
4,557 |
5,122 |
(11.0%) |
21,207 |
20,682 |
2.5% |
|||||
Furniture and equipment |
2,136 |
2,291 |
(6.8%) |
8,970 |
9,190 |
(2.4%) |
|||||
Data processing |
2,617 |
2,526 |
3.6% |
10,229 |
8,837 |
15.8% |
|||||
Marketing |
999 |
1,566 |
(36.2%) |
4,270 |
5,550 |
(23.1%) |
|||||
Communication |
728 |
814 |
(10.6%) |
3,207 |
3,409 |
(5.9%) |
|||||
Professional services |
1,781 |
1,667 |
6.8% |
6,876 |
7,269 |
(5.4%) |
|||||
State intangible tax |
901 |
942 |
(4.4%) |
3,929 |
3,899 |
0.8% |
|||||
FDIC assessments |
1,121 |
1,085 |
3.3% |
4,501 |
4,682 |
(3.9%) |
|||||
Loss (gain) - other real estate owned |
348 |
569 |
(38.8%) |
1,250 |
3,250 |
(61.5%) |
|||||
Loss (gain) - covered other real estate owned |
946 |
(54) |
(1851.9%) |
(1,219) |
2,446 |
(149.8%) |
|||||
Loss sharing expense |
1,495 |
2,305 |
(35.1%) |
7,083 |
10,725 |
(34.0%) |
|||||
FDIC indemnification impairment |
22,417 |
0 |
N/M |
22,417 |
0 |
N/M |
|||||
Other |
5,754 |
6,608 |
(12.9%) |
25,179 |
28,904 |
(12.9%) |
|||||
Total noninterest expenses |
70,285 |
53,474 |
31.4% |
225,475 |
221,997 |
1.6% |
|||||
Income before income taxes |
2,568 |
25,458 |
(89.9%) |
67,583 |
103,745 |
(34.9%) |
|||||
Income tax expense |
(1,217) |
9,193 |
(113.2%) |
19,234 |
36,442 |
(47.2%) |
|||||
Net income |
3,785 |
16,265 |
(76.7%) |
48,349 |
67,303 |
(28.2%) |
|||||
ADDITIONAL DATA |
|||||||||||
Net earnings per share - basic |
$0.07 |
$0.28 |
$0.84 |
$1.16 |
|||||||
Net earnings per share - diluted |
$0.07 |
$0.28 |
$0.83 |
$1.14 |
|||||||
Dividends declared per share |
$0.15 |
$0.28 |
$0.94 |
$1.18 |
|||||||
Return on average assets |
0.24% |
1.03% |
0.77% |
1.07% |
|||||||
Return on average shareholders' equity |
2.15% |
9.06% |
6.89% |
9.43% |
|||||||
Interest income |
$59,847 |
$67,605 |
(11.5%) |
$245,208 |
$280,930 |
(12.7%) |
|||||
Tax equivalent adjustment |
635 |
366 |
73.5% |
2,142 |
1,055 |
103.0% |
|||||
Interest income - tax equivalent |
60,482 |
67,971 |
(11.0%) |
247,350 |
281,985 |
(12.3%) |
|||||
Interest expense |
4,043 |
5,629 |
(28.2%) |
16,888 |
27,589 |
(38.8%) |
|||||
Net interest income - tax equivalent |
$56,439 |
$62,342 |
(9.5%) |
$230,462 |
$254,396 |
(9.4%) |
|||||
Net interest margin |
3.90% |
4.27% |
3.97% |
4.37% |
|||||||
Net interest margin (fully tax equivalent) (1) |
3.94% |
4.29% |
4.01% |
4.39% |
|||||||
Full-time equivalent employees |
1,306 |
1,439 |
|||||||||
(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. |
|||||||||||
N/M = Not meaningful. |
FIRST FINANCIAL BANCORP. CONSOLIDATED QUARTERLY STATEMENTS OF INCOME
(Dollars in thousands, except per share) (Unaudited) |
|||||||||||
2013 |
|||||||||||
Fourth |
Third |
Second |
First |
% Change |
|||||||
Quarter |
Quarter |
Quarter |
Quarter |
YTD |
Linked Qtr. |
||||||
Interest income |
|||||||||||
Loans, including fees |
$52,351 |
$52,908 |
$55,022 |
$56,025 |
$216,306 |
(1.1%) |
|||||
Investment securities |
|||||||||||
Taxable |
9,209 |
8,267 |
8,295 |
8,376 |
34,147 |
11.4% |
|||||
Tax-exempt |
719 |
541 |
560 |
580 |
2,400 |
32.9% |
|||||
Total investment securities interest |
9,928 |
8,808 |
8,855 |
8,956 |
36,547 |
12.7% |
|||||
Other earning assets |
(2,432) |
(2,185) |
(1,556) |
(1,472) |
(7,645) |
11.3% |
|||||
Total interest income |
59,847 |
59,531 |
62,321 |
63,509 |
245,208 |
0.5% |
|||||
Interest expense |
|||||||||||
Deposits |
3,247 |
2,856 |
3,284 |
3,860 |
13,247 |
13.7% |
|||||
Short-term borrowings |
257 |
286 |
305 |
329 |
1,177 |
(10.1%) |
|||||
Long-term borrowings |
539 |
617 |
654 |
654 |
2,464 |
(12.6%) |
|||||
Total interest expense |
4,043 |
3,759 |
4,243 |
4,843 |
16,888 |
7.6% |
|||||
Net interest income |
55,804 |
55,772 |
58,078 |
58,666 |
228,320 |
0.1% |
|||||
Provision for loan and lease losses - uncovered |
1,851 |
1,413 |
2,409 |
3,041 |
8,714 |
31.0% |
|||||
Provision for loan and lease losses - covered |
(5,857) |
5,293 |
(8,283) |
9,042 |
195 |
(210.7%) |
|||||
Net interest income after provision for loan and lease losses |
59,810 |
49,066 |
63,952 |
46,583 |
219,411 |
21.9% |
|||||
Noninterest income |
|||||||||||
Service charges on deposit accounts |
5,226 |
5,447 |
5,205 |
4,717 |
20,595 |
(4.1%) |
|||||
Trust and wealth management fees |
3,506 |
3,366 |
3,497 |
3,950 |
14,319 |
4.2% |
|||||
Bankcard income |
2,699 |
2,637 |
3,145 |
2,433 |
10,914 |
2.4% |
|||||
Net gains from sales of loans |
604 |
751 |
1,089 |
706 |
3,150 |
(19.6%) |
|||||
Gain on sale of investment securities |
0 |
0 |
188 |
1,536 |
1,724 |
N/M |
|||||
FDIC loss sharing income |
(3,385) |
5,555 |
(7,384) |
8,934 |
3,720 |
(160.9%) |
|||||
Accelerated discount on covered loans |
1,572 |
1,711 |
1,935 |
1,935 |
7,153 |
(8.1%) |
|||||
Other |
2,821 |
2,824 |
3,940 |
2,487 |
12,072 |
(0.1%) |
|||||
Total noninterest income |
13,043 |
22,291 |
11,615 |
26,698 |
73,647 |
(41.5%) |
|||||
Noninterest expenses |
|||||||||||
Salaries and employee benefits |
24,023 |
23,834 |
26,216 |
27,329 |
101,402 |
0.8% |
|||||
Pension settlement charges |
462 |
1,396 |
4,316 |
0 |
6,174 |
(66.9%) |
|||||
Net occupancy |
4,557 |
5,101 |
5,384 |
6,165 |
21,207 |
(10.7%) |
|||||
Furniture and equipment |
2,136 |
2,213 |
2,250 |
2,371 |
8,970 |
(3.5%) |
|||||
Data processing |
2,617 |
2,584 |
2,559 |
2,469 |
10,229 |
1.3% |
|||||
Marketing |
999 |
1,192 |
1,182 |
897 |
4,270 |
(16.2%) |
|||||
Communication |
728 |
865 |
781 |
833 |
3,207 |
(15.8%) |
|||||
Professional services |
1,781 |
1,528 |
1,764 |
1,803 |
6,876 |
16.6% |
|||||
State intangible tax |
901 |
1,010 |
1,004 |
1,014 |
3,929 |
(10.8%) |
|||||
FDIC assessments |
1,121 |
1,107 |
1,148 |
1,125 |
4,501 |
1.3% |
|||||
Loss (gain) - other real estate owned |
348 |
184 |
216 |
502 |
1,250 |
89.1% |
|||||
Loss (gain) - covered other real estate owned |
946 |
204 |
(2,212) |
(157) |
(1,219) |
363.7% |
|||||
Loss sharing expense |
1,495 |
1,724 |
1,578 |
2,286 |
7,083 |
(13.3%) |
|||||
FDIC indemnification impairment |
22,417 |
0 |
0 |
0 |
22,417 |
N/M |
|||||
Other |
5,754 |
5,859 |
7,097 |
6,469 |
25,179 |
(1.8%) |
|||||
Total noninterest expenses |
70,285 |
48,801 |
53,283 |
53,106 |
225,475 |
44.0% |
|||||
Income before income taxes |
2,568 |
22,556 |
22,284 |
20,175 |
67,583 |
(88.6%) |
|||||
Income tax expense |
(1,217) |
7,645 |
6,455 |
6,351 |
19,234 |
(115.9%) |
|||||
Net income |
$3,785 |
$14,911 |
$15,829 |
$13,824 |
$48,349 |
(74.6%) |
|||||
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 |
0.5% |
|||||
Tax equivalent adjustment |
635 |
516 |
514 |
477 |
2,142 |
23.1% |
|||||
Interest income - tax equivalent |
60,482 |
60,047 |
62,835 |
63,986 |
247,350 |
0.7% |
|||||
Interest expense |
4,043 |
3,759 |
4,243 |
4,843 |
16,888 |
7.6% |
|||||
Net interest income - tax equivalent |
$56,439 |
$56,288 |
$58,592 |
$59,143 |
$230,462 |
0.3% |
|||||
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. |
|||||||||||
N/M = Not meaningful. |
FIRST FINANCIAL BANCORP. CONSOLIDATED QUARTERLY STATEMENTS OF INCOME
(Dollars in thousands, except per share) (Unaudited) |
|||||||||
2012 |
|||||||||
Fourth |
Third |
Second |
First |
Full |
|||||
Quarter |
Quarter |
Quarter |
Quarter |
Year |
|||||
Interest income |
|||||||||
Loans, including fees |
$60,389 |
$59,536 |
$63,390 |
$66,436 |
$249,751 |
||||
Investment securities |
|||||||||
Taxable |
8,410 |
8,358 |
10,379 |
10,517 |
37,664 |
||||
Tax-exempt |
370 |
111 |
121 |
134 |
736 |
||||
Total investment securities interest |
8,780 |
8,469 |
10,500 |
10,651 |
38,400 |
||||
Other earning assets |
(1,564) |
(1,700) |
(1,967) |
(1,990) |
(7,221) |
||||
Total interest income |
67,605 |
66,305 |
71,923 |
75,097 |
280,930 |
||||
Interest expense |
|||||||||
Deposits |
4,798 |
5,730 |
6,381 |
7,716 |
24,625 |
||||
Short-term borrowings |
159 |
54 |
37 |
12 |
262 |
||||
Long-term borrowings |
672 |
675 |
675 |
680 |
2,702 |
||||
Total interest expense |
5,629 |
6,459 |
7,093 |
8,408 |
27,589 |
||||
Net interest income |
61,976 |
59,846 |
64,830 |
66,689 |
253,341 |
||||
Provision for loan and lease losses - uncovered |
3,882 |
3,613 |
8,364 |
3,258 |
19,117 |
||||
Provision for loan and lease losses - covered |
5,283 |
6,622 |
6,047 |
12,951 |
30,903 |
||||
Net interest income after provision for loan and lease losses |
52,811 |
49,611 |
50,419 |
50,480 |
203,321 |
||||
Noninterest income |
|||||||||
Service charges on deposit accounts |
5,431 |
5,499 |
5,376 |
4,909 |
21,215 |
||||
Trust and wealth management fees |
3,409 |
3,374 |
3,377 |
3,791 |
13,951 |
||||
Bankcard income |
2,526 |
2,387 |
2,579 |
2,536 |
10,028 |
||||
Net gains from sales of loans |
1,179 |
1,319 |
1,132 |
940 |
4,570 |
||||
Gain on sale of investment securities |
1,011 |
2,617 |
0 |
0 |
3,628 |
||||
FDIC loss sharing income |
5,754 |
8,496 |
8,280 |
12,816 |
35,346 |
||||
Accelerated discount on covered loans |
2,455 |
3,798 |
3,764 |
3,645 |
13,662 |
||||
Other |
4,356 |
3,340 |
9,037 |
3,288 |
20,021 |
||||
Total noninterest income |
26,121 |
30,830 |
33,545 |
31,925 |
122,421 |
||||
Noninterest expenses |
|||||||||
Salaries and employee benefits |
28,033 |
27,212 |
29,048 |
28,861 |
113,154 |
||||
Net occupancy |
5,122 |
5,153 |
5,025 |
5,382 |
20,682 |
||||
Furniture and equipment |
2,291 |
2,332 |
2,323 |
2,244 |
9,190 |
||||
Data processing |
2,526 |
2,334 |
2,076 |
1,901 |
8,837 |
||||
Marketing |
1,566 |
1,592 |
1,238 |
1,154 |
5,550 |
||||
Communication |
814 |
788 |
913 |
894 |
3,409 |
||||
Professional services |
1,667 |
1,304 |
2,151 |
2,147 |
7,269 |
||||
State intangible tax |
942 |
961 |
970 |
1,026 |
3,899 |
||||
FDIC assessments |
1,085 |
1,164 |
1,270 |
1,163 |
4,682 |
||||
Loss (gain) - other real estate owned |
569 |
1,372 |
313 |
996 |
3,250 |
||||
Loss (gain) - covered other real estate owned |
(54) |
(25) |
1,233 |
1,292 |
2,446 |
||||
Loss sharing expense |
2,305 |
3,584 |
3,085 |
1,751 |
10,725 |
||||
Other |
6,608 |
7,515 |
7,814 |
6,967 |
28,904 |
||||
Total noninterest expenses |
53,474 |
55,286 |
57,459 |
55,778 |
221,997 |
||||
Income before income taxes |
25,458 |
25,155 |
26,505 |
26,627 |
103,745 |
||||
Income tax expense |
9,193 |
8,913 |
8,703 |
9,633 |
36,442 |
||||
Net income |
$16,265 |
$16,242 |
$17,802 |
$16,994 |
$67,303 |
||||
ADDITIONAL DATA |
|||||||||
Net earnings per share - basic |
$0.28 |
$0.28 |
$0.31 |
$0.29 |
$1.16 |
||||
Net earnings per share - diluted |
$0.28 |
$0.28 |
$0.30 |
$0.29 |
$1.14 |
||||
Dividends declared per share |
$0.28 |
$0.30 |
$0.29 |
$0.31 |
$1.18 |
||||
Return on average assets |
1.03% |
1.05% |
1.13% |
1.05% |
1.07% |
||||
Return on average shareholders' equity |
9.06% |
9.01% |
9.98% |
9.67% |
9.43% |
||||
Interest income |
$67,605 |
$66,305 |
$71,923 |
$75,097 |
$280,930 |
||||
Tax equivalent adjustment |
366 |
255 |
216 |
218 |
1,055 |
||||
Interest income - tax equivalent |
67,971 |
66,560 |
72,139 |
75,315 |
281,985 |
||||
Interest expense |
5,629 |
6,459 |
7,093 |
8,408 |
27,589 |
||||
Net interest income - tax equivalent |
$62,342 |
$60,101 |
$65,046 |
$66,907 |
$254,396 |
||||
Net interest margin |
4.27% |
4.21% |
4.49% |
4.51% |
4.37% |
||||
Net interest margin (fully tax equivalent) (1) |
4.29% |
4.23% |
4.50% |
4.52% |
4.39% |
||||
Full-time equivalent employees |
1,439 |
1,475 |
1,525 |
1,513 |
|||||
(1) The tax equivalent adjustment to net interest income recognizes the income tax savings when comparing taxable and tax-exempt assets and assumes a 35% tax rate. Management believes that it is a standard practice in the banking industry to present net interest income on a fully tax equivalent basis. Therefore, management believes, these measures provided useful information to investors by allowing them to make peer comparisons. Management also uses these measures to make peer comparisons. |
FIRST FINANCIAL BANCORP. CONSOLIDATED STATEMENTS OF CONDITION
(Dollars in thousands) (Unaudited) |
|||||||||||||
Dec. 31, |
Sep. 30, |
Jun. 30, |
Mar. 31, |
Dec. 31, |
% Change |
% Change |
|||||||
2013 |
2013 |
2013 |
2013 |
2012 |
Linked Qtr. |
Comparable Qtr. |
|||||||
ASSETS |
|||||||||||||
Cash and due from banks |
$117,620 |
$177,698 |
$114,745 |
$106,249 |
$134,502 |
(33.8%) |
(12.6%) |
||||||
Interest-bearing deposits with other banks |
25,830 |
10,414 |
2,671 |
1,170 |
24,341 |
148.0% |
6.1% |
||||||
Investment securities available-for-sale |
913,601 |
854,747 |
884,694 |
952,039 |
1,032,096 |
6.9% |
(11.5%) |
||||||
Investment securities held-to-maturity |
837,272 |
669,093 |
670,246 |
716,214 |
770,755 |
25.1% |
8.6% |
||||||
Other investments |
47,427 |
75,945 |
75,645 |
75,375 |
71,492 |
(37.6%) |
(33.7%) |
||||||
Loans held for sale |
8,114 |
10,704 |
18,650 |
28,126 |
16,256 |
(24.2%) |
(50.1%) |
||||||
Loans |
|||||||||||||
Commercial |
1,035,668 |
960,016 |
940,420 |
892,381 |
861,033 |
7.9% |
20.3% |
||||||
Real estate - construction |
80,741 |
90,089 |
97,246 |
87,542 |
73,517 |
(10.4%) |
9.8% |
||||||
Real estate - commercial |
1,496,987 |
1,493,969 |
1,477,226 |
1,433,182 |
1,417,008 |
0.2% |
5.6% |
||||||
Real estate - residential |
352,931 |
352,830 |
343,016 |
330,260 |
318,210 |
0.0% |
10.9% |
||||||
Installment |
47,133 |
49,273 |
50,781 |
53,509 |
56,810 |
(4.3%) |
(17.0%) |
||||||
Home equity |
376,454 |
373,839 |
370,206 |
365,943 |
367,500 |
0.7% |
2.4% |
||||||
Credit card |
35,592 |
34,285 |
33,222 |
32,465 |
34,198 |
3.8% |
4.1% |
||||||
Lease financing |
80,135 |
76,615 |
70,011 |
53,556 |
50,788 |
4.6% |
57.8% |
||||||
Total loans, excluding covered loans |
3,505,641 |
3,430,916 |
3,382,128 |
3,248,838 |
3,179,064 |
2.2% |
10.3% |
||||||
Less |
|||||||||||||
Allowance for loan and lease losses |
43,829 |
45,514 |
47,047 |
48,306 |
47,777 |
(3.7%) |
(8.3%) |
||||||
Net loans - uncovered |
3,461,812 |
3,385,402 |
3,335,081 |
3,200,532 |
3,131,287 |
2.3% |
10.6% |
||||||
Covered loans |
457,873 |
518,524 |
622,265 |
687,798 |
748,116 |
(11.7%) |
(38.8%) |
||||||
Less |
|||||||||||||
Allowance for loan and lease losses |
18,901 |
23,259 |
32,961 |
45,496 |
45,190 |
(18.7%) |
(58.2%) |
||||||
Net loans - covered |
438,972 |
495,265 |
589,304 |
642,302 |
702,926 |
(11.4%) |
(37.6%) |
||||||
Net loans |
3,900,784 |
3,880,667 |
3,924,385 |
3,842,834 |
3,834,213 |
0.5% |
1.7% |
||||||
Premises and equipment |
137,110 |
139,125 |
142,675 |
146,889 |
146,716 |
(1.4%) |
6.5% |
||||||
Goodwill |
95,050 |
95,050 |
95,050 |
95,050 |
95,050 |
0.0% |
0.0% |
||||||
Other intangibles |
5,924 |
6,249 |
6,620 |
7,078 |
7,648 |
(5.2%) |
(22.5%) |
||||||
FDIC indemnification asset |
45,091 |
78,132 |
88,966 |
112,428 |
119,607 |
(42.3%) |
(62.3%) |
||||||
Accrued interest and other assets |
283,390 |
255,617 |
250,228 |
265,565 |
244,372 |
10.9% |
16.0% |
||||||
Total assets |
$6,417,213 |
$6,253,441 |
$6,274,575 |
$6,349,017 |
$6,497,048 |
2.6% |
(1.2%) |
||||||
LIABILITIES |
|||||||||||||
Deposits |
|||||||||||||
Interest-bearing demand |
$1,125,723 |
$1,068,067 |
$1,131,466 |
$1,113,940 |
$1,160,815 |
5.4% |
(3.0%) |
||||||
Savings |
1,612,005 |
1,593,895 |
1,601,122 |
1,620,874 |
1,623,614 |
1.1% |
(0.7%) |
||||||
Time |
952,327 |
926,029 |
978,680 |
1,030,124 |
1,068,637 |
2.8% |
(10.9%) |
||||||
Total interest-bearing deposits |
3,690,055 |
3,587,991 |
3,711,268 |
3,764,938 |
3,853,066 |
2.8% |
(4.2%) |
||||||
Noninterest-bearing |
1,147,452 |
1,141,016 |
1,059,368 |
1,056,409 |
1,102,774 |
0.6% |
4.1% |
||||||
Total deposits |
4,837,507 |
4,729,007 |
4,770,636 |
4,821,347 |
4,955,840 |
2.3% |
(2.4%) |
||||||
Short-term borrowings |
|||||||||||||
Federal funds purchased and securities sold |
|||||||||||||
under agreements to repurchase |
94,749 |
105,472 |
114,030 |
130,863 |
122,570 |
(10.2%) |
(22.7%) |
||||||
FHLB short-term borrowings |
654,000 |
518,200 |
505,900 |
502,200 |
502,000 |
26.2% |
30.3% |
||||||
Total short-term borrowings |
748,749 |
623,672 |
619,930 |
633,063 |
624,570 |
20.1% |
19.9% |
||||||
Long-term debt |
60,780 |
61,088 |
73,957 |
74,498 |
75,202 |
(0.5%) |
(19.2%) |
||||||
Total borrowed funds |
809,529 |
684,760 |
693,887 |
707,561 |
699,772 |
18.2% |
15.7% |
||||||
Accrued interest and other liabilities |
88,016 |
147,635 |
114,600 |
118,495 |
131,011 |
(40.4%) |
(32.8%) |
||||||
Total liabilities |
5,735,052 |
5,561,402 |
5,579,123 |
5,647,403 |
5,786,623 |
3.1% |
(0.9%) |
||||||
SHAREHOLDERS' EQUITY |
|||||||||||||
Common stock |
577,076 |
577,429 |
576,641 |
575,514 |
579,293 |
(0.1%) |
(0.4%) |
||||||
Retained earnings |
324,192 |
328,993 |
329,633 |
327,635 |
330,004 |
(1.5%) |
(1.8%) |
||||||
Accumulated other comprehensive loss |
(31,281) |
(29,294) |
(25,645) |
(21,475) |
(18,677) |
6.8% |
67.5% |
||||||
Treasury stock, at cost |
(187,826) |
(185,089) |
(185,177) |
(180,060) |
(180,195) |
1.5% |
4.2% |
||||||
Total shareholders' equity |
682,161 |
692,039 |
695,452 |
701,614 |
710,425 |
(1.4%) |
(4.0%) |
||||||
Total liabilities and shareholders' equity |
$6,417,213 |
$6,253,441 |
$6,274,575 |
$6,349,017 |
$6,497,048 |
2.6% |
(1.2%) |
FIRST FINANCIAL BANCORP. AVERAGE CONSOLIDATED STATEMENTS OF CONDITION
(Dollars in thousands) (Unaudited) |
|||||||||||||
Quarterly Averages |
Year-to-Date Averages |
||||||||||||
Dec. 31, |
Sep. 30, |
Jun. 30, |
Mar. 31, |
Dec. 31, |
Dec. 31, |
||||||||
2013 |
2013 |
2013 |
2013 |
2012 |
2013 |
2012 |
|||||||
ASSETS |
|||||||||||||
Cash and due from banks |
$110,246 |
$120,154 |
$119,909 |
$111,599 |
$118,619 |
$115,486 |
$120,492 |
||||||
Interest-bearing deposits with other banks |
4,906 |
4,010 |
13,890 |
3,056 |
5,146 |
6,464 |
36,674 |
||||||
Investment securities |
1,654,374 |
1,589,666 |
1,705,219 |
1,838,783 |
1,746,961 |
1,696,211 |
1,682,821 |
||||||
Loans held for sale |
7,990 |
13,349 |
19,722 |
21,096 |
18,054 |
15,497 |
20,848 |
||||||
Loans |
|||||||||||||
Commercial |
986,438 |
937,939 |
904,029 |
863,427 |
819,262 |
923,336 |
827,205 |
||||||
Real estate - construction |
79,194 |
93,103 |
93,813 |
81,171 |
85,219 |
86,832 |
97,278 |
||||||
Real estate - commercial |
1,489,858 |
1,488,047 |
1,445,626 |
1,411,769 |
1,373,781 |
1,459,119 |
1,303,155 |
||||||
Real estate - residential |
351,929 |
347,110 |
334,652 |
323,768 |
307,580 |
339,463 |
294,803 |
||||||
Installment |
47,733 |
50,130 |
52,313 |
54,684 |
58,283 |
51,193 |
61,768 |
||||||
Home equity |
374,919 |
371,072 |
367,408 |
365,568 |
368,605 |
369,771 |
363,470 |
||||||
Credit card |
35,673 |
34,176 |
33,785 |
33,300 |
32,954 |
34,240 |
31,882 |
||||||
Lease financing |
76,335 |
75,176 |
62,383 |
50,998 |
44,022 |
66,317 |
29,899 |
||||||
Total loans, excluding covered loans |
3,442,079 |
3,396,753 |
3,294,009 |
3,184,685 |
3,089,706 |
3,330,271 |
3,009,460 |
||||||
Less |
|||||||||||||
Allowance for loan and lease losses |
46,531 |
49,451 |
50,172 |
49,408 |
50,172 |
48,884 |
51,378 |
||||||
Net loans - uncovered |
3,395,548 |
3,347,302 |
3,243,837 |
3,135,277 |
3,039,534 |
3,281,387 |
2,958,082 |
||||||
Covered loans |
490,072 |
573,243 |
653,892 |
724,846 |
794,838 |
609,768 |
907,520 |
||||||
Less |
|||||||||||||
Allowance for loan and lease losses |
21,733 |
31,208 |
41,861 |
46,104 |
48,553 |
35,149 |
48,711 |
||||||
Net loans - covered |
468,339 |
542,035 |
612,031 |
678,742 |
746,285 |
574,619 |
858,809 |
||||||
Net loans |
3,863,887 |
3,889,337 |
3,855,868 |
3,814,019 |
3,785,819 |
3,856,006 |
3,816,891 |
||||||
Premises and equipment |
138,644 |
141,498 |
144,759 |
147,355 |
148,047 |
143,036 |
144,238 |
||||||
Goodwill |
95,050 |
95,050 |
95,050 |
95,050 |
95,050 |
95,050 |
95,050 |
||||||
Other intangibles |
6,075 |
6,428 |
6,831 |
7,346 |
8,001 |
6,666 |
9,240 |
||||||
FDIC indemnification asset |
78,313 |
82,411 |
104,983 |
115,344 |
125,264 |
95,126 |
142,594 |
||||||
Accrued interest and other assets |
273,486 |
251,819 |
244,371 |
237,401 |
243,123 |
251,869 |
249,333 |
||||||
Total assets |
$6,232,971 |
$6,193,722 |
$6,310,602 |
$6,391,049 |
$6,294,084 |
$6,281,411 |
$6,318,181 |
||||||
LIABILITIES |
|||||||||||||
Deposits |
|||||||||||||
Interest-bearing demand |
$1,150,275 |
$1,098,524 |
$1,141,767 |
$1,112,664 |
$1,145,800 |
$1,125,836 |
$1,196,764 |
||||||
Savings |
1,637,657 |
1,608,351 |
1,639,834 |
1,618,239 |
1,640,427 |
1,626,025 |
1,630,426 |
||||||
Time |
932,877 |
947,436 |
1,011,290 |
1,054,499 |
1,126,627 |
986,085 |
1,341,985 |
||||||
Total interest-bearing deposits |
3,720,809 |
3,654,311 |
3,792,891 |
3,785,402 |
3,912,854 |
3,737,946 |
4,169,175 |
||||||
Noninterest-bearing |
1,129,097 |
1,072,259 |
1,063,102 |
1,049,943 |
1,112,072 |
1,078,800 |
1,035,319 |
||||||
Total deposits |
4,849,906 |
4,726,570 |
4,855,993 |
4,835,345 |
5,024,926 |
4,816,746 |
5,204,494 |
||||||
Short-term borrowings |
|||||||||||||
Federal funds purchased and securities sold |
|||||||||||||
under agreements to repurchase |
107,738 |
114,505 |
105,299 |
134,709 |
100,087 |
115,486 |
86,980 |
||||||
Federal Home Loan Bank short-term borrowings |
414,892 |
483,937 |
464,630 |
525,878 |
263,895 |
472,062 |
111,295 |
||||||
Total short-term borrowings |
522,630 |
598,442 |
569,929 |
660,587 |
363,982 |
587,548 |
198,275 |
||||||
Long-term debt |
60,892 |
69,264 |
74,129 |
74,740 |
75,326 |
69,717 |
75,523 |
||||||
Total borrowed funds |
583,522 |
667,706 |
644,058 |
735,327 |
439,308 |
657,265 |
273,798 |
||||||
Accrued interest and other liabilities |
99,480 |
106,288 |
106,747 |
111,515 |
115,477 |
105,975 |
126,172 |
||||||
Total liabilities |
5,532,908 |
5,500,564 |
5,606,798 |
5,682,187 |
5,579,711 |
5,579,986 |
5,604,464 |
||||||
SHAREHOLDERS' EQUITY |
|||||||||||||
Common stock |
577,851 |
576,953 |
576,391 |
578,452 |
578,691 |
577,409 |
577,759 |
||||||
Retained earnings |
337,034 |
329,518 |
329,795 |
330,879 |
331,414 |
331,817 |
329,615 |
||||||
Accumulated other comprehensive loss |
(28,380) |
(28,232) |
(19,204) |
(19,576) |
(19,612) |
(23,884) |
(18,987) |
||||||
Treasury stock, at cost |
(186,442) |
(185,081) |
(183,178) |
(180,893) |
(176,120) |
(183,917) |
(174,670) |
||||||
Total shareholders' equity |
700,063 |
693,158 |
703,804 |
708,862 |
714,373 |
701,425 |
713,717 |
||||||
Total liabilities and shareholders' equity |
$6,232,971 |
$6,193,722 |
$6,310,602 |
$6,391,049 |
$6,294,084 |
$6,281,411 |
$6,318,181 |
FIRST FINANCIAL BANCORP. NET INTEREST MARGIN RATE/VOLUME ANALYSIS (1)
(Dollars in thousands) (Unaudited) |
|||||||||||||||||||
Quarterly Averages |
Year-to-Date Averages |
||||||||||||||||||
Dec. 31, 2013 |
Sep. 30, 2013 |
Dec. 31, 2012 |
Dec. 31, 2013 |
Dec. 31, 2012 |
|||||||||||||||
Balance |
Yield |
Balance |
Yield |
Balance |
Yield |
Balance |
Yield |
Balance |
Yield |
||||||||||
Earning assets |
|||||||||||||||||||
Investments: |
|||||||||||||||||||
Investment securities |
$ 1,654,374 |
2.38% |
$ 1,589,666 |
2.20% |
$ 1,746,961 |
1.99% |
$ 1,696,211 |
2.15% |
$ 1,682,821 |
2.28% |
|||||||||
Interest-bearing deposits with other banks |
4,906 |
0.57% |
4,010 |
0.49% |
5,146 |
0.54% |
6,464 |
0.42% |
36,674 |
0.30% |
|||||||||
Gross loans(2) |
4,018,454 |
4.93% |
4,065,756 |
4.95% |
4,027,862 |
5.79% |
4,050,662 |
5.15% |
4,080,422 |
5.94% |
|||||||||
Total earning assets |
5,677,734 |
4.18% |
5,659,432 |
4.17% |
5,779,969 |
4.64% |
5,753,337 |
4.26% |
5,799,917 |
4.84% |
|||||||||
Nonearning assets |
|||||||||||||||||||
Allowance for loan and lease losses |
(68,264) |
(80,659) |
(98,725) |
(84,033) |
(100,089) |
||||||||||||||
Cash and due from banks |
110,246 |
120,154 |
118,619 |
115,486 |
120,492 |
||||||||||||||
Accrued interest and other assets |
513,255 |
494,795 |
494,221 |
496,621 |
497,861 |
||||||||||||||
Total assets |
$ 6,232,971 |
$ 6,193,722 |
$ 6,294,084 |
$ 6,281,411 |
$ 6,318,181 |
||||||||||||||
Interest-bearing liabilities |
|||||||||||||||||||
Deposits: |
|||||||||||||||||||
Interest-bearing demand |
$ 1,150,275 |
0.19% |
$ 1,098,524 |
0.12% |
$ 1,145,800 |
0.13% |
$ 1,125,836 |
0.13% |
$ 1,196,764 |
0.13% |
|||||||||
Savings |
1,637,657 |
0.15% |
1,608,351 |
0.09% |
1,640,427 |
0.11% |
1,626,025 |
0.11% |
1,630,426 |
0.12% |
|||||||||
Time |
932,877 |
0.90% |
947,436 |
0.90% |
1,126,627 |
1.40% |
986,085 |
1.01% |
1,341,985 |
1.57% |
|||||||||
Total interest-bearing deposits |
3,720,809 |
0.35% |
3,654,311 |
0.31% |
3,912,854 |
0.49% |
3,737,946 |
0.35% |
4,169,175 |
0.59% |
|||||||||
Borrowed funds |
|||||||||||||||||||
Short-term borrowings |
522,630 |
0.20% |
598,442 |
0.19% |
363,982 |
0.17% |
587,548 |
0.20% |
198,275 |
0.13% |
|||||||||
Long-term debt |
60,892 |
3.51% |
69,264 |
3.53% |
75,326 |
3.54% |
69,717 |
3.53% |
75,523 |
3.58% |
|||||||||
Total borrowed funds |
583,522 |
0.54% |
667,706 |
0.54% |
439,308 |
0.75% |
657,265 |
0.55% |
273,798 |
1.08% |
|||||||||
Total interest-bearing liabilities |
4,304,331 |
0.37% |
4,322,017 |
0.35% |
4,352,162 |
0.51% |
4,395,211 |
0.38% |
4,442,973 |
0.62% |
|||||||||
Noninterest-bearing liabilities |
|||||||||||||||||||
Noninterest-bearing demand deposits |
1,129,097 |
1,072,259 |
1,112,072 |
1,078,800 |
1,035,319 |
||||||||||||||
Other liabilities |
99,480 |
106,288 |
115,477 |
105,975 |
126,172 |
||||||||||||||
Shareholders' equity |
700,063 |
693,158 |
714,373 |
701,425 |
713,717 |
||||||||||||||
Total liabilities & shareholders' equity |
$ 6,232,971 |
$ 6,193,722 |
$ 6,294,084 |
$ 6,281,411 |
$ 6,318,181 |
||||||||||||||
Net interest income(1) |
$ 55,804 |
$ 55,772 |
$ 61,976 |
$ 228,320 |
$ 253,341 |
||||||||||||||
Net interest spread(1) |
3.81% |
3.82% |
4.13% |
3.88% |
4.22% |
||||||||||||||
Net interest margin(1) |
3.90% |
3.91% |
4.27% |
3.97% |
4.37% |
||||||||||||||
(1)Not tax equivalent. |
|||||||||||||||||||
(2)Loans held for sale, nonaccrual loans, covered loans, and indemnification asset are included in gross loans. |
|||||||||||||||||||
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 |
$ 732 |
$ 388 |
$ 1,120 |
$ 1,704 |
$ (556) |
$ 1,148 |
$ (2,142) |
$ 289 |
$ (1,853) |
||||||||
Interest-bearing deposits with other banks |
1 |
1 |
2 |
0 |
0 |
0 |
42 |
(126) |
(84) |
||||||||
Gross loans(2) |
(218) |
(588) |
(806) |
(8,789) |
(117) |
(8,906) |
(32,252) |
(1,533) |
(33,785) |
||||||||
Total earning assets |
515 |
(199) |
316 |
(7,085) |
(673) |
(7,758) |
(34,352) |
(1,370) |
(35,722) |
||||||||
Interest-bearing liabilities |
|||||||||||||||||
Total interest-bearing deposits |
$ 333 |
$ 58 |
$ 391 |
$ (1,383) |
$ (168) |
$ (1,551) |
$ (9,850) |
$ (1,528) |
$ (11,378) |
||||||||
Borrowed funds |
|||||||||||||||||
Short-term borrowings |
8 |
(37) |
(29) |
20 |
78 |
98 |
135 |
780 |
915 |
||||||||
Long-term debt |
(4) |
(74) |
(78) |
(5) |
(128) |
(133) |
(33) |
(205) |
(238) |
||||||||
Total borrowed funds |
4 |
(111) |
(107) |
15 |
(50) |
(35) |
102 |
575 |
677 |
||||||||
Total interest-bearing liabilities |
337 |
(53) |
284 |
(1,368) |
(218) |
(1,586) |
(9,748) |
(953) |
(10,701) |
||||||||
Net interest income(1) |
$ 178 |
$ (146) |
$ 32 |
$ (5,717) |
$ (455) |
$ (6,172) |
$ (24,604) |
$ (417) |
$ (25,021) |
||||||||
(1)Not tax equivalent. |
|||||||||||||||||
(2)Loans held for sale, nonaccrual loans, covered loans, and indemnification asset are included in gross loans. |
|||||||||||||||||
FIRST FINANCIAL BANCORP. CREDIT QUALITY (excluding covered assets)
(Dollars in thousands) (Unaudited) |
|||||||||||||
Dec. 31, |
Sep. 30, |
Jun. 30, |
Mar. 31, |
Dec. 31, |
Full Year |
Full Year |
|||||||
2013 |
2013 |
2013 |
2013 |
2012 |
2013 |
2012 |
|||||||
ALLOWANCE FOR LOAN AND LEASE LOSS ACTIVITY |
|||||||||||||
Balance at beginning of period |
$45,514 |
$47,047 |
$48,306 |
$47,777 |
$49,192 |
$47,777 |
$52,576 |
||||||
Provision for uncovered loan and lease losses |
1,851 |
1,413 |
2,409 |
3,041 |
3,882 |
8,714 |
19,117 |
||||||
Gross charge-offs |
|||||||||||||
Commercial |
293 |
1,482 |
859 |
781 |
657 |
3,415 |
4,312 |
||||||
Real estate - construction |
1 |
0 |
0 |
0 |
0 |
1 |
2,684 |
||||||
Real estate - commercial |
3,113 |
2,174 |
2,044 |
995 |
2,221 |
8,326 |
11,012 |
||||||
Real estate - residential |
218 |
249 |
326 |
223 |
454 |
1,016 |
1,814 |
||||||
Installment |
39 |
99 |
97 |
100 |
267 |
335 |
577 |
||||||
Home equity |
706 |
411 |
591 |
701 |
1,722 |
2,409 |
3,661 |
||||||
Other |
398 |
696 |
277 |
410 |
227 |
1,781 |
1,252 |
||||||
Total gross charge-offs |
4,768 |
5,111 |
4,194 |
3,210 |
5,548 |
17,283 |
25,312 |
||||||
Recoveries |
|||||||||||||
Commercial |
194 |
92 |
67 |
319 |
71 |
672 |
393 |
||||||
Real estate - construction |
46 |
490 |
0 |
136 |
0 |
672 |
0 |
||||||
Real estate - commercial |
634 |
1,264 |
57 |
39 |
46 |
1,994 |
265 |
||||||
Real estate - residential |
96 |
98 |
5 |
4 |
3 |
203 |
73 |
||||||
Installment |
66 |
57 |
110 |
77 |
53 |
310 |
323 |
||||||
Home equity |
136 |
95 |
225 |
52 |
32 |
508 |
115 |
||||||
Other |
60 |
69 |
62 |
71 |
46 |
262 |
227 |
||||||
Total recoveries |
1,232 |
2,165 |
526 |
698 |
251 |
4,621 |
1,396 |
||||||
Total net charge-offs |
3,536 |
2,946 |
3,668 |
2,512 |
5,297 |
12,662 |
23,916 |
||||||
Ending allowance for uncovered loan and lease losses |
$43,829 |
$45,514 |
$47,047 |
$48,306 |
$47,777 |
$43,829 |
$47,777 |
||||||
NET CHARGE-OFFS TO AVERAGE LOANS AND LEASES (ANNUALIZED) |
|||||||||||||
Commercial |
0.04% |
0.59% |
0.35% |
0.22% |
0.28% |
0.30% |
0.47% |
||||||
Real estate - construction |
(0.23%) |
(2.09%) |
0.00% |
(0.68%) |
0.00% |
(0.77%) |
2.76% |
||||||
Real estate - commercial |
0.66% |
0.24% |
0.55% |
0.27% |
0.63% |
0.43% |
0.82% |
||||||
Real estate - residential |
0.14% |
0.17% |
0.38% |
0.27% |
0.58% |
0.24% |
0.59% |
||||||
Installment |
(0.22%) |
0.33% |
(0.10%) |
0.17% |
1.46% |
0.05% |
0.41% |
||||||
Home equity |
0.60% |
0.34% |
0.40% |
0.72% |
1.82% |
0.51% |
0.98% |
||||||
Other |
1.20% |
2.27% |
0.90% |
1.63% |
0.94% |
1.51% |
1.66% |
||||||
Total net charge-offs |
0.41% |
0.34% |
0.45% |
0.32% |
0.68% |
0.38% |
0.79% |
||||||
COMPONENTS OF NONPERFORMING LOANS, NONPERFORMING ASSETS, AND UNDERPERFORMING ASSETS |
|||||||||||||
Nonaccrual loans1 |
|||||||||||||
Commercial |
$7,934 |
$8,554 |
$12,925 |
$16,296 |
$15,893 |
$7,934 |
$15,893 |
||||||
Real estate - construction |
223 |
1,099 |
1,104 |
2,094 |
2,102 |
223 |
2,102 |
||||||
Real estate - commercial |
17,286 |
35,549 |
35,055 |
33,871 |
34,977 |
17,286 |
34,977 |
||||||
Real estate - residential |
8,606 |
9,346 |
9,369 |
8,295 |
7,869 |
8,606 |
7,869 |
||||||
Installment |
574 |
421 |
249 |
341 |
452 |
574 |
452 |
||||||
Home equity |
2,982 |
2,871 |
2,813 |
3,059 |
3,252 |
2,982 |
3,252 |
||||||
Lease financing |
0 |
86 |
496 |
496 |
496 |
0 |
496 |
||||||
Nonaccrual loans |
37,605 |
57,926 |
62,011 |
64,452 |
65,041 |
37,605 |
65,041 |
||||||
Accruing troubled debt restructurings (TDRs) |
15,094 |
16,278 |
12,924 |
12,757 |
10,856 |
15,094 |
10,856 |
||||||
Total nonperforming loans |
52,699 |
74,204 |
74,935 |
77,209 |
75,897 |
52,699 |
75,897 |
||||||
Other real estate owned (OREO) |
19,806 |
11,804 |
11,798 |
11,993 |
12,526 |
19,806 |
12,526 |
||||||
Total nonperforming assets |
72,505 |
86,008 |
86,733 |
89,202 |
88,423 |
72,505 |
88,423 |
||||||
Accruing loans past due 90 days or more |
218 |
265 |
158 |
157 |
212 |
218 |
212 |
||||||
Total underperforming assets |
$72,723 |
$86,273 |
$86,891 |
$89,359 |
$88,635 |
$72,723 |
$88,635 |
||||||
Total classified assets |
$110,509 |
$120,423 |
$129,832 |
$130,436 |
$129,040 |
$110,509 |
$129,040 |
||||||
CREDIT QUALITY RATIOS (excluding covered assets) |
|||||||||||||
Allowance for loan and lease losses to |
|||||||||||||
Nonaccrual loans |
116.55% |
78.57% |
75.87% |
74.95% |
73.46% |
116.55% |
73.46% |
||||||
Nonperforming loans |
83.17% |
61.34% |
62.78% |
62.57% |
62.95% |
83.17% |
62.95% |
||||||
Total ending loans |
1.25% |
1.33% |
1.39% |
1.49% |
1.50% |
1.25% |
1.50% |
||||||
Nonperforming loans to total loans |
1.50% |
2.16% |
2.22% |
2.38% |
2.39% |
1.50% |
2.39% |
||||||
Nonperforming assets to |
|||||||||||||
Ending loans, plus OREO |
2.06% |
2.50% |
2.56% |
2.74% |
2.77% |
2.06% |
2.77% |
||||||
Total assets |
1.13% |
1.38% |
1.38% |
1.40% |
1.36% |
1.13% |
1.36% |
||||||
Nonperforming assets, excluding accruing TDRs to |
|||||||||||||
Ending loans, plus OREO |
1.63% |
2.03% |
2.17% |
2.34% |
2.43% |
1.63% |
2.43% |
||||||
Total assets |
0.89% |
1.12% |
1.18% |
1.20% |
1.19% |
0.89% |
1.19% |
||||||
1 Nonaccrual loans include nonaccrual TDRs of $13.0 million, $13.0 million, $19.9 million, $22.3 million, $14.1 million, and as of December 31, 2013 September 30, 2013, June 30, 2013, March 31, 2013, and December 31, 2012, respectively. |
FIRST FINANCIAL BANCORP. CAPITAL ADEQUACY
(Dollars in thousands, except per share) (Unaudited)
|
||||||||||||||
Twelve months ended, |
||||||||||||||
Dec. 31, |
Sep. 30, |
Jun. 30, |
Mar. 31, |
Dec. 31, |
Dec. 31, |
Dec. 31, |
||||||||
2013 |
2013 |
2013 |
2013 |
2012 |
2013 |
2012 |
||||||||
PER COMMON SHARE |
||||||||||||||
Market Price |
||||||||||||||
High |
$17.59 |
$16.47 |
$16.05 |
$16.07 |
$16.95 |
$17.59 |
$18.28 |
|||||||
Low |
$14.56 |
$14.89 |
$14.52 |
$14.46 |
$13.90 |
$14.46 |
$13.90 |
|||||||
Close |
$17.43 |
$15.17 |
$14.90 |
$16.05 |
$14.62 |
$17.43 |
$14.62 |
|||||||
Average shares outstanding - basic |
57,152,425 |
57,201,390 |
57,291,994 |
57,439,029 |
57,800,988 |
57,270,233 |
57,876,685 |
|||||||
Average shares outstanding - diluted |
57,863,433 |
58,012,588 |
58,128,349 |
58,283,467 |
58,670,666 |
58,073,054 |
58,868,792 |
|||||||
Ending shares outstanding |
57,533,046 |
57,702,444 |
57,698,344 |
58,028,923 |
58,046,235 |
57,533,046 |
58,046,235 |
|||||||
REGULATORY CAPITAL |
Preliminary |
Preliminary |
||||||||||||
Tier 1 Capital |
$624,746 |
$631,846 |
$630,819 |
$632,020 |
$637,176 |
$624,746 |
$637,176 |
|||||||
Tier 1 Ratio |
14.61% |
15.26% |
15.41% |
15.87% |
16.32% |
14.61% |
16.32% |
|||||||
Total Capital |
$678,970 |
$684,363 |
$682,927 |
$682,974 |
$686,961 |
$678,970 |
$686,961 |
|||||||
Total Capital Ratio |
15.88% |
16.53% |
16.68% |
17.15% |
17.60% |
15.88% |
17.60% |
|||||||
Total Capital in excess of minimum |
||||||||||||||
requirement |
$336,878 |
$353,118 |
$355,435 |
$364,376 |
$374,633 |
$336,878 |
$374,633 |
|||||||
Total Risk-Weighted Assets |
$4,276,153 |
$4,140,561 |
$4,093,644 |
$3,982,479 |
$3,904,096 |
$4,276,153 |
$3,904,096 |
|||||||
Leverage Ratio |
10.11% |
10.29% |
10.12% |
10.00% |
10.25% |
10.11% |
10.25% |
|||||||
OTHER CAPITAL RATIOS |
||||||||||||||
Ending shareholders' equity to ending |
||||||||||||||
assets |
10.63% |
11.07% |
11.08% |
11.05% |
10.93% |
10.63% |
10.93% |
|||||||
Ending tangible shareholders' equity |
||||||||||||||
to ending tangible assets |
9.20% |
9.60% |
9.62% |
9.60% |
9.50% |
9.20% |
9.50% |
|||||||
Average shareholders' equity to |
||||||||||||||
average assets |
11.23% |
11.19% |
11.15% |
11.09% |
11.35% |
11.17% |
11.30% |
|||||||
Average tangible shareholders' equity |
||||||||||||||
to average tangible assets |
9.77% |
9.71% |
9.70% |
9.65% |
9.88% |
9.72% |
9.83% |
|||||||
REPURCHASE PROGRAM(1) |
||||||||||||||
Shares repurchased |
209,745 |
0 |
291,400 |
249,000 |
460,500 |
750,145 |
460,500 |
|||||||
Average share repurchase price |
$16.39 |
N/A |
$15.47 |
$15.39 |
$14.78 |
$15.70 |
$14.78 |
|||||||
Total cost of shares repurchased |
$3,438 |
N/A |
$4,508 |
$3,831 |
$6,806 |
$11,778 |
$6,806 |
|||||||
(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 fourth quarter, First Financial recognized approximately $1.6 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 driven payments before the maturity date or loan sales. The amount of discount attributable to the credit loss component of each loan varies and the recognized amount is offset by a related reduction in the FDIC indemnification asset.
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 December 31, 2013.
Table VII |
For the Three Months Ended |
|||||||
December 31, 2013 |
||||||||
Average |
||||||||
(Dollars in thousands) |
Balance |
Yield |
||||||
Loans, excluding covered loans 1 |
$ 3,450,069 |
4.51% |
||||||
Covered loan portfolio accounted for under ASC Topic 310-302 |
432,498 |
10.16% |
||||||
Covered loan portfolio accounted for under ASC Topic 310-203 |
57,574 |
14.08% |
||||||
FDIC indemnification asset2 |
78,313 |
(12.36%) |
||||||
Total |
$ 4,018,454 |
4.93% |
||||||
Yield earned on total covered loans |
10.62% |
|||||||
Yield earned on total covered loans and FDIC indemnification asset |
7.45% |
|||||||
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 December 31, 2013, September 30, 2013 and December 31, 2012.
Table VIII |
|||||||||||||||
As of |
|||||||||||||||
December 31, 2013 |
September 30, 2013 |
December 31, 2012 |
|||||||||||||
Percent |
Percent |
Percent |
|||||||||||||
(Dollars in thousands) |
Balance |
of Total |
Balance |
of Total |
Balance |
of Total |
|||||||||
Commercial |
$ 42,316 |
9.2% |
$ 52,276 |
10.1% |
$ 102,126 |
13.7% |
|||||||||
Real estate - construction |
8,556 |
1.9% |
8,692 |
1.7% |
10,631 |
1.4% |
|||||||||
Real estate - commercial |
268,633 |
58.7% |
312,798 |
60.3% |
465,555 |
62.2% |
|||||||||
Real estate - residential |
80,733 |
17.6% |
84,418 |
16.3% |
100,694 |
13.5% |
|||||||||
Installment |
5,641 |
1.2% |
6,135 |
1.2% |
8,674 |
1.2% |
|||||||||
Home equity |
49,624 |
10.8% |
51,692 |
10.0% |
57,458 |
7.7% |
|||||||||
Other |
2,370 |
0.5% |
2,513 |
0.5% |
2,978 |
0.4% |
|||||||||
Total |
$ 457,873 |
100.0% |
$ 518,524 |
100.0% |
$ 748,116 |
100.0% |
|||||||||
As of December 31, 2013, 11.6% of the Company's total loans were covered loans. During the fourth quarter, the total balance of covered loans decreased $60.7 million, or 11.7%, compared to the prior quarter. Of this decline, $46.1 million consisted of covered loans classified as likely to exit and resulted from the continued successful execution of resolution strategies. As required under the loss sharing agreements, First Financial must file monthly certifications with the FDIC on single-family residential loans and quarterly certifications on all other 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 and the agreements related to single-family loans expire in the third quarter 2019.
Covered OREO decreased $0.6 million, or 2.3%, during the fourth quarter to $27.1 million as of December 31, 2013 as additions of $3.2 million were offset by resolutions and valuation adjustments of $3.8 million. Additionally, the Company recognized a net loss on sales of covered OREO of $0.9 million during the quarter. The net loss was offset by a corresponding increase in FDIC loss sharing income of approximately 80% of the net loss recognized.
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 December 31, 2013 and for the trailing three quarters.
Table IX |
|||||||||||
As of or for the Three Months Ended |
|||||||||||
December 31, |
September 30, |
June 30, |
March 31, |
||||||||
(Dollars in thousands) |
2013 |
2013 |
2013 |
2013 |
|||||||
Balance at beginning of period |
$ 23,259 |
$ 32,961 |
$ 45,496 |
$ 45,190 |
|||||||
Provision for loan and lease losses - covered |
(5,857) |
5,293 |
(8,283) |
9,042 |
|||||||
Total gross charge-offs |
(3,850) |
(21,009) |
(4,681) |
(9,684) |
|||||||
Total recoveries |
5,349 |
6,014 |
429 |
948 |
|||||||
Total net (charge-offs) / recoveries |
1,499 |
(14,995) |
(4,252) |
(8,736) |
|||||||
Ending allowance for loan and lease losses - covered |
$ 18,901 |
$ 23,259 |
$ 32,961 |
$ 45,496 |
|||||||
As a percentage of total covered loans, the allowance for loan losses totaled 4.13% as of December 31, 2013 compared to 4.49% as of September 30, 2013.
The Company realized net recoveries on covered loans during the fourth quarter of $1.5 million compared to net charge-offs of $15.0 million for the third quarter. The net recoveries realized during the fourth quarter were driven primarily by the continued resolution strategies related to covered loans discussed above. During the fourth quarter, the Company recognized a negative provision expense of $5.9 million compared to a provision expense of $5.3 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 $1.5 million, consisting primarily of credit expenses, and net losses related to covered OREO of $0.9 million. The negative FDIC loss sharing income of $3.4 million for the quarter reflects the quarterly re-estimation of expected cash flows and the corresponding offset related to the net losses on sales of covered OREO and loss sharing and covered asset expenses.
As previously disclosed in the press release dated January 22, 2014, the Company recognized a $22.4 million pre-tax non-cash valuation adjustment on its FDIC indemnification asset during the quarter. The non-cash valuation adjustment resulted primarily from an improvement in future expected cash flows on covered loans, a meaningful decline in loss claims filed with the FDIC, higher reimbursements to the FDIC related to positive asset resolutions in recent periods and the significantly shorter remaining life of the indemnification asset in comparison to the weighted average life of the related covered loans.
SOURCE First Financial Bancorp
WANT YOUR COMPANY'S NEWS FEATURED ON PRNEWSWIRE.COM?
Newsrooms &
Influencers
Digital Media
Outlets
Journalists
Opted In
Share this article