First Financial Bancorp Announces Second Quarter 2021 Financial Results

CINCINNATI, July 22, 2021 /PRNewswire/ --

• Earnings per diluted share of $0.52; $0.58 on an adjusted⁽¹⁾ basis
• Return on average assets of 1.26%; 1.39% as adjusted⁽¹⁾
• Net interest margin FTE⁽¹⁾ of 3.31%
• Provision recapture of $4.2 million
• Repurchased 1,308,945 shares during the quarter

First Financial Bancorp. (Nasdaq: FFBC) ("First Financial" or the "Company") announced financial results for the three and six months ended June 30, 2021. 

For the three months ended June 30, 2021, the Company reported net income of $50.9 million, or $0.52 per diluted common share.  These results compare to net income of $47.3 million, or $0.48 per diluted common share, for the first quarter of 2021 and $37.4 million, or $0.38 per diluted common share, for the second quarter of 2020.  For the six months ended June 30, 2021, First Financial had earnings per diluted common share of $1.01 compared to $0.67 for the same period in 2020.

Return on average assets for the second quarter of 2021 was 1.26% while return on average tangible common equity was 16.31%⁽¹⁾.  These compare to returns on average assets of 1.20% and 0.96%, and returns on average tangible common equity of 15.24%⁽¹⁾ and 12.90%⁽¹⁾, in the first quarter of 2021 and the second quarter of 2020, respectively.

Second quarter 2021 highlights include:

• After adjustments⁽¹⁾ for certain nonrecurring items:
• Net income of $0.58 per diluted common share
• 1.39% return on average assets
• 18.03% return on average tangible common equity
                         
• Net interest margin of 3.31% on a fully tax-equivalent basis⁽¹⁾ in line with expectations
• 9 basis point reduction from linked quarter driven by lower yields on earning assets and additional days during the second quarter
                    
• Noninterest income of $43.0 million, or $43.1 million as adjusted⁽¹⁾
• Record foreign exchange income of $12.0 million; increased $1.3 million, or 11.9%, compared to linked quarter
• Record wealth management fees of $6.2 million; increased $0.6 million, or 10.4%, compared to the linked quarter
                            
• Noninterest expenses of $99.6 million, or $91.8 million as adjusted⁽¹⁾
• Adjustments⁽¹⁾ include:
• $3.8 million of legal settlement costs
• $2.8 million of branch consolidation costs
• $1.2 million of tax credit investment write-downs
• Efficiency ratio of 63.5%; 58.4% as adjusted⁽¹⁾
                                 
• Loan balances declined during the quarter driven by $288.8 million of PPP forgiveness and elevated prepayments

⁽¹⁾ Financial information in this release that is described as "adjusted" or that is presented on a fully tax equivalent basis is non-GAAP.  For details on the calculation of these non-GAAP financial measures and a reconciliation to the GAAP financial measure, see the sections titled "Use of Non-GAAP Financial Measures" in this release and "Appendix: Non-GAAP to GAAP Reconciliation" in the accompanying slide presentation.

• Average transactional deposit balances grew $469.6 million compared to the linked quarter; 17.8% on an annualized basis
                               
• Total Allowance for Credit Losses of $173.1 million; Total quarterly provision recapture of $4.2 million
• Loans and leases - ACL of $159.6 million, 1.68% of total loans; 1.75% of loans excluding PPP
• Unfunded Commitments - ACL of $13.6 million
• Provision recapture driven by improvements in economic conditions and classified asset balances, coupled with lower net charge-offs
                                  
• Strong capital ratios
• Total capital of 15.31%
• Tier 1 common equity of 11.78%
• Tangible common equity of 8.37%⁽¹⁾; 8.61%⁽¹⁾ excluding PPP loans
• Tangible book value per share of $13.08⁽¹⁾; $0.30 increase compared to linked quarter
• Repurchased 1,308,945 shares during second quarter; 2,149,060 shares repurchased in 2021

Archie Brown, President and Chief Executive Officer, commented, "We are very pleased to announce second quarter results that are highlighted by robust earnings, higher fee income, lower credit costs and improving credit trends."

Mr. Brown continued, "Our core quarterly financial metrics reflected the strong quarter with an adjusted⁽¹⁾ earnings per share of $0.58, adjusted⁽¹⁾ return on assets of 1.39%, and an adjusted⁽¹⁾ efficiency ratio of 58.4%.  The quarterly performance was bolstered by higher fee revenue in interchange, and record revenue in Wealth Management and Bannockburn.  Additionally, provision recapture during the period positively impacted our results, driven by improved credit quality trends, which included declines in net charge-offs and classified asset balances.  We are optimistic about the economic environment and expect further reductions in credit costs in the coming periods."

Mr. Brown added, "We were pleased with a 23% increase in loan originations for the quarter, driven primarily by our core commercial markets, in addition to consumer and mortgage banking.  Loan payoffs accelerated during the quarter in almost all commercial banking areas, with larger payoff amounts in Commercial Finance and ICRE driving an overall reduction in core loan balances for the quarter.  Given the state of our loan pipeline, we expect originations to remain strong in the second half of the year, however we also anticipate higher payoffs to continue due to the amount of liquidity in the market.  Average transactional deposits increased 18% on an annualized basis, as clients continued to build liquidity from recent government stimulus actions, however we believe these balances may have peaked as we began to experience some outflows late in the quarter.  Our capital ratios remained strong and in excess of both internal and external targets.  We also remained active in our share buyback program, repurchasing over 1 million shares during the quarter.  When combined with the common dividend, the share repurchases approximate a return to shareholders of 98% of adjusted⁽¹⁾ quarterly earnings.  We anticipate further share buyback activity in the third quarter, absent higher priority capital deployment alternatives."

Mr. Brown concluded, "Throughout the summer, the number of associates working in our offices has increased steadily in anticipation of a broader return, and we are very much looking forward to welcoming all of our associates back in the beginning of August.  We have learned a great deal from the remote environment during the last 16 months and are excited to incorporate the best practices derived from that experience into our culture moving forward, including greater associate flexibility."

Full detail of the Company's second quarter 2021 performance is provided in the accompanying financial statements and slide presentation.

Teleconference / Webcast Information

First Financial's executive management will host a conference call to discuss the Company's financial and operating results on Friday, July 23, 2021 at 8:30 a.m. Eastern Time.  Members of the public who would like to listen to the conference call should dial (877) 506-6873 (U.S. toll free), (855) 669-9657 (Canada toll free) or +1 (412) 380-2003 (International) (no passcode required).  The number should be dialed five to ten minutes prior to the start of the conference call.  The conference call will also be accessible as an audio webcast via the Investor Relations section of the Company's website at www.bankatfirst.com.  A replay of the conference call will be available beginning one hour after the completion of the live call at (877) 344-7529 (U.S. toll free), (855) 669-9658 (Canada toll free) and +1 (412) 317-0088 (International); conference number 10158382.  The webcast will be archived on the Investor Relations section of the Company's website for 12 months.

Press Release and Additional Information on Website

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

Use of Non-GAAP Financial Measures

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

Forward-Looking Statement

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

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

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

Additional factors that may cause our actual results to differ materially from those described in our forward-looking statements can be found in our Form 10-K for the year ended December 31, 2020, as well as our other filings with the SEC, which are available on the SEC website at www.sec.gov. 

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

About First Financial Bancorp.

First Financial Bancorp. is a Cincinnati, Ohio based bank holding company.  As of June 30, 2021, the Company had $16.0 billion in assets, $9.5 billion in loans, $12.5 billion in deposits and $2.3 billion in shareholders' equity.  The Company's subsidiary, First Financial Bank, founded in 1863, provides banking and financial services products through its six lines of business: Commercial, Retail Banking, Investment Commercial Real Estate, Mortgage Banking, Commercial Finance and Wealth Management.  These business units provide traditional banking services to business and retail clients.  Wealth Management provides wealth planning, portfolio management, trust and estate, brokerage and retirement plan services and had approximately $3.2 billion in assets under management as of June 30, 2021.  The Company operated 139 full service banking centers as of June 30, 2021, primarily in Ohio, Indiana, Kentucky and Illinois, while the Commercial Finance business lends into targeted industry verticals on a nationwide basis.  Additional information about the Company, including its products, services and banking locations, is available at www.bankatfirst.com.