FFBC 8-K

First Financial Bancorp /Oh/ (FFBC)

8-K 2020-01-23 For: 2020-01-23

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Ohio	001-34762		31-1042001
(State or other jurisdiction of incorporation or organization)	(Commission File Number)		(I.R.S. employer identification number)

255 East Fifth Street, Suite 800	Cincinnati,	Ohio	45202
(Address of principal executive offices)			(Zip Code)



Title of each class	Trading symbol	Name of exchange on which registered
Common stock, No par value	FFBC	The NASDAQ Stock Market LLC



		By: /s/ James M. Anderson
		James M. Anderson
		Executive Vice President and Chief Financial Officer

Date:	January 23, 2020



Contents	Page
Consolidated Financial Highlights	2
Consolidated Statements of Income	3
Consolidated Quarterly Statements of Income	4-5
Consolidated Statements of Condition	6
Average Consolidated Statements of Condition	7
Net Interest Margin Rate / Volume Analysis	8-9
Credit Quality	10
Capital Adequacy	11



FIRST FINANCIAL BANCORP.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Dollars in thousands, except per share data)
(Unaudited)

	Three Months Ended,															Twelve months ended,
	Dec. 31,			Sep. 30,			Jun. 30,			Mar. 31,			Dec. 31,			Dec. 31,
	2019			2019			2019			2019			2018			2019			2018
RESULTS OF OPERATIONS
Net income	$	48,677		$	50,856		$	52,703		$	45,839		$	55,014		$	198,075		$	172,595
Net earnings per share - basic	$	0.49		$	0.52		$	0.54		$	0.47		$	0.56		$	2.01		$	1.95
Net earnings per share - diluted	$	0.49		$	0.51		$	0.53		$	0.47		$	0.56		$	2.00		$	1.93
Dividends declared per share	$	0.23		$	0.23		$	0.22		$	0.22		$	0.20		$	0.90		$	0.78

KEY FINANCIAL RATIOS
Return on average assets	1.34		%	1.41		%	1.50		%	1.33		%	1.59		%	1.39		%	1.37		%
Return on average shareholders' equity	8.60		%	9.13		%	9.85		%	8.88		%	10.68		%	9.11		%	9.85		%
Return on average tangible shareholders' equity	15.84		%	16.15		%	17.33		%	15.95		%	19.63		%	16.32		%	17.32		%

Net interest margin	3.84		%	3.91		%	3.99		%	4.05		%	4.16		%	3.95		%	4.05		%
Net interest margin (fully tax equivalent) ⁽¹⁾	3.89		%	3.96		%	4.04		%	4.10		%	4.21		%	4.00		%	4.10		%

Ending shareholders' equity as a percent of ending assets	15.49		%	15.62		%	15.16		%	15.14		%	14.86		%	15.49		%	14.86		%
Ending tangible shareholders' equity as a percent of:
Ending tangible assets	9.07		%	9.17		%	9.34		%	9.15		%	8.79		%	9.07		%	8.79		%
Risk-weighted assets	11.09		%	11.34		%	11.82		%	11.61		%	11.20		%	11.09		%	11.20		%

Average shareholders' equity as a percent of average assets	15.53		%	15.43		%	15.22		%	15.01		%	14.84		%	15.30		%	13.89		%
Average tangible shareholders' equity as a percent of
average tangible assets	9.07		%	9.35		%	9.26		%	8.95		%	8.66		%	9.16		%	8.40		%

Book value per share	$	22.82		$	22.59		$	22.18		$	21.60		$	21.23		$	22.82		$	21.23
Tangible book value per share	$	12.42		$	12.33		$	12.79		$	12.19		$	11.72		$	12.42		$	11.72

Common equity tier 1 ratio⁽²⁾	11.30		%	11.52		%	12.00		%	12.03		%	11.87		%	11.30		%	11.87		%
Tier 1 ratio ⁽²⁾	11.69		%	11.91		%	12.40		%	12.43		%	12.28		%	11.69		%	12.28		%
Total capital ratio ⁽²⁾	13.39		%	13.62		%	14.20		%	14.24		%	14.10		%	13.39		%	14.10		%
Leverage ratio ⁽²⁾	9.58		%	9.75		%	10.02		%	9.84		%	9.71		%	9.58		%	9.71		%

AVERAGE BALANCE SHEET ITEMS
Loans ⁽³⁾	$	9,149,222		$	9,014,092		$	8,852,662		$	8,773,310		$	8,766,302		$	8,948,535		$	8,151,068
Investment securities	3,102,867			3,290,666			3,408,994			3,355,732			3,204,758			3,288,875			2,897,167
Interest-bearing deposits with other banks	36,672			38,569			33,255			34,709			32,013			35,814			32,090
Total earning assets	$	12,288,761		$	12,343,327		$	12,294,911		$	12,163,751		$	12,003,073		$	12,273,224		$	11,080,325
Total assets	$	14,460,288		$	14,320,514		$	14,102,733		$	13,952,551		$	13,768,958		$	14,210,719		$	12,611,438
Noninterest-bearing deposits	$	2,638,908		$	2,513,458		$	2,484,214		$	2,457,587		$	2,476,773		$	2,524,011		$	2,217,349
Interest-bearing deposits	7,583,531			7,504,708			7,612,146			7,610,092			7,573,069			7,577,347			7,098,836
Total deposits	$	10,222,439		$	10,018,166		$	10,096,360		$	10,067,679		$	10,049,842		$	10,101,358		$	9,316,185
Borrowings	$	1,613,696		$	1,816,983		$	1,656,570		$	1,587,068		$	1,509,642		$	1,669,059		$	1,385,994
Shareholders' equity	$	2,245,107		$	2,210,327		$	2,146,997		$	2,094,234		$	2,042,884		$	2,174,679		$	1,752,261

CREDIT QUALITY RATIOS
Allowance to ending loans	0.63		%	0.62		%	0.69		%	0.64		%	0.64		%	0.63		%	0.64		%
Allowance to nonaccrual loans	119.69		%	93.18		%	119.86		%	95.40		%	79.97		%	119.69		%	79.97		%
Allowance to nonperforming loans	96.73		%	71.46		%	69.33		%	68.94		%	65.13		%	96.73		%	65.13		%
Nonperforming loans to total loans	0.65		%	0.87		%	0.99		%	0.93		%	0.98		%	0.65		%	0.98		%
Nonperforming assets to ending loans, plus OREO	0.67		%	0.89		%	1.00		%	0.95		%	1.00		%	0.67		%	1.00		%
Nonperforming assets to total assets	0.42		%	0.56		%	0.62		%	0.60		%	0.63		%	0.42		%	0.63		%
Classified assets to total assets	0.62		%	0.92		%	1.02		%	1.01		%	0.94		%	0.62		%	0.94		%
Net charge-offs to average loans (annualized)	0.15		%	0.45		%	0.08		%	0.64		%	0.29		%	0.33		%	0.15		%


•	Fourth Quarter 2019 Earnings per Diluted Share of $0.49; $0.52 on an Adjusted Basis


•	After adjustments⁽¹⁾ for merger-related and nonrecurring items:


◦	1.41% return on average assets; 16.73% return on average tangible common equity


◦	$2.9 million historic tax credit investment write-down; offset by impact to income taxes


◦	$1.7 million of other nonrecurring costs such as branch consolidation costs


◦	$0.7 million of taxes on merger-related executive compensation


◦	$138.0 million increase compared to the linked quarter driven by commercial real estate


•	Average deposit balances grew 8.1% on an annualized basis


◦	Noninterest bearing demand deposits grew 19.8% on an annualized basis


•	Net interest margin of 3.89% on a fully tax-equivalent basis⁽¹⁾


•	32.6% Decline in Classified Assets


•	6.0% Loan Growth on an Annualized Basis


•	Adjustments to net income include:


◦	Impact of lower interest rates on asset yields partially offset by funding cost reductions and favorable shift in funding mix


◦	Positively impacted by full quarter impact of Bannockburn acquisition, strong mortgage banking activity and client derivative fees


•	Noninterest expenses of $93.1 million, or $87.8 million as adjusted⁽¹⁾


◦	Includes $1.7 million of additional incentive compensation due to strong operating results


◦	$0.8 million of additional collection expenses in fourth quarter


•	Significant decline in nonperforming and classified asset levels; ALLL relatively flat at $57.7 million, or 0.63% of loans; Provision expense sufficient to cover net charge-offs and loan growth


◦	Total capital of 13.39%; Tier 1 common equity of 11.30%; Tangible common equity of 9.07%



FIRST FINANCIAL BANCORP.
CONSOLIDATED STATEMENTS OF CONDITION
(Dollars in thousands)
(Unaudited)

	Dec. 31,			Sep. 30,			Jun. 30,			Mar. 31,			Dec. 31,			% Change		% Change
	2019			2019			2019			2019			2018			Linked Qtr.		Comp Qtr.
ASSETS
Cash and due from banks	$	200,691		$	242,482		$	169,694		$	169,004		$	236,221		(17.2	)%	(15.0	)%
Interest-bearing deposits with other banks	56,948			39,669			101,668			50,224			37,738			43.6	%	50.9	%
Investment securities available-for-sale	2,852,084			2,850,502			3,152,970			3,113,811			2,779,255			0.1	%	2.6	%
Investment securities held-to-maturity	142,862			148,778			154,327			158,305			429,328			(4.0	)%	(66.7	)%
Other investments	125,020			124,965			127,439			115,731			115,660			0.0	%	8.1	%
Loans held for sale	13,680			23,528			20,244			8,217			4,372			(41.9	)%	212.9	%
Loans and leases
Commercial and industrial	2,465,877			2,470,017			2,547,997			2,543,427			2,514,661			(0.2	)%	(1.9	)%
Lease financing	88,364			92,616			90,638			95,573			93,415			(4.6	)%	(5.4	)%
Construction real estate	493,182			515,960			497,683			458,113			548,935			(4.4	)%	(10.2	)%
Commercial real estate	4,194,651			4,015,908			3,903,654			3,802,179			3,754,681			4.5	%	11.7	%
Residential real estate	1,055,949			1,055,007			1,015,820			975,120			955,646			0.1	%	10.5	%
Home equity	771,869			776,885			787,139			797,118			817,282			(0.6	)%	(5.6	)%
Installment	82,589			88,275			89,149			90,689			93,212			(6.4	)%	(11.4	)%
Credit card	49,184			49,010			48,706			46,982			46,382			0.4	%	6.0	%
Total loans	9,201,665			9,063,678			8,980,786			8,809,201			8,824,214			1.5	%	4.3	%
Less:
Allowance for loan and lease losses	57,650			56,552			61,549			56,722			56,542			1.9	%	2.0	%
Net loans	9,144,015			9,007,126			8,919,237			8,752,479			8,767,672			1.5	%	4.3	%
Premises and equipment	214,506			213,681			211,313			210,676			215,652			0.4	%	(0.5	)%
Goodwill	937,771			937,689			879,727			879,727			880,251			0.0	%	6.5	%
Other intangibles	76,201			79,506			36,349			38,571			40,805			(4.2	)%	86.7	%
Accrued interest and other assets	747,847			812,519			664,695			577,518			479,706			(8.0	)%	55.9	%
Total Assets	$	14,511,625		$	14,480,445		$	14,437,663		$	14,074,263		$	13,986,660		0.2	%	3.8	%

LIABILITIES
Deposits
Interest-bearing demand	$	2,364,881		$	2,316,301		$	2,332,692		$	2,235,036		$	2,307,071		2.1	%	2.5	%
Savings	2,960,979			2,924,200			2,953,114			3,100,894			3,167,325			1.3	%	(6.5	)%
Time	2,240,441			2,308,617			2,321,908			2,309,810			2,173,564			(3.0	)%	3.1	%
Total interest-bearing deposits	7,566,301			7,549,118			7,607,714			7,645,740			7,647,960			0.2	%	(1.1	)%
Noninterest-bearing	2,643,928			2,534,739			2,501,290			2,488,157			2,492,434			4.3	%	6.1	%
Total deposits	10,210,229			10,083,857			10,109,004			10,133,897			10,140,394			1.3	%	0.7	%
Federal funds purchased and securities sold
under agreements to repurchase	165,181			85,286			260,621			95,015			183,591			93.7	%	(10.0	)%
FHLB short-term borrowings	1,151,000			1,128,900			1,052,700			952,400			857,100			2.0	%	34.3	%
Total short-term borrowings	1,316,181			1,214,186			1,313,321			1,047,415			1,040,691			8.4	%	26.5	%
Long-term debt	414,376			498,778			547,042			546,423			570,739			(16.9	)%	(27.4	)%
Total borrowed funds	1,730,557			1,712,964			1,860,363			1,593,838			1,611,430			1.0	%	7.4	%
Accrued interest and other liabilities	323,134			422,311			280,107			216,109			156,587			(23.5	)%	106.4	%
Total Liabilities	12,263,920			12,219,132			12,249,474			11,943,844			11,908,411			0.4	%	3.0	%

SHAREHOLDERS' EQUITY
Common stock	1,640,771			1,639,333			1,623,699			1,622,554			1,633,256			0.1	%	0.5	%
Retained earnings	711,249			685,368			657,730			626,408			600,014			3.8	%	18.5	%
Accumulated other comprehensive income (loss)	13,323			15,450			5,193			(19,635		)	(44,408		)	(13.8	)%	130.0	%
Treasury stock, at cost	(117,638		)	(78,838		)	(98,433		)	(98,908		)	(110,613		)	49.2	%	6.4	%
Total Shareholders' Equity	2,247,705			2,261,313			2,188,189			2,130,419			2,078,249			(0.6	)%	8.2	%
Total Liabilities and Shareholders' Equity	$	14,511,625		$	14,480,445		$	14,437,663		$	14,074,263		$	13,986,660		0.2	%	3.8	%



FIRST FINANCIAL BANCORP.
NET INTEREST MARGIN RATE/VOLUME ANALYSIS
(Dollars in thousands)
(Unaudited)

	Quarterly Averages															Year-to-Date Averages
	December 31, 2019					September 30, 2019					December 31, 2018					December 31, 2019					December 31, 2018
	Balance			Yield		Balance			Yield		Balance			Yield		Balance			Yield		Balance			Yield
Earning assets
Investments:
Investment securities	$	3,102,867		3.16	%	$	3,290,666		3.21	%	$	3,204,758		3.30	%	$	3,288,875		3.28	%	$	2,897,167		3.19	%
Interest-bearing deposits with other banks	36,672			1.81	%	38,569			2.28	%	32,013			2.38	%	35,814			2.25	%	32,090			2.15	%
Gross loans ⁽¹⁾	9,149,222			5.33	%	9,014,092			5.58	%	8,766,302			5.73	%	8,948,535			5.58	%	8,151,068			5.49	%
Total earning assets	12,288,761			4.77	%	12,343,327			4.94	%	12,003,073			5.07	%	12,273,224			4.95	%	11,080,325			4.88	%

Nonearning assets
Allowance for loan and lease losses	(56,649		)			(61,911		)			(58,216		)			(58,504		)			(56,115		)
Cash and due from banks	221,060					191,000					213,927					191,864					188,971
Accrued interest and other assets	2,007,116					1,848,098					1,610,174					1,804,135					1,398,257
Total assets	$	14,460,288				$	14,320,514				$	13,768,958				$	14,210,719				$	12,611,438

Interest-bearing liabilities
Deposits:
Interest-bearing demand	$	2,373,962		0.53	%	$	2,325,405		0.56	%	$	2,342,528		0.48	%	$	2,326,193		0.55	%	$	2,169,396		0.39	%
Savings	2,995,395			0.60	%	2,945,076			0.69	%	3,156,789			0.66	%	3,027,725			0.71	%	2,990,731			0.60	%
Time	2,214,174			2.03	%	2,234,227			2.09	%	2,073,752			1.75	%	2,223,429			2.02	%	1,938,709			1.57	%
Total interest-bearing deposits	7,583,531			1.00	%	7,504,708			1.07	%	7,573,069			0.90	%	7,577,347			1.04	%	7,098,836			0.80	%
Borrowed funds
Short-term borrowings	1,159,425			1.86	%	1,297,247			2.20	%	939,338			2.19	%	1,146,719			2.20	%	947,427			1.90	%
Long-term debt	454,271			3.75	%	519,736			3.63	%	570,304			3.54	%	522,340			3.65	%	438,567			3.68	%
Total borrowed funds	1,613,696			2.39	%	1,816,983			2.61	%	1,509,642			2.70	%	1,669,059			2.65	%	1,385,994			2.47	%
Total interest-bearing liabilities	9,197,227			1.24	%	9,321,691			1.37	%	9,082,711			1.20	%	9,246,406			1.33	%	8,484,830			1.07	%

Noninterest-bearing liabilities
Noninterest-bearing demand deposits	2,638,908					2,513,458					2,476,773					2,524,011					2,217,349
Other liabilities	379,046					275,038					166,590					265,623					156,998
Shareholders' equity	2,245,107					2,210,327					2,042,884					2,174,679					1,752,261
Total liabilities & shareholders' equity	$	14,460,288				$	14,320,514				$	13,768,958				$	14,210,719				$	12,611,438

Net interest income	$	118,902				$	121,535				$	125,959				$	484,254				$	449,235
Net interest spread				3.53	%				3.57	%				3.87	%				3.62	%				3.81	%
Net interest margin				3.84	%				3.91	%				4.16	%				3.95	%				4.05	%

Tax equivalent adjustment				0.05	%				0.05	%				0.05	%				0.05	%				0.05	%
Net interest margin (fully tax equivalent)				3.89	%				3.96	%				4.21	%				4.00	%				4.10	%


⁽¹⁾ Loans held for sale and nonaccrual loans are included in gross loans.