First Financial Bancorp Announces Third Quarter 2021 Financial Results

CINCINNATI, Oct. 21, 2021 /PRNewswire/ --

• Earnings per diluted share of $0.63 and on both GAAP and adjusted⁽¹⁾ basis
• Return on average assets of 1.49% on both GAAP and adjusted⁽¹⁾ basis
• Net interest margin FTE⁽¹⁾ of 3.32%
• Loan growth of $74.8 million, excluding decline in PPP loans
• Provision recapture of $10.1 million
• Repurchased 2,484,295 shares during the quarter

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

For the three months ended September 30, 2021, the Company reported net income of $60.0 million, or $0.63 per diluted common share.  These results compare to net income of $50.9 million, or $0.52 per diluted common share, for the second quarter of 2021 and $41.5 million, or $0.42 per diluted common share, for the third quarter of 2020.  For the nine months ended September 30, 2021, First Financial had earnings per diluted common share of $1.64 compared to $1.10 for the same period in 2020.

Return on average assets for the third quarter of 2021 was 1.49% while return on average tangible common equity was 19.03%⁽¹⁾.  These compare to returns on average assets of 1.26% and 1.04%, and returns on average tangible common equity of 16.31%⁽¹⁾ and 13.61%⁽¹⁾, in the second quarter of 2021 and the third quarter of 2020, respectively.

Third quarter 2021 highlights include:

• Net interest margin of 3.32% on a fully tax-equivalent basis⁽¹⁾ in line with expectations
• 1 basis point increase from linked quarter driven by PPP forgiveness, which offset lower yields on earning assets
• Noninterest income of $42.5 million, or $42.2 million as adjusted⁽¹⁾
• Strong mortgage banking income of $8.6 million driven by higher premiums during the period
• Elevated wealth management fees of $5.9 million
• Other noninterest income increased $1.1 million, or 34.3%; driven by income from limited partnership investments and insurance proceeds
• Noninterest expenses of $99.1 million, or $93.6 million as adjusted⁽¹⁾
• Adjustments⁽¹⁾ include:
• $5.3 million of tax credit investment write-downs
• Increase in expenses driven by incentive compensation tied to the Company's strong financial performance and modest increases in marketing costs and professional services
• Efficiency ratio of 63.5%; 60.1% as adjusted⁽¹⁾
• Loan balances declined $150.6 million from the second quarter driven by PPP forgiveness of $225.4 million during the quarter
• Core loan balances increased $74.8 million, or 3.3% on an annualized basis compared to the second quarter
• Non-PPP C&I loan balances increased 16.0% on an annualized basis

• Total Allowance for Credit Losses of $160.5 million; Total quarterly provision recapture of $10.1 million
• Loans and leases - ACL of $148.9 million, 1.59% of total loans; 1.62% of loans excluding PPP
• Unfunded Commitments - ACL of $11.6 million
• Provision recapture driven by improvements in economic conditions, declining classified asset balances, and lower net charge-offs
• Strong capital ratios
• Total capital of 14.97%
• Tier 1 common equity of 11.54%
• Tangible common equity of 8.21%⁽¹⁾; 8.31%⁽¹⁾ excluding PPP loans
• Tangible book value per share of $13.09⁽¹⁾
• Repurchased 2,484,295 shares during third quarter; 4,633,355 shares repurchased in 2021

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

Mr. Brown continued, "Third quarter results were strong across the board, with earnings per share of $0.63, return on assets of 1.49% and an adjusted⁽¹⁾ efficiency ratio of 60.1%.  Third quarter earnings were the highest they've been since the MainSource merger in 2018, and were highlighted by significant provision recapture of $10.1 million.  Provision recapture during the period was a result of improving credit quality trends, specifically, lower net charge-offs and declines in classified asset balances, and we expect further reductions in credit costs in the fourth quarter of 2021 and the first part of 2022 given our optimism for further economic recovery.  In addition, earnings were positively impacted by elevated mortgage and wealth management revenues and we were encouraged by strong loan originations during the period."

Mr. Brown added, "Total loan balances declined $150.6 million driven by $225.4 million in PPP forgiveness during the quarter.  Core loan balances increased $74.8 million for the period as a result of strong origination activity, which included 16.0% growth in the C&I portfolio on an annualized basis.  Our origination levels more than offset loan payoffs which remained high, particularly in our specialty finance and ICRE units.  Additionally, we are encouraged that loan pipeline activity has increased."

Mr. Brown commented regarding the share repurchase program, "During the quarter we repurchased approximately 2.5 million shares at an average price of $23.04 bringing our total shares repurchased in 2021 to 4.6 million.  When combined with the common dividend, the share repurchases approximate a return to shareholders of 131.7% of quarterly earnings.  There are 366,645 shares remaining in our current buyback authorization."

Mr. Brown concluded, "We were also very pleased to bring our associates back to our physical office locations during the quarter, albeit with greater flexibility than pre-Covid.  We firmly believe we are stronger when we are together, and we have already witnessed how combining best practices learned from the pandemic with our culture of collaboration positively impacts our clients and financial performance."

Full detail of the Company's third 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, October 22, 2021 at 8:30 a.m. Eastern Time.  Members of the public who would like to listen to the conference call should dial (833) 950-0062 (U.S. toll free), (646) 904-5544 (U.S. local) or +1 (929) 526-1599 (International), access code 674818.  The number should be dialed five to ten minutes prior to the start of the conference call.  A replay of the conference call will be available beginning one hour after the completion of the live call at (866) 813-9403 (U.S. toll free), (929) 458-6194 (U.S. local) and +44 204 525-0658 (all other locations), access code 979537.  The recording will be available until November 5, 2021.  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.  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 Statements

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 September 30, 2021, the Company had $16.0 billion in assets, $9.4 billion in loans, $12.7 billion in deposits and $2.2 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 September 30, 2021.  The Company operated 139 full service banking centers as of September 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.