First Financial Bancorp Announces First Quarter 2021 Financial Results

CINCINNATI, April 22, 2021 /PRNewswire/ -- 

• Earnings per diluted share of $0.48; $0.50 on an adjusted⁽¹⁾ basis
• Return on average assets of 1.20%; 1.24% as adjusted⁽¹⁾
• Net interest margin FTE⁽¹⁾ of 3.40%
• Provision for credit losses of $4.0 million; $7.5 million decline from linked quarter
• Repurchased 840,115 shares during the quarter

First Financial Bancorp. (Nasdaq: FFBC) ("First Financial" or the "Company") announced financial results for the three months ended March 31, 2021. 

For the three months ended March 31, 2021, the Company reported net income of $47.3 million, or $0.48 per diluted common share.  These results compare to net income of $48.3 million, or $0.49 per diluted common share, for the fourth quarter of 2020 and $28.6 million, or $0.29 per diluted common share, for the first quarter of 2020.

Return on average assets for the first quarter of 2021 was 1.20% while return on average tangible common equity was 15.24%.  These compare to returns on average assets of 1.20% and 0.79%, and returns on average tangible common equity of 15.50% and 9.71%, in the fourth quarter of 2020 and the first quarter of 2020, respectively.

First quarter 2021 highlights include:

• After adjustments⁽¹⁾ for certain nonrecurring items:
• Net income of $0.50 per diluted common share
• 1.24% return on average assets
• 15.80% return on average tangible common equity
• Net interest margin of 3.40% on a fully tax-equivalent basis⁽¹⁾ in line with expectations
• 9 basis point reduction from linked quarter driven by fewer fees related to loan prepayments, and lower volume of PPP forgiveness
• Noninterest income of $40.3 million, or $40.2 million as adjusted⁽¹⁾
• Foreign exchange income of $10.8 million remains strong despite decline from record fourth quarter
• Mortgage income of $9.5 million in line with expectations given expected seasonal declines and lower premiums
• Noninterest expenses of $92.5 million, or $90.0 million as adjusted⁽¹⁾
• Adjustments⁽¹⁾ include:
• $1.3 million of severance related costs
• $1.3 million of other nonrecurring costs such as branch consolidation costs
• Efficiency ratio of 60.0%; 58.4% as adjusted⁽¹⁾
• Excluding PPP growth, loan balances declined slightly during the quarter driven primarily by a decline in consumer and mortgage loans
• Average transactional deposit balances grew $523.7 million compared to the linked quarter; 21.1% on an annualized basis

• Total Allowance for Credit Losses of $183.0 million; Total quarterly provision for credit losses of $4.0 million
• Loans and leases - ACL of $169.9 million, 1.71% of total loans; 1.84% of loans excluding PPP
• Unfunded Commitments - ACL of $13.0 million
• First quarter provision expense driven by net charge-offs, partially offset by improvements in economic conditions
• Strong capital ratios
• Total capital of 15.41%
• Tier 1 common equity of 11.81%
• Tangible common equity of 8.22%; 8.62% excluding PPP loans
• Tangible book value per share of $12.78; $0.15 decrease compared to linked quarter
• Repurchased 840,115 shares during first quarter

Archie Brown, President and Chief Executive Officer, remarked, "While uncertainty remains due to the ongoing pandemic, the accelerated COVID-19 vaccine distribution, unprecedented fiscal stimulus, and an accommodative Federal Reserve have led to widespread optimism for our economy, which is in stark contrast to our sentiment at this time last year.  Our first quarter operating performance reflects this change in sentiment and we have renewed optimism as a result of the improved business climate, despite an operating environment that presents challenges due to very low interest rates and muted loan demand."

Mr. Brown continued, "Our first quarter financial results once again reflect our earnings power and our consistent ability to deliver value to our shareholders.  Our core quarterly financial metrics remained strong with adjusted⁽¹⁾ earnings per share of $0.50, adjusted⁽¹⁾ return on assets of 1.24%, and an adjusted⁽¹⁾ efficiency ratio of 58.4%.  Net income was bolstered by  lower expenses and significantly lower credit costs.  Despite expected seasonal declines, noninterest income was strong due to healthy mortgage demand, robust foreign exchange activity and higher wealth management fees.  In addition, adjusted⁽¹⁾ noninterest expenses declined $4.6 million from the linked quarter and resulted in a sub-60% efficiency ratio.  As I mentioned, credit costs were low with $4.0 million of provision expense during the quarter, and resulted in an allowance for credit losses of 1.84% of total loans, excluding PPP.  Classified assets increased during the quarter, however our overall credit outlook has improved significantly and our borrowers are seeing benefits from the various stimulus actions.  While first quarter net charge-offs increased slightly from previous quarters, this was driven by a single customer relationship.  Given our overall credit outlook, we expect the allowance for credit losses to continue to decline over the course of 2021." 

Mr. Brown commented on balance sheet trends and capital utilization, "Excluding PPP activity, loan balances declined slightly for the quarter due to accelerated mortgage and HELOC payoffs, increased borrower liquidity, and muted business loan demand.  As a result of these trends, we anticipate slower growth in the near-term, with some acceleration in the second half of the year.  As of March 31, consumers and businesses were holding record levels of deposits, with average balances increasing during the quarter as a result of the stimulus package approved by Congress last December.  We anticipate further deposit balance growth in the second quarter after the passage of the most recent stimulus bill.  This anticipated growth will likely suppress loan demand and service charge income in the near-term.  From a capital standpoint, our ratios remained strong through the first quarter.  The combination of our current capital levels and our improved credit outlook, prompted us to repurchase 840,115 shares during the quarter.  Absent higher priority capital deployment alternatives, we anticipate additional buyback activity in the second quarter."

Mr. Brown concluded, "We are pleased with our improved performance and outlook from this time last year.  We have started to transition associates back into their physical office locations, and we look forward to implementing the lessons learned over the past year to create an efficient, safe, and collaborative workplace.  As our local and national economies continue to improve, we believe we are well positioned to deliver industry leading services to our clients and returns to our shareholders."

Full detail of the Company's first 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, April 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 10154329.  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 March 31, 2021, the Company had $16.2 billion in assets, $9.9 billion in loans, $12.6 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 $3.1 billion in assets under management as of March 31, 2021.  The Company operated 143 full service banking centers as of March 31, 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.