First Financial Bancorp Announces Fourth Quarter and Full Year 2020 Financial Results and Quarterly Dividend

CINCINNATI, Jan. 28, 2021 /PRNewswire/ --  

• Earnings per diluted share of $0.49; $0.51 on an adjusted⁽¹⁾ basis
• Return on average assets of 1.20%; 1.23% as adjusted⁽¹⁾
• Net interest margin FTE⁽¹⁾ of 3.49%; 13 basis point increase from linked quarter
• Strong noninterest income driven by foreign exchange fees and mortgage production
• Announces $0.23 per share Quarterly Dividend 

First Financial Bancorp. (Nasdaq: FFBC) ("First Financial" or the "Company") announced financial results for the three and twelve months ended December 31, 2020. 

For the three months ended December 31, 2020, the Company reported net income of $48.3 million, or $0.49 per diluted common share.  These results compare to net income of $41.5 million, or $0.42 per diluted common share, for the third quarter of 2020 and $48.7 million, or $0.49 per diluted common share, for the fourth quarter of 2019.  For the twelve months ended December 31,  2020, First Financial had earnings per diluted common share of $1.59 compared to $2.00 for the same period in 2019.

Return on average assets for the fourth quarter of 2020 was 1.20% while return on average tangible common equity was 15.50%.  These compare to returns on average assets of 1.04% and 1.34%, and returns on average tangible common equity of 13.61% and 15.84%, in the third quarter of 2020 and the fourth quarter of 2019, respectively.

Fourth quarter 2020 highlights include:

• After adjustments⁽¹⁾ for certain nonrecurring and certain COVID-19 related items:
• Net income of $0.51 per diluted common share
• 1.23% return on average assets
• 15.94% return on average tangible common equity
• Net interest margin of 3.49% on a fully tax-equivalent basis⁽¹⁾
• 13 basis point increase driven by loan fees, which includes PPP forgiveness, and lower deposit costs
• Noninterest income of $61.5 million, or $48.1 million as adjusted⁽¹⁾
• Adjustments⁽¹⁾ include $13.4 million in gain recognized on class B Visa shares
• Record foreign exchange income of $12.3 million; 16.9% increase from linked quarter
• Mortgage income remains strong, despite decline from record third quarter production
• Noninterest expenses of $114.8 million, or $94.6 million as adjusted⁽¹⁾
• Adjustments⁽¹⁾ include:
• $7.3 million of debt extinguishment costs
• $5.1 million write down of a tax credit investment
• $5.0 million contribution to First Financial Foundation
• $2.9 million of costs directly related to COVID-19 and other nonrecurring costs such as merger-related and branch consolidation costs
• Efficiency ratio of 63.8%; 56.8% as adjusted⁽¹⁾

• Non-PPP loan balances were flat during the quarter
• Average transactional deposit balances grew $533.8 million compared to the linked quarter; 22.2% on an annualized basis
• Total Allowance for Credit Losses of $188.2 million; Total quarterly provision for credit losses of $11.5 million
• Loans and leases - ACL of $175.7 million, 1.77% of total loans; 1.89% of loans excluding PPP
• Unfunded Commitments - ACL of $12.5 million
• Fourth quarter provision expense driven by COVID-19 uncertainty, partially offset by improvements in economic forecast, resulting in expected peak ACL as a percentage of loans
• Strong capital ratios
• Total capital of 15.55%
• Tier 1 common equity of 11.82%
• Tangible common equity of 8.47%; 8.83% excluding PPP loans 
• Tangible book value per share of $12.93; $0.37 increase compared to linked quarter

Additionally, First Financial's board of directors has authorized a quarterly dividend of $0.23 per common share for the next regularly scheduled dividend, payable on March 15, 2021 to shareholders of record as of March 1, 2021.

Archie Brown, President and Chief Executive Officer, remarked, "When considering a year in which we encountered a global pandemic, experienced widespread government mandated business shutdowns and stay-at-home orders, and a reduction in the Fed Funds rate of 150 basis points, I am very pleased with our response to these challenges and our overall management of the company.  On an adjusted⁽¹⁾ basis, we earned $1.66 per diluted share, achieved a 1.05% return on average assets, strengthened Tier 1 Common Equity and Total Capital, significantly bolstered our allowance for credit losses from 0.63% of loans to 1.77%, and experienced low levels of charge-offs."

Mr. Brown continued, "Business conditions remained difficult in the fourth quarter; however, our core quarterly financial metrics were strong with adjusted⁽¹⁾ earnings per share of $0.51, adjusted⁽¹⁾ return on assets of 1.23%, and an adjusted⁽¹⁾ efficiency ratio of 56.8%.  An increase in interest income, which includes PPP loan forgiveness fees, strong mortgage banking and record foreign exchange income drove our solid quarterly results.  Our sub-60% efficiency ratio reflected our diligent expense management despite adapting to a remote working environment and continued investment in processes and technologies that position the Company for long-term success.  Credit trends remain relatively stable; however, with COVID-19 cases in the Midwest remaining at peak levels, a slower than anticipated vaccine rollout and general economic uncertainty, we recorded $11.5 million of provision expense, resulting in an increase in our allowance for credit losses to 1.89% of total loans, excluding PPP.  We believe the increase in our allowance has positioned us to absorb future losses anticipated by the pandemic or otherwise." 

Mr. Brown concluded, "I am most pleased by the response of our associates and their commitment to our clients and communities.  They demonstrated amazing flexibility and resilience in pivoting from normal business activities and processes to working remotely or with significant changes to their in-office routines.  From the beginning of the pandemic, we prioritized keeping our associates safe and engaged, which enabled them to support our clients in one of the most stressful and uncertain periods in our history.  Our associates were constant stewards, embodying our organizational belief that banking is an essential function in the lives of consumers, businesses and our communities and were focused on ensuring that we remained faithful to our mission.  Notably, our corporate-wide effort in granting approximately 7,000 PPP loans totaling over $900 million in a matter of months was something to remember.  I am very proud of the effort and commitment of our First Financial Team."

Full detail of the Company's fourth quarter and full year 2020 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, January 29, 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 10151308.  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, 2019, 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 December 31, 2020, the Company had $16.0 billion in assets, $9.9 billion in loans, $12.2 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 $3.0 billion in assets under management as of December 31, 2020.  The Company operated 143 full service banking centers as of December 31, 2020, primarily in Ohio, Indiana and Kentucky, 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.