First Financial Bancorp Reports Fourth Quarter and Full Year 2013 Financial Results - KPLC 7 News, Lake Charles, Louisiana

First Financial Bancorp Reports Fourth Quarter and Full Year 2013 Financial Results

  • More Local NewsLocalMore>>

  • David "Dice" Fontenot sentenced to life in prison

    David "Dice" Fontenot sentenced to life in prison

    Wednesday, April 23 2014 8:31 PM EDT2014-04-24 00:31:38 GMT
    David "Dice" Fontenot was sentenced to life in prison without benefit of parole for the 2011 shooting death of Stephin Bergeron.
    More >>
    David "Dice" Fontenot was sentenced to life in prison without benefit of parole for the 2011 shooting death of Stephin Bergeron.More >>
  • National Drug Take Back Day set for Saturday

    National Drug Take Back Day set for Saturday

    Wednesday, April 23 2014 6:42 PM EDT2014-04-23 22:42:11 GMT
    Multiple local, state and federal agencies will participate in the National Prescription Drug Take Back Day on Saturday. The program gives residents a chance to rid their homes of potentially dangerousMore >>
    Multiple local, state and federal agencies will participate in the National Prescription Drug Take Back Day on Saturday. The program gives residents a chance to rid their homes of potentially dangerousMore >>
  • Former LSU player Tahj Jones out of the hospital

    Former LSU player Tahj Jones out of the hospital

    Wednesday, April 23 2014 5:20 PM EDT2014-04-23 21:20:57 GMT
    Former LSU and Sulphur linebacker Tahj Jones has been released from the hospital, less than two weeks after he was shot. An official from Rapides Regional Medical Center in Alexander confirmed that Jones,More >>
    Former LSU and Sulphur linebacker Tahj Jones has been released from the hospital, less than two weeks after he was shot. An official from Rapides Regional Medical Center in Alexander confirmed that Jones,More >>

Information contained on this page is provided by an independent third-party content provider. WorldNow and this Station make no warranties or representations in connection therewith. If you have any questions or comments about this page please contact pressreleases@worldnow.com.

SOURCE First Financial Bancorp

CINCINNATI, Ohio, Jan. 30, 2014 /PRNewswire/ -- First Financial Bancorp (Nasdaq: FFBC) ("First Financial" or the "Company") announced today financial and operational results for the fourth quarter 2013 and for the twelve month period ended December 31, 2013.

Fourth quarter net income was $3.8 million and earnings per diluted common share were $0.07.  This compares with third quarter net income of $14.9 million and earnings per diluted common share of $0.26 and fourth quarter 2012 net income of $16.3 million and earnings per diluted common share of $0.28.

For the twelve month period ended December 31, 2013, net income was $48.3 million and earnings per diluted common share were $0.83 as compared to net income of $67.3 million and earnings per diluted common share of $1.14 for the twelve month period ended December 31, 2012.

  • Quarterly adjusted pre-tax, pre-provision income increased 4.0% to $27.4 million, or 1.75% of average assets
  • Continued solid quarterly performance
    • Quarterly results included several items which reduced earnings per diluted share by approximately $0.24 on a net basis
    • Return on average assets of 0.24%; 1.14% as adjusted for the items noted below
    • Return on average tangible common equity of 2.51%; 11.88% as adjusted for the items noted below
  • Capital ratios remain strong
    • Tangible common equity to tangible assets of 9.20%
    • Tier 1 capital ratio of 14.61%
    • Total risk-based capital ratio of 15.88%
  • Total uncovered loan growth for the quarter of 8.6% on an annualized basis
    • Strong performance in traditional C&I / owner-occupied CRE and franchise lending
    • Continued growth in specialty finance balances
  • Quarterly net interest margin of 3.90%
    • Excluding the impact from loans that returned to accrual status, net interest margin was 3.86% for the quarter
    • Adjusted yield on the uncovered loan increased 2 bps during the quarter
    • Yield on investment securities increased 18 bps to 2.38%
  • Continued improvement in asset quality metrics
    • Total nonperforming loans declined $21.5 million, or 29.0%, and represent 1.50% of total loans compared to 2.16% for the linked quarter
    • Total nonperforming assets declined $13.5 million, or 15.7%, and represent 1.13% of total assets compared to 1.38% for the linked quarter

During the quarter, the Company incurred certain pre-tax expenses of $1.5 million resulting from its efficiency initiatives.  Approximately $1.3 million was related to employee benefit expenses associated with staffing reductions and $0.2 million was related to expenses associated with real estate consolidation and closure plans.  Additionally, the Company incurred pre-tax pension settlement charges of $0.5 million resulting from employee-driven activity as well as acquisition-related expenses of $0.3 million.  In the aggregate, these items reduced pre-tax earnings by $2.2 million, or approximately $0.02 per diluted share after taxes.

As previously disclosed in the press release dated January 22, 2014, the Company recognized a $22.4 million pre-tax non-cash valuation adjustment on its FDIC indemnification asset during the quarter which reduced the fourth quarter's diluted earnings per share after taxes by $0.26.

The Company recognized an income tax benefit for the quarter resulting from favorable state tax adjustments as well as lower income for the quarter primarily due to the FDIC indemnification asset valuation adjustment.  In the aggregate, these items increased quarterly after-tax net income by $2.1 million, or $0.04 per diluted share.

The board of directors has authorized a dividend of $0.15 per common share for the next regularly scheduled dividend, payable on April 1, 2014 to shareholders of record as of February 28, 2014.

Under the announced share repurchase plan, the Company repurchased 209,745 shares of common stock during the fourth quarter at an average price of $16.39 per share.  For the full year 2013, the Company repurchased 750,145 shares at an average price of $15.70 per share.  When combined with the regular and variable dividends paid during the year, First Financial returned 151.4% of 2013 full year net income to shareholders during the year.  Additionally, the Company has repurchased 40,255 shares during the first quarter 2014 at an average price of $17.32 per share.

The Company continued to execute on its efficiency initiative during the quarter.  Adjusting for expenses covered under loss sharing agreements, noninterest expense items discussed above and OREO costs, noninterest expense declined $1.4 million during the quarter.  Based on operating performance during the year, the Company estimates that it surpassed its original goal of 85% realization of announced cost savings and achieved 100% of its annual target of $17.1 million during 2013.  All initiatives related to the original plan are fully implemented and annualized run rate savings are expected to exceed the original target.  As previously announced, the Company identified additional initiatives that it implemented during the fourth quarter.  These initiatives are expected to produce $5.0 million of added cost savings that will be realized in 2014 full year results across multiple expense categories.

Claude Davis, President and Chief Executive Officer, commented, "We ended 2013 on a positive note as the fourth quarter's results represent our best operating quarter of the year.  Adjusted pre-tax, pre-provision income increased 4% as we were able to maintain a consistent level of operating revenue while operating expenses continued to decline.

"We were able to execute on strategic initiatives late in the year and early in 2014 with the announced acquisitions of The First Bexley Bank and Insight Bank in Columbus, Ohio, and the hiring of strong commercial and residential mortgage lending teams in Fort Wayne, Indiana – two markets we had previously identified as presenting strong prospects for future growth.  In Columbus, we are working hard on the operational and cultural integration of these two outstanding institutions and our new team in Fort Wayne is actively calling on new clients and prospects with the wider product set and resources at their disposal as part of First Financial.

"We were also very pleased with our ability to execute on the efficiency initiative and deliver announced cost savings ahead of schedule.  Our associates worked very hard throughout the year to carry out these initiatives and as a result of their efforts we expect to realize savings in 2014 beyond the annual target of $17.1 million related to the original plan.  When combined with the additional initiatives we implemented during the fourth quarter, we have made significant progress in right-sizing the expense base and are positioned to deliver positive operating leverage in future periods as organic growth increasingly outweighs the impact of the declining covered loan portfolio and we capitalize on our new market expansion activities.

"The fourth quarter represented our seventh consecutive quarter of growth in the uncovered loan portfolio, increasing $74.7 million, or 8.6% on an annualized basis, compared to the linked quarter and $326.6 million, or 10.3%, compared to the fourth quarter 2012.  Additionally, uncovered loan growth exceeded the decline in the covered loan portfolio, making this the fourth out of the last five quarters we achieved this milestone.  As loan originations and renewals were particularly strong in December and forecasted production for the first quarter 2014 looks solid, we feel encouraged about our asset generation capabilities and momentum heading into the new year."

NET INTEREST INCOME AND NET INTEREST MARGIN

Net interest income for the fourth quarter was $55.8 million as compared to $55.8 million for the third quarter and $62.0 million for the fourth quarter 2012.  Compared to the linked quarter, total interest income increased $0.3 million, or 0.5%, and total interest expense increased $0.3 million, or 7.6%.  Net interest margin was 3.90% for the fourth quarter as compared to 3.91% for the third quarter and 4.27% for the fourth quarter 2012.

Interest income earned on loans decreased $0.6 million, or 1.1%, compared to the prior quarter.  Included in the fourth quarter's interest income on loans was the recognition of $0.6 million of previously reserved interest related to loans that returned to accrual status.  Excluding this amount, net interest margin was 3.86%, a decline of 5 bps compared to the linked quarter.  Net of the interest income related to loans that returned to accrual status, the lower interest income earned on loans was driven primarily by a decline of $83.2 million, or 14.5%, in average covered loan balances, partially offset by a 37 bp increase in the yield earned on the portfolio.  Amortization of the FDIC indemnification asset increased $0.2 million during the quarter despite the average balance declining $4.1 million as the negative yield on the asset increased 182 bps to -12.36%, negatively impacting net interest income and net interest margin.

Growth in average uncovered loan balances of $45.3 million, or 1.3% on a linked quarter basis, helped to partially offset the impact on net interest income and net interest margin from covered loan and FDIC indemnification asset activity during the quarter.  Excluding the impact of interest income related to loans that returned to accrual status, the yield earned on the uncovered portfolio during the quarter was approximately 4.45%, a 2 bp increase compared to the linked quarter.

Interest income earned from investment securities increased $1.1 million, or 12.7%, compared to the prior quarter as average balances increased $64.7 million, or 4.1%, and the yield earned on the portfolio increased 18 bps to 2.38%.

The increase in total interest expense was due to an increase in deposit costs.  Average interest-bearing deposit balances increased $66.5 million, or 1.8%, during the quarter driven primarily by growth in interest-bearing checking and money market balances.  The cost of funds related to interest-bearing deposits increased 4 bps to 35 bps compared to 31 bps for the linked quarter.

NONINTEREST INCOME

The following table presents noninterest income for the three months ended December 31, 2013 and for the trailing four quarters, adjusted to exclude the impact of covered loan activity and other select items on the Company's reported balance.  































Table I















For the Three Months Ended






December 31,


September 30,


June 30,


March 31,


December 31,





(Dollars in thousands)

2013


2013


2013


2013


2012



















Total noninterest income

$      13,043


$      22,291


$      11,615


$      26,698


$      26,121



















Selected components of noninterest income




























Accelerated discount on covered loans 1

1,572


1,711


1,935


1,935


2,455





FDIC loss sharing income

(3,385)


5,555


(7,384)


8,934


5,754





Gain on sale of investment securities

-


-


188


1,536


1,011





Other items not expected to recur

-


-


442


-


-



















Total noninterest income excluding items noted above

$      14,856


$      15,025


$      16,434


$      14,293


$      16,901

































1  Net of the corresponding valuation adjustment on the FDIC indemnification asset


















Excluding the items highlighted in Table I, noninterest income earned in the fourth quarter was $14.9 million compared to $15.0 million in the third quarter and $16.9 million in the fourth quarter 2012.  The decrease of $0.2 million compared to the linked quarter was driven by lower service charges on deposit accounts and net gains on sales of residential mortgages, partially offset by higher trust and wealth management fees.

NONINTEREST EXPENSE

The following table presents noninterest expense for the three months ended December 31, 2013 and for the trailing four quarters, adjusted to exclude the impact of covered asset activity and other select items on the Company's reported balance.































Table II















For the Three Months Ended






December 31,


September 30,


June 30,


March 31,


December 31,





(Dollars in thousands)

2013


2013


2013


2013


2012



















Total noninterest expense

$      70,285


$      48,801


$      53,283


$      53,106


$      53,474



















Selected components of noninterest expense




























Loss (gain) - covered real estate owned

946


204


(2,212)


(157)


(54)





Loss sharing expense

1,495


1,724


1,578


2,286


2,305





Pension settlement charges

462


1,396


4,316


-


-





Expenses associated with efficiency initiative

1,450


1,051


1,518


2,878


952





FDIC indemnification asset valuation adjustment

22,417


-


-


-


-





Acquisition-related expenses

284


-


-


-


-





Other items not expected to recur

-


-


-


390


-



















Total noninterest expense excluding items noted above

$      43,231


$      44,426


$      48,083


$      47,709


$      50,271



















FDIC loss share support 1

$           844


$           841


$           795


$           776


$           798

































1  Represents direct expenses associated with credit management and loan administration related to covered assets as well as compliance with FDIC loss sharing agreements; included in total noninterest expense excluding the items noted above and comprised of several noninterest expense line items






Excluding the items highlighted in Table II, noninterest expense in the fourth quarter was $43.2 million as compared to $44.4 million in the third quarter and $50.3 million in the fourth quarter 2012.  The decrease of $1.2 million compared to the linked quarter was due primarily to lower salaries and employee benefits expense, occupancy costs and marketing and communications expenses.  Expenses associated with the efficiency initiative and other staffing-related changes include $1.3 million of employee benefit expenses related to staffing reductions and $0.2 million of expenses associated with real estate consolidation and closure plans.

During the quarter, the Company recognized $0.5 million of pension settlement charges associated with recent employee-driven actions and the resulting lump-sum distributions from its pension plan.  Pension settlement charges are an acceleration of previously deferred costs that would have been recognized in future periods and are determined in accordance with FASB ASC Topic 715, Compensation - Retirement Benefits.  First Financial exceeded the annual accounting threshold for lump-sum distributions during 2013 and has recognized a proportionate share of lump-sum distributions from its pension plan as pension settlement charges during the year.  The annual threshold for recognizing lump-sum distributions as pension settlement charges resets on January 1, 2014.

INCOME TAXES

For the fourth quarter, the Company recognized an income tax benefit of $1.2 million, resulting in an effective tax rate of -47.4%, compared with income tax expense of $7.6 million and an effective tax rate of 33.9% during the third quarter and income tax expense of $9.2 million and an effective tax rate of 36.1% during the fourth quarter 2012.  The fourth quarter income tax benefit resulted from favorable state tax adjustments as well as lower net income for the quarter primarily related to the FDIC indemnification asset valuation adjustment.  The Company recognized favorable state tax adjustments, net of federal taxes, of approximately $1.0 million during the fourth quarter resulting from the completion of its 2012 state tax returns and other related adjustments.  While adjustments related to the completion of federal and state tax returns are typical late in the year, 2013 activity was made more significant by the impact of a favorable state tax rate change on the Company's deferred taxes.  For the full year 2013, the Company's effective tax rate was 28.5%.  A normalized effective tax rate in future periods is estimated to be 34.0%.

CREDIT QUALITY – EXCLUDING COVERED ASSETS

The following table presents certain credit quality metrics related to the Company's uncovered loan portfolio as of December 31, 2013 and the trailing four quarters.































Table III















As of or for the Three Months Ended






December 31,


September 30,


June 30,


March 31,


December 31,





(Dollars in thousands)

2013


2013


2013


2013


2012



















Total nonaccrual loans 1

$      37,605


$      57,926


$      62,011


$      64,452


$      65,041





Troubled debt restructurings - accruing

15,094


16,278


12,924


12,757


10,856





Total nonperforming loans

52,699


74,204


74,935


77,209


75,897





Total nonperforming assets

72,505


86,008


86,733


89,202


88,423



















Nonperforming assets as a % of:














Period-end loans plus OREO

2.06%


2.50%


2.56%


2.74%


2.77%





Total assets

1.13%


1.38%


1.38%


1.40%


1.36%





Nonperforming assets ex. accruing TDRs as a % of:














Period-end loans plus OREO

1.63%


2.03%


2.17%


2.34%


2.43%





Total assets

0.89%


1.12%


1.18%


1.20%


1.19%



















Nonperforming loans as a % of total loans

1.50%


2.16%


2.22%


2.38%


2.39%



















Provision for loan and lease losses - uncovered

$        1,851


$        1,413


$        2,409


$        3,041


$        3,882



















Allowance for uncovered loan & lease losses

$      43,829


$      45,514


$      47,047


$      48,306


$      47,777



















Allowance for loan & lease losses as a % of:














Total loans

1.25%


1.33%


1.39%


1.49%


1.50%





Nonaccrual loans

116.6%


78.6%


75.9%


75.0%


73.5%





Nonperforming loans

83.2%


61.3%


62.8%


62.6%


63.0%



















Total net charge-offs

$        3,536


$        2,946


$        3,668


$        2,512


$        5,297





Annualized net-charge-offs as a % of average














loans & leases

0.41%


0.34%


0.45%


0.32%


0.68%

































1  Includes nonaccrual troubled debt restructurings








Net Charge-offs

For the fourth quarter, net charge-offs increased $0.6 million to $3.5 million compared to the linked quarter.  Significant charge-offs during the quarter included $1.8 million related to a commercial real estate credit that was transferred to OREO as well as $0.9 million associated with an unrelated commercial real estate credit.

Nonperforming Assets

Nonaccrual loans, including nonaccrual troubled debt restructurings, decreased $20.3 million, or 35.1%, to $37.6 million as of December 31, 2013 from $57.9 million as of September 30, 2013.  Contributing to the decline were three commercial real estate credits totaling $7.5 million in the aggregate that returned to accrual status, $1.2 million in payoffs related to commercial and construction real estate credits and a $9.1 million commercial real estate credit that was charged down and transferred to OREO.  Other activity included the addition to nonaccrual loans of a $0.6 million commercial credit and a $1.2 million commercial real estate credit.  Included in the $7.5 million of loans that returned to accrual status was a single credit totaling $4.9 million that paid in full during January 2014.

Accruing troubled debt restructurings decreased $1.2 million, or 7.3%, to $15.1 million as of December 31, 2013 compared to the linked quarter.  The decline was primarily driven by the transfer of a $1.2 million commercial credit to OREO during the quarter.

OREO increased $8.0 million, or 67.8%, on a net basis to $19.8 million during the fourth quarter as additions of $9.4 million exceeded resolutions and valuation adjustments of $1.4 million during the quarter.  Additions were driven by four properties totaling $9.2 million in the aggregate, while resolutions included one property totaling $0.6 million.

Classified assets as of December 31, 2013 declined $9.9 million, or 8.2%, to $110.5 million from $120.4 million for the linked quarter and decreased $18.5 million, or 14.4%, from $129.0 million as of December 31, 2012.  Classified assets are defined by the Company as nonperforming assets plus performing loans internally rated substandard or worse.

Delinquent Loans

As of December 31, 2013, loans 30-to-89 days past due totaled $13.6 million, or 0.39% of period-end loans, as compared to $10.4 million, or 0.30%, as of September 30, 2013 and $16.3 million, or 0.51%, as of December 31, 2012.  The increase of $3.2 million, or 31.1%, during the fourth quarter was driven primarily by a $3.3 million increase in delinquent commercial real estate credits during the period.

Provision for Loan & Lease Losses

Fourth quarter provision expense related to uncovered loans and leases was $1.9 million as compared to $1.4 million for the linked quarter and $3.9 million for the fourth quarter 2012.  Provision expense is a result of the Company's modeling efforts to estimate the period-end allowance for loan and lease losses.  The allowance for loan and lease losses as a percent of period end loans was 1.25% as of December 31, 2013.

LOANS (EXCLUDING COVERED LOANS)

The following table presents the loan portfolio, excluding covered loans, as of December 31, 2013, September 30, 2013 and December 31, 2012.



































Table IV

















As of






December 31, 2013


September 30, 2013


December 31, 2012








Percent




Percent




Percent





(Dollars in thousands)

Balance


of Total


Balance


of Total


Balance


of Total





















Commercial

$ 1,035,668


29.5%


$    960,016


28.0%


$    861,033


27.1%





















Real estate - construction

80,741


2.3%


90,089


2.6%


73,517


2.3%





















Real estate - commercial

1,496,987


42.7%


1,493,969


43.5%


1,417,008


44.6%





















Real estate - residential

352,931


10.1%


352,830


10.3%


318,210


10.0%





















Installment

47,133


1.3%


49,273


1.4%


56,810


1.8%





















Home equity

376,454


10.7%


373,839


10.9%


367,500


11.6%





















Credit card

35,592


1.0%


34,285


1.0%


34,198


1.1%





















Lease financing

80,135


2.3%


76,615


2.2%


50,788


1.6%





















Total

$ 3,505,641


100.0%


$ 3,430,916


100.0%


$ 3,179,064


100.0%



































Loans, excluding covered loans, totaled $3.5 billion as of December 31, 2013, increasing $74.7 million, or 8.6% on an annualized basis, compared to the linked quarter and $326.6 million, or 10.3%, compared to December 31, 2012.  The increase relative to the linked quarter was driven by growth in traditional C&I and owner-occupied commercial real estate lending, franchise finance and specialty finance.

INVESTMENTS

The following table presents a summary of the total investment portfolio at December 31, 2013.

































Table V

















As of December 31, 2013







Held-to-


Available-for-






% of





(Dollars in thousands)


Maturity


Sale


Other


Total


Portfolio




















Debt obligations of the U.S. Government


$               -


$      21,223


$             -


$      21,223


1.2%





Debt obligations of U.S. Government Agency

18,981


9,571


-


28,552


1.6%





Residential Mortgage Backed Securities















Pass-through securities:















Agency fixed rate


86,819


109,398


-


196,217


10.9%





Agency adjustable rate


145,019


41,667


-


186,686


10.4%





Collateralized mortgage obligations:















Agency fixed rate


370,303


253,938


-


624,241


34.7%





Agency variable rate


-


82,137


-


82,137


4.6%





Agency collateralized and insured municipal securities

68,888


103,974


-


172,862


9.6%





Commercial mortgage backed securities


145,977


119,275


-


265,252


14.8%





Municipal bond securities


1,285


3,358


-


4,643


0.3%





Corporate securities


-


110,513


-


110,513


6.1%





Asset-backed securities


-


50,554


-


50,554


2.8%





Regulatory stock


-


-


42,576


42,576


2.4%





Other


-


7,993


4,851


12,844


0.7%






















$    837,272


$    913,601


$   47,427


$ 1,798,300


100.0%
















































The investment portfolio increased $198.5 million, or 12.4%, during the fourth quarter as $289.1 million of purchases were offset by amortizations and other portfolio reductions.  As of December 31, 2013, the overall duration of the investment portfolio increased to 4.3 years compared to 4.1 years as of September 30, 2013.  The yield earned on the portfolio during the quarter increased 18 bps to 2.38% from 2.20% for the linked quarter, driven by the increase in interest rates and continued stabilization in premium amortization.  Due primarily to the increase in interest rates during the quarter, the net unrealized loss included in accumulated other comprehensive loss related to the investment portfolio increased $6.5 million to $16.3 million as of December 31, 2013.

DEPOSITS

Non-time deposit balances totaled $3.9 billion as of December 31, 2013, increasing $82.2 million, or 2.2%, on a linked quarter basis.  The Company experienced growth across multiple lines of business as public fund balances increased $38.8 million, consumer balances increased $26.4 million and commercial balances increased $15.2 million.

Time deposit balances increased $26.3 million, or 2.8%, compared to the linked quarter due primarily to an increase in consumer balances of $23.9 million driven by sales of a CD product celebrating the Company's 150th anniversary which offers incentives for opening additional checking or money market accounts.

The Company's total cost of deposit funding, inclusive of noninterest-bearing balances, was 27 bps for the quarter, an increase of 3 bps compared to the prior quarter and a decrease of 11 bps compared to the fourth quarter 2012.

CAPITAL MANAGEMENT

The following table presents First Financial's regulatory and other capital ratios as of December 31, 2013, September 30, 2013 and December 31, 2012.























Table VI











As of






December 31,


September 30,


December 31,






2013


2013


2012















Leverage Ratio

10.11%


10.29%


10.25%















Tier 1 Capital Ratio

14.61%


15.26%


16.32%















Total Risk-Based Capital Ratio

15.88%


16.53%


17.60%















Ending tangible shareholders' equity










to ending tangible assets

9.20%


9.60%


9.50%















Ending tangible common shareholders'










equity to ending tangible assets

9.20%


9.60%


9.50%















Tangible book value per share

$10.10


$10.24


$10.47























Shareholders' equity decreased $9.9 million during the quarter due primarily to the change in the unrealized gain/loss related to the investment portfolio, the excess of dividends paid over net income for the quarter and share repurchases.  The decline in shareholders' equity combined with increases in both tangible assets and risk-weighted assets resulted in lower tangible common equity and regulatory capital ratios compared to the linked quarter.  Regulatory capital ratios as of December 31, 2013 are considered preliminary pending the filing of the Company's regulatory reports.

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 31, 2014 at 8:30 a.m. Eastern Time.  Members of the public who would like to listen to the conference call should dial (888) 317-6016 (U.S. toll free), (855) 669-9657 (Canada toll free) or +1 (412) 317-6016 (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 through February 17, 2014 at (877) 344-7529 (U.S. toll free), (855) 669-9658 (Canada toll free) and +1 (412) 317-0088 (International); conference number 10039964.  The webcast will be archived on the Investor Relations section of the Company's website through January 31, 2015.

Press Release and Additional Information on Website

This press release as well as supplemental information and any non-GAAP reconciliations related to this release is available to the public through the Investor Relations section of First Financial's website at www.bankatfirst.com/investor.

About First Financial Bancorp

First Financial Bancorp is a Cincinnati, Ohio based bank holding company.  As of December 31, 2013, the Company had $6.4 billion in assets, $4.0 billion in loans, $4.8 billion in deposits and $682 million in shareholders' equity.  The Company's subsidiary, First Financial Bank, N.A., founded in 1863, provides banking and financial services products through its four lines of business: commercial, consumer, wealth management and mortgage.  The commercial, consumer and mortgage units provide traditional banking services to business and retail clients.  First Financial Wealth Management provides wealth planning, portfolio management, trust and estate, brokerage and retirement plan services and had approximately $2.5 billion in assets under management as of December 31, 2013.  The Company's strategic operating markets are located in Ohio, Indiana and Kentucky where it operates 110 banking centers.  Additional information about the Company, including its products, services and banking locations is available at www.bankatfirst.com.

Forward-Looking Statement

Certain statements contained in this release which are not statements of historical fact constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act.  Examples of forward-looking statements include, but are not limited to, projections of revenues, income or loss, earnings or loss per share, the payment or non-payment of dividends, capital structure and other financial items, statements of plans and objectives of First Financial or its management or board of directors and statements of future economic performances and statements of assumptions underlying such statements.  Words such as ''believes,'' ''anticipates,'' "likely," "expected," ''intends,'' and other similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements.  Management's analysis contains forward-looking statements that are provided to assist in the understanding of anticipated future financial performance.  However, such performance involves risks and uncertainties that may cause actual results to differ materially.  These factors include, but are not limited to: economic, market, liquidity, credit, interest rate, operational and technological risks associated with the Company's business; the effect of and changes in policies and laws or regulatory agencies (notably the recently enacted Dodd-Frank Wall Street Reform and Consumer Protection Act); management's ability to effectively execute its business plan; mergers and acquisitions, including costs or difficulties related to the integration of acquired companies, including the recently announced proposed acquisitions of The First Bexley Bank and Insight Bank; the Company's ability to comply with the terms of loss sharing agreements with the FDIC; the effect of changes in accounting policies and practices; and the costs and effects of litigation and of unexpected or adverse outcomes in such litigation.  Please refer to the Company's Annual Report on Form 10-K for the year ended December 31, 2012, as well as its other filings with the SEC, for a more detailed discussion of these risks, uncertainties and other factors that could cause actual results to differ from those discussed in the forward-looking statements.  Such forward-looking statements are meaningful only on the date when such statements are made, and the Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such a statement is made to reflect the occurrence of unanticipated events.

 FIRST FINANCIAL BANCORP.

CONSOLIDATED FINANCIAL HIGHLIGHTS

 

(Dollars in thousands, except per share)

(Unaudited)



Three months ended,


Twelve months ended,


Dec. 31,


Sep. 30,


Jun. 30,


Mar. 31,


Dec. 31,


Dec. 31,


2013


2013


2013


2013


2012


2013


2012















RESULTS OF OPERATIONS














Net income

$3,785


$14,911


$15,829


$13,824


$16,265


$48,349


$67,303

Net earnings per share - basic 

$0.07


$0.26


$0.28


$0.24


$0.28


$0.84


$1.16

Net earnings per share - diluted 

$0.07


$0.26


$0.27


$0.24


$0.28


$0.83


$1.14

Dividends declared per share

$0.15


$0.27


$0.24


$0.28


$0.28


$0.94


$1.18















KEY FINANCIAL RATIOS














Return on average assets

0.24%


0.96%


1.01%


0.88%


1.03%


0.77%


1.07%

Return on average shareholders' equity

2.15%


8.53%


9.02%


7.91%


9.06%


6.89%


9.43%

Return on average tangible shareholders' equity

2.51%


10.00%


10.54%


9.24%


10.58%


8.05%


11.01%















Net interest margin

3.90%


3.91%


4.02%


4.04%


4.27%


3.97%


4.37%

Net interest margin (fully tax equivalent) (1)

3.94%


3.95%


4.06%


4.07%


4.29%


4.01%


4.39%















Ending shareholders' equity as a percent of ending assets

10.63%


11.07%


11.08%


11.05%


10.93%


10.63%


10.93%

Ending tangible shareholders' equity as a percent of:














  Ending tangible assets

9.20%


9.60%


9.62%


9.60%


9.50%


9.20%


9.50%

  Risk-weighted assets

13.59%


14.27%


14.50%


15.05%


15.57%


13.59%


15.57%















Average shareholders' equity as a percent of average assets

11.23%


11.19%


11.15%


11.09%


11.35%


11.17%


11.30%

Average tangible shareholders' equity as a percent of














    average tangible assets

9.77%


9.71%


9.70%


9.65%


9.88%


9.72%


9.83%















Book value per share

$11.86


$11.99


$12.05


$12.09


$12.24


$11.86


$12.24

Tangible book value per share

$10.10


$10.24


$10.29


$10.33


$10.47


$10.10


$10.47















Tier 1 Ratio(2)

14.61%


15.26%


15.41%


15.87%


16.32%


14.61%


16.32%

Total Capital Ratio(2)

15.88%


16.53%


16.68%


17.15%


17.60%


15.88%


17.60%

Leverage Ratio(2)

10.11%


10.29%


10.12%


10.00%


10.25%


10.11%


10.25%















AVERAGE BALANCE SHEET ITEMS













Loans (3)

$3,450,069


$3,410,102


$3,313,731


$3,205,781


$3,107,760


$3,345,768


$3,030,308

Covered loans and FDIC indemnification asset

568,385


655,654


758,875


840,190


920,102


704,894


1,050,114

Investment securities

1,654,374


1,589,666


1,705,219


1,838,783


1,746,961


1,696,211


1,682,821

Interest-bearing deposits with other banks

4,906


4,010


13,890


3,056


5,146


6,464


36,674

   Total earning assets

$5,677,734


$5,659,432


$5,791,715


$5,887,810


$5,779,969


$5,753,337


$5,799,917

Total assets

$6,232,971


$6,193,722


$6,310,602


$6,391,049


$6,294,084


$6,281,411


$6,318,181

Noninterest-bearing deposits

$1,129,097


$1,072,259


$1,063,102


$1,049,943


$1,112,072


$1,078,800


$1,035,319

Interest-bearing deposits

3,720,809


3,654,311


3,792,891


3,785,402


3,912,854


3,737,946


4,169,175

   Total deposits

$4,849,906


$4,726,570


$4,855,993


$4,835,345


$5,024,926


$4,816,746


$5,204,494

Borrowings

$583,522


$667,706


$644,058


$735,327


$439,308


$657,265


$273,798

Shareholders' equity

$700,063


$693,158


$703,804


$708,862


$714,373


$701,425


$713,717















CREDIT QUALITY RATIOS (excluding covered assets)













Allowance to ending loans

1.25%


1.33%


1.39%


1.49%


1.50%


1.25%


1.50%

Allowance to nonaccrual loans

116.55%


78.57%


75.87%


74.95%


73.46%


116.55%


73.46%

Allowance to nonperforming loans

83.17%


61.34%


62.78%


62.57%


62.95%


83.17%


62.95%

Nonperforming loans to total loans

1.50%


2.16%


2.22%


2.38%


2.39%


1.50%


2.39%

Nonperforming assets to ending loans, plus OREO

2.06%


2.50%


2.56%


2.74%


2.77%


2.06%


2.77%

Nonperforming assets to total assets

1.13%


1.38%


1.38%


1.40%


1.36%


1.13%


1.36%

Net charge-offs to average loans (annualized) 

0.41%


0.34%


0.45%


0.32%


0.68%


0.38%


0.79%















(1)The tax equivalent adjustment to net interest income recognizes the income tax savings when comparing taxable and tax-exempt assets and assumes a 35% tax rate.  Management believes that it is a standard practice in the banking industry to present net interest margin and net interest income on a fully tax equivalent basis.  Therefore, management believes, these measures provide useful information to investors by allowing them to make peer comparisons.  Management also uses these measures to make peer comparisons.

















(2)December 31, 2013 regulatory capital ratios are preliminary.





(3) Includes loans held for sale.





 


FIRST FINANCIAL BANCORP.

CONSOLIDATED STATEMENTS OF INCOME

 

(Dollars in thousands, except per share)

(Unaudited)



Three months ended,


Twelve months ended,


Dec. 31,


Dec. 31,


2013


2012


%

Change


2013


2012


% Change

Interest income












  Loans, including fees

$52,351


$60,389


(13.3%)


$216,306


$249,751


(13.4%)

  Investment securities












     Taxable

9,209


8,410


9.5%


34,147


37,664


(9.3%)

     Tax-exempt

719


370


94.3%


2,400


736


226.1%

        Total investment securities interest

9,928


8,780


13.1%


36,547


38,400


(4.8%)

  Other earning assets

(2,432)


(1,564)


55.5%


(7,645)


(7,221)


5.9%

       Total interest income

59,847


67,605


(11.5%)


245,208


280,930


(12.7%)













Interest expense












  Deposits

3,247


4,798


(32.3%)


13,247


24,625


(46.2%)

  Short-term borrowings

257


159


61.6%


1,177


262


349.2%

  Long-term borrowings

539


672


(19.8%)


2,464


2,702


(8.8%)

      Total interest expense

4,043


5,629


(28.2%)


16,888


27,589


(38.8%)

      Net interest income

55,804


61,976


(10.0%)


228,320


253,341


(9.9%)

  Provision for loan and lease losses - uncovered

1,851


3,882


(52.3%)


8,714


19,117


(54.4%)

  Provision for loan and lease losses - covered

(5,857)


5,283


(210.9%)


195


30,903


(99.4%)

      Net interest income after provision for loan and lease losses

59,810


52,811


13.3%


219,411


203,321


7.9%













Noninterest income












  Service charges on deposit accounts

5,226


5,431


(3.8%)


20,595


21,215


(2.9%)

  Trust and wealth management fees

3,506


3,409


2.8%


14,319


13,951


2.6%

  Bankcard income 

2,699


2,526


6.8%


10,914


10,028


8.8%

  Net gains from sales of loans

604


1,179


(48.8%)


3,150


4,570


(31.1%)

  Gain on sale of investment securities

0


1,011


(100.0%)


1,724


3,628


(52.5%)

  FDIC loss sharing income

(3,385)


5,754


(158.8%)


3,720


35,346


(89.5%)

  Accelerated discount on covered loans

1,572


2,455


(36.0%)


7,153


13,662


(47.6%)

  Other

2,821


4,356


(35.2%)


12,072


20,021


(39.7%)

      Total noninterest income

13,043


26,121


(50.1%)


73,647


122,421


(39.8%)













Noninterest expenses












  Salaries and employee benefits

24,023


28,033


(14.3%)


101,402


113,154


(10.4%)

  Pension settlement charges

462


0


N/M


6,174


0


N/M

  Net occupancy

4,557


5,122


(11.0%)


21,207


20,682


2.5%

  Furniture and equipment 

2,136


2,291


(6.8%)


8,970


9,190


(2.4%)

  Data processing 

2,617


2,526


3.6%


10,229


8,837


15.8%

  Marketing

999


1,566


(36.2%)


4,270


5,550


(23.1%)

  Communication

728


814


(10.6%)


3,207


3,409


(5.9%)

  Professional services

1,781


1,667


6.8%


6,876


7,269


(5.4%)

  State intangible tax

901


942


(4.4%)


3,929


3,899


0.8%

  FDIC assessments

1,121


1,085


3.3%


4,501


4,682


(3.9%)

  Loss (gain) - other real estate owned

348


569


(38.8%)


1,250


3,250


(61.5%)

  Loss (gain) - covered other real estate owned

946


(54)


(1851.9%)


(1,219)


2,446


(149.8%)

  Loss sharing expense

1,495


2,305


(35.1%)


7,083


10,725


(34.0%)

  FDIC indemnification impairment 

22,417


0


N/M


22,417


0


N/M

  Other 

5,754


6,608


(12.9%)


25,179


28,904


(12.9%)

      Total noninterest expenses

70,285


53,474


31.4%


225,475


221,997


1.6%

Income before income taxes

2,568


25,458


(89.9%)


67,583


103,745


(34.9%)

Income tax expense

(1,217)


9,193


(113.2%)


19,234


36,442


(47.2%)

      Net income

3,785


16,265


(76.7%)


48,349


67,303


(28.2%)

























ADDITIONAL DATA












Net earnings per share - basic

$0.07


$0.28




$0.84


$1.16



Net earnings per share - diluted

$0.07


$0.28




$0.83


$1.14



Dividends declared per share

$0.15


$0.28




$0.94


$1.18















Return on average assets

0.24%


1.03%




0.77%


1.07%



Return on average shareholders' equity

2.15%


9.06%




6.89%


9.43%















Interest income

$59,847


$67,605


(11.5%)


$245,208


$280,930


(12.7%)

Tax equivalent adjustment

635


366


73.5%


2,142


1,055


103.0%

   Interest income - tax equivalent

60,482


67,971


(11.0%)


247,350


281,985


(12.3%)

Interest expense

4,043


5,629


(28.2%)


16,888


27,589


(38.8%)

   Net interest income - tax equivalent

$56,439


$62,342


(9.5%)


$230,462


$254,396


(9.4%)













Net interest margin

3.90%


4.27%




3.97%


4.37%



Net interest margin (fully tax equivalent) (1)

3.94%


4.29%




4.01%


4.39%















Full-time equivalent employees 

1,306


1,439










(1) The tax equivalent adjustment to net interest income recognizes the income tax savings when comparing taxable and tax-exempt assets and assumes a 35% tax rate. Management believes that it is a standard practice in the banking industry to present net interest income on a fully tax equivalent basis.  Therefore, management believes, these measures provided useful information to investors by allowing them to make peer comparisons.  Management also uses these measures to make peer comparisons.


N/M = Not meaningful.

FIRST FINANCIAL BANCORP.

CONSOLIDATED QUARTERLY STATEMENTS OF INCOME

 

(Dollars in thousands, except per share)

(Unaudited)



2013


Fourth


Third


Second


First




% Change


Quarter


Quarter


Quarter


Quarter


YTD


Linked Qtr.

Interest income












  Loans, including fees

$52,351


$52,908


$55,022


$56,025


$216,306


(1.1%)

  Investment securities












     Taxable

9,209


8,267


8,295


8,376


34,147


11.4%

     Tax-exempt

719


541


560


580


2,400


32.9%

        Total investment securities interest

9,928


8,808


8,855


8,956


36,547


12.7%

  Other earning assets

(2,432)


(2,185)


(1,556)


(1,472)


(7,645)


11.3%

       Total interest income

59,847


59,531


62,321


63,509


245,208


0.5%













Interest expense












  Deposits

3,247


2,856


3,284


3,860


13,247


13.7%

  Short-term borrowings

257


286


305


329


1,177


(10.1%)

  Long-term borrowings

539


617


654


654


2,464


(12.6%)

      Total interest expense

4,043


3,759


4,243


4,843


16,888


7.6%

      Net interest income

55,804


55,772


58,078


58,666


228,320


0.1%

  Provision for loan and lease losses - uncovered

1,851


1,413


2,409


3,041


8,714


31.0%

  Provision for loan and lease losses - covered

(5,857)


5,293


(8,283)


9,042


195


(210.7%)

Net interest income after provision for loan and lease losses

59,810


49,066


63,952


46,583


219,411


21.9%













Noninterest income












  Service charges on deposit accounts

5,226


5,447


5,205


4,717


20,595


(4.1%)

  Trust and wealth management fees

3,506


3,366


3,497


3,950


14,319


4.2%

  Bankcard income 

2,699


2,637


3,145


2,433


10,914


2.4%

  Net gains from sales of loans

604


751


1,089


706


3,150


(19.6%)

  Gain on sale of investment securities

0


0


188


1,536


1,724


              N/M

  FDIC loss sharing income

(3,385)


5,555


(7,384)


8,934


3,720


(160.9%)

  Accelerated discount on covered loans

1,572


1,711


1,935


1,935


7,153


(8.1%)

  Other

2,821


2,824


3,940


2,487


12,072


(0.1%)

      Total noninterest income

13,043


22,291


11,615


26,698


73,647


(41.5%)













Noninterest expenses












  Salaries and employee benefits

24,023


23,834


26,216


27,329


101,402


0.8%

  Pension settlement charges

462


1,396


4,316


0


6,174


(66.9%)

  Net occupancy

4,557


5,101


5,384


6,165


21,207


(10.7%)

  Furniture and equipment 

2,136


2,213


2,250


2,371


8,970


(3.5%)

  Data processing 

2,617


2,584


2,559


2,469


10,229


1.3%

  Marketing

999


1,192


1,182


897


4,270


(16.2%)

  Communication

728


865


781


833


3,207


(15.8%)

  Professional services

1,781


1,528


1,764


1,803


6,876


16.6%

  State intangible tax

901


1,010


1,004


1,014


3,929


(10.8%)

  FDIC assessments

1,121


1,107


1,148


1,125


4,501


1.3%

  Loss (gain) - other real estate owned

348


184


216


502


1,250


89.1%

  Loss (gain) - covered other real estate owned

946


204


(2,212)


(157)


(1,219)


363.7%

  Loss sharing expense

1,495


1,724


1,578


2,286


7,083


(13.3%)

  FDIC indemnification impairment 

22,417


0


0


0


22,417


              N/M

  Other 

5,754


5,859


7,097


6,469


25,179


(1.8%)

      Total noninterest expenses

70,285


48,801


53,283


53,106


225,475


44.0%

Income before income taxes

2,568


22,556


22,284


20,175


67,583


(88.6%)

Income tax expense

(1,217)


7,645


6,455


6,351


19,234


(115.9%)

      Net income

$3,785


$14,911


$15,829


$13,824


$48,349


(74.6%)













ADDITIONAL DATA












Net earnings per share - basic

$0.07


$0.26


$0.28


$0.24


$0.84



Net earnings per share - diluted

$0.07


$0.26


$0.27


$0.24


$0.83



Dividends declared per share

$0.15


$0.27


$0.24


$0.28


$0.94















Return on average assets

0.24%


0.96%


1.01%


0.88%


0.77%



Return on average shareholders' equity

2.15%


8.53%


9.02%


7.91%


6.89%















Interest income

$59,847


$59,531


$62,321


$63,509


$245,208


0.5%

Tax equivalent adjustment

635


516


514


477


2,142


23.1%

   Interest income - tax equivalent

60,482


60,047


62,835


63,986


247,350


0.7%

Interest expense

4,043


3,759


4,243


4,843


16,888


7.6%

   Net interest income - tax equivalent

$56,439


$56,288


$58,592


$59,143


$230,462


0.3%













Net interest margin

3.90%


3.91%


4.02%


4.04%


3.97%



Net interest margin (fully tax equivalent) (1)

3.94%


3.95%


4.06%


4.07%


4.01%















Full-time equivalent employees 

1,306


1,292


1,338


1,385






(1) The tax equivalent adjustment to net interest income recognizes the income tax savings when comparing taxable and tax-exempt assets and assumes a 35% tax rate.  Management believes that it is a standard practice in the banking industry to present net interest income on a fully tax equivalent basis.  Therefore, management believes, these measures provided useful information to investors by allowing them to make peer comparisons.  Management also uses these measures to make peer comparisons.


N/M = Not meaningful.

 

FIRST FINANCIAL BANCORP.

CONSOLIDATED QUARTERLY STATEMENTS OF INCOME

 

(Dollars in thousands, except per share)

(Unaudited)



2012


Fourth 


Third


Second


First


Full


Quarter


Quarter


Quarter


Quarter


Year

Interest income










  Loans, including fees

$60,389


$59,536


$63,390


$66,436


$249,751

  Investment securities










     Taxable

8,410


8,358


10,379


10,517


37,664

     Tax-exempt

370


111


121


134


736

        Total investment securities interest

8,780


8,469


10,500


10,651


38,400

  Other earning assets

(1,564)


(1,700)


(1,967)


(1,990)


(7,221)

       Total interest income

67,605


66,305


71,923


75,097


280,930











Interest expense










  Deposits

4,798


5,730


6,381


7,716


24,625

  Short-term borrowings

159


54


37


12


262

  Long-term borrowings

672


675


675


680


2,702

      Total interest expense

5,629


6,459


7,093


8,408


27,589

      Net interest income

61,976


59,846


64,830


66,689


253,341

  Provision for loan and lease losses - uncovered

3,882


3,613


8,364


3,258


19,117

  Provision for loan and lease losses - covered

5,283


6,622


6,047


12,951


30,903

      Net interest income after provision for loan and lease losses

52,811


49,611


50,419


50,480


203,321











Noninterest income










  Service charges on deposit accounts

5,431


5,499


5,376


4,909


21,215

  Trust and wealth management fees

3,409


3,374


3,377


3,791


13,951

  Bankcard income 

2,526


2,387


2,579


2,536


10,028

  Net gains from sales of loans

1,179


1,319


1,132


940


4,570

  Gain on sale of investment securities

1,011


2,617


0


0


3,628

  FDIC loss sharing income

5,754


8,496


8,280


12,816


35,346

  Accelerated discount on covered loans

2,455


3,798


3,764


3,645


13,662

  Other

4,356


3,340


9,037


3,288


20,021

      Total noninterest income

26,121


30,830


33,545


31,925


122,421











Noninterest expenses










  Salaries and employee benefits

28,033


27,212


29,048


28,861


113,154

  Net occupancy

5,122


5,153


5,025


5,382


20,682

  Furniture and equipment 

2,291


2,332


2,323


2,244


9,190

  Data processing 

2,526


2,334


2,076


1,901


8,837

  Marketing

1,566


1,592


1,238


1,154


5,550

  Communication

814


788


913


894


3,409

  Professional services

1,667


1,304


2,151


2,147


7,269

  State intangible tax

942


961


970


1,026


3,899

  FDIC assessments

1,085


1,164


1,270


1,163


4,682

  Loss (gain) - other real estate owned

569


1,372


313


996


3,250

  Loss (gain) - covered other real estate owned

(54)


(25)


1,233


1,292


2,446

  Loss sharing expense

2,305


3,584


3,085


1,751


10,725

  Other 

6,608


7,515


7,814


6,967


28,904

      Total noninterest expenses

53,474


55,286


57,459


55,778


221,997

Income before income taxes

25,458


25,155


26,505


26,627


103,745

Income tax expense

9,193


8,913


8,703


9,633


36,442

      Net income

$16,265


$16,242


$17,802


$16,994


$67,303











ADDITIONAL DATA










Net earnings per share - basic

$0.28


$0.28


$0.31


$0.29


$1.16

Net earnings per share - diluted

$0.28


$0.28


$0.30


$0.29


$1.14

Dividends declared per share

$0.28


$0.30


$0.29


$0.31


$1.18











Return on average assets

1.03%


1.05%


1.13%


1.05%


1.07%

Return on average shareholders' equity

9.06%


9.01%


9.98%


9.67%


9.43%











Interest income

$67,605


$66,305


$71,923


$75,097


$280,930

Tax equivalent adjustment

366


255


216


218


1,055

   Interest income - tax equivalent

67,971


66,560


72,139


75,315


281,985

Interest expense

5,629


6,459


7,093


8,408


27,589

   Net interest income - tax equivalent

$62,342


$60,101


$65,046


$66,907


$254,396











Net interest margin

4.27%


4.21%


4.49%


4.51%


4.37%

Net interest margin (fully tax equivalent) (1)

4.29%


4.23%


4.50%


4.52%


4.39%











Full-time equivalent employees 

1,439


1,475


1,525


1,513




(1) The tax equivalent adjustment to net interest income recognizes the income tax savings when comparing taxable and tax-exempt assets and assumes a 35% tax rate. Management believes that it is a standard practice in the banking industry to present net interest income on a fully tax equivalent basis.  Therefore, management believes, these measures provided useful information to investors by allowing them to make peer comparisons.  Management also uses these measures to make peer comparisons.

 

 

FIRST FINANCIAL BANCORP.

CONSOLIDATED STATEMENTS OF CONDITION

 

(Dollars in thousands)

(Unaudited)



Dec. 31,


Sep. 30,


Jun. 30,


Mar. 31,


Dec. 31,


% Change


% Change


2013


2013


2013


2013


2012


Linked Qtr.


Comparable Qtr.

ASSETS














     Cash and due from banks

$117,620


$177,698


$114,745


$106,249


$134,502


(33.8%)


(12.6%)

     Interest-bearing deposits with other banks

25,830


10,414


2,671


1,170


24,341


148.0%


6.1%

     Investment securities available-for-sale

913,601


854,747


884,694


952,039


1,032,096


6.9%


(11.5%)

     Investment securities held-to-maturity

837,272


669,093


670,246


716,214


770,755


25.1%


8.6%

     Other investments

47,427


75,945


75,645


75,375


71,492


(37.6%)


(33.7%)

     Loans held for sale

8,114


10,704


18,650


28,126


16,256


(24.2%)


(50.1%)

     Loans














       Commercial

1,035,668


960,016


940,420


892,381


861,033


7.9%


20.3%

       Real estate - construction

80,741


90,089


97,246


87,542


73,517


(10.4%)


9.8%

       Real estate - commercial

1,496,987


1,493,969


1,477,226


1,433,182


1,417,008


0.2%


5.6%

       Real estate - residential

352,931


352,830


343,016


330,260


318,210


0.0%


10.9%

       Installment

47,133


49,273


50,781


53,509


56,810


(4.3%)


(17.0%)

       Home equity

376,454


373,839


370,206


365,943


367,500


0.7%


2.4%

       Credit card

35,592


34,285


33,222


32,465


34,198


3.8%


4.1%

       Lease financing

80,135


76,615


70,011


53,556


50,788


4.6%


57.8%

          Total loans, excluding covered loans

3,505,641


3,430,916


3,382,128


3,248,838


3,179,064


2.2%


10.3%

       Less














          Allowance for loan and lease losses

43,829


45,514


47,047


48,306


47,777


(3.7%)


(8.3%)

             Net loans - uncovered

3,461,812


3,385,402


3,335,081


3,200,532


3,131,287


2.3%


10.6%

       Covered loans

457,873


518,524


622,265


687,798


748,116


(11.7%)


(38.8%)

       Less














          Allowance for loan and lease losses

18,901


23,259


32,961


45,496


45,190


(18.7%)


(58.2%)

             Net loans - covered

438,972


495,265


589,304


642,302


702,926


(11.4%)


(37.6%)

                Net loans

3,900,784


3,880,667


3,924,385


3,842,834


3,834,213


0.5%


1.7%

     Premises and equipment

137,110


139,125


142,675


146,889


146,716


(1.4%)


6.5%

     Goodwill

95,050


95,050


95,050


95,050


95,050


0.0%


0.0%

     Other intangibles

5,924


6,249


6,620


7,078


7,648


(5.2%)


(22.5%)

     FDIC indemnification asset

45,091


78,132


88,966


112,428


119,607


(42.3%)


(62.3%)

     Accrued interest and other assets

283,390


255,617


250,228


265,565


244,372


10.9%


16.0%

       Total assets

$6,417,213


$6,253,441


$6,274,575


$6,349,017


$6,497,048


2.6%


(1.2%)















LIABILITIES














     Deposits














       Interest-bearing demand

$1,125,723


$1,068,067


$1,131,466


$1,113,940


$1,160,815


5.4%


(3.0%)

       Savings

1,612,005


1,593,895


1,601,122


1,620,874


1,623,614


1.1%


(0.7%)

       Time

952,327


926,029


978,680


1,030,124


1,068,637


2.8%


(10.9%)

          Total interest-bearing deposits

3,690,055


3,587,991


3,711,268


3,764,938


3,853,066


2.8%


(4.2%)

       Noninterest-bearing

1,147,452


1,141,016


1,059,368


1,056,409


1,102,774


0.6%


4.1%

          Total deposits

4,837,507


4,729,007


4,770,636


4,821,347


4,955,840


2.3%


(2.4%)

     Short-term borrowings














       Federal funds purchased and securities sold














         under agreements to repurchase

94,749


105,472


114,030


130,863


122,570


(10.2%)


(22.7%)

       FHLB short-term borrowings

654,000


518,200


505,900


502,200


502,000


26.2%


30.3%

          Total short-term borrowings

748,749


623,672


619,930


633,063


624,570


20.1%


19.9%

     Long-term debt

60,780


61,088


73,957


74,498


75,202


(0.5%)


(19.2%)

          Total borrowed funds

809,529


684,760


693,887


707,561


699,772


18.2%


15.7%

     Accrued interest and other liabilities

88,016


147,635


114,600


118,495


131,011


(40.4%)


(32.8%)

       Total liabilities

5,735,052


5,561,402


5,579,123


5,647,403


5,786,623


3.1%


(0.9%)















SHAREHOLDERS' EQUITY














     Common stock

577,076


577,429


576,641


575,514


579,293


(0.1%)


(0.4%)

     Retained earnings 

324,192


328,993


329,633


327,635


330,004


(1.5%)


(1.8%)

     Accumulated other comprehensive loss

(31,281)


(29,294)


(25,645)


(21,475)


(18,677)


6.8%


67.5%

     Treasury stock, at cost

(187,826)


(185,089)


(185,177)


(180,060)


(180,195)


1.5%


4.2%

       Total shareholders' equity

682,161


692,039


695,452


701,614


710,425


(1.4%)


(4.0%)

       Total liabilities and shareholders' equity

$6,417,213


$6,253,441


$6,274,575


$6,349,017


$6,497,048


2.6%


(1.2%)

 

FIRST FINANCIAL BANCORP.

AVERAGE CONSOLIDATED STATEMENTS OF CONDITION

 

(Dollars in thousands)

(Unaudited)



Quarterly Averages


Year-to-Date Averages


Dec. 31,


Sep. 30,


Jun. 30,


Mar. 31,


Dec. 31,


Dec. 31,


2013


2013


2013


2013


2012


2013


2012

ASSETS














     Cash and due from banks

$110,246


$120,154


$119,909


$111,599


$118,619


$115,486


$120,492

     Interest-bearing deposits with other banks

4,906


4,010


13,890


3,056


5,146


6,464


36,674

     Investment securities

1,654,374


1,589,666


1,705,219


1,838,783


1,746,961


1,696,211


1,682,821

     Loans held for sale

7,990


13,349


19,722


21,096


18,054


15,497


20,848

     Loans














       Commercial

986,438


937,939


904,029


863,427


819,262


923,336


827,205

       Real estate - construction

79,194


93,103


93,813


81,171


85,219


86,832


97,278

       Real estate - commercial

1,489,858


1,488,047


1,445,626


1,411,769


1,373,781


1,459,119


1,303,155

       Real estate - residential

351,929


347,110


334,652


323,768


307,580


339,463


294,803

       Installment

47,733


50,130


52,313


54,684


58,283


51,193


61,768

       Home equity

374,919


371,072


367,408


365,568


368,605


369,771


363,470

       Credit card

35,673


34,176


33,785


33,300


32,954


34,240


31,882

       Lease financing

76,335


75,176


62,383


50,998


44,022


66,317


29,899

          Total loans, excluding covered loans

3,442,079


3,396,753


3,294,009


3,184,685


3,089,706


3,330,271


3,009,460

       Less














          Allowance for loan and lease losses

46,531


49,451


50,172


49,408


50,172


48,884


51,378

             Net loans - uncovered

3,395,548


3,347,302


3,243,837


3,135,277


3,039,534


3,281,387


2,958,082

       Covered loans

490,072


573,243


653,892


724,846


794,838


609,768


907,520

       Less














          Allowance for loan and lease losses

21,733


31,208


41,861


46,104


48,553


35,149


48,711

             Net loans - covered

468,339


542,035


612,031


678,742


746,285


574,619


858,809

                Net loans

3,863,887


3,889,337


3,855,868


3,814,019


3,785,819


3,856,006


3,816,891

     Premises and equipment

138,644


141,498


144,759


147,355


148,047


143,036


144,238

     Goodwill

95,050


95,050


95,050


95,050


95,050


95,050


95,050

     Other intangibles

6,075


6,428


6,831


7,346


8,001


6,666


9,240

     FDIC indemnification asset

78,313


82,411


104,983


115,344


125,264


95,126


142,594

     Accrued interest and other assets

273,486


251,819


244,371


237,401


243,123


251,869


249,333

       Total assets

$6,232,971


$6,193,722


$6,310,602


$6,391,049


$6,294,084


$6,281,411


$6,318,181















LIABILITIES














     Deposits














       Interest-bearing demand

$1,150,275


$1,098,524


$1,141,767


$1,112,664


$1,145,800


$1,125,836


$1,196,764

       Savings

1,637,657


1,608,351


1,639,834


1,618,239


1,640,427


1,626,025


1,630,426

       Time

932,877


947,436


1,011,290


1,054,499


1,126,627


986,085


1,341,985

          Total interest-bearing deposits

3,720,809


3,654,311


3,792,891


3,785,402


3,912,854


3,737,946


4,169,175

       Noninterest-bearing

1,129,097


1,072,259


1,063,102


1,049,943


1,112,072


1,078,800


1,035,319

          Total deposits

4,849,906


4,726,570


4,855,993


4,835,345


5,024,926


4,816,746


5,204,494

     Short-term borrowings














       Federal funds purchased and securities sold














          under agreements to repurchase

107,738


114,505


105,299


134,709


100,087


115,486


86,980

       Federal Home Loan Bank short-term borrowings

414,892


483,937


464,630


525,878


263,895


472,062


111,295

          Total short-term borrowings

522,630


598,442


569,929


660,587


363,982


587,548


198,275

     Long-term debt

60,892


69,264


74,129


74,740


75,326


69,717


75,523

       Total borrowed funds

583,522


667,706


644,058


735,327


439,308


657,265


273,798

     Accrued interest and other liabilities

99,480


106,288


106,747


111,515


115,477


105,975


126,172

       Total liabilities

5,532,908


5,500,564


5,606,798


5,682,187


5,579,711


5,579,986


5,604,464















SHAREHOLDERS' EQUITY














     Common stock

577,851


576,953


576,391


578,452


578,691


577,409


577,759

     Retained earnings 

337,034


329,518


329,795


330,879


331,414


331,817


329,615

     Accumulated other comprehensive loss

(28,380)


(28,232)


(19,204)


(19,576)


(19,612)


(23,884)


(18,987)

     Treasury stock, at cost

(186,442)


(185,081)


(183,178)


(180,893)


(176,120)


(183,917)


(174,670)

       Total shareholders' equity

700,063


693,158


703,804


708,862


714,373


701,425


713,717

       Total liabilities and shareholders' equity

$6,232,971


$6,193,722


$6,310,602


$6,391,049


$6,294,084


$6,281,411


$6,318,181

 

 

 FIRST FINANCIAL BANCORP.

NET INTEREST MARGIN RATE/VOLUME ANALYSIS (1)

 

(Dollars in thousands)

(Unaudited)



 Quarterly Averages 


 Year-to-Date Averages 


Dec. 31, 2013


Sep. 30, 2013


Dec. 31, 2012


Dec. 31, 2013


Dec. 31, 2012


Balance


Yield


Balance


Yield


Balance


Yield


Balance


Yield


Balance


Yield

Earning assets




















   Investments:




















   Investment securities

$         1,654,374


2.38%


$      1,589,666


2.20%


$       1,746,961


1.99%


$        1,696,211


2.15%


$       1,682,821


2.28%

   Interest-bearing deposits with other banks

4,906


0.57%


4,010


0.49%


5,146


0.54%


6,464


0.42%


36,674


0.30%

Gross loans(2)

4,018,454


4.93%


4,065,756


4.95%


4,027,862


5.79%


4,050,662


5.15%


4,080,422


5.94%

Total earning assets

5,677,734


4.18%


5,659,432


4.17%


5,779,969


4.64%


5,753,337


4.26%


5,799,917


4.84%





















Nonearning assets




















Allowance for loan and lease losses

(68,264)




(80,659)




(98,725)




(84,033)




(100,089)



Cash and due from banks

110,246




120,154




118,619




115,486




120,492



Accrued interest and other assets

513,255




494,795




494,221




496,621




497,861



Total assets

$         6,232,971




$      6,193,722




$     6,294,084




$        6,281,411




$        6,318,181























Interest-bearing liabilities




















   Deposits:




















Interest-bearing demand

$          1,150,275


0.19%


$      1,098,524


0.12%


$       1,145,800


0.13%


$       1,125,836


0.13%


$       1,196,764


0.13%

Savings

1,637,657


0.15%


1,608,351


0.09%


1,640,427


0.11%


1,626,025


0.11%


1,630,426


0.12%

Time

932,877


0.90%


947,436


0.90%


1,126,627


1.40%


986,085


1.01%


1,341,985


1.57%

Total interest-bearing deposits

3,720,809


0.35%


3,654,311


0.31%


3,912,854


0.49%


3,737,946


0.35%


4,169,175


0.59%

Borrowed funds




















Short-term borrowings

522,630


0.20%


598,442


0.19%


363,982


0.17%


587,548


0.20%


198,275


0.13%

Long-term debt

60,892


3.51%


69,264


3.53%


75,326


3.54%


69,717


3.53%


75,523


3.58%

Total borrowed funds

583,522


0.54%


667,706


0.54%


439,308


0.75%


657,265


0.55%


273,798


1.08%

Total interest-bearing liabilities

4,304,331


0.37%


4,322,017


0.35%


4,352,162


0.51%


4,395,211


0.38%


4,442,973


0.62%





















Noninterest-bearing liabilities




















Noninterest-bearing demand deposits

1,129,097




1,072,259




1,112,072




1,078,800




1,035,319



Other liabilities

99,480




106,288




115,477




105,975




126,172



Shareholders' equity

700,063




693,158




714,373




701,425




713,717



Total liabilities & shareholders' equity

$         6,232,971




$      6,193,722




$     6,294,084




$        6,281,411




$        6,318,181























Net interest income(1)

$              55,804




$           55,772




$            61,976




$         228,320




$          253,341



Net interest spread(1)



3.81%




3.82%




4.13%




3.88%




4.22%

Net interest margin(1)



3.90%




3.91%




4.27%




3.97%




4.37%





















(1)Not tax equivalent.




















(2)Loans held for sale, nonaccrual loans, covered loans, and indemnification asset are included in gross loans.







































 

 FIRST FINANCIAL BANCORP.

NET INTEREST MARGIN RATE/VOLUME ANALYSIS (1)

 

(Dollars in thousands)

(Unaudited)



 Linked Qtr. Income Variance 


 Comparable Qtr. Income Variance 


 Year-to-Date Income Variance 


Rate


Volume


Total


Rate


Volume


Total


Rate


Volume


Total

Earning assets


















Investment securities

$            732


$             388


$          1,120


$          1,704


$           (556)


$          1,148


$        (2,142)


$             289


$        (1,853)

Interest-bearing deposits with other banks

1


1


2


0


0


0


42


(126)


(84)

Gross loans(2)

(218)


(588)


(806)


(8,789)


(117)


(8,906)


(32,252)


(1,533)


(33,785)

Total earning assets

515


(199)


316


(7,085)


(673)


(7,758)


(34,352)


(1,370)


(35,722)

Interest-bearing liabilities


















Total interest-bearing deposits

$             333


$               58


$             391


$        (1,383)


$           (168)


$        (1,551)


$        (9,850)


$        (1,528)


$      (11,378)

Borrowed funds


















Short-term borrowings

8


(37)


(29)


20


78


98


135


780


915

Long-term debt

(4)


(74)


(78)


(5)


(128)


(133)


(33)


(205)


(238)

Total borrowed funds

4


(111)


(107)


15


(50)


(35)


102


575


677

Total interest-bearing liabilities

337


(53)


284


(1,368)


(218)


(1,586)


(9,748)


(953)


(10,701)

         Net interest income(1)

$             178


$          (146)


$               32


$        (5,717)


$           (455)


$        (6,172)


$      (24,604)


$           (417)


$      (25,021)





































(1)Not tax equivalent.


















(2)Loans held for sale, nonaccrual loans, covered loans, and indemnification asset are included in gross loans.



































 

 

FIRST FINANCIAL BANCORP.

CREDIT QUALITY

(excluding covered assets)

 

(Dollars in thousands)

(Unaudited)



Dec. 31,


Sep. 30,


Jun. 30,


Mar. 31,


Dec. 31,


Full Year


Full Year


2013


2013


2013


2013


2012


2013


2012















ALLOWANCE FOR LOAN AND LEASE LOSS ACTIVITY













Balance at beginning of period

$45,514


$47,047


$48,306


$47,777


$49,192


$47,777


$52,576

  Provision for uncovered loan and lease losses

1,851


1,413


2,409


3,041


3,882


8,714


19,117

  Gross charge-offs














    Commercial 

293


1,482


859


781


657


3,415


4,312

    Real estate - construction

1


0


0


0


0


1


2,684

    Real estate - commercial

3,113


2,174


2,044


995


2,221


8,326


11,012

    Real estate - residential

218


249


326


223


454


1,016


1,814

    Installment

39


99


97


100


267


335


577

    Home equity

706


411


591


701


1,722


2,409


3,661

    Other

398


696


277


410


227


1,781


1,252

      Total gross charge-offs 

4,768


5,111


4,194


3,210


5,548


17,283


25,312

  Recoveries














    Commercial 

194


92


67


319


71


672


393

    Real estate - construction

46


490


0


136


0


672


0

    Real estate - commercial

634


1,264


57


39


46


1,994


265

    Real estate - residential

96


98


5


4


3


203


73

    Installment

66


57


110


77


53


310


323

    Home equity

136


95


225


52


32


508


115

    Other

60


69


62


71


46


262


227

      Total recoveries

1,232


2,165


526


698


251


4,621


1,396

  Total net charge-offs

3,536


2,946


3,668


2,512


5,297


12,662


23,916

Ending allowance for uncovered loan and lease losses

$43,829


$45,514


$47,047


$48,306


$47,777


$43,829


$47,777















NET CHARGE-OFFS TO AVERAGE LOANS AND LEASES (ANNUALIZED)













  Commercial 

0.04%


0.59%


0.35%


0.22%


0.28%


0.30%


0.47%

  Real estate - construction

(0.23%)


(2.09%)


0.00%


(0.68%)


0.00%


(0.77%)


2.76%

  Real estate - commercial

0.66%


0.24%


0.55%


0.27%


0.63%


0.43%


0.82%

  Real estate - residential

0.14%


0.17%


0.38%


0.27%


0.58%


0.24%


0.59%

  Installment

(0.22%)


0.33%


(0.10%)


0.17%


1.46%


0.05%


0.41%

  Home equity

0.60%


0.34%


0.40%


0.72%


1.82%


0.51%


0.98%

  Other

1.20%


2.27%


0.90%


1.63%


0.94%


1.51%


1.66%

Total net charge-offs 

0.41%


0.34%


0.45%


0.32%


0.68%


0.38%


0.79%















COMPONENTS OF NONPERFORMING LOANS, NONPERFORMING ASSETS, AND UNDERPERFORMING ASSETS







  Nonaccrual loans1














    Commercial 

$7,934


$8,554


$12,925


$16,296


$15,893


$7,934


$15,893

    Real estate - construction

223


1,099


1,104


2,094


2,102


223


2,102

    Real estate - commercial

17,286


35,549


35,055


33,871


34,977


17,286


34,977

    Real estate - residential

8,606


9,346


9,369


8,295


7,869


8,606


7,869

    Installment

574


421


249


341


452


574


452

    Home equity

2,982


2,871


2,813


3,059


3,252


2,982


3,252

    Lease financing

0


86


496


496


496


0


496

Nonaccrual loans

37,605


57,926


62,011


64,452


65,041


37,605


65,041

  Accruing troubled debt restructurings (TDRs)

15,094


16,278


12,924


12,757


10,856


15,094


10,856

Total nonperforming loans

52,699


74,204


74,935


77,209


75,897


52,699


75,897

  Other real estate owned (OREO)

19,806


11,804


11,798


11,993


12,526


19,806


12,526

Total nonperforming assets

72,505


86,008


86,733


89,202


88,423


72,505


88,423

  Accruing loans past due 90 days or more

218


265


158


157


212


218


212

Total underperforming assets

$72,723


$86,273


$86,891


$89,359


$88,635


$72,723


$88,635

Total classified assets

$110,509


$120,423


$129,832


$130,436


$129,040


$110,509


$129,040















CREDIT QUALITY RATIOS (excluding covered assets)














Allowance for loan and lease losses to














Nonaccrual loans

116.55%


78.57%


75.87%


74.95%


73.46%


116.55%


73.46%

Nonperforming loans

83.17%


61.34%


62.78%


62.57%


62.95%


83.17%


62.95%

Total ending loans

1.25%


1.33%


1.39%


1.49%


1.50%


1.25%


1.50%

Nonperforming loans to total loans

1.50%


2.16%


2.22%


2.38%


2.39%


1.50%


2.39%

Nonperforming assets to














Ending loans, plus OREO

2.06%


2.50%


2.56%


2.74%


2.77%


2.06%


2.77%

Total assets

1.13%


1.38%


1.38%


1.40%


1.36%


1.13%


1.36%

Nonperforming assets, excluding accruing TDRs to














Ending loans, plus OREO

1.63%


2.03%


2.17%


2.34%


2.43%


1.63%


2.43%

Total assets

0.89%


1.12%


1.18%


1.20%


1.19%


0.89%


1.19%















1  Nonaccrual loans include nonaccrual TDRs of $13.0 million, $13.0 million, $19.9 million, $22.3 million, $14.1 million, and as of December 31, 2013 September 30, 2013, June 30, 2013, March 31, 2013, and December 31, 2012, respectively.  

 

 FIRST FINANCIAL BANCORP.

CAPITAL ADEQUACY

 

(Dollars in thousands, except per share)

(Unaudited)

 












Twelve months ended,


Dec. 31,


Sep. 30,


Jun. 30,


Mar. 31,


Dec. 31,


Dec. 31,


Dec. 31,



2013


2013


2013


2013


2012


2013


2012


PER COMMON SHARE















Market Price















  High

$17.59


$16.47


$16.05


$16.07


$16.95


$17.59


$18.28


  Low

$14.56


$14.89


$14.52


$14.46


$13.90


$14.46


$13.90


  Close

$17.43


$15.17


$14.90


$16.05


$14.62


$17.43


$14.62

















Average shares outstanding - basic

57,152,425


57,201,390


57,291,994


57,439,029


57,800,988


57,270,233


57,876,685


Average shares outstanding - diluted

57,863,433


58,012,588


58,128,349


58,283,467


58,670,666


58,073,054


58,868,792


Ending shares outstanding

57,533,046


57,702,444


57,698,344


58,028,923


58,046,235


57,533,046


58,046,235

















REGULATORY CAPITAL

Preliminary










Preliminary




Tier 1 Capital

$624,746


$631,846


$630,819


$632,020


$637,176


$624,746


$637,176


Tier 1 Ratio

14.61%


15.26%


15.41%


15.87%


16.32%


14.61%


16.32%


Total Capital

$678,970


$684,363


$682,927


$682,974


$686,961


$678,970


$686,961


Total Capital Ratio

15.88%


16.53%


16.68%


17.15%


17.60%


15.88%


17.60%


Total Capital in excess of minimum 















  requirement

$336,878


$353,118


$355,435


$364,376


$374,633


$336,878


$374,633


Total Risk-Weighted Assets

$4,276,153


$4,140,561


$4,093,644


$3,982,479


$3,904,096


$4,276,153


$3,904,096


Leverage Ratio

10.11%


10.29%


10.12%


10.00%


10.25%


10.11%


10.25%

















OTHER CAPITAL RATIOS















Ending shareholders' equity to ending















  assets

10.63%


11.07%


11.08%


11.05%


10.93%


10.63%


10.93%


Ending tangible shareholders' equity















  to ending tangible assets

9.20%


9.60%


9.62%


9.60%


9.50%


9.20%


9.50%


Average shareholders' equity to















  average assets

11.23%


11.19%


11.15%


11.09%


11.35%


11.17%


11.30%


Average tangible shareholders' equity















  to average tangible assets

9.77%


9.71%


9.70%


9.65%


9.88%


9.72%


9.83%

















REPURCHASE PROGRAM(1)















Shares repurchased

209,745


0


291,400


249,000


460,500


750,145


460,500


Average share repurchase price

$16.39


N/A


$15.47


$15.39


$14.78


$15.70


$14.78


Total cost of shares repurchased

$3,438


N/A


$4,508


$3,831


$6,806


$11,778


$6,806

















(1)Represents share repurchases as part of publicly announced plans.












N/A=Not applicable















 

SUPPLEMENTAL INFORMATION ON COVERED ASSETS

ACCELERATED DISCOUNT ON LOAN PREPAYMENTS AND DISPOSITIONS

During the fourth quarter, First Financial recognized approximately $1.6 million in accelerated discount on covered loans, net of the related adjustment on the FDIC indemnification asset.  Accelerated discount is recognized when covered loans, which are recorded on the Company's balance sheet at an amount less than the unpaid principal balance, prepay at an amount greater than their recorded book value.  Prepayments can occur through either customer driven payments before the maturity date or loan sales.  The amount of discount attributable to the credit loss component of each loan varies and the recognized amount is offset by a related reduction in the FDIC indemnification asset.

NET INTEREST MARGIN IMPACT

Net interest margin is affected by certain activity related to the covered loan portfolio.  The majority of these loans are accounted for under FASB ASC Topic 310-30 and, as such, the Company is required to periodically update its forecast of expected cash flows from these loans.  Impairment, as a result of a decrease in expected cash flows, is recognized as provision expense in the period it is measured and has no impact on net interest margin.  Improvements in expected cash flows, in excess of any prior impairment, are recognized on a prospective basis through an upward adjustment to the yield earned on the portfolio.  Impairment and improvement are both partially offset by the impact of changes in the value of the FDIC indemnification asset.  Impairment is partially offset by an increase to the FDIC indemnification asset as a result of FDIC loss sharing income.  Improvement, which is reflected as a higher yield, is partially offset by a lower yield earned on the FDIC indemnification asset until the next periodic valuation of the loans and the indemnification asset.  The weighted average yield of the acquired loan portfolio may also be subject to change as loans with higher yields pay down more quickly or slowly than loans with lower yields.

The following table shows the estimated yield earned by the Company on its covered and uncovered loan portfolios and the FDIC indemnification asset for the three months ended December 31, 2013.





















Table VII


For the Three Months Ended







December 31, 2013







Average







(Dollars in thousands)


Balance


Yield














Loans, excluding covered loans 1


$     3,450,069


4.51%














Covered loan portfolio accounted for under ASC Topic 310-302


432,498


10.16%














Covered loan portfolio accounted for under ASC Topic 310-203


57,574


14.08%














FDIC indemnification asset2


78,313


(12.36%)














Total


$     4,018,454


4.93%














Yield earned on total covered loans




10.62%














Yield earned on total covered loans and FDIC indemnification asset




7.45%























1  Includes loans with loss share coverage removed








2  Future yield adjustments subject to change based on required, periodic valuation procedures




3  Includes loans with revolving privileges which are scoped out of ASC Topic 310-30 and certain loans which the Company elected to treat under the cost recovery method of accounting



















COVERED ASSETS

The following table presents the covered loan portfolio as of December 31, 2013, September 30, 2013 and December 31, 2012.



































Table VIII

















As of






December 31, 2013


September 30, 2013


December 31, 2012








Percent




Percent




Percent





(Dollars in thousands)

Balance


of Total


Balance


of Total


Balance


of Total





















Commercial

$      42,316


9.2%


$      52,276


10.1%


$    102,126


13.7%





















Real estate - construction

8,556


1.9%


8,692


1.7%


10,631


1.4%





















Real estate - commercial

268,633


58.7%


312,798


60.3%


465,555


62.2%





















Real estate - residential

80,733


17.6%


84,418


16.3%


100,694


13.5%





















Installment

5,641


1.2%


6,135


1.2%


8,674


1.2%





















Home equity

49,624


10.8%


51,692


10.0%


57,458


7.7%





















Other

2,370


0.5%


2,513


0.5%


2,978


0.4%





















Total

$    457,873


100.0%


$    518,524


100.0%


$    748,116


100.0%



































As of December 31, 2013, 11.6% of the Company's total loans were covered loans.  During the fourth quarter, the total balance of covered loans decreased $60.7 million, or 11.7%, compared to the prior quarter.  Of this decline, $46.1 million consisted of covered loans classified as likely to exit and resulted from the continued successful execution of resolution strategies.  As required under the loss sharing agreements, First Financial must file monthly certifications with the FDIC on single-family residential loans and quarterly certifications on all other loans.  The payment of claims is subject to the FDIC's review for compliance with the loss sharing agreements and to date, all certifications have been filed in a timely manner and without significant issues.  The Company's loss sharing agreements with the FDIC related to non-single-family loans expire during the third quarter 2014 and the agreements related to single-family loans expire in the third quarter 2019.

Covered OREO decreased $0.6 million, or 2.3%, during the fourth quarter to $27.1 million as of December 31, 2013 as additions of $3.2 million were offset by resolutions and valuation adjustments of $3.8 million.  Additionally, the Company recognized a net loss on sales of covered OREO of $0.9 million during the quarter.  The net loss was offset by a corresponding increase in FDIC loss sharing income of approximately 80% of the net loss recognized.

ALLOWANCE FOR LOAN AND LEASE LOSSES - COVERED

Under the applicable accounting guidance, the allowance for loan losses related to covered loans is a result of impairment identified in ongoing valuation procedures and is generally recognized in the current period as provision expense.  However, if improvement is noted in a loan pool that had previously experienced impairment, the amount of improvement is recognized as a reduction to the applicable period's provision expense.  Additional improvement beyond previously recorded impairment is reflected as a yield adjustment on a prospective basis.  The timing inherent in this accounting treatment may result in earnings volatility in future periods.

The following table presents activity in the allowance for loan losses related to covered loans for the three months ended December 31, 2013 and for the trailing three quarters.



























Table IX

























As of or for the Three Months Ended






December 31,


September 30,


June 30,


March 31,





(Dollars in thousands)

2013


2013


2013


2013

















Balance at beginning of period

$      23,259


$      32,961


$      45,496


$      45,190

















Provision for loan and lease losses - covered

(5,857)


5,293


(8,283)


9,042

















Total gross charge-offs

(3,850)


(21,009)


(4,681)


(9,684)

















Total recoveries

5,349


6,014


429


948

















Total net (charge-offs) / recoveries

1,499


(14,995)


(4,252)


(8,736)

















Ending allowance for loan and lease losses - covered

$      18,901


$      23,259


$      32,961


$      45,496



























As a percentage of total covered loans, the allowance for loan losses totaled 4.13% as of December 31, 2013 compared to 4.49% as of September 30, 2013.

The Company realized net recoveries on covered loans during the fourth quarter of $1.5 million compared to net charge-offs of $15.0 million for the third quarter.  The net recoveries realized during the fourth quarter were driven primarily by the continued resolution strategies related to covered loans discussed above.  During the fourth quarter, the Company recognized a negative provision expense of $5.9 million compared to a provision expense of $5.3 million for the linked quarter.  The difference between provision expense and net charge-offs / recoveries primarily relates to the quarterly re-estimation of cash flow expectations required under FASB ASC Topic 310-30.

In addition to the provision expense, the Company incurred loss sharing and covered asset expenses of $1.5 million, consisting primarily of credit expenses, and net losses related to covered OREO of $0.9 million.  The negative FDIC loss sharing income of $3.4 million for the quarter reflects the quarterly re-estimation of expected cash flows and the corresponding offset related to the net losses on sales of covered OREO and loss sharing and covered asset expenses.

As previously disclosed in the press release dated January 22, 2014, the Company recognized a $22.4 million pre-tax non-cash valuation adjustment on its FDIC indemnification asset during the quarter.  The non-cash valuation adjustment resulted primarily from an improvement in future expected cash flows on covered loans, a meaningful decline in loss claims filed with the FDIC, higher reimbursements to the FDIC related to positive asset resolutions in recent periods and the significantly shorter remaining life of the indemnification asset in comparison to the weighted average life of the related covered loans.

©2012 PR Newswire. All Rights Reserved.

Powered by WorldNow