EX-99.1 2 a8k2q17earningsreleaseex991.htm EXHIBIT 99.1 Document

EXHIBIT 99.1
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First Financial Bancorp. Announces Second Quarter Results
Year to Date Earnings per Share Increase of 12% Compared to 2016;
Announces Strategic Merger with MainSource Financial Group


Cincinnati, Ohio - July 25, 2017 - First Financial Bancorp. (Nasdaq: FFBC) (“First Financial” or the “Company”) announced financial results for the second quarter 2017. For the three months ended June 30, 2017, the Company reported net income of $22.7 million, or $0.37 per diluted common share. These results compare to net income of $24.4 million, or $0.39 per diluted common share, for the first quarter of 2017 and $22.6 million, or $0.36 per diluted common share, for the second quarter of 2016. For the six months ended June 30, 2017, First Financial had earnings per diluted common
share of $0.76 compared to $0.68 for the same period in 2016.

Return on average assets for the second quarter of 2017 was 1.06% while return on average tangible common equity was 13.42%. These compare to a return on average assets of 1.18% and return on average tangible common equity of 14.98% in the first quarter of 2017 and a return on average assets of 1.11% and a return on average tangible common equity of 14.49% in the second quarter of 2016.

Additionally, First Financial's board of directors has authorized a quarterly dividend of $0.17 per common share for the next regularly scheduled dividend, payable on October 2, 2017 to shareholders of record as of September 1, 2017.

Second quarter 2017 highlights include:

•
Net income increased $4.8 million, or 11.3%, year to date compared to 2016; $1.7 million, or 6.9%, decline compared to the linked quarter
•
Strong second quarter loan growth of $119.7 million, or 2.1%, compared to the linked quarter; loan balances increased $172.6 million, or 3.0%, compared to second quarter 2016
•
Average deposits increased $128.4 million, or 2.0%, from the linked quarter; $261.7 million, or 4.1%, increase compared to second quarter 2016
•
Net interest margin of 3.50% on a GAAP basis; margin declined 14 basis points to 3.56% on a fully tax equivalent basis due to lower prepayment fees and other factors
•
Solid credit performance with lower classified and nonperforming asset balances, in addition to stable net charge-offs, resulting in $0.5 million of provision expense
•
Stable capital ratios; tier 1 ratio of 10.54%, total ratio of 13.05% and leverage ratio of 8.69%
•
Efficiency ratio of 60.0% compared to 59.2% in the linked quarter and 56.6% in second quarter 2016

Claude Davis, Chief Executive Officer, commented, “Consistent earnings and strong loan demand marked the second quarter of 2017, which was our 107th consecutive quarter of profitability. We believe that the growing loan demand and solid credit quality metrics evident during the quarter position us for a strong second half to the year. Lower income from loan prepayment fees, which can be volatile, coupled with higher nonaccrual loan balances and changes in our earning asset and funding mix resulted in a net

1

interest margin that fell short of our expectations. We are taking proactive steps to reduce expenses and contain funding costs should margin remain under pressure in the back half of the year."

"In addition to announcing our quarterly results, we are extremely excited to announce the merger agreement with MainSource Financial Group, Inc, which we believe to be a perfect strategic complement to our existing business. We are confident that the increases in scale, geographic reach and talent will enhance First Financial’s ability to deliver a superior banking and client service experience. While our integration planning activities will be intense in the months ahead, we will not be distracted from meeting the needs of our commercial and consumer clients and continuing to deliver long-term value for our shareholders through our premier business bank strategy.”

This release announcing our second quarter 2017 financial results includes an accompanying slide presentation, which management intends to refer to during the conference call on Wednesday, July 26, 2017. 


Teleconference / Webcast Information
First Financial’s executive management will host a conference call to discuss the Company’s financial and operating results on Wednesday, July 26, 2017 at 8:30 a.m. Eastern Standard 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 10104461. 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 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.

About First Financial Bancorp.
First Financial Bancorp. is a Cincinnati, Ohio based bank holding company. As of June 30, 2017, the Company had $8.7 billion in assets, $5.9 billion in loans, $6.5 billion in deposits and $898.1 million in shareholders’ equity. The Company’s subsidiary, First Financial Bank, founded in 1863, provides banking and financial services products through its four lines of business: Commercial and Private Banking, Retail Banking, Investment Commercial Real Estate and Commercial Finance. These business units provide traditional banking services to business and retail clients. Commercial and Private Banking includes First Financial Wealth Management, which provides wealth planning, portfolio management, trust and estate, brokerage and retirement plan services and had approximately $2.6 billion in assets under management as of June 30, 2017. The Company’s primary operating markets are located in Ohio, Indiana and Kentucky where it operates 102 banking centers, 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.


2

Forward-Looking Statement
This earnings release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are not based on historical or current facts, but rather on our current beliefs, expectations, assumptions and projections about our business, the economy and other future conditions. Forward-looking statements often include words such as ‘‘believes,’’ ‘‘anticipates,’’ “likely,” “expected,” ‘‘intends,’’ “could,” “should,” and other similar references to future periods. 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. Important factors that could cause actual results to differ materially from those in our forward-looking statements include the following, without limitation: (i) economic, market, liquidity, credit, interest rate, operational and technological risks associated with the Company’s business; (ii) 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; (iii) management’s ability to effectively execute its business plans; (iv) mergers and acquisitions, including costs or difficulties related to the integration of acquired companies; (v) the Company’s ability to comply with the terms of loss sharing agreements with the FDIC; (vi) the effect of changes in accounting policies and practices; (vii) changes in consumer spending, borrowing and saving and changes in unemployment; (viii) changes in customers’ performance and creditworthiness; and (ix) the costs and effects of litigation and of unexpected or adverse outcomes in such litigation. Additional factors that may cause our actual results to differ materially from those described in our forward-looking statements can be found in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, as well as its other filings with the SEC, which are available on the SEC website at www.sec.gov.
Forward-looking statements are meaningful only on the date when such statements are made. We undertake no obligation to update any forward-looking statement to reflect events or circumstances that may arise after the date on which a forward-looking statement is made.


Contact Information
Investors/Analysts                    Media
John Gavigan                        Lynda Crossan
Chief Financial Officer                    Marketing Director
(513) 887-5400                        (513) 979-5817
InvestorRelations@bankatfirst.com            Lynda.Crossan@bankatfirst.com    

3


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Selected Financial Information
June 30, 2017
(unaudited)


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




FIRST FINANCIAL BANCORP.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Dollars in thousands, except per share data)
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended,
 
Six months ended,
 
Jun. 30,
 
Mar. 31,
 
Dec. 31,
 
Sep. 30,
 
Jun. 30,
 
Jun. 30,
 
2017
 
2017
 
2016
 
2016
 
2016
 
2017
 
2016
RESULTS OF OPERATIONS
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
$
22,736

 
$
24,414

 
$
23,294

 
$
22,850

 
$
22,568

 
$
47,150

 
$
42,382

Net earnings per share - basic
$
0.37

 
$
0.40

 
$
0.38

 
$
0.37

 
$
0.37

 
$
0.77

 
$
0.69

Net earnings per share - diluted
$
0.37

 
$
0.39

 
$
0.38

 
$
0.37

 
$
0.36

 
$
0.76

 
$
0.68

Dividends declared per share
$
0.17

 
$
0.17

 
$
0.16

 
$
0.16

 
$
0.16

 
$
0.34

 
$
0.32

 
 
 
 
 
 
 
 
 
 
 
 
 
 
KEY FINANCIAL RATIOS
 
 
 
 
 
 
 
 
 
 
 
 
 
Return on average assets
1.06
%
 
1.18
%
 
1.11
%
 
1.09
%
 
1.11
%
 
1.12
%
 
1.04
%
Return on average shareholders' equity
10.25
%
 
11.36
%
 
10.73
%
 
10.62
%
 
10.84
%
 
10.80
%
 
10.27
%
Return on average tangible shareholders' equity
13.42
%
 
14.98
%
 
14.19
%
 
14.08
%
 
14.49
%
 
14.18
%
 
13.78
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest margin
3.50
%
 
3.63
%
 
3.66
%
 
3.61
%
 
3.61
%
 
3.56
%
 
3.62
%
Net interest margin (fully tax equivalent) (1)
3.56
%
 
3.70
%
 
3.71
%
 
3.66
%
 
3.67
%
 
3.63
%
 
3.67
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending shareholders' equity as a percent of ending assets
10.31
%
 
10.32
%
 
10.25
%
 
10.29
%
 
10.19
%
 
10.31
%
 
10.19
%
Ending tangible shareholders' equity as a percent of:
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending tangible assets
8.09
%
 
8.05
%
 
7.96
%
 
7.97
%
 
7.85
%
 
8.09
%
 
7.85
%
Risk-weighted assets
9.92
%
 
9.90
%
 
9.73
%
 
9.63
%
 
9.51
%
 
9.92
%
 
9.51
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average shareholders' equity as a percent of average assets
10.36
%
 
10.36
%
 
10.33
%
 
10.29
%
 
10.21
%
 
10.36
%
 
10.16
%
Average tangible shareholders' equity as a percent of
 
 
 
 
 
 
 
 
 
 
 
 
 
    average tangible assets
8.12
%
 
8.06
%
 
8.01
%
 
7.96
%
 
7.83
%
 
8.09
%
 
7.78
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Book value per share
$
14.45

 
$
14.16

 
$
13.96

 
$
13.90

 
$
13.67

 
$
14.45

 
$
13.67

Tangible book value per share
$
11.07

 
$
10.78

 
$
10.56

 
$
10.50

 
$
10.26

 
$
11.07

 
$
10.26

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common equity tier 1 ratio (2)
10.54
%
 
10.59
%
 
10.46
%
 
10.20
%
 
10.07
%
 
10.54
%
 
10.07
%
Tier 1 ratio (2)
10.54
%
 
10.59
%
 
10.46
%
 
10.20
%
 
10.07
%
 
10.54
%
 
10.07
%
Total capital ratio (2)
13.05
%
 
13.19
%
 
13.10
%
 
12.82
%
 
12.70
%
 
13.05
%
 
12.70
%
Leverage ratio (2)
8.69
%
 
8.69
%
 
8.60
%
 
8.45
%
 
8.38
%
 
8.69
%
 
8.38
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
AVERAGE BALANCE SHEET ITEMS
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans (3)
$
5,789,610

 
$
5,736,513

 
$
5,780,865

 
$
5,743,773

 
$
5,569,080

 
$
5,763,208

 
$
5,493,446

FDIC indemnification asset
10,327

 
11,520

 
12,782

 
14,031

 
15,404

 
10,920

 
16,271

Investment securities
2,035,334

 
1,906,699

 
1,816,944

 
1,811,240

 
1,869,540

 
1,971,372

 
1,904,156

Interest-bearing deposits with other banks
20,293

 
40,985

 
19,557

 
22,116

 
21,687

 
30,582

 
22,989

  Total earning assets
$
7,855,564

 
$
7,695,717

 
$
7,630,148

 
$
7,591,160

 
$
7,475,711

 
$
7,776,082

 
$
7,436,862

Total assets
$
8,582,961

 
$
8,409,071

 
$
8,359,912

 
$
8,322,156

 
$
8,203,837

 
$
8,496,496

 
$
8,161,391

Noninterest-bearing deposits
$
1,513,995

 
$
1,499,097

 
$
1,544,598

 
$
1,453,842

 
$
1,441,068

 
$
1,506,587

 
$
1,413,918

Interest-bearing deposits
5,056,223

 
4,942,766

 
5,012,613

 
4,746,887

 
4,867,439

 
4,999,808

 
4,808,346

  Total deposits
$
6,570,218

 
$
6,441,863

 
$
6,557,211

 
$
6,200,729

 
$
6,308,507

 
$
6,506,395

 
$
6,222,264

Borrowings
$
995,132

 
$
968,326

 
$
815,928

 
$
1,153,042

 
$
965,951

 
$
981,803

 
$
1,015,845

Shareholders' equity
$
889,604

 
$
871,215

 
$
863,509

 
$
856,296

 
$
837,412

 
$
880,460

 
$
829,500

 
 
 
 
 
 
 
 
 
 
 
 
 
 
CREDIT QUALITY RATIOS
 
 
 
 
 
 
 
 
 
 
 
 
Allowance to ending loans
0.93
%
 
0.98
%
 
1.01
%
 
1.00
%
 
0.99
%
 
0.93
%
 
0.99
%
Allowance to nonaccrual loans
150.05
%
 
169.85
%
 
326.91
%
 
314.84
%
 
254.56
%
 
150.05
%
 
254.56
%
Allowance to nonperforming loans
96.77
%
 
89.25
%
 
120.83
%
 
114.17
%
 
112.74
%
 
96.77
%
 
112.74
%
Nonperforming loans to total loans
0.97
%
 
1.10
%
 
0.83
%
 
0.87
%
 
0.88
%
 
0.97
%
 
0.88
%
Nonperforming assets to ending loans, plus OREO
1.07
%
 
1.19
%
 
0.94
%
 
1.00
%
 
1.04
%
 
1.07
%
 
1.04
%
Nonperforming assets to total assets
0.72
%
 
0.80
%
 
0.64
%
 
0.69
%
 
0.72
%
 
0.72
%
 
0.72
%
Classified assets to total assets
1.13
%
 
1.34
%
 
1.48
%
 
1.70
%
 
1.72
%
 
1.13
%
 
1.72
%
Net charge-offs to average loans (annualized)
0.13
%
 
0.14
%
 
0.17
%
 
0.05
%
 
0.08
%
 
0.14
%
 
0.09
%

(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) June 30, 2017 regulatory capital ratios are preliminary.
(3) Includes loans held for sale.


2


FIRST FINANCIAL BANCORP.
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
(Unaudited)
 
 
 
 
 
Three months ended,
 
Six months ended,
 
Jun. 30,
 
Jun. 30,
 
2017
 
2016
 
% Change
 
2017
 
2016
 
% Change
Interest income
 
 
 
 
 
 
 
 
 
 
 
  Loans, including fees
$
67,748

 
$
64,424

 
5.2
 %
 
$
134,616

 
$
127,823

 
5.3
 %
  Investment securities

 
 
 
 
 
 
 
 
 
 
     Taxable
12,598

 
10,706

 
17.7
 %
 
24,206

 
22,079

 
9.6
 %
     Tax-exempt
1,457

 
1,156

 
26.0
 %
 
2,810

 
2,318

 
21.2
 %
        Total investment securities interest
14,055

 
11,862

 
18.5
 %
 
27,016

 
24,397

 
10.7
 %
  Other earning assets
(1,014
)
 
(1,103
)
 
8.1
 %
 
(2,015
)
 
(2,242
)
 
(10.1
)%
       Total interest income
80,789

 
75,183

 
7.5
 %
 
159,617

 
149,978

 
6.4
 %
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense
 
 
 
 
 
 
 
 
 
 
 
  Deposits
8,679

 
5,457

 
59.0
 %
 
15,604

 
10,987

 
42.0
 %
  Short-term borrowings
2,051

 
1,053

 
94.8
 %
 
3,483

 
2,223

 
56.7
 %
  Long-term borrowings
1,539

 
1,541

 
(0.1
)%
 
3,078

 
3,081

 
(0.1
)%
      Total interest expense
12,269

 
8,051

 
52.4
 %
 
22,165

 
16,291

 
36.1
 %
      Net interest income
68,520

 
67,132

 
2.1
 %
 
137,452

 
133,687

 
2.8
 %
  Provision for loan and lease losses
467

 
4,037

 
(88.4
)%
 
834

 
5,692

 
(85.3
)%
      Net interest income after provision for loan and lease losses
68,053

 
63,095

 
7.9
 %
 
136,618

 
127,995

 
6.7
 %
 
 
 
 
 
 
 
 
 
 
 
 
Noninterest income
 
 
 
 
 
 
 
 
 
 
 
  Service charges on deposit accounts
4,772

 
4,455

 
7.1
 %
 
9,416

 
8,836

 
6.6
 %
  Trust and wealth management fees
3,405

 
3,283

 
3.7
 %
 
7,152

 
6,723

 
6.4
 %
  Bankcard income
3,501

 
3,130

 
11.9
 %
 
6,636

 
6,012

 
10.4
 %
  Client derivative fees
1,489

 
1,799

 
(17.2
)%
 
2,592

 
2,894

 
(10.4
)%
  Net gains from sales of loans
1,327

 
1,846

 
(28.1
)%
 
2,543

 
3,027

 
(16.0
)%
  Net gains on sale of investment securities
838

 
(188
)
 
N/M

 
1,354

 
(164
)
 
N/M

  Other
2,122

 
5,869

 
(63.8
)%
 
5,125

 
8,378

 
(38.8
)%
      Total noninterest income
17,454

 
20,194

 
(13.6
)%
 
34,818

 
35,706

 
(2.5
)%
 
 
 
 
 
 
 
 
 
 
 
 
Noninterest expenses
 
 
 
 
 
 
 
 
 
 
 
  Salaries and employee benefits
31,544

 
29,526

 
6.8
 %
 
63,294

 
59,141

 
7.0
 %
  Net occupancy
4,302

 
4,491

 
(4.2
)%
 
8,817

 
9,448

 
(6.7
)%
  Furniture and equipment
2,136

 
2,130

 
0.3
 %
 
4,313

 
4,343

 
(0.7
)%
  Data processing
3,501

 
2,765

 
26.6
 %
 
6,799

 
5,483

 
24.0
 %
  Marketing
982

 
801

 
22.6
 %
 
1,492

 
1,866

 
(20.0
)%
  Communication
468

 
477

 
(1.9
)%
 
915

 
958

 
(4.5
)%
  Professional services
1,469

 
1,299

 
13.1
 %
 
3,227

 
3,112

 
3.7
 %
  State intangible tax
721

 
639

 
12.8
 %
 
1,442

 
1,278

 
12.8
 %
  FDIC assessments
1,018

 
1,112

 
(8.5
)%
 
1,950

 
2,244

 
(13.1
)%
  Loss (gain) - other real estate owned
162

 
43

 
N/M

 
186

 
(147
)
 
N/M

  Other
5,253

 
6,130

 
(14.3
)%
 
10,166

 
12,407

 
(18.1
)%
      Total noninterest expenses
51,556

 
49,413

 
4.3
 %
 
102,601

 
100,133

 
2.5
 %
Income before income taxes
33,951

 
33,876

 
0.2
 %
 
68,835

 
63,568

 
8.3
 %
Income tax expense
11,215

 
11,308

 
(0.8
)%
 
21,685

 
21,186

 
2.4
 %
      Net income
$
22,736

 
$
22,568

 
0.7
 %
 
$
47,150

 
$
42,382

 
11.3
 %
 
 
 
 
 
 
 
 
 
 
 
 
ADDITIONAL DATA
 
 
 
 
 
 
 
 
 
 
 
Net earnings per share - basic
$
0.37

 
$
0.37

 
 
 
$
0.77

 
$
0.69

 
 
Net earnings per share - diluted
$
0.37

 
$
0.36

 
 
 
$
0.76

 
$
0.68

 
 
Dividends declared per share
$
0.17

 
$
0.16

 
 
 
$
0.34

 
$
0.32

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Return on average assets
1.06
%
 
1.11
%
 
 
 
1.12
%
 
1.04
%
 
 
Return on average shareholders' equity
10.25
%
 
10.84
%
 
 
 
10.80
%
 
10.27
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest income
$
80,789

 
$
75,183

 
7.5
 %
 
$
159,617

 
$
149,978

 
6.4
 %
Tax equivalent adjustment
1,294

 
1,058

 
22.3
 %
 
2,519

 
2,110

 
19.4
 %
   Interest income - tax equivalent
82,083

 
76,241

 
7.7
 %
 
162,136

 
152,088

 
6.6
 %
Interest expense
12,269

 
8,051

 
52.4
 %
 
22,165

 
16,291

 
36.1
 %
   Net interest income - tax equivalent
$
69,814

 
$
68,190

 
2.4
 %
 
$
139,971

 
$
135,797

 
3.1
 %
 
 
 
 
 
 
 
 
 
 
 
 
Net interest margin
3.50
%
 
3.61
%
 
 
 
3.56
%
 
3.62
%
 
 
Net interest margin (fully tax equivalent) (1)
3.56
%
 
3.67
%
 
 
 
3.63
%
 
3.67
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Full-time equivalent employees
1,429

 
1,403

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(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 provide useful information to investors by allowing them to make peer comparisons. Management also uses these measures to make peer comparisons.
N/M = Not meaningful.
 
 
 
 
 
 
 
 
 
 
 

3

FIRST FINANCIAL BANCORP.
CONSOLIDATED QUARTERLY STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
(Unaudited)
 
 
 
 
 
 
 
 
 
 
2017
 
 
Second
 
First
 
Full
 
% Change
 
 
Quarter
 
Quarter
 
Year
 
Linked Qtr.
Interest income
 
 
 
 
 
 
 
 
  Loans, including fees
 
$
67,748

 
$
66,868

 
$
134,616

 
1.3
 %
  Investment securities
 

 
 
 
 
 
 
     Taxable
 
12,598

 
11,608

 
24,206

 
8.5
 %
     Tax-exempt
 
1,457

 
1,353

 
2,810

 
7.7
 %
        Total investment securities interest
 
14,055

 
12,961

 
27,016

 
8.4
 %
  Other earning assets
 
(1,014
)
 
(1,001
)
 
(2,015
)
 
(1.3
)%
       Total interest income
 
80,789

 
78,828

 
159,617

 
2.5
 %
 
 
 
 
 
 
 
 
 
Interest expense
 
 
 
 
 
 
 
 
  Deposits
 
8,679

 
6,925

 
15,604

 
25.3
 %
  Short-term borrowings
 
2,051

 
1,432

 
3,483

 
43.2
 %
  Long-term borrowings
 
1,539

 
1,539

 
3,078

 
0.0
 %
      Total interest expense
 
12,269

 
9,896

 
22,165

 
24.0
 %
      Net interest income
 
68,520

 
68,932

 
137,452

 
(0.6
)%
  Provision for loan and lease losses
 
467

 
367

 
834

 
27.2
 %
      Net interest income after provision for loan and lease losses
 
68,053

 
68,565

 
136,618

 
(0.7
)%
 
 
 
 
 
 
 
 
 
Noninterest income
 
 
 
 
 
 
 
 
  Service charges on deposit accounts
 
4,772

 
4,644

 
9,416

 
2.8
 %
  Trust and wealth management fees
 
3,405

 
3,747

 
7,152

 
(9.1
)%
  Bankcard income
 
3,501

 
3,135

 
6,636

 
11.7
 %
  Client derivative fees
 
1,489

 
1,103

 
2,592

 
35.0
 %
  Net gains from sales of loans
 
1,327

 
1,216

 
2,543

 
9.1
 %
  Net gains on sale of investment securities
 
838

 
516

 
1,354

 
62.4
 %
  Other
 
2,122

 
3,003

 
5,125

 
(29.3
)%
      Total noninterest income
 
17,454

 
17,364

 
34,818

 
0.5
 %
 
 
 
 
 
 
 
 
 
Noninterest expenses
 
 
 
 
 
 
 
 
  Salaries and employee benefits
 
31,544

 
31,750

 
63,294

 
(0.6
)%
  Net occupancy
 
4,302

 
4,515

 
8,817

 
(4.7
)%
  Furniture and equipment
 
2,136

 
2,177

 
4,313

 
(1.9
)%
  Data processing
 
3,501

 
3,298

 
6,799

 
6.2
 %
  Marketing
 
982

 
510

 
1,492

 
92.5
 %
  Communication
 
468

 
447

 
915

 
4.7
 %
  Professional services
 
1,469

 
1,758

 
3,227

 
(16.4
)%
  State intangible tax
 
721

 
721

 
1,442

 
0.0
 %
  FDIC assessments
 
1,018

 
932

 
1,950

 
9.2
 %
  Loss (gain) - other real estate owned
 
162

 
24

 
186

 
N/M

  Other
 
5,253

 
4,913

 
10,166

 
6.9
 %
      Total noninterest expenses
 
51,556

 
51,045

 
102,601

 
1.0
 %
Income before income taxes
 
33,951

 
34,884

 
68,835

 
(2.7
)%
Income tax expense
 
11,215

 
10,470

 
21,685

 
7.1
 %
      Net income
 
$
22,736

 
$
24,414

 
$
47,150

 
(6.9
)%
 
 
 
 
 
 
 
 
 
ADDITIONAL DATA
 
 
 
 
 
 
 
 
Net earnings per share - basic
 
$
0.37

 
$
0.40

 
$
0.77

 
 
Net earnings per share - diluted
 
$
0.37

 
$
0.39

 
$
0.76

 
 
Dividends declared per share
 
$
0.17

 
$
0.17

 
$
0.34

 
 
 
 
 
 
 
 
 
 
 
Return on average assets
 
1.06
%
 
1.18
%
 
1.12
%
 
 
Return on average shareholders' equity
 
10.25
%
 
11.36
%
 
10.80
%
 
 
 
 
 
 
 
 
 
 
 
Interest income
 
$
80,789

 
$
78,828

 
$
159,617

 
2.5
 %
Tax equivalent adjustment
 
1,294

 
1,225

 
2,519

 
5.6
 %
   Interest income - tax equivalent
 
82,083

 
80,053

 
162,136

 
2.5
 %
Interest expense
 
12,269

 
9,896

 
22,165

 
24.0
 %
   Net interest income - tax equivalent
 
$
69,814

 
$
70,157

 
$
139,971

 
(0.5
)%
 
 
 
 
 
 
 
 
 
Net interest margin
 
3.50
%
 
3.63
%
 
3.56
%
 
 
Net interest margin (fully tax equivalent) (1)
 
3.56
%
 
3.70
%
 
3.63
%
 
 
 
 
 
 
 
 
 
 
 
Full-time equivalent employees
 
1,429

 
1,424

 
 
 
 
 
 
 
 
 
 
 
 
 
(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 provide useful information to investors by allowing them to make peer comparisons. Management also uses these measures to make peer comparisons.
N/M = Not meaningful.
 
 
 
 
 
 
 
 

4

FIRST FINANCIAL BANCORP.
CONSOLIDATED QUARTERLY STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
2016
 
 
Fourth
 
Third
 
Second
 
First
 
Full
 
 
Quarter
 
Quarter
 
Quarter
 
Quarter
 
Year
Interest income
 
 
 
 
 
 
 
 
 
 
  Loans, including fees
 
$
67,883

 
$
66,997

 
$
64,424

 
$
63,399

 
$
262,703

  Investment securities
 
 
 
 
 
 
 
 
 
 
     Taxable
 
10,698

 
10,326

 
10,706

 
11,373

 
43,103

     Tax-exempt
 
1,134

 
1,083

 
1,156

 
1,162

 
4,535

        Total investment securities interest
 
11,832

 
11,409

 
11,862

 
12,535

 
47,638

  Other earning assets
 
(1,068
)
 
(1,081
)
 
(1,103
)
 
(1,139
)
 
(4,391
)
       Total interest income
 
78,647

 
77,325

 
75,183

 
74,795

 
305,950

 
 
 
 
 
 
 
 
 
 
 
Interest expense
 
 
 
 
 
 
 
 
 
 
  Deposits
 
6,026

 
5,600

 
5,457

 
5,530

 
22,613

  Short-term borrowings
 
915

 
1,368

 
1,053

 
1,170

 
4,506

  Long-term borrowings
 
1,540

 
1,539

 
1,541

 
1,540

 
6,160

      Total interest expense
 
8,481

 
8,507

 
8,051

 
8,240

 
33,279

      Net interest income
 
70,166

 
68,818

 
67,132

 
66,555

 
272,671

  Provision for loan and lease losses
 
2,761

 
1,687

 
4,037

 
1,655

 
10,140

      Net interest income after provision for loan and lease losses
 
67,405

 
67,131

 
63,095

 
64,900

 
262,531

 
 
 
 
 
 
 
 
 
 


Noninterest income
 
 
 
 
 
 
 
 
 
 
  Service charges on deposit accounts
 
5,041

 
5,056

 
4,455

 
4,381

 
18,933

  Trust and wealth management fees
 
3,241

 
3,236

 
3,283

 
3,440

 
13,200

  Bankcard income
 
3,136

 
2,984

 
3,130

 
2,882

 
12,132

  Client derivative fees
 
466

 
1,210

 
1,799

 
1,095

 
4,570

  Net gains from sales of loans
 
1,711

 
2,066

 
1,846

 
1,181

 
6,804

  Net gains on sale of investment securities
 
0

 
398

 
(188
)
 
24

 
234

  Other
 
3,351

 
1,999

 
5,869

 
2,509

 
13,728

      Total noninterest income
 
16,946

 
16,949

 
20,194

 
15,512

 
69,601

 
 
 
 
 
 
 
 
 
 
 
Noninterest expenses
 
 
 
 
 
 
 
 
 
 
  Salaries and employee benefits
 
31,127

 
32,093

 
29,526

 
29,615

 
122,361

  Net occupancy
 
4,338

 
4,543

 
4,491

 
4,957

 
18,329

  Furniture and equipment
 
2,181

 
2,139

 
2,130

 
2,213

 
8,663

  Data processing
 
3,095

 
2,828

 
2,765

 
2,718

 
11,406

  Marketing
 
1,458

 
641

 
801

 
1,065

 
3,965

  Communication
 
404

 
527

 
477

 
481

 
1,889

  Professional services
 
1,731

 
1,460

 
1,299

 
1,813

 
6,303

  State intangible tax
 
117

 
639

 
639

 
639

 
2,034

  FDIC assessments
 
1,001

 
1,048

 
1,112

 
1,132

 
4,293

  Loss (gain) - other real estate owned
 
(953
)
 
(112
)
 
43

 
(190
)
 
(1,212
)
  Other
 
5,664

 
5,299

 
6,130

 
6,277

 
23,370

      Total noninterest expenses
 
50,163

 
51,105

 
49,413

 
50,720

 
201,401

Income before income taxes
 
34,188

 
32,975

 
33,876

 
29,692

 
130,731

Income tax expense
 
10,894

 
10,125

 
11,308

 
9,878

 
42,205

      Net income
 
$
23,294

 
$
22,850

 
$
22,568

 
$
19,814

 
$
88,526

 
 
 
 
 
 
 
 
 
 


ADDITIONAL DATA
 
 
 
 
 
 
 
 
 
 
Net earnings per share - basic
 
$
0.38

 
$
0.37

 
$
0.37

 
$
0.32

 
$
1.45

Net earnings per share - diluted
 
$
0.38

 
$
0.37

 
$
0.36

 
$
0.32

 
$
1.43

Dividends declared per share
 
$
0.16

 
$
0.16

 
$
0.16

 
$
0.16

 
$
0.64

 
 
 
 
 
 
 
 
 
 
 
Return on average assets
 
1.11
%
 
1.09
%
 
1.11
%
 
0.98
%
 
1.07
%
Return on average shareholders' equity
 
10.73
%
 
10.62
%
 
10.84
%
 
9.70
%
 
10.48
%
 
 
 
 
 
 
 
 
 
 
 
Interest income
 
$
78,647

 
$
77,325

 
$
75,183

 
$
74,795

 
$
305,950

Tax equivalent adjustment
 
1,077

 
1,028

 
1,058

 
1,052

 
4,215

   Interest income - tax equivalent
 
79,724

 
78,353

 
76,241

 
75,847

 
310,165

Interest expense
 
8,481

 
8,507

 
8,051

 
8,240

 
33,279

   Net interest income - tax equivalent
 
$
71,243

 
$
69,846

 
$
68,190

 
$
67,607

 
$
276,886

 
 
 
 
 
 
 
 
 
 
 
Net interest margin
 
3.66
%
 
3.61
%
 
3.61
%
 
3.62
%
 
3.62
%
Net interest margin (fully tax equivalent) (1)
 
3.71
%
 
3.66
%
 
3.67
%
 
3.68
%
 
3.68
%
 
 
 
 
 
 
 
 
 
 
 
Full-time equivalent employees
 
1,420

 
1,402

 
1,403

 
1,390

 
 
 
 
 
 
 
 
 
 
 
 
 
(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 provide useful information to investors by allowing them to make peer comparisons. Management also uses these measures to make peer comparisons.

5


FIRST FINANCIAL BANCORP.
CONSOLIDATED STATEMENTS OF CONDITION
(Dollars in thousands)
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Jun. 30,
 
Mar. 31,
 
Dec. 31,
 
Sep. 30,
 
Jun. 30,
 
% Change
 
% Change
 
2017
 
2017
 
2016
 
2016
 
2016
 
Linked Qtr.
 
Comparable Qtr.
ASSETS
 
 
 
 
 
 
 
 
 
 
 
 
 
     Cash and due from banks
$
117,478

 
$
117,914

 
$
121,598

 
$
117,982

 
$
106,174

 
(0.4
)%
 
10.6
 %
     Interest-bearing deposits with other banks
29,839

 
39,058

 
82,450

 
16,765

 
18,911

 
(23.6
)%
 
57.8
 %
     Investment securities available-for-sale
1,298,578

 
1,220,046

 
1,039,870

 
1,120,494

 
1,114,349

 
6.4
 %
 
16.5
 %
     Investment securities held-to-maturity
696,269

 
730,796

 
763,254

 
628,497

 
670,111

 
(4.7
)%
 
3.9
 %
     Other investments
53,285

 
50,996

 
51,077

 
51,170

 
51,261

 
4.5
 %
 
3.9
 %
     Loans held for sale
11,939

 
7,657

 
13,135

 
17,414

 
10,494

 
55.9
 %
 
13.8
 %
     Loans and leases
 
 
 
 
 
 
 
 
 
 
 
 
 
       Commercial and industrial
1,824,589

 
1,779,635

 
1,781,948

 
1,782,782

 
1,794,533

 
2.5
 %
 
1.7
 %
       Lease financing
88,152

 
88,888

 
93,108

 
96,046

 
100,263

 
(0.8
)%
 
(12.1
)%
       Construction real estate
443,112

 
446,332

 
399,434

 
380,349

 
374,949

 
(0.7
)%
 
18.2
 %
       Commercial real estate
2,471,655

 
2,398,235

 
2,427,577

 
2,468,083

 
2,363,456

 
3.1
 %
 
4.6
 %
       Residential real estate
490,398

 
486,601

 
500,980

 
507,715

 
512,800

 
0.8
 %
 
(4.4
)%
       Home equity
464,066

 
458,974

 
460,388

 
463,702

 
467,549

 
1.1
 %
 
(0.7
)%
       Installment
47,654

 
52,063

 
50,639

 
47,825

 
46,917

 
(8.5
)%
 
1.6
 %
       Credit card
44,139

 
43,354

 
43,408

 
43,009

 
40,746

 
1.8
 %
 
8.3
 %
          Total loans
5,873,765

 
5,754,082

 
5,757,482

 
5,789,511

 
5,701,213

 
2.1
 %
 
3.0
 %
       Less:
 
 
 
 
 
 
 
 
 
 
 
 
 
          Allowance for loan and lease losses
54,873

 
56,326

 
57,961

 
57,618

 
56,708

 
(2.6
)%
 
(3.2
)%
                Net loans
5,818,892

 
5,697,756

 
5,699,521

 
5,731,893

 
5,644,505

 
2.1
 %
 
3.1
 %
     Premises and equipment
128,956

 
131,808

 
131,579

 
132,082

 
133,969

 
(2.2
)%
 
(3.7
)%
     Goodwill and other intangibles
210,045

 
210,324

 
210,625

 
210,888

 
211,199

 
(0.1
)%
 
(0.5
)%
     Accrued interest and other assets
344,761

 
324,815

 
324,858

 
341,296

 
349,129

 
6.1
 %
 
(1.3
)%
       Total Assets
$
8,710,042

 
$
8,531,170

 
$
8,437,967

 
$
8,368,481

 
$
8,310,102

 
2.1
 %
 
4.8
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
LIABILITIES
 
 
 
 
 
 
 
 
 
 
 
 
 
     Deposits
 
 
 
 
 
 
 
 
 
 
 
 
 
       Interest-bearing demand
$
1,496,173

 
$
1,494,892

 
$
1,513,771

 
$
1,494,529

 
$
1,436,078

 
0.1
 %
 
4.2
 %
       Savings
2,398,262

 
2,284,821

 
2,142,189

 
2,005,407

 
1,974,449

 
5.0
 %
 
21.5
 %
       Time
1,097,911

 
1,202,563

 
1,321,843

 
1,346,736

 
1,279,934

 
(8.7
)%
 
(14.2
)%
          Total interest-bearing deposits
4,992,346

 
4,982,276

 
4,977,803

 
4,846,672

 
4,690,461

 
0.2
 %
 
6.4
 %
       Noninterest-bearing
1,476,563

 
1,547,600

 
1,547,985

 
1,492,011

 
1,429,163

 
(4.6
)%
 
3.3
 %
          Total deposits
6,468,909

 
6,529,876

 
6,525,788

 
6,338,683

 
6,119,624

 
(0.9
)%
 
5.7
 %
     Federal funds purchased and securities sold
 
 
 
 
 
 
 
 
 
 
 
 
 
         under agreements to repurchase
130,633

 
52,484

 
120,212

 
77,936

 
80,084

 
148.9
 %
 
63.1
 %
     FHLB short-term borrowings
957,700

 
806,700

 
687,700

 
848,300

 
1,035,000

 
18.7
 %
 
(7.5
)%
          Total short-term borrowings
1,088,333

 
859,184

 
807,912

 
926,236

 
1,115,084

 
26.7
 %
 
(2.4
)%
     Long-term debt
119,669

 
119,629

 
119,589

 
119,549

 
119,596

 
0.0
 %
 
0.1
 %
          Total borrowed funds
1,208,002

 
978,813

 
927,501

 
1,045,785

 
1,234,680

 
23.4
 %
 
(2.2
)%
     Accrued interest and other liabilities
135,014

 
142,416

 
119,454

 
122,876

 
109,075

 
(5.2
)%
 
23.8
 %
       Total Liabilities
7,811,925

 
7,651,105

 
7,572,743

 
7,507,344

 
7,463,379

 
2.1
 %
 
4.7
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SHAREHOLDERS' EQUITY
 
 
 
 
 
 
 
 
 
 
 
 
 
     Common stock
569,302

 
567,911

 
570,382

 
569,199

 
567,687

 
0.2
 %
 
0.3
 %
     Retained earnings
463,250

 
451,073

 
437,188

 
423,800

 
410,893

 
2.7
 %
 
12.7
 %
     Accumulated other comprehensive loss
(22,222
)
 
(26,639
)
 
(28,443
)
 
(17,522
)
 
(17,688
)
 
(16.6
)%
 
25.6
 %
     Treasury stock, at cost
(112,213
)
 
(112,280
)
 
(113,903
)
 
(114,340
)
 
(114,169
)
 
(0.1
)%
 
(1.7
)%
       Total Shareholders' Equity
898,117

 
880,065

 
865,224

 
861,137

 
846,723

 
2.1
 %
 
6.1
 %
       Total Liabilities and Shareholders' Equity
$
8,710,042

 
$
8,531,170

 
$
8,437,967

 
$
8,368,481

 
$
8,310,102

 
2.1
 %
 
4.8
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 


6


FIRST FINANCIAL BANCORP.
AVERAGE CONSOLIDATED STATEMENTS OF CONDITION
(Dollars in thousands)
(Unaudited)
 
 
 
 
 
 
 
Quarterly Averages
 
Year-to-Date Averages
 
Jun. 30,
 
Mar. 31,
 
Dec. 31,
 
Sep. 30,
 
Jun. 30,
 
June 30,
 
2017
 
2017
 
2016
 
2016
 
2016
 
2017
 
2016
ASSETS
 
 
 
 
 
 
 
 
 
 
 
 
 
     Cash and due from banks
$
116,123

 
$
115,719

 
$
122,130

 
$
116,441

 
$
121,426

 
$
115,922

 
$
119,604

     Interest-bearing deposits with other banks
20,293

 
40,985

 
19,557

 
22,116

 
21,687

 
30,582

 
22,989

     Investment securities
2,035,334

 
1,906,699

 
1,816,944

 
1,811,240

 
1,869,540

 
1,971,372

 
1,904,156

     Loans held for sale
9,243

 
8,125

 
14,729

 
11,197

 
11,752

 
8,687

 
12,484

     Loans and leases

 

 
 
 
 
 
 
 
 
 
 
       Commercial and industrial
1,778,523

 
1,782,829

 
1,767,570

 
1,786,461

 
1,752,237

 
1,780,664

 
1,704,758

       Lease financing
86,880

 
89,549

 
93,817

 
96,518

 
100,103

 
88,207

 
97,519

       Construction real estate
447,716

 
414,038

 
376,616

 
380,894

 
348,100

 
430,970

 
335,350

       Commercial real estate
2,418,355

 
2,390,004

 
2,470,280

 
2,400,308

 
2,294,980

 
2,404,258

 
2,282,833

       Residential real estate
490,709

 
497,412

 
503,711

 
512,341

 
510,262

 
494,042

 
509,842

       Home equity
462,431

 
459,821

 
461,177

 
466,062

 
466,170

 
461,133

 
466,446

       Installment
51,275

 
50,722

 
49,071

 
47,428

 
44,438

 
51,000

 
43,068

       Credit card
44,478

 
44,013

 
43,894

 
42,564

 
41,038

 
44,247

 
41,146

          Total loans
5,780,367

 
5,728,388

 
5,766,136

 
5,732,576

 
5,557,328

 
5,754,521

 
5,480,962

       Less:
 
 
 
 
 
 
 
 
 
 
 
 
 
          Allowance for loan and lease losses
57,379

 
58,461

 
58,733

 
58,284

 
55,504

 
57,917

 
55,193

                Net loans
5,722,988

 
5,669,927

 
5,707,403

 
5,674,292

 
5,501,824

 
5,696,604

 
5,425,769

     Premises and equipment
131,654

 
132,384

 
132,414

 
133,360

 
137,927

 
132,017

 
138,152

     Goodwill and other intangibles
210,215

 
210,513

 
210,768

 
211,029

 
211,363

 
210,363

 
211,535

     Accrued interest and other assets
337,111

 
324,719

 
335,967

 
342,481

 
328,318

 
330,949

 
326,702

       Total Assets
$
8,582,961

 
$
8,409,071

 
$
8,359,912

 
$
8,322,156

 
$
8,203,837

 
$
8,496,496

 
$
8,161,391

 
 
 
 
 
 
 
 
 
 
 
 
 
 
LIABILITIES
 
 
 
 
 
 
 
 
 
 
 
 
 
     Deposits
 
 
 
 
 
 
 
 
 
 
 
 
 
       Interest-bearing demand
$
1,483,186

 
$
1,484,427

 
$
1,540,755

 
$
1,447,226

 
$
1,483,025

 
$
1,483,803

 
$
1,437,308

       Savings
2,408,950

 
2,224,708

 
2,093,557

 
2,015,602

 
2,042,188

 
2,317,338

 
1,990,197

       Time
1,164,087

 
1,233,631

 
1,378,301

 
1,284,059

 
1,342,226

 
1,198,667

 
1,380,841

          Total interest-bearing deposits
5,056,223

 
4,942,766

 
5,012,613

 
4,746,887

 
4,867,439

 
4,999,808

 
4,808,346

       Noninterest-bearing
1,513,995

 
1,499,097

 
1,544,598

 
1,453,842

 
1,441,068

 
1,506,587

 
1,413,918

          Total deposits
6,570,218

 
6,441,863

 
6,557,211

 
6,200,729

 
6,308,507

 
6,506,395

 
6,222,264

     Federal funds purchased and securities sold
 
 
 
 
 
 
 
 
 
 
 
 
 
          under agreements to repurchase
62,893

 
88,048

 
93,452

 
87,343

 
86,457

 
75,401

 
87,903

     FHLB short-term borrowings
812,588

 
760,673

 
602,720

 
946,096

 
759,919

 
786,774

 
808,378

          Total short-term borrowings
875,481

 
848,721

 
696,172

 
1,033,439

 
846,376

 
862,175

 
896,281

     Long-term debt
119,651

 
119,605

 
119,756

 
119,603

 
119,575

 
119,628

 
119,564

       Total borrowed funds
995,132

 
968,326

 
815,928

 
1,153,042

 
965,951

 
981,803

 
1,015,845

     Accrued interest and other liabilities
128,007

 
127,667

 
123,264

 
112,089

 
91,967

 
127,838

 
93,782

       Total Liabilities
7,693,357

 
7,537,856

 
7,496,403

 
7,465,860

 
7,366,425

 
7,616,036

 
7,331,891

 
 
 
 
 
 
 
 
 
 
 
 
 
 
SHAREHOLDERS' EQUITY
 
 
 
 
 
 
 
 
 
 
 
 
 
     Common stock
568,654

 
570,058

 
569,779

 
568,203

 
567,682

 
569,352

 
569,120

     Retained earnings
456,648

 
442,104

 
430,402

 
419,901

 
406,788

 
449,416

 
401,272

     Accumulated other comprehensive loss
(23,414
)
 
(27,569
)
 
(22,436
)
 
(17,701
)
 
(21,901
)
 
(25,480
)
 
(24,033
)
     Treasury stock, at cost
(112,284
)
 
(113,378
)
 
(114,236
)
 
(114,107
)
 
(115,157
)
 
(112,828
)
 
(116,859
)
       Total Shareholders' Equity
889,604

 
871,215

 
863,509

 
856,296

 
837,412

 
880,460

 
829,500

       Total Liabilities and Shareholders' Equity
$
8,582,961

 
$
8,409,071

 
$
8,359,912

 
$
8,322,156

 
$
8,203,837

 
$
8,496,496

 
$
8,161,391

 
 
 
 
 
 
 
 
 
 
 
 
 
 


7


FIRST FINANCIAL BANCORP.
NET INTEREST MARGIN RATE/VOLUME ANALYSIS
(Dollars in thousands)
(Unaudited)
 
 
 
 
 
 
 
 Quarterly Averages
 
Year-to-Date Averages
 
 
June 30, 2017
 
March 31, 2017
 
June 30, 2016
 
June 30, 2017
 
June 30, 2016
 
 
Balance
 
Yield
 
Balance
 
Yield
 
Balance
 
Yield
 
Balance
 
Yield
 
Balance
 
Yield
Earning assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
    Investments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Investment securities
 
$
2,035,334

 
2.77
%
 
$
1,906,699

 
2.76
%
 
$
1,869,540

 
2.54
%
 
$
1,971,372

 
2.76
%
 
$
1,904,156

 
2.58
%
      Interest-bearing deposits with other banks
 
20,293

 
1.11
%
 
40,985

 
0.80
%
 
21,687

 
0.50
%
 
30,582

 
0.90
%
 
22,989

 
0.52
%
    Gross loans (1)
 
5,799,937

 
4.61
%
 
5,748,033

 
4.64
%
 
5,584,484

 
4.55
%
 
5,774,128

 
4.63
%
 
5,509,717

 
4.59
%
       Total earning assets
 
7,855,564

 
4.13
%
 
7,695,717

 
4.15
%
 
7,475,711

 
4.03
%
 
7,776,082

 
4.14
%
 
7,436,862

 
4.07
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nonearning assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
    Allowance for loan and lease losses
 
(57,379
)
 
 
 
(58,461
)
 
 
 
(55,504
)
 
 
 
(57,917
)
 
 
 
(55,193
)
 
 
    Cash and due from banks
 
116,123

 
 
 
115,719

 
 
 
121,426

 
 
 
115,922

 
 
 
119,604

 
 
    Accrued interest and other assets
 
668,653

 
 
 
656,096

 
 
 
662,204

 
 
 
662,409

 
 
 
660,118

 
 
       Total assets
 
$
8,582,961

 
 
 
$
8,409,071

 
 
 
$
8,203,837

 
 
 
$
8,496,496

 
 
 
$
8,161,391

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
    Deposits:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Interest-bearing demand
 
$
1,483,186

 
0.27
%
 
$
1,484,427

 
0.20
%
 
$
1,483,025

 
0.13
%
 
$
1,483,803

 
0.23
%
 
$
1,437,308

 
0.14
%
      Savings
 
2,408,950

 
0.69
%
 
2,224,708

 
0.48
%
 
2,042,188

 
0.25
%
 
2,317,338

 
0.59
%
 
1,990,197

 
0.26
%
      Time
 
1,164,087

 
1.23
%
 
1,233,631

 
1.17
%
 
1,342,226

 
1.10
%
 
1,198,667

 
1.20
%
 
1,380,841

 
1.08
%
    Total interest-bearing deposits
 
5,056,223

 
0.69
%
 
4,942,766

 
0.57
%
 
4,867,439

 
0.45
%
 
4,999,808

 
0.63
%
 
4,808,346

 
0.46
%
    Borrowed funds
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Short-term borrowings
 
875,481

 
0.94
%
 
848,721

 
0.68
%
 
846,376

 
0.50
%
 
862,175

 
0.81
%
 
896,281

 
0.50
%
      Long-term debt
 
119,651

 
5.16
%
 
119,605

 
5.22
%
 
119,575

 
5.17
%
 
119,628

 
5.19
%
 
119,564

 
5.20
%
        Total borrowed funds
 
995,132

 
1.45
%
 
968,326

 
1.24
%
 
965,951

 
1.08
%
 
981,803

 
1.35
%
 
1,015,845

 
1.05
%
       Total interest-bearing liabilities
 
6,051,355

 
0.81
%
 
5,911,092

 
0.68
%
 
5,833,390

 
0.55
%
 
5,981,611

 
0.75
%
 
5,824,191

 
0.56
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Noninterest-bearing liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
    Noninterest-bearing demand deposits
 
1,513,995

 
 
 
1,499,097

 
 
 
1,441,068

 
 
 
1,506,587

 
 
 
1,413,918

 
 
    Other liabilities
 
128,007

 
 
 
127,667

 
 
 
91,967

 
 
 
127,838

 
 
 
93,782

 
 
    Shareholders' equity
 
889,604

 
 
 
871,215

 
 
 
837,412

 
 
 
880,460

 
 
 
829,500

 
 
       Total liabilities & shareholders' equity
 
$
8,582,961

 
 
 
$
8,409,071

 
 
 
$
8,203,837

 
 
 
$
8,496,496

 
 
 
$
8,161,391

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income
 
$
68,520

 
 
 
$
68,932

 
 
 
$
67,132

 
 
 
$
137,452

 

 
$
133,687

 

Net interest spread
 
 
 
3.32
%
 
 
 
3.47
%
 
 
 
3.48
%
 
 
 
3.39
%
 
 
 
3.51
%
Net interest margin
 
 
 
3.50
%
 
 
 
3.63
%
 
 
 
3.61
%
 
 
 
3.56
%
 
 
 
3.62
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Tax equivalent adjustment
 
 
 
0.06
%
 
 
 
0.07
%
 
 
 
0.06
%
 
 
 
0.07
%
 
 
 
0.05
%
Net interest margin (fully tax equivalent)
 
 
 
3.56
%
 
 
 
3.70
%
 
 
 
3.67
%
 
 
 
3.63
%
 
 
 
3.67
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Loans held for sale, nonaccrual loans, covered loans, and indemnification asset are included in gross loans.
 
 

8

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
 
$
61

 
$
1,033

 
$
1,094

 
$
1,048

 
$
1,145

 
$
2,193

 
$
1,698

 
$
921

 
$
2,619

    Interest-bearing deposits with other banks
 
31

 
(56
)
 
(25
)
 
33

 
(4
)
 
29

 
44

 
34

 
78

    Gross loans (2)
 
(431
)
 
1,323

 
892

 
907

 
2,477

 
3,384

 
876

 
6,066

 
6,942

       Total earning assets
 
(339
)
 
2,300

 
1,961

 
1,988

 
3,618

 
5,606

 
2,618

 
7,021

 
9,639

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
    Total interest-bearing deposits
 
$
1,466

 
$
288

 
$
1,754

 
$
2,898

 
$
324

 
$
3,222

 
$
4,019

 
$
598

 
$
4,617

    Borrowed funds
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
    Short-term borrowings
 
534

 
85

 
619

 
930

 
68

 
998

 
1,398

 
(138
)
 
1,260

    Long-term debt
 
(17
)
 
17

 
0

 
(3
)
 
1

 
(2
)
 
(5
)
 
2

 
(3
)
       Total borrowed funds
 
517

 
102

 
619

 
927

 
69

 
996

 
1,393

 
(136
)
 
1,257

       Total interest-bearing liabilities
 
1,983

 
390

 
2,373

 
3,825

 
393

 
4,218

 
5,412

 
462

 
5,874

          Net interest income (1)
 
$
(2,322
)
 
$
1,910

 
$
(412
)
 
$
(1,837
)
 
$
3,225

 
$
1,388

 
$
(2,794
)
 
$
6,559

 
$
3,765

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Not tax equivalent.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(2) Loans held for sale, nonaccrual loans, covered loans, and indemnification asset are included in gross loans.
 
 
 
 



9

FIRST FINANCIAL BANCORP.
CREDIT QUALITY
(Dollars in thousands)
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Six months ended,
 
Jun. 30,
 
Mar. 31,
 
Dec. 31,
 
Sep. 30,
 
Jun. 30,
 
Jun. 30,
 
Jun. 30,
 
2017
 
2017
 
2016
 
2016
 
2016
 
2017
 
2016
ALLOWANCE FOR LOAN AND LEASE LOSS ACTIVITY
 
 
 
 
 
 
 
 
 
 
Balance at beginning of period
$
56,326

 
$
57,961

 
$
57,618

 
$
56,708

 
$
53,732

 
$
57,961

 
$
53,398

  Provision for loan and lease losses
467

 
367

 
2,761

 
1,687

 
4,037

 
834

 
5,692

  Gross charge-offs
 
 
 
 
 
 
 
 
 
 
 
 
 
    Commercial and industrial
3,065

 
1,743

 
1,590

 
296

 
265

 
4,808

 
744

    Lease financing
0

 
0

 
0

 
0

 
0

 
0

 
0

    Construction real estate
0

 
0

 
(2
)
 
64

 
28

 
0

 
31

    Commercial real estate
485

 
485

 
990

 
1,135

 
1,596

 
970

 
2,859

    Residential real estate
223

 
61

 
224

 
90

 
28

 
284

 
73

    Home equity
384

 
180

 
232

 
475

 
398

 
564

 
738

    Installment
126

 
49

 
60

 
223

 
30

 
175

 
102

    Credit card
215

 
232

 
326

 
267

 
357

 
447

 
597

      Total gross charge-offs
4,498

 
2,750

 
3,420

 
2,550

 
2,702

 
7,248

 
5,144

  Recoveries
 
 
 
 
 
 
 
 
 
 
 
 
 
    Commercial and industrial
693

 
262

 
186

 
327

 
420

 
955

 
641

    Lease financing
1

 
0

 
0

 
0

 
1

 
1

 
1

    Construction real estate
89

 
0

 
51

 
6

 
202

 
89

 
228

    Commercial real estate
1,398

 
256

 
382

 
997

 
681

 
1,654

 
1,123

    Residential real estate
59

 
9

 
54

 
38

 
81

 
68

 
145

    Home equity
222

 
106

 
144

 
257

 
131

 
328

 
319

    Installment
43

 
71

 
118

 
56

 
62

 
114

 
161

    Credit card
73

 
44

 
67

 
92

 
63

 
117

 
144

      Total recoveries
2,578

 
748

 
1,002

 
1,773

 
1,641

 
3,326

 
2,762

  Total net charge-offs
1,920

 
2,002

 
2,418

 
777

 
1,061

 
3,922

 
2,382

Ending allowance for loan and lease losses
$
54,873

 
$
56,326

 
$
57,961

 
$
57,618

 
$
56,708

 
$
54,873

 
$
56,708

 
 
 
 
 
 
 
 
 
 
 
 
 
 
NET CHARGE-OFFS TO AVERAGE LOANS AND LEASES (ANNUALIZED)
 
 
 
 
 
 
 
 
 
 
  Commercial and industrial
0.53
 %
 
0.34
 %
 
0.32
 %
 
(0.01
)%
 
(0.04
)%
 
0.44
 %
 
0.01
 %
  Lease financing
0.00
 %
 
0.00
 %
 
0.00
 %
 
0.00
 %
 
0.00
 %
 
0.00
 %
 
0.00
 %
  Construction real estate
(0.08
)%
 
0.00
 %
 
(0.06
)%
 
0.06
 %
 
(0.20
)%
 
(0.04
)%
 
(0.12
)%
  Commercial real estate
(0.15
)%
 
0.04
 %
 
0.10
 %
 
0.02
 %
 
0.16
 %
 
(0.06
)%
 
0.15
 %
  Residential real estate
0.13
 %
 
0.04
 %
 
0.13
 %
 
0.04
 %
 
(0.04
)%
 
0.09
 %
 
(0.03
)%
  Home equity
0.14
 %
 
0.07
 %
 
0.08
 %
 
0.19
 %
 
0.23
 %
 
0.10
 %
 
0.18
 %
  Installment
0.65
 %
 
(0.18
)%
 
(0.47
)%
 
1.40
 %
 
(0.29
)%
 
0.24
 %
 
(0.28
)%
  Credit card
1.28
 %
 
1.73
 %
 
2.35
 %
 
1.64
 %
 
2.88
 %
 
1.50
 %
 
2.21
 %
     Total net charge-offs
0.13
 %
 
0.14
 %
 
0.17
 %
 
0.05
 %
 
0.08
 %
 
0.14
 %
 
0.09
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
COMPONENTS OF NONPERFORMING LOANS, NONPERFORMING ASSETS, AND UNDERPERFORMING ASSETS
 
 
  Nonaccrual loans (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
    Commercial and industrial
$
15,099

 
$
9,249

 
$
2,419

 
$
3,201

 
$
2,980

 
$
15,099

 
$
2,980

    Lease financing
94

 
102

 
195

 
214

 
1,167

 
94

 
1,167

    Construction real estate
1,075

 
1,075

 
0

 
0

 
0

 
1,075

 
0

    Commercial real estate
12,617

 
14,324

 
6,098

 
5,985

 
8,750

 
12,617

 
8,750

    Residential real estate
4,442

 
4,520

 
5,251

 
4,759

 
4,824

 
4,442

 
4,824

    Home equity
2,937

 
3,571

 
3,400

 
3,815

 
4,123

 
2,937

 
4,123

    Installment
307

 
322

 
367

 
327

 
433

 
307

 
433

      Nonaccrual loans
36,571

 
33,163

 
17,730

 
18,301

 
22,277

 
36,571

 
22,277

  Accruing troubled debt restructurings (TDRs)
20,135

 
29,948

 
30,240

 
32,164

 
28,022

 
20,135

 
28,022

     Total nonperforming loans
56,706

 
63,111

 
47,970

 
50,465

 
50,299

 
56,706

 
50,299

  Other real estate owned (OREO)
5,961

 
5,300

 
6,284

 
7,577

 
9,302

 
5,961

 
9,302

     Total nonperforming assets
62,667

 
68,411

 
54,254

 
58,042

 
59,601

 
62,667

 
59,601

  Accruing loans past due 90 days or more
124

 
96

 
142

 
130

 
981

 
124

 
981

     Total underperforming assets
$
62,791

 
$
68,507

 
$
54,396

 
$
58,172

 
$
60,582


$
62,791

 
$
60,582

Total classified assets
$
98,391

 
$
114,550

 
$
125,155

 
$
142,169

 
$
143,331

 
$
98,391

 
$
143,331

 
 
 
 
 
 
 
 
 
 
 
 
 
 
CREDIT QUALITY RATIOS
 
 
 
 
 
 
 
 
 
 
Allowance for loan and lease losses to
 
 
 
 
 
 
 
 
 
 
 
 
 
     Nonaccrual loans
150.05
 %
 
169.85
 %
 
326.91
 %
 
314.84
 %
 
254.56
 %
 
150.05
 %
 
254.56
 %
     Nonperforming loans
96.77
 %
 
89.25
 %
 
120.83
 %
 
114.17
 %
 
112.74
 %
 
96.77
 %
 
112.74
 %
     Total ending loans
0.93
 %
 
0.98
 %
 
1.01
 %
 
1.00
 %
 
0.99
 %
 
0.93
 %
 
0.99
 %
Nonperforming loans to total loans
0.97
 %
 
1.10
 %
 
0.83
 %
 
0.87
 %
 
0.88
 %
 
0.97
 %
 
0.88
 %
Nonperforming assets to
 
 
 
 
 
 
 
 
 
 
 
 
 
     Ending loans, plus OREO
1.07
 %
 
1.19
 %
 
0.94
 %
 
1.00
 %
 
1.04
 %
 
1.07
 %
 
1.04
 %
     Total assets
0.72
 %
 
0.80
 %
 
0.64
 %
 
0.69
 %
 
0.72
 %
 
0.72
 %
 
0.72
 %
Nonperforming assets, excluding accruing TDRs to
 
 
 
 
 
 
 
 
 
 
 
 
 
     Ending loans, plus OREO
0.72
 %
 
0.67
 %
 
0.42
 %
 
0.45
 %
 
0.55
 %
 
0.72
 %
 
0.55
 %
     Total assets
0.49
 %
 
0.45
 %
 
0.28
 %
 
0.31
 %
 
0.38
 %
 
0.49
 %
 
0.38
 %
Classified assets to total assets
1.13
 %
 
1.34
 %
 
1.48
 %
 
1.70
 %
 
1.72
 %
 
1.13
 %
 
1.72
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Nonaccrual loans include nonaccrual TDRs of $9.4 million, $7.8 million, $5.1 million, $5.6 million, and $8.0 million, as of June 30, 2017, March 31, 2017, December 31, 2016, September 30, 2016, and June 30, 2016, respectively.
 
 
 
 
 


10

FIRST FINANCIAL BANCORP.
CAPITAL ADEQUACY
(Dollars in thousands, except per share data)
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
Six months ended,
 
Jun. 30,
 
Mar. 31,
 
Dec. 31,
 
Sep. 30,
 
Jun. 30,
 
Jun. 30,
 
Jun. 30,
 
2017
 
2017
 
2016
 
2016
 
2016
 
2017
 
2016
PER COMMON SHARE
 
 
 
 
 
 
 
 
 
 
 
 
 
Market Price
 
 
 
 
 
 
 
 
 
 
 
 
 
  High
$
28.90

 
$
28.90

 
$
29.35

 
$
22.52

 
$
20.16

 
$
28.90

 
$
20.16

  Low
$
25.00

 
$
26.00

 
$
21.05

 
$
18.83

 
$
17.49

 
$
25.00

 
$
14.91

  Close
$
27.65

 
$
27.45

 
$
28.45

 
$
21.84

 
$
19.45

 
$
27.65

 
$
19.45

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average shares outstanding - basic
61,543,478

 
61,398,414

 
61,311,068

 
61,280,283

 
61,194,254

 
61,471,347

 
61,115,525

Average shares outstanding - diluted
62,234,022

 
62,140,384

 
62,080,683

 
62,086,067

 
62,027,008

 
62,187,473

 
61,912,366

Ending shares outstanding
62,141,071

 
62,134,285

 
61,979,552

 
61,952,873

 
61,959,529

 
62,141,071

 
61,959,529

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total shareholders' equity
$
898,117

 
$
880,065

 
$
865,224

 
$
861,137

 
$
846,723

 
$
898,117

 
$
846,723

 
 
 
 
 
 
 
 
 
 
 
 
 
 
REGULATORY CAPITAL
Preliminary
 
 
 
 
 
 
 
 
 
Preliminary
 
 
Common equity tier 1 capital
$
731,024

 
$
716,678

 
$
703,891

 
$
688,363

 
$
673,313

 
$
731,024

 
$
673,313

Common equity tier 1 capital ratio
10.54
%
 
10.59
%
 
10.46
%
 
10.20
%
 
10.07
%
 
10.54
%
 
10.07
%
Tier 1 capital
$
731,128

 
$
716,782

 
$
703,995

 
$
688,467

 
$
673,417

 
$
731,128

 
$
673,417

Tier 1 ratio
10.54
%
 
10.59
%
 
10.46
%
 
10.20
%
 
10.07
%
 
10.54
%
 
10.07
%
Total capital
$
905,222

 
$
892,161

 
$
881,158

 
$
865,248

 
$
849,303

 
$
905,222

 
$
849,303

Total capital ratio
13.05
%
 
13.19
%
 
13.10
%
 
12.82
%
 
12.70
%
 
13.05
%
 
12.70
%
Total capital in excess of minimum
 
 
 
 
 
 
 
 
 
 
 
 
 
  requirement
$
263,580

 
$
266,367

 
$
300,804

 
$
282,996

 
$
272,708

 
$
263,580

 
$
272,708

Total risk-weighted assets
$
6,936,665

 
$
6,765,336

 
$
6,728,737

 
$
6,750,750

 
$
6,685,158

 
$
6,936,665

 
$
6,685,158

Leverage ratio
8.69
%
 
8.69
%
 
8.60
%
 
8.45
%
 
8.38
%
 
8.69
%
 
8.38
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
OTHER CAPITAL RATIOS
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending shareholders' equity to ending assets
10.31
%
 
10.32
%
 
10.25
%
 
10.29
%
 
10.19
%
 
10.31
%
 
10.19
%
Ending tangible shareholders' equity to ending tangible assets
8.09
%
 
8.05
%
 
7.96
%
 
7.97
%
 
7.85
%
 
8.09
%
 
7.85
%
Average shareholders' equity to average assets
10.36
%
 
10.36
%
 
10.33
%
 
10.29
%
 
10.21
%
 
10.36
%
 
10.16
%
Average tangible shareholders' equity to average tangible assets
8.12
%
 
8.06
%
 
8.01
%
 
7.96
%
 
7.83
%
 
8.09
%
 
7.78
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 

11