FFBC First Financial Bancorp

CINCINNATI, Oct. 22, 2015 /PRNewswire/ --

• Net Income of $18.7 million
• Earnings per Share of $0.30
• Return on Average Assets of 0.97%
• Return on Average Tangible Common Equity of 12.33%
• Net Interest Margin of 3.67% (fully tax equivalent)

First Financial Bancorp (Nasdaq: FFBC) ("First Financial" or the "Company") announced financial results for the third quarter 2015.  For the three months ended September 30, 2015, the Company recorded net income of $18.7 million, or $0.30 per diluted common share, compared to net income of $18.9 million, or $0.31 per diluted common share, in the second quarter of 2015 and $15.3 million, or $0.26 per diluted common share, in the third quarter of 2014.

Third quarter results included approximately $3.3 million of pre-tax non-operating expenses which were primarily related to the previously announced acquisition of Indianapolis, Indiana based Oak Street Holdings Corporation ("Oak Street") which closed during the quarter and adjustments to reserves for litigation-related items.  Excluding these items, net income was $20.9 million, or $0.34 per diluted common share, return on average assets was 1.09% and return on average tangible common equity was 13.77%.

As of September 30, 2015, gross loan balances related to the Oak Street acquisition were $245.3 million.  Excluding expenses related to the acquisition, which closed on August 14, 2015, Oak Street contributed approximately $0.02 to earnings per diluted share and 10 bps to net interest margin during the quarter.

Claude Davis, Chief Executive Officer, commented, "I am very pleased with our results for the third quarter, which marks our 100th consecutive quarter of profitability. On an operating basis, our net income grew 11% compared to the second quarter and 12% compared to the third quarter last year.  Although net interest margin continues to be constrained by the prolonged low interest rate environment we are excited about the growth opportunities throughout our footprint.  We are especially encouraged by the organic growth in our core-bank loan portfolio which increased by approximately 10%, on an annualized basis, compared to the linked quarter.  In addition, the acquisition of Oak Street added $245.3 million of high yielding loans to our already well-diversified balance sheet."

"Our ability to successfully grow low-cost deposits continues to provide competitive advantage as we compete for new business and will be especially advantageous to us with the addition and expansion of Oak Street's high-yielding loan portfolio."

"We remain committed to our stated objectives of top-quartile performance.  During the quarter, we generated $120.6 million of organic loan growth, completed the acquisition of Oak Street, and issued $120.0 million of 10-year subordinated debt."

"As we look forward to the rest of 2015 and beyond, our focus remains centered on serving the financial needs of our commercial, small business, consumer and wealth management clients."

NET INTEREST INCOME AND NET INTEREST MARGIN

Net interest income for the third quarter was $63.2 million as compared to $58.7 million for the second quarter 2015 and $58.4 million for the third quarter 2014.  Compared to the linked quarter, total interest income increased $4.8 million, or 7.6%, while total interest expense increased $0.3 million, or 6.7%.  Net interest margin was 3.67%, on a fully tax equivalent basis, for the third quarter compared to 3.62% for the second quarter 2015 and 3.71% for the third quarter 2014.

Interest income earned on loans increased $4.1 million compared to the prior quarter, as average loan balances increased $233.3 million during the period, which included one additional day.  The effective yield earned on the loan portfolio increased by 7 bps to 4.52% primarily related to the acquisition of Oak Street.

Interest income earned on investment securities increased $0.7 million compared to the prior quarter while average balances increased $65.3 million.  The effective yield earned on the investment portfolio increased 5 bps to 2.39% as slower prepayments positively affected portfolio yields and the Company reinvested cash flows into predominately fixed-rate instruments during the quarter.

Interest expense increased by $0.3 million compared to the prior quarter due primarily to a $159.5 million increase in average borrowed funds and a $169.6 million increase in average interest-bearing deposits.  The Company recorded non-interest expense of $0.7 million related to the prepayment of $14.1 million of, primarily acquired, long-term FHLB debt during the period.  This was partially offset by the accelerated amortization of the fair-value mark which reduced interest expense by $0.5 million.   During the quarter, the Company also issued $120.0 million of 10-year subordinated debt at 5.125% and raised $211.5 million of brokered time deposits, at a weighted average cost of 51 bps, to support the acquisition of Oak Street.   The effective cost of borrowed funds decreased by 2 bps to 35 bps and the cost of interest-bearing deposits was unchanged at 42 bps.

NON-INTEREST INCOME

The Company's non-interest income was $20.4 million for the third quarter of 2015 compared to $21.4 million for the second quarter of 2015 and $16.5 million for the third quarter of 2014.  The $1.1 million decrease versus the linked quarter was primarily related to a $0.7 million decrease in gain on sale of investment securities, a $0.7 million decrease in FDIC loss sharing income and a $0.2 million decrease in gain on sale of mortgage loans partially offset by a $0.7 million increase in fees related to the Company's client derivative program.

NON-INTEREST EXPENSE

The Company's non-interest expense was $53.0 million for the third quarter of 2015 compared to $48.8 million for the second quarter of 2015 and $51.4 million for the third quarter of 2014.  The $4.2 million increase over the linked quarter was primarily related to $2.6 million of expenses related to the acquisition of Oak Street, $0.7 million related to prepayment of FHLB debt and $0.7 million related to reserve adjustments for litigation-related items which were resolved during the quarter. Non-interest expense for the quarter included approximately $0.9 million related to Oak Street operating expenses subsequent to the closing.

BALANCE SHEET & CAPITAL

Total assets were $7.9 billion, total loans were $5.2 billion and investment securities were $1.9 billion as of September 30, 2015.  Total assets increased by $497.2 million, or 26.7% annualized, from the prior quarter and by $527.1 million, or 7.2%, over the prior year, including the impact of the Oak Street acquisition.  Total loans increased by $363.3 million, or 29.7% annualized, from the prior quarter and by $433.8 million, or 9.1%, over the prior year, including the impact of the Oak Street acquisition.  Investment securities increased by $77.9 million, or 17.2% annualized, from the prior quarter and decreased by $1.0 million, or 0.1%, over the prior year.

Including approximately $212 million of brokered time deposits related to the Oak Street acquisition, total deposits were $6.1 billion as of September 30, 2015, an increase of $365.6 million, or 25.4% annualized, compared to the prior quarter and $548.4 million, or 9.9%, higher than a year ago.  Borrowed funds were $883.0 million as of September 30, 2015, compared to $757.1 million as of June 30, 2015 and $972.0 million as of September 30, 2014.

During the quarter, the Company repurchased 148,935 shares at a weighted average price of $18.68 and has repurchased 1,399,835 of the 5,000,000 shares authorized in 2012.  As of September 30, 2015, the Company had total shareholders' equity of $813.0 million, an increase of $10.6 million, or 5.3% annualized, over the prior quarter and $39.1 million, or 5.1%, over the prior year. 

The Company's regulatory capital ratios remain strong and, as of September 30, 2015, were as follows:  leverage ratio of 8.58%, total capital ratio of 13.37%, tier 1 capital ratio of 10.52% and tangible common equity ratio of 7.84%.  The Company's tangible book value per share was $9.74 as of September 30, 2015.

ASSET QUALITY

Third quarter provision expense was $2.6 million and the total allowance for loan and lease losses as of September 30, 2015 was $53.3 million.  The allowance as a percentage of period-end loans was 1.02% at the end of the third quarter.  The balance of the Company's total allowance and loan marks, net of the indemnification asset, was 1.17% of total loans and leases as of September 30, 2015 which represents a 10 bps decline from 1.27% as of June 30, 2015.  This change is largely attributable to elevated levels of payoff activity in the covered / formerly covered loan portfolio, the addition of the Oak Street loan portfolio and solid organic loan growth during the third quarter.

For the third quarter, net charge-offs totaled $2.2 million, a decrease of $1.1 million, or 33.0% compared to the linked quarter, and were 0.17% of average loans on an annualized basis.  Nonaccrual loans decreased $4.0 million, or 10.0%, to $35.7 million as of September 30, 2015.  Total classified assets decreased $11.2 million, or 8.0%, to $128.7 million as of September 30, 2015, primarily due to a decrease in both commercial real estate and covered/formerly covered classified assets.

Teleconference / Webcast Information
First Financial's executive management will host a conference call to discuss the Company's financial and operating results on Friday, October 23, 2015 at 8:30 a.m. Eastern Time.  Members of the public who would like to listen to the conference call should dial (877) 506-6873 (U.S. toll free), (855) 669-9657 (Canada toll free) or +1 (412) 380-2003 (International) (no passcode required).  The number should be dialed five to ten minutes prior to the start of the conference call.  The conference call will also be accessible as an audio webcast via the Investor Relations section of the Company's website at www.bankatfirst.com.  A replay of the conference call will be available beginning one hour after the completion of the live call at (877) 344-7529 (U.S. toll free), (855) 669-9658 (Canada toll free) and +1 (412) 317-0088 (International); conference number 10074410.  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 September 30, 2015, the Company had $7.9 billion in assets, $5.2 billion in loans, $6.1 billion in deposits and $813.0 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 $2.3 billion in assets under management as of September 30, 2015.  The Company's strategic operating markets are located in Ohio, Indiana and Kentucky where it operates 106 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; 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, 2014, 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.