CINCINNATI, April 29 /PRNewswire-FirstCall/ --
-- Net income available to common shareholders of $5.2 million and earnings per diluted common share of $0.14 -- Capital and liquidity positions remain strong -- Total regulatory capital exceeded the minimum requirement by $159 million -- Provision expense exceeded net charge-offs by 15% -- Average total loans increased $119 million from first quarter 2008 and $23 million from fourth quarter 2008 -- Average commercial loans increased $274 million from first quarter 2008 and $66 million from fourth quarter 2008 -- Average total deposits increased $42 million or 6% on an annualized basis from fourth quarter 2008
First Financial Bancorp today reported first quarter 2009 net income of $5.7 million, and net income available to common shareholders of $5.2 million, or $0.14 per diluted common share. This compares with net income of $2.1 million, or $0.06 per diluted common share for the fourth quarter of 2008, and net income of $7.3 million, or $0.20 per diluted common share for the first quarter of 2008. Net income available to common shareholders reflects net income, less dividends paid to the U.S. Treasury on its $80 million investment in First Financial perpetual preferred securities that were issued as part of the Treasury's Capital Purchase Program (CPP).
The following table presents First Financial's return on average assets and return on average common shareholders' equity for the first quarter of 2009 and the fourth and first quarters of 2008.
Table I --------- Quarter --------- 1Q-09 4Q-08 1Q-08 ----- ----- ----- Return on Average Assets 0.62% 0.23% 0.89% Return on Average Common Shareholders' Equity 7.67% 2.97% 10.66%
During the fourth quarter of 2008, First Financial increased its loan loss reserve in response to a higher level of net charge-offs and the continued deterioration in U.S. economic conditions. This resulted in a decrease to fourth quarter 2008 net income and earnings per diluted share, on an after-tax basis, of $4.9 million, or $0.13 per share, respectively.
First Financial is also reporting pre-tax, pre-provision income this quarter, which excludes provision expense and applicable securities gains and losses. The company believes this metric is useful as it demonstrates a more representative comparison of operational performance without the volatility of credit quality that is typically present in times of economic stress, as has been the case over the past several quarters. The following table presents pre-tax, pre-provision income, including and excluding applicable securities gains and losses for the first quarter of 2009 and the fourth and first quarters of 2008.
Table II ($ in thousands) ---------------- Quarter ------- 1Q-09 4Q-08 1Q-08 ----- ----- ----- Pre-Tax Income $8,768 $2,455 $10,881 Excluding Provision Expense 4,259 10,475 3,223 ----- ------ ----- Pre-Tax, Pre- Provision Income $13,027 $12,930 $14,104 ------- ------- ------- Securities Gains (Losses) 11 (1) (137) (1) 1,605 (2) -- ---- ----- Pre-Tax, Pre- Provision Income, excluding Securities Gains (Losses) $13,016 $13,067 $12,499 ------- ------- ------- (1) Gains (losses) related to the company's investment in 200,000 Federal Home Loan Mortgage Corporation (FHLMC) perpetual preferred series V shares. (2) Includes a $1,585 gain associated with the partial redemption of Visa, Inc. common shares.
Commenting on the company's results, Claude Davis, First Financial Bancorp's president and chief executive officer, stated, "We are pleased with our profitability this quarter including strong loan and deposit growth and a relatively stable net interest margin given the very difficult economic environment we are experiencing. The unprecedented level of economic stress has caused our credit quality to weaken and we expect credit losses to be a challenge throughout 2009 for us and the entire industry. Our historically conservative underwriting practices, market discipline and proactive management of resolution strategies for problem credits have produced asset quality ratios that continue to be better than our industry peers.
"We continue to invest in and grow our business. During the fourth quarter of 2008, we opened a new banking center in Crown Point, Indiana, and a new regional banking center in the Dayton, Ohio market. In February, we expanded our presence in the Cincinnati market with the opening of a new banking center in the suburb of Madeira. We are excited about our expansion within the Cincinnati market, and look forward to further expansion throughout our franchise.
"Despite the numerous challenges facing the financial services industry, we remain focused on serving our clients," added Mr. Davis. "While the economy is expected to remain challenging throughout 2009, the strength of our balance sheet, including our strong capital and liquidity levels, positions us to continue to meet the daily needs of our clients. First Financial stands ready to benefit as economic conditions improve."
For additional information on First Financial's comparable financial results, please refer to the discussions that follow detailing revenue and expense fluctuations.
DETAILS OF RESULTS
Unless otherwise noted, all amounts discussed in this earnings release are pre-tax except net income and per-share data which are presented after-tax. Percentage changes are not annualized unless specifically noted. In some instances, financial data may not add up due to rounding.
CREDIT QUALITY The following table presents First Financial's key credit quality metrics. Table III ($ in thousands) ---------------- Three Months Ended ------------------ March December September June March 31, 2009 31, 2008 30, 2008 30, 2008 31, 2008 --------- --------- --------- ----- --------- Total Nonperforming Loans $24,892 $18,185 $14,038 $15,366 $15,253 Total Nonperforming Assets $28,405 $22,213 $18,648 $19,129 $17,621 Nonperforming Assets as a % of: Period-End Loans, Plus Other Real Estate Owned 1.04% 0.83% 0.70% 0.71% 0.67% Total Assets 0.75% 0.60% 0.53% 0.55% 0.53% Nonperforming Loans as a % of Total Loans 0.91% 0.68% 0.53% 0.57% 0.58% Allowance for Loan & Lease Losses $36,437 $35,873 $30,353 $29,580 $29,718 Allowance for Loan & Lease Losses as a % of: Period-End Loans 1.33% 1.34% 1.14% 1.11% 1.14% Nonaccrual Loans 147.6% 199.5% 219.5% 199.7% 202.3% Nonperforming Loans 146.4% 197.3% 216.2% 192.5% 194.8% Total Net Charge-Offs $3,695 $4,955 $2,446 $2,631 $2,562 Annualized Net Charge-Offs as a % of Average Loans & Leases 0.55% 0.73% 0.36% 0.40% 0.40%
First quarter 2009 nonperforming loans increased $6.7 million to $24.9 million or 0.91% of total loans, from $18.2 million or 0.68% of total loans in the fourth quarter of 2008. This increase was largely attributable to deterioration within the commercial lending portfolio; however, this deterioration was not specific to any industry or geographic concentration. While the overall credit quality of the commercial lending portfolio has remained strong throughout most of the economic downturn, late in the fourth quarter of 2008 and continuing into the first quarter of 2009, the company began to see a higher level of borrowers experiencing additional stress related to the prolonged weak economic conditions. During the fourth quarter of 2008, in anticipation of continued economic deterioration, the company increased the provision for credit losses, which significantly increased the allowance for loan and lease losses as a percent of period-end loans to 1.34% at December 31, 2008.
The first quarter 2009 provision expense, although lower than the fourth quarter level, represented approximately 115% of first quarter 2009 total net charge-offs. The allowance for loan and lease losses increased to $36.4 million at March 31, 2009, from $29.7 million at March 31, 2008, and $35.9 million at December 31, 2008. The allowance for loan and lease losses as a percent of period-end loans remained stable at March 31, 2009 at 1.33%.
First quarter 2009 net charge-offs included a $1.1 million charge-off of a single commercial credit related to a borrower in the hotel industry.
The quarter's higher level of nonperforming loans adversely impacted the company's nonperforming loan coverage ratios in the first quarter of 2009. The allowance for loan and lease losses as a percent of nonaccrual and nonperforming loans was 147.6% and 146.4%, respectively, compared with 199.5% and 197.3%, respectively, in the fourth quarter of 2008, and 202.3% and 194.8%, respectively, in the first quarter of 2008. Although the first quarter 2009 allowance for loan and lease losses as a percent of nonaccrual and nonperforming loans has decreased from prior periods, based on historical information available, the company believes that it continues to compare favorably with the industry and its peers on these ratios. The company expects that the uncertain and challenging economic conditions are likely to continue to impact borrowers in all lending categories throughout the remainder of 2009, and possibly into 2010. Assuming further decay in economic conditions over the next several quarters, First Financial would expect that the level of nonperforming assets would continue to increase.
Total loans 30 to 89 days past due at March 31, 2009 were $20.4 million, or 0.75% of period end loans, compared with $22.6 million, or 0.84% at December 31, 2008, and $20.3 million, or 0.78% at March 31, 2008. Management closely monitors these trends and ratios and currently considers the level of delinquent loans consistent with its expectation of the total loan portfolio's behavior.
The allowance for loan and lease losses increased approximately $0.6 million from the fourth quarter 2008 level. A higher level of reserves reflects the company's expectations of a continuing decline in economic conditions and the uncertainty surrounding the timing of an economic recovery. The allowance for loan and lease losses as a percent of period-end loans is based on the estimated potential losses inherent in the loan portfolio in today's economic environment. The company believes that the $36.4 million allowance for loan and lease losses at March 31, 2009 or 1.33% of period end loans is adequate to absorb probable credit losses inherent in its lending portfolio.
Other real estate owned decreased $0.5 million to $3.5 million at March 31, 2009, from $4.0 million at December 31, 2008, and increased $1.1 million from $2.4 million at March 31, 2008. The linked quarter decrease was a result of net dispositions and valuation adjustments, and the year-over-year increase was a result of net additions in residential real estate.
For further details on the quarter-over-quarter and year-to-date changes in credit quality, please see the attached Credit Quality schedule.
CAPITAL MANAGEMENT
All regulatory capital ratios exceeded the amounts necessary to be classified as "well-capitalized" at March 31, 2009. In addition, total regulatory capital exceeded the "minimum" requirement by approximately $159.1 million, on a consolidated basis. The following table presents the regulatory capital ratios for First Financial Bancorp and its subsidiary, First Financial Bank, at March 31, 2009. The capital levels for First Financial Bank do not include the additional capital that the company received from the U.S. Treasury in December 2008, under its CPP.
Regulatory First "well-capitalized" Table IV FFBC Financial Bank minimum -------- ---- --------------- -------------------- Leverage Ratio 9.51% 8.26% 5% -------------- ---- ---- - Tier 1 Capital Ratio 12.16% 10.58% 6% -------------------- ----- ----- - Total Risk-Based Capital Ratio 13.39% 12.07% 10% ----------------- ----- ----- -- EOP Tangible Equity / EOP Tangible Assets 8.60% N/A N/A ---------------------- ---- --- --- EOP Tangible Common Equity / EOP Tangible Assets 6.54% N/A N/A ------------------- ---- --- --- N/A = not applicable
Earlier this year, in an effort to build capital and further strengthen the balance sheet, the company reduced its quarterly cash dividend from $0.17 per common share to $0.10 per common share - a move that preserved approximately $2.6 million in tangible equity in the first quarter of 2009. First Financial remains committed to maintaining a strong capital base and will continue to take the necessary steps to ensure that its capital position remains sound throughout this period of uncertainty.
U.S. TREASURY CAPITAL PURCHASE PROGRAM
On December 23, 2008, First Financial completed the sale of $80.0 million in perpetual preferred securities to the U.S. Treasury under the Capital Purchase Program (CPP), a component of the Troubled Asset Relief Program (TARP). As a participant in the program, First Financial is reporting the use of this capital.
Use of Capital
First Financial has both short- and long-term plans for use of the CPP proceeds. In anticipation of the receipt of the $80.0 million in capital, the company began purchasing agency-guaranteed, mortgage-backed securities during the fourth quarter 2008. This investment portfolio - specifically designated as the CPP Investment Portfolio - totaled approximately $225.4 million at March 31, 2009, compared with $121.9 million at December 31, 2008. The ratio of investments to capital, or leverage on the CPP capital, was 2.8 times the proceeds received at March 31, 2009, and at December 31, 2008, was 1.5 times the proceeds received. During the first quarter 2009, the fixed-income market experienced a significant increase in pricing for agency-guaranteed, mortgage-backed securities. This was as a result of a Federal Reserve program designed to support the purchase of mortgage-related assets as part of their efforts to stimulate the mortgage financing sector. As a result, the company added selectively to the CPP Investment Portfolio.
Earnings from the CPP Investment Portfolio have had, and the company expects will continue to have, a positive effect on net interest income, and should also exceed the quarterly dividends payable to the U.S. Treasury on their investment in the preferred shares.
Funding
Upon receipt of the CPP funds in late December 2008, funding to support the CPP Investment Portfolio was evaluated in order to take advantage of the low interest rate environment. While several duration-matched funding alternatives were analyzed during the first quarter, the portfolio is currently funded with short-term borrowings to maximize the return on net interest income. This strategy is employed in the context of the company's total interest-rate risk-management process and is re-evaluated continually in the context of expected market behavior.
Increased Lending Activities
Total loans at March 31, 2009, increased $53.3 million from December 31, 2008. Commercial lending period-end balances were up $73.1 million, which more than offset the decline in period-end balances in the consumer lending portfolios. The decline in certain consumer lending balances is a result of the First Financial's strategy to transition its lending emphasis from consumer-oriented lending to commercial-oriented lending. However, during the first quarter of 2009, the company originated $47.9 million in residential mortgage loans compared with $21.8 million in the fourth quarter of 2008, and $30.9 million in the first quarter of 2008. As part of the company's originate-and-sell business model, those loans are not included in the period-end consumer loan balances. While First Financial has not emphasized the residential mortgage lending part of its business over the past several years, the company does plan to focus on expanding within this area in the future, including maintaining its originate-and-sell strategy.
It is expected that as additional lending opportunities become available, the cash flows from the CPP Investment Portfolio will provide sufficient liquidity and capital support for redeployment into loans.
First Financial has evaluated several ways to increase lending volume consistent with the intent of the CPP program and is working with its third-party servicer for residential mortgage loans to evaluate appropriate foreclosure modification solutions.
Preferred Stock Dividend
During the first quarter of 2009, First Financial paid a pro-rated dividend of $0.6 million for the period ending February 15, 2009, to the U.S. Treasury on their investment in the company's preferred shares. Future quarterly dividends will be $1.0 million, reflecting a full calendar quarter.
NET INTEREST INCOME & NET INTEREST MARGIN Table V ($ in thousands) ---------------- Quarter ------- 1Q-09 4Q-08 1Q-08 ----- ----- ----- Net Interest Income $30,928 $30,129 $28,249 Net Interest Margin 3.61% 3.67% 3.78% Net Interest Margin (fully tax equivalent) 3.65% 3.71% 3.85%
First quarter 2009 end-of-period and average total deposits increased from the fourth quarter of 2008 as a result of growth in lower-cost transaction deposit accounts, particularly commercial balances. The continued transition in the deposit mix from higher-cost certificates of deposits to lower-cost transaction-based accounts, combined with higher average earning asset balances and a lower cost of short-term funding had a positive impact on the net interest margin during the quarter, but was more than offset by the impact of lower overall earning interest rates on loans.
First Financial's balance sheet, excluding the impact of the increased size of its investment portfolio and the corresponding short-term funding, remains asset sensitive.
First quarter 2009 net interest income increased $2.7 million from the first quarter of 2008, and $0.8 million from the fourth quarter of 2008 due to increases in both end-of-period and average total loans primarily driven by higher commercial lending volume, and growth in the investment securities portfolio.
For further details on the quarter-over-quarter and year-to-date changes in the net interest margin, please see the attached Net Interest Margin Rate / Volume Analysis
NONINTEREST INCOME -- First quarter 2009 noninterest income was $12.0 million, compared with $14.9 million in the first quarter of 2008, and $12.6 million in the fourth quarter of 2008.
The following table presents a summary of items impacting noninterest income for the first quarter of 2009 and the first and fourth quarters of 2008.
Table VI ($ in thousands) ---------------- Quarter ------- 1Q-09 4Q-08 1Q-08 ----- ----- ----- Gain on Sale of Property & Casualty Portion of Insurance Business $574 $- $- Gain on Sales of Investment Securities (VISA) - - 1,585 ---- -- ------ Impact to Noninterest Income $574 $- $1,585 ==== == ======
First quarter 2009 results included a $0.6 million gain, before associated employee-related costs, from the sale of the property and casualty liability portion of the company's insurance business. As previously disclosed, this transaction closed on March 31, 2009.
First quarter 2009 noninterest income declined $2.8 million from the first quarter of 2008 and $0.6 million from the fourth quarter of 2008. Excluding the items mentioned above, first quarter 2009 noninterest income declined $1.8 million from the first quarter of 2008 and $1.2 million from the fourth quarter of 2008. The year-over-year and linked-quarter declines were primarily due to the impact of fewer days during the quarter, lower service charges on deposit accounts, particularly lower overdraft/non-sufficient funds fees, and decreases in bank card income and trust and wealth management fees. These fee income categories were negatively impacted by current economic conditions and their effect on consumer spending activity, as well as volatility in the investment and equity markets. A decline in income from bank-owned life insurance, which was impacted by volatility in the fixed-income markets, also contributed to the linked-quarter and year-over-year declines in noninterest income. The following table presents a breakout of overdraft/non-sufficient funds fees and trust and wealth management fees for the first quarter of 2009 and the first and fourth quarters of 2008.
Table VII ($ in thousands) ---------------- Quarter ------- 1Q-09 4Q-08 1Q-08 ----- ----- ----- Overdraft/Non-Sufficient Fund Fees $2,785 $3,445 $3,329 Other Deposit Fees 1,294 1,307 1,278 ----- ----- --- Total Service Charges on Deposit Accounts 4,079 4,752 4,607 ----- ----- ----- Trust Fees 2,946 3,284 3,913 Investment Advisory Fees 343 461 709 --- --- --- Total Trust & Wealth Management Fees 3,289 3,745 4,622 ----- ----- -----
The decline in Total Trust and Wealth Management Fees is attributable to decreases in both investment advisory and trust fees, which were primarily driven by lower asset valuations from overall market declines. Since June 30, 2008, assets under management by the company's wealth management division have declined by approximately $472.9 million or 23.4% to $1.6 billion at March 31, 2009, primarily as a result of equity market declines.
NONINTEREST EXPENSE -- First quarter 2009 noninterest expense was $29.9 million, compared with $29.0 million in the first quarter of 2008, and $29.8 million in the fourth quarter of 2008.
First quarter 2009 noninterest expense, which includes severance payments of $0.2 million related to the previously mentioned sale of the property and casualty liability portion of the company's insurance business, increased slightly over both the first and fourth quarters of 2008. The linked-quarter increase was primarily due to a $0.1 million increase in FDIC deposit insurance premiums, as well as seasonal fluctuations related to payroll and benefit plans, offset by lower marketing costs. The year-over-year increase was a result of a $0.2 million increase in FDIC deposit insurance premiums, combined with higher professional fees and medical and pension-related costs, as well as increased marketing costs primarily related to deposit gathering initiatives. The FDIC is currently evaluating further increases in deposit insurance premiums for all participating institutions later in 2009, including a possible special assessment in the second or third quarter of the year.
INCOME TAXES
Income tax expense was $3.0 million and the effective tax rate was 34.6% for the first quarter of 2009, compared with income tax expense of $3.5 million and an effective tax rate of 32.6% for the first quarter of 2008, and income tax expense of $0.4 million and an effective tax rate of 15.1% for the fourth quarter of 2008. The lower effective tax rate for the fourth quarter 2008 was due to the marginal impact of lower pre-tax earnings.
LOANS First Quarter 2009 versus First Quarter 2008 -- Average total loans increased $118.7 million or 4.6%. -- Average commercial, commercial real estate, and construction loans increased $274.4 million, or 16.6%. First Quarter 2009 versus Fourth Quarter 2008 -- Average total loans increased $23.0 million, or 3.4% on an annualized basis. -- Average commercial, commercial real estate, and construction loans increased $65.7 million, or 14.1% on an annualized basis.
First Financial experienced strong loan growth during the first quarter of 2009, primarily within its commercial lending portfolios. Overall declines in certain period-end and average loans are a result of the company's strategy to de-emphasize certain consumer-based lending activities.
INVESTMENTS
In early 2008, First Financial began increasing the size of its investment portfolio. Since the end of the first quarter of 2008, the portfolio has grown approximately $380.7 million on a net basis. Approximately $112.9 million of securities were purchased during the first quarter of 2009. The portfolio selection criteria avoids securities that are backed by sub-prime assets and also those containing assets that would give rise to material geographic concentrations. At March 31, 2009, the company held approximately 86.1% of its available-for-sale securities in residential mortgage-related investments, substantially all of which are held in highly-rated, agency-backed pass-through instruments, including collateralized mortgage obligations (CMOs). All CMOs held by the company are AAA rated by Standard & Poor's Corporation or similar rating agencies. First Financial does not own any interest-only, principal-only, or other high-risk securities.
Securities available-for-sale at March 31, 2009, totaled $732.9 million, compared with $345.1 million at March 31, 2008, and $659.8 million at December 31, 2008. The total investment portfolio represented 20.1% and 11.7% of total assets at March 31, 2009 and 2008, respectively, and 18.7% of total assets at December 31, 2008.
The company has recorded, as a component of equity in accumulated other comprehensive income, an unrealized after-tax gain on the investment portfolio of approximately $10.6 million at March 31, 2009, compared with an unrealized after-tax gain of $3.6 million at March 31, 2008, and an unrealized after-tax gain of $6.9 million at December 31, 2008.
The following table presents a summary of the total investment portfolio at March 31, 2009.
Table VIII ($ in thousands, excluding book price and market value) Base % of Book Book Book 3/31/2009 Gain/ Total Value Yield Price Market Value (Loss) -------- ----- ----- ----- ----- ------------ ------ Agency's 5.4% $41,534 5.31 99.78 103.66 $1,554 CMOs (Agency) 22.3% 170,397 4.62 100.87 103.00 3,526 CMOs (Private) 0.0% 85 2.04 100.00 98.04 (2) MBSs (Agency) 63.8% 488,448 4.87 101.01 103.50 11,790 Agency Preferred 0.0% 72 - 0.36 0.36 - --- -- - ---- ---- - Subtotal 91.5% $700,536 4.83 100.89 103.38 $16,868 -------- ---- -------- ---- ------ ------ ------- Municipal 4.4% $33,699 7.15 99.17 100.28 $376 Other * 4.1% 31,382 4.41 100.91 99.45 (461) ------- --- ------ ---- ------ ----- ---- Subtotal 8.5% $65,081 5.83 100.01 99.88 $(85) -------- --- ------- ---- ------ ----- ---- Total Investment Portfolio 100.0% $765,617 4.92 100.82 103.08 $16,783 ----------- ----- -------- ---- ------ ------ ------- Net Unrealized Gain/(Loss) $16,783 Aggregate Gains $17,836 Aggregate Losses $(1,053) Net Unrealized Gain/(Loss) % of Book Value 2.19% * Other includes $28.0 million of regulatory stock DEPOSITS First Quarter 2009 compared with First Quarter 2008 -- Average total deposits declined $10.4 million, or 0.4%. -- Average transaction and savings deposits increased $66.8 million, or 4.1%. -- Average time deposits declined $77.1 million, or 6.3%. First Quarter 2009 compared with Fourth Quarter 2008 -- Average total deposits increased $42.1 million, or 6.1% on an annualized basis. -- Average transaction and savings deposits increased $51.5 million, or 12.6% on an annualized basis. -- Average time deposits declined $9.4 million, or 3.2% on an annualized basis.
The decline in average total deposits from the first quarter of 2008 is attributable to a decrease in average total interest-bearing deposits primarily due to the runoff of time deposits resulting from disciplined pricing and the company's strategy to generate lower-cost transaction-based accounts. The increase in average total deposits from the fourth quarter of 2008 is a result of recent deposit-pricing strategies and other initiatives designed to grow and retain more transaction-based retail and commercial deposits. Average commercial transaction deposits increased $36.6 million and average commercial time deposits increased $6.0 million from the fourth quarter of 2008. First Financial continues to employ prudent pricing disciplines for all deposits.
Conference Call & Webcast
As previously announced, a conference call and webcast to discuss First Financial's first quarter 2009 results will be held on Thursday, April 30, 2009, at 9:00 a.m. ET, with Claude E. Davis, president and chief executive officer, and J. Franklin Hall, executive vice president and chief financial officer. To access the conference call, dial 800-860-2442 (passcode not required). The webcast will be available at the Investor Relations section of First Financial's website (http://www.bankatfirst.com/Investor). Participants should join the live conference call and webcast 5 to 10 minutes before its scheduled start. A replay of the call and webcast will be available approximately one hour after the live call has ended. To access the replay, dial 877-344-7529 (passcode 429741).
Forward-Looking Statements
This news release should be read in conjunction with the consolidated financial statements, notes and tables in First Financial Bancorp's most recent Annual Report on Form 10-K for the year ended December 31, 2008. Management's analysis contains forward-looking statements that are provided to assist in the understanding of anticipated future financial performance. However, such performance involves risk and uncertainties that may cause actual results to differ materially. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to, management's ability to effectively execute its business plan; the risk that the strength of the United States economy in general and the strength of the local economies in which First Financial conducts operations may be different from expected, resulting in, among other things, a deterioration in credit quality or a reduced demand for credit, including the resultant effect on First Financial's loan portfolio and allowance for loan and lease losses; the ability of financial institutions to access sources of liquidity at a reasonable cost; the impact of recent upheaval in the financial markets and the effectiveness of domestic and international governmental actions taken in response, such as the U.S. Treasury's TARP and the FDIC's Temporary Liquidity Guarantee Program, and the effect of such governmental actions on First Financial, its competitors and counterparties, financial markets generally and availability of credit specifically, and the U.S. and international economies, including potentially higher FDIC premiums arising from participation in the Temporary Liquidity Guarantee Program or from increased payments from FDIC insurance funds as a result of depository institution failures; the effects of and changes in policies and laws of regulatory agencies, inflation, and interest rates; technology changes; mergers and acquisitions; the effect of changes in accounting policies and practices; adverse changes in the securities and debt markets; First Financial's success in recruiting and retaining the necessary personnel to support business growth and expansion and maintain sufficient expertise to support increasingly complex products and services; the cost and effects of litigation and of unexpected or adverse outcomes in such litigation; uncertainties arising from First Financial's participation in the TARP, including impacts on employee recruitment and retention and other business practices, and uncertainties concerning the potential redemption of the U.S. Treasury's preferred stock investment under the program, including the timing of, regulatory approvals for, and conditions placed upon, any such redemption; and First Financial's success at managing the risks involved in the foregoing. For further discussion of certain factors that may cause such forward-looking statements to differ materially from actual results, refer to the 2008 Form 10-K and other public documents filed with the Securities and Exchange Commission (SEC). These documents are available at no cost within the investor relations section of First Financial's website at http://www.bankatfirst.com/investors and on the SEC's website at http://www.sec.gov/. Additional information will also be set forth in our quarterly report on Form 10-Q for the quarter ended March 31, 2009, which will be filed with the SEC no later than May 11, 2009.
About First Financial Bancorp
First Financial Bancorp is a Cincinnati, Ohio based bank holding company with $3.8 billion in assets. Its banking subsidiary, First Financial Bank, N.A., founded in 1863, provides retail and commercial banking products and services, and investment and insurance products through its 82 retail banking locations in Ohio, Kentucky and Indiana. The bank's wealth management division, First Financial Wealth Resource Group, provides investment management, traditional trust, brokerage, private banking, and insurance services, and has approximately $1.6 billion in assets under management. Additional information about the company, including its products, services, and banking locations, is available at http://www.bankatfirst.com/investors.
FIRST FINANCIAL BANCORP. CONSOLIDATED FINANCIAL HIGHLIGHTS (Dollars in thousands, except per share) (Unaudited) Three months ended Mar. 31, Dec. 31, Sep. 30, Jun. 30, Mar. 31, 2009 2008 2008 2008 2008 ---- ---- ---- ---- ---- RESULTS OF OPERATIONS Net interest income $30,928 $30,129 $29,410 $28,414 $28,249 Net income $5,735 $2,084 $5,732 $7,808 $7,338 Net income available to common shareholders $5,157 $2,084 $5,732 $7,808 $7,338 Net earnings per common share - basic $0.14 $0.06 $0.15 $0.21 $0.20 Net earnings per common share - diluted $0.14 $0.06 $0.15 $0.21 $0.20 Dividends declared per common share $0.10 $0.17 $0.17 $0.17 $0.17 KEY FINANCIAL RATIOS Return on average assets 0.62% 0.23% 0.66% 0.93% 0.89% Return on average shareholders' equity 6.63% 2.89% 8.24% 11.26% 10.66% Return on average common shareholders' equity 7.67% 2.97% 8.24% 11.26% 10.66% Return on average tangible common shareholders' equity 8.57% 3.32% 9.21% 12.57% 11.91% Net interest margin 3.61% 3.67% 3.68% 3.72% 3.78% Net interest margin (fully tax equivalent) (1) 3.65% 3.71% 3.73% 3.78% 3.85% Ending equity as a percent of ending assets 9.29% 9.42% 7.89% 7.96% 8.36% Ending common equity as a percent of ending assets 7.24% 7.31% 7.89% 7.96% 8.36% Ending tangible common equity as a percent of: Ending tangible assets 6.54% 6.52% 7.13% 7.18% 7.55% Risk-weighted Assets 8.38% 8.32% 8.86% 8.97% 9.31% Average equity as a percent of average assets 9.29% 8.04% 7.96% 8.29% 8.39% Average common equity as a percent of average assets 7.22% 7.82% 7.96% 8.29% 8.39% Average tangible common equity as a percent of average tangible assets 6.51% 7.05% 7.18% 7.50% 7.58% Book value per common share $7.36 $7.16 $7.40 $7.34 $7.41 Tangible book value per common share $6.59 $6.38 $6.62 $6.57 $6.64 Tier 1 Ratio (2) 12.16% 12.38% 9.80% 9.99% 10.20% Total Capital Ratio (2) 13.39% 13.62% 10.89% 11.06% 11.31% Leverage Ratio (2) 9.51% 10.00% 7.95% 8.21% 8.32% AVERAGE BALANCE SHEET ITEMS Loans (3) $2,717,097 $2,690,895 $2,709,629 $2,648,327 $2,596,483 Investment securities 758,257 574,893 467,524 422,463 343,553 Other earning assets 0 1,737 3,137 4,095 65,799 - ----- ----- ----- ------ Total earning assets $3,475,354 $3,267,525 $3,180,290 $3,074,885 $3,005,835 Total assets $3,777,510 $3,566,051 $3,476,648 $3,361,649 $3,298,663 Noninterest- bearing deposits $416,206 $412,644 $402,604 $394,352 $379,240 Interest- bearing deposits 2,405,700 2,367,121 2,380,037 2,400,940 2,453,028 --------- --------- --------- --------- --------- Total deposits $2,821,906 $2,779,765 $2,782,641 $2,795,292 $2,832,268 Borrowings $566,808 $474,655 $394,708 $256,409 $157,899 Shareholders' equity $350,857 $286,582 $276,594 $278,803 $276,815 CREDIT QUALITY RATIOS Allowance to ending loans 1.33% 1.34% 1.14% 1.11% 1.14% Allowance to nonaccrual loans 147.57% 199.51% 219.47% 199.70% 202.29% Allowance to nonperforming loans 146.38% 197.27% 216.22% 192.50% 194.83% Nonperforming loans to total loans 0.91% 0.68% 0.53% 0.57% 0.58% Nonperforming assets to ending loans, plus OREO 1.04% 0.83% 0.70% 0.71% 0.67% Nonperforming assets to total assets 0.75% 0.60% 0.53% 0.55% 0.53% Net charge-offs to average loans (annualized) 0.55% 0.73% 0.36% 0.40% 0.40% (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) March 31, 2009 regulatory capital ratios are preliminary. (3) Includes loans held for sale. FIRST FINANCIAL BANCORP. CONSOLIDATED QUARTERLY STATEMENTS OF INCOME (Dollars in thousands) (Unaudited) 2009 2008 ---- --------------------------------- First Fourth Third Second Quarter Quarter Quarter Quarter ------- ------- ------- ------- Interest income Loans, including fees $33,657 $37,864 $39,754 $39,646 Investment securities Taxable 8,690 6,697 5,349 4,387 Tax-exempt 434 519 631 792 --- --- --- --- Total investment securities interest 9,124 7,216 5,980 5,179 Federal funds sold 0 6 22 40 - - -- -- Total interest income 42,781 45,086 45,756 44,865 Interest expense Deposits 9,803 12,015 13,608 14,635 Short-term borrowings 507 1,186 1,720 1,130 Long-term borrowings 1,306 1,395 707 384 Subordinated debentures and capital securities 237 361 311 302 --- --- --- --- Total interest expense 11,853 14,957 16,346 16,451 ------ ------ ------ ------ Net interest income 30,928 30,129 29,410 28,414 Provision for loan and lease losses 4,259 10,475 3,219 2,493 ----- ------ ----- ----- Net interest income after provision for loan and lease losses 26,669 19,654 26,191 25,921 Noninterest income Service charges on deposit accounts 4,079 4,752 5,348 4,951 Trust and wealth management fees 3,289 3,745 4,390 4,654 Bankcard income 1,291 1,457 1,405 1,493 Net gains from sales of loans 384 321 376 188 Gains on sales of investment securities 0 0 0 0 Income (loss) on preferred securities 11 (137) (3,400) (221) Other 2,979 2,510 2,359 2,683 ----- ----- ----- ----- Total noninterest income 12,033 12,648 10,478 13,748 Noninterest expenses Salaries and employee benefits 17,653 17,015 16,879 15,895 Net occupancy 2,817 2,635 2,538 2,510 Furniture and equipment 1,802 1,748 1,690 1,617 Data processing 818 840 791 814 Marketing 640 935 622 474 Communication 671 704 601 749 Professional services 953 912 729 1,061 State intangible tax 668 435 697 688 Other 3,912 4,623 3,793 4,161 ----- ----- ----- ----- Total noninterest expenses 29,934 29,847 28,340 27,969 ------ ------ ------ ------ Income before income taxes 8,768 2,455 8,329 11,700 Income tax expense 3,033 371 2,597 3,892 ----- --- ----- ----- Net income 5,735 2,084 5,732 7,808 Dividends on preferred stock 578 0 0 0 --- - - - Net income available to common shareholders $5,157 $2,084 $5,732 $7,808 ====== ====== ====== ====== ADDITIONAL DATA Net earnings per common share -basic $0.14 $0.06 $0.15 $0.21 Net earnings per common share -diluted $0.14 $0.06 $0.15 $0.21 Dividends declared per common share $0.10 $0.17 $0.17 $0.17 Return on average assets 0.62% 0.23% 0.66% 0.93% Return on average shareholders' equity 6.63% 2.89% 8.24% 11.26% Interest income $42,781 $45,086 $45,756 $44,865 Tax equivalent adjustment 363 360 424 510 --- --- --- --- Interest income - tax equivalent 43,144 45,446 46,180 45,375 Interest expense 11,853 14,957 16,346 16,451 ------ ------ ------ ------ Net interest income - tax equivalent $31,291 $30,489 $29,834 $28,924 ======= ======= ======= ======= Net interest margin 3.61% 3.67% 3.68% 3.72% Net interest margin (fully tax equivalent) (1) 3.65% 3.71% 3.73% 3.78% Full-time equivalent employees 1,063 1,061 1,052 1,058 2008 ------------------ % Change First Full % Change Comparable Quarter Year Linked Qtr. Qtr. ------- ------ ----------- ---------- Interest income Loans, including fees $42,721 $159,985 (11.1%) (21.2%) Investment securities Taxable 3,521 19,954 29.8% 146.8% Tax-exempt 791 2,733 (16.4%) (45.1%) --- ----- ----- ----- Total investment securities interest 4,312 22,687 26.4% 111.6% Federal funds sold 565 633 (100.0%) (100.0%) --- --- ------ ------ Total interest income 47,598 183,305 (5.1%) (10.1%) Interest expense Deposits 17,739 57,997 (18.4%) (44.7%) Short-term borrowings 792 4,828 (57.3%) (36.0%) Long-term borrowings 406 2,892 (6.4%) 221.7% Subordinated debentures and capital securities 412 1,386 (34.3%) (42.5%) --- ----- ----- ----- Total interest expense 19,349 67,103 (20.8%) (38.7%) ------ ------ ----- ----- Net interest income 28,249 116,202 2.7% 9.5% Provision for loan and lease losses 3,223 19,410 (59.3%) 32.1% ----- ------ ----- ---- Net interest income after provision for loan and lease losses 25,026 96,792 35.7% 6.6% Noninterest income Service charges on deposit accounts 4,607 19,658 (14.2%) (11.5%) Trust and wealth management fees 4,622 17,411 (12.2%) (28.8%) Bankcard income 1,298 5,653 (11.4%) (0.5%) Net gains from sales of loans 219 1,104 19.6% 75.3% Gains on sales of investment securities 1,585 1,585 N/M (100.0%) Income (loss) on preferred securities 20 (3,738) (108.0%) (45.0%) Other 2,524 10,076 18.7% 18.0% ----- ------ ---- ---- Total noninterest income 14,875 51,749 (4.9%) (19.1%) Noninterest expenses Salaries and employee benefits 17,073 66,862 3.7% 3.4% Net occupancy 2,952 10,635 6.9% (4.6%) Furniture and equipment 1,653 6,708 3.1% 9.0% Data processing 793 3,238 (2.6%) 3.2% Marketing 517 2,548 (31.6%) 23.8% Communication 805 2,859 (4.7%) (16.6%) Professional services 761 3,463 4.5% 25.2% State intangible tax 686 2,506 53.6% (2.6%) Other 3,780 16,357 (15.4%) 3.5% ----- ------ ----- --- Total noninterest expenses 29,020 115,176 0.3% 3.1% ------ ------- --- --- Income before income taxes 10,881 33,365 257.1% (19.4%) Income tax expense 3,543 10,403 717.5% (14.4%) ----- ------ ----- ----- Net income 7,338 22,962 175.2% (21.8%) Dividends on preferred stock 0 0 N/M N/M - -- --- --- Net income available to common shareholders $7,338 $22,962 147.5% (29.7%) ====== ======= ===== ===== ADDITIONAL DATA Net earnings per common share - basic $0.20 $0.62 Net earnings per common share - diluted $0.20 $0.61 Dividends declared per common share $0.17 $0.68 Return on average assets 0.89% 0.67% Return on average shareholders' equity 10.66% 8.21% Interest income $47,598 $183,305 (5.1%) (10.1%) Tax equivalent adjustment 514 1,808 0.8% (29.4%) --- ----- --- ----- Interest income - tax equivalent 48,112 185,113 (5.1%) (10.3%) Interest expense 19,349 67,103 (20.8%) (38.7%) ------ ------ ----- ----- Net interest income - tax equivalent $28,763 $118,010 2.6% 8.8% ======= ======== === === Net interest margin 3.78% 3.71% Net interest margin (fully tax equivalent) (1) 3.85% 3.77% Full-time equivalent employees 1,056 1,061 (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 STATEMENTS OF CONDITION (Dollars in thousands) (Unaudited) Mar. 31, Dec. 31, Sep. 30, 2009 2008 2008 ---- ---- ---- ASSETS Cash and due from banks $79,563 $100,935 $90,341 Federal funds sold 0 0 0 Investment securities trading 72 61 198 Investment securities available- for-sale 732,868 659,756 492,554 Investment securities held-to- maturity 4,701 4,966 5,037 Other investments 27,976 27,976 34,976 Loans held for sale 6,342 3,854 2,437 Loans Commercial 850,111 807,720 819,430 Real estate - construction 251,115 232,989 203,809 Real estate - commercial 859,303 846,673 814,578 Real estate - residential 360,013 383,599 424,902 Installment 91,767 98,581 106,456 Home equity 298,000 286,110 276,943 Credit card 26,191 27,538 27,047 Lease financing 45 50 92 -- -- -- Total loans 2,736,545 2,683,260 2,673,257 Less Allowance for loan and lease losses 36,437 35,873 30,353 ------ ------ ------ Net loans 2,700,108 2,647,387 2,642,904 Premises and equipment 85,385 84,105 81,989 Goodwill 28,261 28,261 28,261 Other intangibles 500 1,002 872 Accrued interest and other assets 143,420 140,839 132,107 ------- ------- ------- Total Assets $3,809,196 $3,699,142 $3,511,676 ========== ========== ========== LIABILITIES Deposits Interest-bearing $622,263 $636,945 $580,417 Savings 705,229 583,081 608,438 Time 1,137,398 1,150,208 1,118,511 --------- --------- --------- Total interest-bearing deposits 2,464,890 2,370,234 2,307,366 Noninterest-bearing 427,068 413,283 404,315 ------- ------- ------- Total deposits 2,891,958 2,783,517 2,711,681 Short-term borrowings Federal funds purchased and securities sold under agreements to repurchase 162,549 147,533 45,495 Federal Home Loan Bank 160,000 150,000 215,000 Other 40,000 57,000 53,000 ------ ------ ------ Total short-term borrowings 362,549 354,533 313,495 Long-term debt 136,832 148,164 152,568 Other long-term debt 20,620 20,620 20,620 Accrued interest and other liabilities 43,477 43,981 36,092 ------ ------ ------ Total Liabilities 3,455,436 3,350,815 3,234,456 SHAREHOLDERS' EQUITY Preferred stock 78,075 78,019 0 Common stock 394,887 394,169 391,249 Retained earnings 77,695 76,339 80,632 Accumulated other comprehensive loss (8,564) (11,905) (6,285) Treasury stock, at cost (188,333) (188,295) (188,376) -------- -------- -------- Total Shareholders' Equity 353,760 348,327 277,220 ------- ------- ------- Total Liabilities and Shareholders' Equity $3,809,196 $3,699,142 $3,511,676 ========== ========== ========== % Change % Change Jun. 30, Mar. 31, Linked Comparable 2008 2008 Qtr. Qtr. ---- ---- ------ ---------- ASSETS Cash and due from banks $106,248 $102,246 (21.2%) (22.2%) Federal funds sold 4,005 2,943 N/M (100.0%) Investment securities trading 3,598 3,820 18.0% (98.1%) Investment securities available-for-sale 421,697 345,145 11.1% 112.3% Investment securities held-to-maturity 5,316 5,414 (5.3%) (13.2%) Other investments 34,632 34,293 0.0% (18.4%) Loans held for sale 2,228 4,108 64.6% 54.4% Loans Commercial 814,779 789,922 5.2% 7.6% Real estate - construction 186,178 172,737 7.8% 45.4% Real estate - commercial 769,555 726,397 1.5% 18.3% Real estate - residential 499,002 519,790 (6.1%) (30.7%) Installment 115,575 126,623 (6.9%) (27.5%) Home equity 263,063 254,200 4.2% 17.2% Credit card 26,399 25,528 (4.9%) 2.6% Lease financing 111 258 (10.0%) (82.6%) --- --- ----- ----- Total loans 2,674,662 2,615,455 2.0% 4.6% Less Allowance for loan and lease losses 29,580 29,718 1.6% 22.6% ------ ------ --- ---- Net loans 2,645,082 2,585,737 2.0% 4.4% Premises and equipment 79,380 78,585 1.5% 8.7% Goodwill 28,261 28,261 0.0% 0.0% Other intangibles 641 659 (50.1%) (24.1%) Accrued interest and other assets 128,874 132,054 1.8% 8.6% ------- ------- --- --- Total Assets $3,459,962 $3,323,265 3.0% 14.6% ========== ========== === ==== LIABILITIES Deposits Interest-bearing $575,236 $610,154 (2.3%) 2.0% Savings 615,613 617,059 20.9% 14.3% Time 1,167,024 1,206,750 (1.1%) (5.7%) --------- --------- ---- ---- Total interest- bearing deposits 2,357,873 2,433,963 4.0% 1.3% Noninterest-bearing 419,045 405,015 3.3% 5.4% ------- ------- --- --- Total deposits 2,776,918 2,838,978 3.9% 1.9% Short-term borrowings Federal funds purchased and securities sold under agreements to repurchase 25,932 27,320 10.2% 495.0% Federal Home Loan Bank 237,900 6,500 6.7% 2361.5% Other 54,000 53,000 (29.8%) (24.5%) ------ ------ ----- ----- Total short-term borrowings 317,832 86,820 2.3% 317.6% Long-term debt 41,263 42,380 (7.6%) 222.9% Other long-term debt 20,620 20,620 0.0% 0.0% Accrued interest and other liabilities 28,039 56,698 (1.1%) (23.3%) ------ ------ ---- ----- Total Liabilities 3,184,672 3,045,496 3.1% 13.5% SHAREHOLDERS' EQUITY Preferred stock 0 0 0.1% N/M Common stock 390,545 389,986 0.2% 1.3% Retained earnings 81,263 79,818 1.8% (2.7%) Accumulated other comprehensive loss (8,236) (3,800) 28.1% (125.4%) Treasury stock, at cost (188,282) (188,235) 0.0% (0.1%) -------- -------- --- ---- Total Shareholders' Equity 275,290 277,769 1.6% 27.4% ------- ------- --- ---- Total Liabilities and Shareholders' Equity $3,459,962 $3,323,265 3.0% 14.6% ========== ========== === ==== N/M = Not meaningful. FIRST FINANCIAL BANCORP. AVERAGE CONSOLIDATED STATEMENTS OF CONDITION (Dollars in thousands) (Unaudited) Quarterly Averages Mar. 31, Dec. 31, Sep. 30, 2009 2008 2008 ---- ---- ---- ASSETS Cash and due from banks $85,650 $87,307 $89,498 Federal funds sold 0 1,737 3,137 Investment securities 758,257 574,893 467,524 Loans held for sale 5,085 1,876 2,080 Loans Commercial 825,399 809,869 819,199 Real estate - construction 242,750 220,839 192,731 Real estate - commercial 858,403 830,121 797,143 Real estate - residential 372,853 417,499 490,089 Installment 94,881 102,814 110,933 Home equity 291,038 280,900 270,659 Credit card 26,641 26,902 26,692 Lease financing 47 75 103 -- -- --- Total loans 2,712,012 2,689,019 2,707,549 Less Allowance for loan and lease losses 37,189 29,710 29,739 ------ ------ ------ Net loans 2,674,823 2,659,309 2,677,810 Premises and equipment 84,932 83,307 81,000 Goodwill 28,261 28,261 28,261 Other intangibles 595 613 639 Accrued interest and other assets 139,907 128,748 126,699 ------- ------- ------- Total Assets $3,777,510 $3,566,051 $3,476,648 ========== ========== ========== LIABILITIES Deposits Interest-bearing $642,934 $611,129 $609,992 Savings 620,509 604,370 611,713 Time 1,142,257 1,151,622 1,158,332 --------- --------- --------- Total interest- bearing deposits 2,405,700 2,367,121 2,380,037 Noninterest-bearing 416,206 412,644 402,604 ------- ------- ------- Total deposits 2,821,906 2,779,765 2,782,641 Short-term borrowings Federal funds purchased and securities sold under agreements to repurchase 127,652 98,690 36,476 Federal Home Loan Bank 218,100 150,867 206,741 Other 56,078 53,044 53,836 ------ ------ ------ Total short-term borrowings 401,830 302,601 297,053 Long-term debt 144,358 151,434 77,035 Other long-term debt 20,620 20,620 20,620 ------ ------ ------ Total borrowed funds 566,808 474,655 394,708 Accrued interest and other liabilities 37,939 25,049 22,705 ------ ------ ------ Total Liabilities 3,426,653 3,279,469 3,200,054 SHAREHOLDERS' EQUITY Preferred stock 78,038 7,805 0 Common stock 394,500 391,601 390,861 Retained earnings 77,317 81,932 82,636 Accumulated other comprehensive loss (10,677) (6,462) (8,594) Treasury stock, at cost (188,321) (188,294) (188,309) -------- -------- -------- Total Shareholders' Equity 350,857 286,582 276,594 ------- ------- ------- Total Liabilities and Shareholders' Equity $3,777,510 $3,566,051 $3,476,648 ========== ========== ========== Quarterly Averages Jun. 30, Mar. 31, 2008 2008 ---- ---- ASSETS Cash and due from banks $81,329 $86,879 Federal funds sold 4,095 65,799 Investment securities 422,463 345,303 Loans held for sale 3,034 3,122 Loans Commercial 805,122 781,358 Real estate - construction 179,078 162,008 Real estate - commercial 747,077 708,779 Real estate - residential 508,837 530,567 Installment 121,000 132,876 Home equity 257,954 251,706 Credit card 26,043 25,745 Lease financing 182 322 --- --- Total loans 2,645,293 2,593,361 Less Allowance for loan and lease losses 29,248 28,860 ------ ------ Net loans 2,616,045 2,564,501 Premises and equipment 78,933 78,969 Goodwill 28,261 28,261 Other intangibles 652 680 Accrued interest and other assets 126,837 125,149 ------- ------- Total Assets $3,361,649 $3,298,663 ========== ========== LIABILITIES Deposits Interest-bearing $590,464 $623,206 Savings 617,029 610,449 Time 1,193,447 1,219,373 --------- --------- Total interest- bearing deposits 2,400,940 2,453,028 Noninterest-bearing 394,352 379,240 ------- ------- Total deposits 2,795,292 2,832,268 Short-term borrowings Federal funds purchased and securities sold under agreements to repurchase 25,771 26,261 Federal Home Loan Bank 114,654 614 Other 53,758 66,154 ------ ------ Total short-term borrowings 194,183 93,029 Long-term debt 41,606 44,250 Other long-term debt 20,620 20,620 ------ ------ Total borrowed funds 256,409 157,899 Accrued interest and other liabilities 31,145 31,681 ------ ------ Total Liabilities 3,082,846 3,021,848 SHAREHOLDERS' EQUITY Preferred stock 0 0 Common stock 390,237 391,079 Retained earnings 81,045 79,951 Accumulated other comprehensive loss (4,211) (4,977) Treasury stock, at cost (188,268) (189,238) -------- -------- Total Shareholders' Equity 278,803 276,815 ------- ------- Total Liabilities and Shareholders' Equity $3,361,649 $3,298,663 ========== ========== FIRST FINANCIAL BANCORP. NET INTEREST MARGIN RATE / VOLUME ANALYSIS (1) (Dollars in thousands) (Unaudited) Quarterly Averages ---------------------------------------------------- Mar. 31, Dec. 31, Mar. 31, 2009 2008 2008 Balance Yield Balance Yield Balance Yield ------- ----- ------- ----- ------- ----- Earning assets Investment securities $758,257 4.88% $574,893 4.99% $343,553 5.05% Federal funds sold - 0.00% 1,737 1.37% 65,799 3.45% Gross loans (2) 2,717,097 5.02% 2,690,895 5.60% 2,596,483 6.62% --------- ---- --------- ---- --------- ---- Total earning assets 3,475,354 4.99% 3,267,525 5.49% 3,005,835 6.37% Nonearning assets Allowance for loan and lease losses (37,189) (29,710) (28,860) Cash and due from banks 85,650 87,307 86,879 Accrued interest and other assets 253,695 240,929 234,809 ------- ------- ------- Total assets $3,777,510 $3,566,051 $3,298,663 ========== ========== ========== Interest-bearing liabilities Total interest- bearing deposits $2,405,700 1.65% $2,367,121 2.02% $2,453,028 2.91% Borrowed funds Short-term borrowings 401,830 0.51% 302,601 1.56% 93,029 3.42% Long-term debt 144,358 3.67% 151,434 3.66% 44,250 3.69% Other long- term debt 20,620 4.66% 20,620 6.96% 20,620 8.04% ------ ---- ------ ---- ------ ---- Total borrowed funds 566,808 1.47% 474,655 2.47% 157,899 4.10% ------- ---- ------- ---- ------- ---- Total interest- bearing liabil- ities 2,972,508 1.62% 2,841,776 2.09% 2,610,927 2.98% Noninterest- bearing liabilities Noninterest- bearing demand deposits 416,206 412,644 379,240 Other liabilities 37,939 25,049 31,681 Shareholders' equity 350,857 286,582 276,815 ------- ------- ------- Total liabilities & shareholders' equity $3,777,510 $3,566,051 $3,298,663 ========== ========== ========== Net interest income (1) $30,928 $30,129 $28,249 ======= ======= ======= Net interest spread (1) 3.37% 3.40% 3.39% ==== ==== ==== Net interest margin (1) 3.61% 3.67% 3.78% ==== ==== ==== Linked Qtr. Comparable Income Qtr. Income Variance Variance ------------- ------------ Rate Volume Total Rate Volume Total ---- ------ ----- ---- ------ ----- Earning assets Investment securities $(222) $2,130 $1,908 $(157) $4,969 $4,812 Federal funds sold (6) - (6) (565) - (565) Gross loans (2) (4,165) (42) (4,207) (10,558) 1,494 (9,064) ------ --- ------ ------- ----- ------ Total earning assets (4,393) 2,088 (2,305) (11,280) 6,463 (4,817) Nonearning assets Allowance for loan and lease losses Cash and due from banks Accrued interest and other assets Total assets Interest-bearing liabilities Total interest- bearing deposits $(2,263) $51 $(2,212) $(7,743) $(193) $(7,936) Borrowed funds Short-term borrowings (800) 121 (679) (675) 390 (285) Long-term debt (10) (79) (89) (6) 906 900 Other long- term debt (121) (3) (124) (175) - (175) ---- -- ---- ---- --- ---- Total borrowed funds (931) 39 (892) (856) 1,296 440 ---- -- ---- ---- ----- --- Total interest- bearing liabilities (3,194) 90 (3,104) (8,599) 1,103 (7,496) Noninterest-bearing liabilities Noninterest-bearing demand deposits Other liabilities Shareholders' equity Total liabilities & shareholders' equity Net interest income (1) $(1,199) $1,998 $799 $(2,681) $5,360 $2,679 ======= ====== ==== ======= ====== ====== Net interest spread (1) Net interest margin (1) (1) Not tax equivalent. (2) Loans held for sale and nonaccrual loans are both included in gross loans. FIRST FINANCIAL BANCORP. CREDIT QUALITY (Dollars in thousands) (Unaudited) Mar. 31, Dec. 31, Sep. 30, Jun. 30, Mar. 31, 2009 2008 2008 2008 2008 ---- ---- ---- ---- ---- ALLOWANCE FOR LOAN AND LEASE LOSS ACTIVITY Balance at beginning of period $35,873 $30,353 $29,580 $29,718 $29,057 Provision for loan and lease losses 4,259 10,475 3,219 2,493 3,223 Gross charge-offs Commercial 2,521 2,168 1,568 946 545 Real estate - construction 0 0 0 0 0 Real estate - commercial 382 2,083 48 589 806 Real estate - residential 231 47 335 227 39 Installment 400 493 424 482 564 Home equity 218 238 135 525 651 All other 308 374 426 426 498 --- --- --- --- --- Total gross charge- offs 4,060 5,403 2,936 3,195 3,103 Recoveries Commercial 60 165 179 166 144 Real estate - construction 0 0 0 0 0 Real estate - commercial 16 40 37 19 3 Real estate - residential 2 5 4 5 11 Installment 254 189 225 246 315 Home equity 0 0 0 30 0 All other 33 49 45 98 68 -- -- -- -- -- Total recoveries 365 448 490 564 541 --- --- --- --- --- Total net charge-offs 3,695 4,955 2,446 2,631 2,562 ----- ----- ----- ----- ----- Ending allowance for loan and lease losses $36,437 $35,873 $30,353 $29,580 $29,718 ======= ======= ======= ======= ======= NET CHARGE-OFFS TO AVERAGE LOANS AND LEASES (ANNUALIZED) Commercial 1.21% 0.98% 0.67% 0.39% 0.21% Real estate - construction 0.00% 0.00% 0.00% 0.00% 0.00% Real estate - commercial 0.17% 0.98% 0.01% 0.31% 0.46% Real estate - residential 0.25% 0.04% 0.27% 0.18% 0.02% Installment 0.62% 1.18% 0.71% 0.78% 0.75% Home equity 0.30% 0.34% 0.20% 0.77% 1.04% All other 4.18% 4.79% 5.66% 5.03% 6.63% ---- ---- ---- ---- ---- Total net charge-offs 0.55% 0.73% 0.36% 0.40% 0.40% ==== ==== ==== ==== ==== COMPONENTS OF NONPERFORMING LOANS, NONPERFORMING ASSETS, AND UNDERPERFORMING ASSETS Nonaccrual loans Commercial $8,652 $6,170 $5,194 $5,447 $3,952 Real estate - commercial 9,170 4,779 3,361 3,592 4,415 Real estate - residential 4,724 5,363 3,742 4,461 4,529 Installment 464 459 417 438 544 Home equity 1,681 1,204 1,084 866 1,221 All other 0 6 32 8 30 - - -- - -- Total nonaccrual loans 24,691 17,981 13,830 14,812 14,691 Restructured loans 201 204 208 554 562 --- --- --- --- --- Total nonperforming loans 24,892 18,185 14,038 15,366 15,253 Other real estate owned (OREO) 3,513 4,028 4,610 3,763 2,368 ----- ----- ----- ----- ----- Total nonperforming assets 28,405 22,213 18,648 19,129 17,621 Accruing loans past due 90 days or more 255 138 241 245 372 --- --- --- --- --- Total underperforming assets $28,660 $22,351 $18,889 $19,374 $17,993 ======= ======= ======= ======= ======= Total classified assets $79,256 $67,393 $58,284 $54,511 $55,302 ======= ======= ======= ======= ======= CREDIT QUALITY RATIOS Allowance for loan and lease losses to Nonaccrual loans 147.57% 199.51% 219.47% 199.70% 202.29% Nonperforming loans 146.38% 197.27% 216.22% 192.50% 194.83% Total ending loans 1.33% 1.34% 1.14% 1.11% 1.14% Nonperforming loans to total loans 0.91% 0.68% 0.53% 0.57% 0.58% Nonperforming assets to Ending loans, plus OREO 1.04% 0.83% 0.70% 0.71% 0.67% Total assets 0.75% 0.60% 0.53% 0.55% 0.53% FIRST FINANCIAL BANCORP. CAPITAL ADEQUACY (Dollars in thousands) (Unaudited) Mar. 31, Dec. 31, Sep. 30, Jun. 30, Mar. 31, 2009 2008 2008 2008 2008 ---- ---- ---- ---- ---- PER COMMON SHARE Market Price High $12.10 $14.30 $14.80 $13.88 $13.81 Low $5.58 $10.81 $8.10 $9.20 $10.19 Close $9.53 $12.39 $14.60 $9.20 $13.45 Average common shares outstanding - basic 37,142,531 37,133,725 37,132,864 37,114,451 37,066,754 Average common shares outstanding - diluted 37,840,954 37,567,032 37,504,231 37,524,789 37,431,918 Ending common shares outstanding 37,474,422 37,481,201 37,476,607 37,483,384 37,488,229 REGULATORY CAPITAL Preliminary Tier 1 Capital $358,834 $356,307 $274,513 $274,372 $272,614 Tier 1 Ratio 12.16% 12.38% 9.80% 9.99% 10.20% Total Capital $395,271 $392,180 $304,866 $303,952 $302,332 Total Capital Ratio 13.39% 13.62% 10.89% 11.06% 11.31% Total Capital in excess of minimum requirement $159,133 $161,896 $80,806 $84,147 $88,553 Total Risk- Weighted Assets $2,951,721 $2,878,548 $2,800,753 $2,747,559 $2,672,242 Leverage Ratio 9.51% 10.00% 7.95% 8.21% 8.32% OTHER CAPITAL RATIOS Ending shareholders' equity to ending assets 9.29% 9.42% 7.89% 7.96% 8.36% Ending common shareholders' equity to ending assets 7.24% 7.31% 7.89% 7.96% 8.36% Ending tangible shareholders' equity to ending tangible assets 8.60% 8.70% 7.13% 7.18% 7.55% Ending tangible common shareholders' equity to ending tangible assets 6.54% 6.52% 7.13% 7.18% 7.55% Average shareholders' equity to average assets 9.29% 8.04% 7.96% 8.29% 8.39% Average common shareholders' equity to average assets 7.22% 7.82% 7.96% 8.29% 8.39% Average tangible shareholders' equity to average tangible assets 8.59% 7.28% 7.18% 7.50% 7.58% Average tangible common shareholders' equity to average tangible assets 6.51% 7.05% 7.18% 7.50% 7.58%
First Financial Bancorp
CONTACT: Investors/Analysts, Patti Forsythe, Vice President, Investor
Relations, +1-513-979-5837, patti.forsythe@bankatfirst.com, Media, Cheryl
Lipp, First Vice President, Marketing Director, +1-513-979-5797,
cheryl.lipp@bankatfirst.com
Web Site: http://www.bankatfirst.com/
