First Financial Bancorp Announces Third Quarter 2022 Financial Results

• Earnings per diluted share of $0.59; $0.61 on an adjusted(1) basis
• Return on average assets of 1.35%; 1.40% on an adjusted(1) basis
• Net interest margin on FTE basis(1) of 3.98%; 53 bp increase from linked quarter
• Loan growth of $377.0 million; 15.9% on an annualized basis
• Strong credit quality with declines in net charge-offs, classified and nonperforming assets from the linked quarter
  
   

CINCINNATI, Ohio, Oct. 20, 2022 /PRNewswire/ -- First Financial Bancorp. (NASDAQ:FFBC) ("First Financial" or the "Company") announced financial results for the three and nine months ended September 30, 2022.  

For the three months ended September 30, 2022, the Company reported net income of $55.7 million, or $0.59 per diluted common share.  These results compare to net income of $51.5 million, or $0.55 per diluted common share, for the second quarter of 2022.  For the nine months ended September 30, 2022, First Financial had earnings per diluted share of $1.57 compared to $1.64 for the same period in 2021.

Return on average assets for the third quarter of 2022 was 1.35% while return on average tangible common equity was 22.29%⁽¹⁾.  These compare to return on average assets of 1.28% and return on average tangible common equity of 20.68%⁽¹⁾ in the second quarter of 2022. 

Third quarter 2022 highlights include:

• Strong loan growth when compared to linked quarter⁽²⁾
• Loan balances increased $377.0 million compared to the second quarter
• Growth of 15.9% on an annualized basis
• Broad based portfolio growth
• Net interest margin of 3.93%, or 3.98% on a fully tax-equivalent basis⁽¹⁾, exceeded expectations
• 53 bp increase to 3.98% from 3.45% in the second quarter due to higher asset yields resulting from higher interest rates
• 89 bp increase in loan yields offset 11 basis point increase in cost of deposits
• Noninterest income of $42.5 million, or $43.4 million as adjusted⁽¹⁾
• Foreign exchange income of $11.8 million exceeded expectations; 12.8% decline from record second quarter
• Leasing business income of $7.1 million; consistent with second quarter
• Wealth management fees remained strong at $5.5 million
• Mortgage banking revenue decreased $1.5 million; 28.8% decrease from the linked quarter
• Other noninterest income decreased $1.4 million in current quarter due to elevated income from investments in limited partnerships in second quarter
• Adjusted⁽¹⁾ for $0.9 million loss on investment securities

⁽¹⁾ Non-GAAP measure.  For details on the calculation of these non-GAAP financial measures and a reconciliation to the GAAP financial measure, see the sections titled "Use of Non-GAAP Financial Measures" in this release and "Appendix: Non-GAAP to GAAP Reconciliation" in the accompanying slide presentation. 

⁽²⁾ The consolidated balance sheets at September 30, 2022, June 30, 2022, March 31, 2022 and December 31, 2021 include assets acquired and liabilities assumed in the Summit Financial transaction.  The fair value measurements of assets acquired and liabilities assumed are subject to refinement for up to one year after the closing date of the acquisition as additional information relative to closing date fair values becomes available.  

• Noninterest expenses of $125.1 million, or $106.1 million as adjusted⁽¹⁾
• Adjustments⁽¹⁾ include $17.2 million tax credit investment writedown and $1.4 million of severance costs
• Increase driven by elevated incentive costs tied to Company performance and higher leasing business expenses during the period
• Efficiency ratio of 69.3%; 58.5% as adjusted⁽¹⁾ 
• Total Allowance for Credit Losses of $141.1 million; Total quarterly provision expense of $8.3 million
• Loans and leases - ACL of $124.1 million, 1.27% of total loans
• Unfunded Commitments - ACL of $17.0 million
• Provision expense driven by loan growth and slower prepayment speeds
• Net charge-offs declined slightly to 7 bps of average loans and leases
• Regulatory capital ratios remain in excess of internal targets
• Total capital ratio of 13.73%
• Tier 1 common equity decreased 9 bps to 10.82%
• Tangible common equity of 5.79%⁽¹⁾; 8.07%⁽¹⁾ excluding impact from AOCI
• Tangible book value per share of $9.48⁽¹⁾

Archie Brown, President and CEO, commented on the quarter, "We are very excited about our third quarter performance.  Adjusted earnings per share increased approximately 9% from the second quarter due to record revenue, which was driven by an 18% increase in net interest income.  Recent rate increases continued to positively impact our asset sensitive balance sheet as our net interest margin accelerated by 53 basis points."  

Mr. Brown continued, "Credit trends remained stable across the portfolio with slight reductions in non-performing loan and net charge off ratios.  Even with these improvements, our loan loss reserve grew modestly to account for loan growth and the intermediate economic outlook." 

Mr. Brown commented on loan growth, "We were very pleased with loan growth in the third quarter.  Loan balances increased by $377 million or 15.9% on an annualized basis, which was driven by increases in C&I, Consumer and Residential Mortgage.  Given our expectations for the economy in the near-term and moderating loan pipelines, we expect loan growth to ease in the coming months."

Mr. Brown continued, "Non-interest income was once again negatively impacted by rising rates and changes made to our overdraft program.  We also experienced an expected decline in foreign exchange income from a record second quarter and mortgage activity suffered from softening demand.  While we expect headwinds in the fourth quarter, we anticipate that fee income will increase modestly to close the year."

Mr. Brown concluded, "Our third quarter performance was strong and we are optimistic we can sustain this momentum over the remainder of 2022 and into the new year.  Our balance sheet is well positioned for rising rates.  In addition, with a loan to deposit ratio under 80%, strong liquidity and positive credit trends, we believe we are well situated to manage a potential economic downturn."

Full detail of the Company's third quarter 2022 performance is provided in the accompanying financial statements and slide presentation.

Teleconference / Webcast Information

First Financial's executive management will host a conference call to discuss the Company's financial and operating results on Friday, October 21, 2022 at 8:30 a.m. Eastern Time.  Members of the public who would like to listen to the conference call should dial (844) 200-6205 (U.S. toll free), (646) 904-5544 (U.S. local) or +1 (929) 526-1599 (International), access code 202818.  The number should be dialed five to ten minutes prior to the start of the conference call.  A replay of the conference call will be available beginning one hour after the completion of the live call at (866) 813-9403 (U.S. toll free), (929) 458-6194 (U.S. local) and +44 204 525-0658 (all other locations), access code 986167.  The recording will be available until November 4, 2022.  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.  The webcast will be archived on the Investor Relations section of the Company's website for 12 months.

Press Release and Additional Information on Website

This press release as well as supplemental information are available to the public through the Investor Relations section of First Financial's website at www.bankatfirst.com.

Use of Non-GAAP Financial Measures

This earnings release contains GAAP financial measures and Non-GAAP financial measures where management believes it to be helpful in understanding the Company's results of operations or financial position.  Where Non-GAAP financial measures are used, the comparable GAAP financial measures, as well as a reconciliation to the comparable GAAP financial measure, can be found in the section titled "Appendix: Non-GAAP to GAAP Reconciliation" in the accompanying slide presentation.

Forward-Looking Statements

Certain statements contained in this report which are not statements of historical fact constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  Words such as ''believes,'' ''anticipates,'' "likely," "expected," "estimated," ''intends'' and other similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements.  Examples of forward-looking statements include, but are not limited to, statements we make about (i) our future operating or financial performance, including revenues, income or loss and earnings or loss per share, (ii) future common stock dividends, (iii) our capital structure, including future capital levels, (iv) our plans, objectives and strategies, and (v) the assumptions that underlie our forward-looking statements.

As with any forecast or projection, forward-looking statements are subject to inherent uncertainties, risks and changes in circumstances that may cause actual results to differ materially from those set forth in the forward-looking statements.  Forward-looking statements are not historical facts but instead express only management's beliefs regarding future results or events, many of which, by their nature, are inherently uncertain and outside of management's control. It is possible that actual results and outcomes may differ, possibly materially, from the anticipated results or outcomes indicated in these forward-looking statements.  Important factors that could cause actual results to differ materially from those in our forward-looking statements include the following, without limitation: 

• economic, market, liquidity, credit, interest rate, operational and technological risks associated with the Company's business;
• future credit quality and performance, including our expectations regarding future loan losses and our allowance for credit losses
• the effect of and changes in policies and laws or regulatory agencies, including the Dodd-Frank Wall Street Reform and Consumer Protection Act and other legislation and regulation relating to the banking industry;
• Management's ability to effectively execute its business plans;
• mergers and acquisitions, including costs or difficulties related to the integration of acquired companies;
• the possibility that any of the anticipated benefits of the Company's acquisitions will not be realized or will not be realized within the expected time period;
• the effect of changes in accounting policies and practices;
• changes in consumer spending, borrowing and saving and changes in unemployment;
• changes in customers' performance and creditworthiness;
• the costs and effects of litigation and of unexpected or adverse outcomes in such litigation;  
• current and future economic and market conditions, including the effects of changes in housing prices, fluctuations in unemployment rates, U.S. fiscal debt, budget and tax matters, geopolitical matters, and any slowdown in global economic growth;
• the adverse impact on the U.S. economy, including the markets in which we operate, of the novel coronavirus, which causes the Coronavirus disease 2019 ("COVID-19"), global pandemic, and the impact on the performance of our loan and lease portfolio, the market value of our investment securities, the availability of sources of funding and the demand for our products;
• our capital and liquidity requirements (including under regulatory capital standards, such as the Basel III capital standards) and our ability to generate capital internally or raise capital on favorable terms;
• financial services reform and other current, pending or future legislation or regulation that could have a negative effect on our revenue and businesses, including the Dodd-Frank Act and other legislation and regulation relating to bank products and services;
• the effect of the current interest rate environment or changes in interest rates or in the level or composition of our assets or liabilities on our net interest income, net interest margin and our mortgage originations, mortgage servicing rights and mortgage loans held for sale;
• the effect of a fall in stock market prices on our brokerage, asset and wealth management businesses;
  
  a failure in or breach of our operational or security systems or infrastructure, or those of our third-party vendors or other service providers, including as a result of cyber attacks;
• the effect of changes in the level of checking or savings account deposits on our funding costs and net interest margin; and
• our ability to develop and execute effective business plans and strategies.

Additional factors that may cause our actual results to differ materially from those described in our forward-looking statements can be found in our Form 10-K for the year ended December 31, 2021, as well as our other filings with the SEC, which are available on the SEC website at www.sec.gov.

All forward-looking statements included in this filing are made as of the date hereof and are based on information available at the time of the filing.  Except as required by law, the Company does not assume any obligation to update any forward-looking statement.

About First Financial Bancorp. 

First Financial Bancorp. is a Cincinnati, Ohio based bank holding company.  As of September 30, 2022, the Company had $16.6 billion in assets, $9.8 billion in loans, $12.3 billion in deposits and $2.0 billion in shareholders' equity.  The Company's subsidiary, First Financial Bank, founded in 1863, provides banking and financial services products through its six lines of business: Commercial, Retail Banking, Investment Commercial Real Estate, Mortgage Banking, Commercial Finance and Wealth Management.  These business units provide traditional banking services to business and retail clients.  Wealth Management provides wealth planning, portfolio management, trust and estate, brokerage and retirement plan services and had approximately $3.0 billion in assets under management as of September 30, 2022.  The Company operated 134 full service banking centers as of September 30, 2022, primarily in Ohio, Indiana, Kentucky and Illinois, 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.

 

 

 

 

 

 

 

 

 

 

 

 

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SOURCE First Financial Bancorp.