EXHIBIT 99.1
First Financial Bancorp Reports Third Quarter 2008 Results
| | § | Net income of $5.7 million and earnings per diluted share of $0.15 |
| | - | Net income of $7.9 million and earnings per diluted share of $0.21, excluding the impact of a $2.2 million after-tax loss related to government sponsored entity preferred stock holdings |
| § | Nonperforming loans and net charge-offs improve from the second quarter of 2008 |
| | § | Capital levels remain strong and continue to exceed regulatory well-capitalized requirement |
| | § | Continued growth in commercial lending |
| | § | Expansion in new and existing markets |
Cincinnati, Ohio - October 29, 2008 -- First Financial Bancorp (Nasdaq: FFBC) announced today results for the three months and nine months ended September 30, 2008. Third quarter 2008 net income was $5.7 million, and earnings per diluted share were $0.15. This compares with second quarter 2008 net income and earnings per diluted share of $7.8 million and $0.21, respectively, and third quarter 2007 net income and earnings per diluted share of $8.4 million and $0.22, respectively. Year-to-date 2008, net income was $20.9 million, and earnings per diluted share were $0.56. This compares with year-to-date 2007 net income and earnings per diluted share of $25.0 million and $0.64, respectively.
Third quarter 2008 net income includes a $2.2 million after-tax loss related to the company’s investment in 200,000 Federal Home Loan Mortgage Corporation (FHLMC) perpetual preferred series V shares. This loss is a result of the decline in market value of the shares following the September 7, 2008 announcement by the U.S. Treasury, the Federal Reserve, and the Federal Housing Finance Agency (FHFA) that the FHFA was placing FHLMC under conservatorship and would eliminate the dividends on its common and preferred shares. Excluding this loss, third quarter 2008 net income and earnings per diluted share were $7.9 million, and $0.21, respectively, and year-to-date 2008 net income and earnings per diluted share were $23.1 million and $0.62, respectively.
Third quarter 2008 return on average assets was 0.66%. Year-to-date 2008 return on average assets was 0.83%, compared with 1.01% for 2007’s comparable period. Third quarter 2008 return on average shareholders’ equity was 8.24%, compared with 11.26% for the second quarter 2008, and 12.03% for the third quarter of 2007. Year-to-date 2008 return on average shareholders’ equity was 10.05%, compared with 11.86% for 2007’s comparable period.
Excluding the loss related to the FHLMC preferred stock holdings, third quarter 2008 return on average assets and return on average shareholders’ equity was 0.90% and 11.35%, respectively; and year-to-date 2008 return on average assets and return on average shareholders’ equity was 0.92% and 11.16%, respectively.
Commenting on the company’s results, Claude Davis, First Financial Bancorp’s President and Chief Executive Officer said, “We reported solid third quarter and year-to-date 2008 results in a volatile and challenging economic environment. Our credit quality performance in the third quarter was consistent with our expectations and reflects our discipline of originating loans within our footprint, strong underwriting policies, and proactive management of resolution strategies for problem credits.
“While we remain highly focused on credit quality, balance sheet management, and capital, we are also continuing to grow within our existing and new markets,” added Mr. Davis. “Recently, we further expanded our presence with a new commercial lending team in Indianapolis, Indiana, and a new business office and retail banking center in the Dayton, Ohio, suburb of Kettering. Construction is currently underway on two new retail banking centers - one in Crown Point, Indiana, and the other in the Cincinnati, Ohio, suburb of Madeira. These new locations are part of our corporate plan, underscore our commitment to the communities we serve, and will contribute to the long-term growth of the company.”
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.
CREDIT QUALITY
Credit quality trends have remained relatively consistent over the past five quarters. Total nonperforming assets as a percent of total assets have ranged from a low of 51 basis points to a high of 55 basis points, and annualized net charge-offs to average loans and leases have been within the company’s expected range, with a low of 23 basis points and a high of 40 basis points.
Delinquency trends have also remained relatively stable over the past five quarters with total loans 30 to 89 days past due at September 30, 2008, of $22.3 million or 0.84% of period end loans, consistent with $22.1 million or 0.83% at June 30, 2008. Management closely monitors these trends and ratios and considers the current level of delinquent loans consistent with its expectation of the total loan portfolio’s behavior.
At September 30, 2008, the commercial real estate and real estate construction loan portfolios totaled $1.0 billion, or 38.1% of total loans, including $152.5 million, or 5.7% of total loans for commercial real estate construction, and $51.3 million, or 1.9% of total loans, for residential construction, land acquisition, and development. First Financial closely monitors the status of all residential construction and land development projects and works proactively with borrowers throughout all stages of the lending relationship.
Over the past five quarters both the home equity net charge-off ratio and ratio of nonaccrual home equity loans to total home equity loans have been below 50 basis points, excluding a few large home equity loan charge-offs in the first and second quarters of 2008 that the company believes were unusual in terms of individual charge-off size. Year-to-date 2008 annualized net charge-offs were 39 basis points of average loans and leases, of which approximately 5 basis points were related to the larger home equity charge-offs recorded earlier this year. The net charge-off level for home equity loans returned to its lower historical level in the third quarter of 2008, and although the company continues to actively monitor its home equity portfolio, it may experience some volatility in future quarters.
Other real estate owned had a net increase of $0.8 million during the third quarter of 2008 from the second quarter of 2008, primarily as a result of net additions from residential lending.
The table below presents First Financial’s key credit quality metrics for the periods ended September 30, 2008, June 30, 2008 and September 30, 2007.
| | | | |
| | | ($ in thousands) | |
| | | September 30, 2008 | | June 30, 2008 | | September 30, 2007 | |
| Total Nonperforming Loans | | $ | 14,038 | | $ | 15,366 | | $ | 13,716 | |
| Total Nonperforming Assets | | $ | 18,648 | | $ | 19,129 | | $ | 16,840 | |
| | | | | | | | | | | |
| Nonperforming Assets as a % of: | | | | | | | | | | |
| Period-End Loans, Plus Other Real Estate Owned | | | 0.70 | % | | 0.71 | % | | 0.65 | % |
| Total Assets | | | 0.53 | % | | 0.55 | % | | 0.51 | % |
| | | | | | | | | | | |
| Nonperforming Loans as a % of Total Loans | | | 0.53 | % | | 0.57 | % | | 0.53 | % |
| | | | | | | | | | | |
| Allowance for Loan & Lease Losses | | $ | 30,353 | | $ | 29,580 | | $ | 29,136 | |
| Allowance for Loan & Lease Losses as a % of: | | | | | | | | | | |
| Period-End Loans | | | 1.14 | % | | 1.11 | % | | 1.12 | % |
| Nonaccrual Loans | | | 219.5 | % | | 199.7 | % | | 221.7 | % |
| Nonperforming Loans | | | 216.2 | % | | 192.5 | % | | 212.4 | % |
| | | | | | | | | | | |
| Total Net Charge-Offs | | $ | 2,446 | | $ | 2,631 | | $ | 1,482 | |
| Annualized Net-Charge-Offs as a % of Average | | | | | | | | | | |
| Loans & Leases | | | 0.36 | % | | 0.40 | % | | 0.23 | % |
| | | | | | | | | | | |
First Financial’s credit quality continues to be favorably impacted by the 2005 decision to shift away from certain low-margin consumer-based lending, including the decision to discontinue the origination of residential real estate loans for retention on the balance sheet. It is also important to note that First Financial does not participate in high risk mortgage lending, including the origination of sub-prime residential real estate loans.
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 $30.4 million allowance for loan and lease losses at September 30, 2008, 1.14% of period end loans, is adequate to absorb probable credit losses inherent in its lending portfolio. Overall credit coverage ratios remained strong, with the allowance for loan and lease losses as a percent of nonaccrual and nonperforming loans at 219.47% and 216.22%, respectively. A large percentage of nonperforming loans are secured by real estate, and this collateral has been appropriately considered in establishing the allowance for loan and lease losses. While First Financial’s credit trends have remained relatively consistent over the past several quarters and the company believes that it is well-positioned to handle the challenging economic environment and avoid many of the troublesome areas facing the financial services industry, the possibility exists that the company could experience higher credit costs over the next several quarters.
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 September 30, 2008. In addition, total regulatory capital exceeded the “minimum” requirement by approximately $80.8 million, on a consolidated basis. At September 30, 2008, First Financial’s regulatory capital ratios were:
| | § | Leverage ratio of 7.95%. |
| | § | Tier 1 capital ratio of 9.80%. |
| | § | Total capital ratio of 10.89%. |
Average tangible equity as a percent of average tangible assets was 7.18% at September 30, 2008, compared with 7.50% at June 30, 2008, and 7.53% at September 30, 2007. The reduction in the average tangible equity ratio has been primarily due to the growth in total average assets.
First Financial Bank, N.A., the subsidiary bank, regulatory capital ratios at September 30, 2008 were:
| | § | Leverage ratio of 8.86%. |
| | § | Total capital ratio of 12.30%. |
Late in the third quarter of 2008, First Financial took steps to further manage the risk profile of its balance sheet by securitizing $58.5 million in residential mortgage loans into agency guaranteed, mortgage-backed securities collateralized by those loans. This resulted in a reduction in credit risk on the balance sheet and a lower regulatory risk weighting for those assets. The assets remain on the balance sheet, but are now accounted for as investment securities available-for-sale rather than residential real estate loans. This securitization resulted in First Financial recognizing a servicing asset of approximately $0.3 million related to the company’s contractual right to service the securitized loans. This mortgage servicing right will be amortized over the period of net servicing income, which is estimated to be sixty months.
First Financial is also evaluating the merits of a sale-leaseback transaction involving certain of its properties. Sale-leaseback transactions have been utilized in the financial services industry as a means to generate higher levels of earning assets by redeploying the current value of real estate. Additionally, a sale-leaseback transaction may provide regulatory capital relief, depending on the risk weighting of the replacement assets. The portfolio under review includes a maximum of 47 of the company’s retail banking locations. A typically structured transaction would result in First Financial selling the properties and simultaneously entering into long-term operating leases. Should the company decide to pursue this strategy, there would be no disruption of services to clients or impact on staff.
The U.S. Treasury Department, working with the Federal Reserve Board, recently announced the Troubled Asset Relief Program (TARP), including the Capital Purchase Program (CPP), both which are intended to stabilize the financial services industry. First Financial is currently analyzing the potential advantages of participating in these programs.
NET INTEREST INCOME & NET INTEREST MARGIN
| | | | | | | | | | | | |
| | | ($ in thousands) | |
| | | Three Months ended | | Nine Months ended | |
| | | | | | | | | | | | |
| | | September 30, 2008 | | June 30, 2008 | | September 30, 2007 | | September 30, 2008 | | September 30, 2007 | |
| Net Interest Income | | $ | 29,410 | | $ | 28,414 | | $ | 29,417 | | $ | 86,073 | | $ | 89,421 | |
| Net Interest Margin | | | 3.68 | % | | 3.72 | % | | 3.88 | % | | 3.72 | % | | 3.99 | % |
| Net Interest Margin | | | | | | | | | | | | | | | | |
| (fully tax equivalent) | | | 3.73 | % | | 3.78 | % | | 3.95 | % | | 3.79 | % | | 4.07 | % |
Overall declines in net interest income and the net interest margin are primarily the result of actions taken by the Federal Reserve to address deteriorating economic conditions. Specifically, the federal funds rate has declined 375 basis points over the past twelve months, which has led to a decline in most market interest rates and negatively impacted the company’s asset sensitive balance sheet. Earning asset growth in the commercial, commercial real estate, and construction loan portfolios, as well as growth in the investment securities portfolio, has partially offset the effects of the decline in market interest rates on net interest income.
Third quarter 2008 net interest income increased from the second quarter of 2008 primarily due to the 14.5% growth in the investment portfolio over the same time period and disciplined pricing on deposits, which substantially offset the impact on loan yields from the decline in market interest rates. The linked-quarter decline in the net interest margin reflects a 7 basis point negative impact from the increase in earnings assets related primarily to the investment portfolio.
Third quarter 2008 net interest income was relatively flat with third quarter 2007 net interest income. Loan growth and growth in the investment portfolio, combined with the continued shift from time deposits to transaction-based accounts partially offset the impact from the decline in overall market interest rates.
Net interest income for the nine months ended September 30, 2008 declined $3.3 million or 3.7% from 2007’s comparable period primarily as a result of decreasing market interest rates, offset by loan growth and growth in the investment portfolio, as well as a shift in deposit balances from higher cost certificates of deposit to lower cost transaction-based accounts.
During the third quarter of 2008, First Financial entered into a $50.0 million two-year interest rate swap to hedge the risk of overall changes in cash flows on a designated prime-based loan portfolio. The execution of this receive fixed/pay floating instrument is consistent with the company’s risk management objective and strategy to reduce exposure to variability in cash flows relating to its variable-rate assets. This interest rate swap will effectively fix the company’s interest rate on $50.0 million of loans at 5.88%.
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
| | § | Third quarter 2008 noninterest income was $10.5 million, compared with $13.7 million in the second quarter of 2008, and $14.5 million in the third quarter of 2007. |
| | § | Excluding the $3.4 million loss related to the FHLMC perpetual preferred stock holdings, third quarter 2008 noninterest income was $13.9 million. |
| | § | Year-to-date 2008 noninterest income was $39.1 million, compared with $43.3 million in 2007’s comparable period. |
| § | Excluding the $3.6 million year-to-date 2008 loss related to the FHLMC perpetual preferred stock holdings, year-to-date 2008 noninterest income was $42.7 million. |
Excluding the loss related to the FHLMC perpetual preferred stock holdings, third quarter 2008 noninterest income was relatively unchanged from the second quarter of 2008, and approximately $0.6 million lower than 2007’s third quarter. Third quarter 2008 service charges on deposits increased $0.4 million from the second quarter of 2008, offsetting a $0.3 million decline in investment advisory fees and lower brokerage revenue. 2007’s third quarter included a $0.4 million gain from the sale of investment securities. Excluding this gain, third quarter 2008 noninterest income declined by $0.2 million from the third quarter of 2007. This decline was attributable to a $0.3 million decrease in investment advisory and trust fees in 2008’s third quarter due to lower equity market values as a result of overall market declines. Assets under management by the company's wealth management division have declined approximately $100.0 million, or 5.0% since June 30, 2008.
Noninterest income for the nine months ended September 30, 2008 declined $4.2 million from 2007’s comparable period. In addition to the $3.6 million year-to-date 2008 loss related to the FHLMC perpetual preferred stock holdings, year-to-date 2008 noninterest income also included a first quarter $1.6 million gain associated with the partial redemption of Visa Inc. common shares. 2007’s comparable period included a $1.1 million gain on the sale of residential mortgage servicing rights, and a $0.4 million gain on the sale of investment securities. Excluding these items, year-to-date 2008 noninterest income declined $0.8 million from 2007’s comparable period, primarily due to lower earnings on banked-owned life insurance.
NONINTEREST EXPENSE
| | § | Third quarter 2008 noninterest expense was $28.3 million, compared with $28.0 million in the second quarter of 2008, and $28.7 million in the third quarter of 2007. |
| | § | Year-to-date 2008 noninterest expense was $85.3 million, compared with $89.4 million in 2007’s comparable period. |
Third quarter 2008 noninterest expense increased approximately $0.4 million from the second quarter of 2008, and declined approximately $0.4 million from the third quarter of 2007. Second quarter 2008 non interest expense included a $1.3 million reduction in the liability for retiree medical benefits. Excluding this reduction, third quarter 2008 noninterest expense declined approximately $0.9 million from 2008’s second quarter, primarily due to lower salaries, benefits, professional fees, and travel costs, offset by increases in marketing costs. The slight decline from 2007’s third quarter was primarily due to decreases in salaries, benefits, data processing, and professional services, offset by increases in marketing costs.
Noninterest expense for the nine months ended September 30, 2008 declined $4.0 million from 2007’s comparable period. Year-to-date 2008 noninterest expense includes the previously mentioned $1.3 million reduction in the liability for retiree medical benefits. Excluding this reduction, year-to-date 2008 noninterest expense declined $2.7 million. The remainder of the year-to-date 2008 decline was primarily due to lower salaries, benefits, data processing, professional fees, and marketing costs.
INCOME TAXES
Income tax expense was $2.6 million and the effective tax rate was 31.18% for the third quarter of 2008, compared with income tax expense of $4.2 million and an effective tax rate of 33.46% for the third quarter of 2007. Income tax expense was $10.0 million and the effective tax rate was 32.46% for the nine months ended September 30, 2008, compared with income tax expense of $12.4 million and an effective tax rate of 33.14% for the nine-month period ending September 30, 2007.
LOANS
As previously discussed, late in the third quarter, First Financial securitized $58.5 million in residential mortgage loans into agency guaranteed mortgage-backed securities. The assets remain on the balance sheet, but are now accounted for as investment securities available-for-sale rather than residential real estate loans. This transaction had an immaterial impact on the average loan balances for the third quarter and year-to-date 2008.
Overall declines in certain period-end and average loans are a result of the company’s 2005 decision to shift away from certain consumer-based lending activities. As a result, the residential real estate and indirect installment loan portfolios have declined $234.2 million and $220.0 million, respectively.
Third Quarter 2008 versus Second Quarter 2008
| | § | Average total loans increased $62.3 million, or 9.4% on an annualized basis. |
| | § | Average commercial, commercial real estate, and construction loans increased $77.8 million, or 17.9% on an annualized basis. |
Third Quarter 2008 versus Third Quarter 2007
| | § | Average total loans increased $133.5 million, or 5.2%. |
| | § | Average commercial, commercial real estate, and construction loans increased $221.8 million, or 14.0%. |
Year-to-Date 2008 versus Year-to-Date 2007
| | § | Average total loans increased $119.3 million, or 4.7%. |
| | § | Average commercial, commercial real estate, and construction loans increased $223.5 million, or 14.8%. |
INVESTMENTS
During the second quarter of 2008, First Financial began to increase the size of its investment portfolio through the purchase of highly-rated agency pass-through mortgage-backed securities. Approximately $68.0 million of securities were added during the third quarter of 2008, bringing the total additions for the year to approximately $189.5 million. The investment portfolio as a percent of total assets remains low relative to peers. The company continues to review various portfolio strategies that may increase the size of its investment portfolio and its absolute level of earnings, while balancing capital and liquidity targets. Among other factors, the portfolio selection criteria avoids securities backed by sub-prime assets and also those containing assets that would give rise to material geographic concentrations. At September 30, 2008, First Financial held approximately 72.9% of its available-for-sale securities in mortgage related instruments, substantially all of which are held in highly rated agency pass-through residential mortgage instruments.
Securities available-for-sale were $492.6 million at September 30, 2008, compared with $307.9 million at September 30, 2007, and $421.7 million at June 30, 2008. The combined investment portfolio was 15.2% and 10.4% of total assets at September 30, 2008 and 2007, respectively, and 13.5% of total assets at June 30, 2008.
The company recorded as a component of equity, in accumulated other comprehensive income, an unrealized gain in the investment portfolio of approximately $0.5 million at September 30, 2008, compared with an unrealized loss of $0.9 million at June 30, 2008, and an unrealized loss of $1.3 million at September 30, 2007.
In the first quarter of 2008, First Financial adopted FASB Statement No. 159 (SFAS No. 159), “The Fair Value Option for Financial Assets and Financial Liabilities - Including an Amendment of FASB Statement No. 115.” The company applied the fair value option to its equity securities of government sponsored entities (“GSE”), specifically 200,000 FHLMC perpetual preferred series V shares; and these shares are classified as trading assets. Third quarter 2008 financial results included a $3.4 million loss related to the company’s investment of these securities. As previously mentioned, this loss is a result of the decline in market value of the shares following the September 7, 2008 announcement by the U.S. Treasury, the Federal Reserve, and the FHFA, was placing FHLMC under conservatorship and would eliminate the dividends on its common and preferred stock. The fair value accounting treatment discussed above requires First Financial to recognize in its income statement both the market value increases and decreases in future periods.
DEPOSITS & FUNDING
Third Quarter 2008 versus Second Quarter 2008
| | § | Average total deposits declined $12.7 million, or 1.8% on an annualized basis. |
| | § | Average noninterest-bearing deposits increased $8.3 million, or 8.3% on an annualized basis. |
| | § | Average transaction account balances increased $14.2 million, or 4.7% on an annualized basis. |
| | § | Average total interest-bearing deposits declined $20.9 million, or 3.5%, on an annualized basis. |
Third Quarter 2008 versus Third Quarter 2007
| | § | Average total deposits declined $53.8 million, or 1.9%. |
| | § | Average noninterest-bearing deposits increased $17.0 million, or 4.4%. |
| | § | Average transaction account balances increased $2.8 million, or 0.2%. |
| | § | Average total interest-bearing deposits declined $70.8 million, or 2.9%. |
Year-to-Date 2008 versus Year-to-Date 2007
| | § | Average total deposits declined $14.8 million, or 0.5%. |
| | § | Average noninterest-bearing deposits declined $5.3 million, or 1.3%. |
| | § | Average transaction account balances increased $22.4 million, or 1.9%. |
| | § | Average total interest-bearing deposits declined $9.5 million, or 0.4%. |
Total deposit balances, both average and period-end, declined on a linked-quarter and year-over-year basis. Contributing significantly to this decline was a decrease in average total interest-bearing deposits primarily due to the planned runoff of public funds and wholesale deposits, which in the third quarter of 2008, declined by approximately $31.0 million from the third quarter of 2007.
For most of this year, First Financial has maintained a strategy of rational deposit pricing aimed at stabilizing the net interest margin in a very competitive landscape. The strategy has been successful as outflows of deposits have been replaced with less expensive wholesale instruments that were used to help fund asset generation.
Growth in average transaction accounts has continued, and at the end of the third quarter of 2008, the company instituted pricing initiatives designed to retain and grow retail deposits. Some of the new initiatives included extending CD offerings with maturities of one year and beyond, and offering rate-competitive core deposit products in an effort to more appropriately manage the company’s overall asset/liability position.
As a result of increasing the size of the investment portfolio over the past several quarters, continued strong loan demand, and the net deposit outflows recently experienced, First Financial executed $115 million of term debt instruments during the third quarter of 2008. Utilizing a combination of its funding sources from the pledging of investment securities and the Federal Home Loan Bank (FHLB), this funding has multiple maturities between two and three years, and a weighted average cost of 3.63%. This strategy was primarily executed to address increased industry-wide liquidity risk.
2008 Outlook
Updated full year 2008 performance expectations remain relatively unchanged. Average loan growth is expected to be in the low single-digits, while average total deposits are expected to experience a revised mid-single-digit decline in balances, with transaction deposits growing at a low single-digit rate, and time deposits declining at a faster pace. Total net interest income is expected to stabilize for the remainder of 2008, and the full-year net interest margin expectation remains between 3.67% and 3.75%. Previous expectations for margin recovery have been tempered by recent market rate declines. Full-year 2008 net charge-off levels are unchanged at an expected 30 and 40 basis points of average loans, though likely at the high end of this range. First Financial does expect modest noninterest income growth in selected areas, and little to no growth in noninterest expense. A material change in economic conditions would have an impact on the company’s expected 2008 performance. Please refer to the forward-looking statement found at the end of this release.
Conference Call & Webcast
As previously announced, a conference call and webcast to discuss First Financial’s third quarter and year-to-date 2008 financial and operational results will be held on Thursday, October 30, 2008, 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 (www.bankatfirst.com). 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 424 614).
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 Form 10-Q filing dated June 30, 2008, and its Annual Report on Form 10-K for the year ended December 31, 2007. 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 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 markets; the cost and effects of litigation and of unexpected or adverse outcomes in such litigation; 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 2007 Form 10-K and other public documents filed with the SEC. These documents are available at no cost within the investor relations section of First Financial’s website at www.bankatfirst.com and on the SEC's website at www.sec.gov.
About First Financial Bancorp
First Financial Bancorp is a Cincinnati, Ohio based bank holding company with $3.5 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 80 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 $1.9 billion in assets under management. Additional information about the company, including its products, services, and banking locations, is available at www.bankatfirst.com.
Additional Information
Investors/Analysts Patti Forsythe Vice President, Investor Relations 513-979-5837 patti.forsythe@bankatfirst.com | Media Cheryl Lipp First Vice President, Marketing Director 513-979-5797 cheryl.lipp@bankatfirst.com |
FIRST FINANCIAL BANCORP.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Dollars in thousands, except per share)
(Unaudited)
| | | Three months ended, | | Nine months ended | |
| | | Sep. 30, | | Jun. 30, | | Mar. 31, | | Dec. 31, | | Sep. 30, | | Sep. 30, | |
| | | 2008 | | 2008 | | 2008 | | 2007 | | 2007 | | 2008 | | 2007 | |
| | | | | | | | | | | | | | | | |
RESULTS OF OPERATIONS | | | | | | | | | | | | | | | | | | | | | | |
| Net interest income | | $ | 29,410 | | $ | 28,414 | | $ | 28,249 | | $ | 29,079 | | $ | 29,417 | | $ | 86,073 | | $ | 89,421 | |
| Net income | | $ | 5,732 | | $ | 7,808 | | $ | 7,338 | | $ | 10,701 | | $ | 8,373 | | $ | 20,878 | | $ | 24,980 | |
| Net earnings per common share - basic | | $ | 0.15 | | $ | 0.21 | | $ | 0.20 | | $ | 0.29 | | $ | 0.22 | | $ | 0.56 | | $ | 0.64 | |
| Net earnings per common share - diluted | | $ | 0.15 | | $ | 0.21 | | $ | 0.20 | | $ | 0.29 | | $ | 0.22 | | $ | 0.56 | | $ | 0.64 | |
| Dividends declared per common share | | $ | 0.17 | | $ | 0.17 | | $ | 0.17 | | $ | 0.17 | | $ | 0.16 | | $ | 0.51 | | $ | 0.48 | |
| | | | | | | | | | | | | | | | | | | | | | | |
KEY FINANCIAL RATIOS | | | | | | | | | | | | | | | | | | | | | | |
| Return on average assets | | | 0.66 | % | | 0.93 | % | | 0.89 | % | | 1.27 | % | | 1.00 | % | | 0.83 | % | | 1.01 | % |
| Return on average shareholders' equity | | | 8.24 | % | | 11.26 | % | | 10.66 | % | | 15.37 | % | | 12.03 | % | | 10.05 | % | | 11.86 | % |
| Return on average tangible shareholders' equity | | | 9.21 | % | | 12.57 | % | | 11.91 | % | | 17.17 | % | | 13.44 | % | | 11.23 | % | | 13.23 | % |
| | | | | | | | | | | | | | | | | | | | | | | |
| Net interest margin | | | 3.68 | % | | 3.72 | % | | 3.78 | % | | 3.79 | % | | 3.88 | % | | 3.72 | % | | 3.99 | % |
Net interest margin (fully tax equivalent) (1) | | | 3.73 | % | | 3.78 | % | | 3.85 | % | | 3.86 | % | | 3.95 | % | | 3.79 | % | | 4.07 | % |
| | | | | | | | | | | | | | | | | | | | | | | |
| Average shareholders' equity to average assets | | | 7.96 | % | | 8.29 | % | | 8.39 | % | | 8.27 | % | | 8.34 | % | | 8.21 | % | | 8.53 | % |
Tier 1 Ratio (2) | | | 9.80 | % | | 9.99 | % | | 10.20 | % | | 10.29 | % | | 10.18 | % | | 9.80 | % | | 10.18 | % |
Total Capital Ratio (2) | | | 10.89 | % | | 11.06 | % | | 11.31 | % | | 11.38 | % | | 11.27 | % | | 10.89 | % | | 11.27 | % |
Leverage Ratio (2) | | | 7.95 | % | | 8.21 | % | | 8.32 | % | | 8.26 | % | | 8.21 | % | | 7.95 | % | | 8.21 | % |
| | | | | | | | | | | | | | | | | | | | | | | |
AVERAGE BALANCE SHEET ITEMS | | | | | | | | | | | | | | | | | | | | | | |
Loans (3) | | $ | 2,709,629 | | $ | 2,648,327 | | $ | 2,596,483 | | $ | 2,588,985 | | $ | 2,576,308 | | $ | 2,651,692 | | $ | 2,532,715 | |
| Investment securities | | | 467,524 | | | 422,463 | | | 343,553 | | | 350,346 | | | 349,686 | | | 411,967 | | | 360,316 | |
| Other earning assets | | | 3,137 | | | 4,095 | | | 65,799 | | | 106,922 | | | 81,669 | | | 24,266 | | | 103,236 | |
| Total earning assets | | $ | 3,180,290 | | $ | 3,074,885 | | $ | 3,005,835 | | $ | 3,046,253 | | $ | 3,007,663 | | $ | 3,087,925 | | $ | 2,996,267 | |
| Total assets | | $ | 3,476,648 | | $ | 3,361,649 | | $ | 3,298,663 | | $ | 3,338,828 | | $ | 3,309,800 | | $ | 3,379,343 | | $ | 3,300,339 | |
| Noninterest-bearing deposits | | $ | 402,604 | | $ | 394,352 | | $ | 379,240 | | $ | 399,304 | | $ | 385,653 | | $ | 392,104 | | $ | 397,451 | |
| Interest-bearing deposits | | | 2,380,037 | | | 2,400,940 | | | 2,453,028 | | | 2,461,464 | | | 2,450,830 | | | 2,411,221 | | | 2,420,715 | |
| Total deposits | | $ | 2,782,641 | | $ | 2,795,292 | | $ | 2,832,268 | | $ | 2,860,768 | | $ | 2,836,483 | | $ | 2,803,325 | | $ | 2,818,166 | |
| Borrowings | | $ | 394,708 | | $ | 256,409 | | $ | 157,899 | | $ | 177,876 | | $ | 176,528 | | $ | 270,128 | | $ | 178,519 | |
| Shareholders' equity | | $ | 276,594 | | $ | 278,803 | | $ | 276,815 | | $ | 276,269 | | $ | 276,183 | | $ | 277,401 | | $ | 281,625 | |
| | | | | | | | | | | | | | | | | | | | | | | |
CREDIT QUALITY RATIOS | | | | | | | | | | | | | | | | | | | | | | |
| Allowance to ending loans | | | 1.14 | % | | 1.11 | % | | 1.14 | % | | 1.12 | % | | 1.12 | % | | 1.14 | % | | 1.12 | % |
| Allowance to nonaccrual loans | | | 219.47 | % | | 199.70 | % | | 202.29 | % | | 205.89 | % | | 221.70 | % | | 219.47 | % | | 221.70 | % |
| Allowance to nonperforming loans | | | 216.22 | % | | 192.50 | % | | 194.83 | % | | 197.94 | % | | 212.42 | % | | 216.22 | % | | 212.42 | % |
| Nonperforming loans to total loans | | | 0.53 | % | | 0.57 | % | | 0.58 | % | | 0.56 | % | | 0.53 | % | | 0.53 | % | | 0.53 | % |
| Nonperforming assets to ending loans, plus OREO | | | 0.70 | % | | 0.71 | % | | 0.67 | % | | 0.67 | % | | 0.65 | % | | 0.70 | % | | 0.65 | % |
| Nonperforming assets to total assets | | | 0.53 | % | | 0.55 | % | | 0.53 | % | | 0.51 | % | | 0.51 | % | | 0.53 | % | | 0.51 | % |
Net charge-offs to average loans (annualized) | | | 0.36 | % | | 0.40 | % | | 0.40 | % | | 0.26 | % | | 0.23 | % | | 0.39 | % | | 0.23 | % |
(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) September 30, 2008 regulatory capital ratios are preliminary.
(3) Includes loans held for sale.
FIRST FINANCIAL BANCORP.
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands)
(Unaudited)
| | | Three months ended, | | Nine months ended, | |
| | | Sep. 30, | | Sep. 30, | |
| | | 2008 | | 2007 | | % Change | | 2008 | | 2007 | | % Change | |
| Interest income | | | | | | | | | | | | | | | | | | | |
| Loans, including fees | | $ | 39,754 | | $ | 46,606 | | | (14.7 | )% | $ | 122,121 | | $ | 136,961 | | | (10.8 | )% |
| Investment securities | | | | | | | | | | | | | | | | | | | |
| Taxable | | | 5,349 | | | 3,667 | | | 45.9 | % | | 13,257 | | | 11,320 | | | 17.1 | % |
| Tax-exempt | | | 631 | | | 863 | | | (26.9 | )% | | 2,214 | | | 2,683 | | | (17.5 | )% |
| Total investment securities interest | | | 5,980 | | | 4,530 | | | 32.0 | % | | 15,471 | | | 14,003 | | | 10.5 | % |
| Federal funds sold | | | 22 | | | 1,048 | | | (97.9 | )% | | 627 | | | 4,045 | | | (84.5 | )% |
| Total interest income | | | 45,756 | | | 52,184 | | | (12.3 | )% | | 138,219 | | | 155,009 | | | (10.8 | )% |
| | | | | | | | | | | | | | | | | | | | |
| Interest expense | | | | | | | | | | | | | | | | | | | |
| Deposits | | | 13,608 | | | 20,528 | | | (33.7 | )% | | 45,982 | | | 58,946 | | | (22.0 | )% |
| Short-term borrowings | | | 1,720 | | | 1,041 | | | 65.2 | % | | 3,642 | | | 3,021 | | | 20.6 | % |
| Long-term borrowings | | | 707 | | | 532 | | | 32.9 | % | | 1,497 | | | 1,633 | | | (8.3 | )% |
| Subordinated debentures and capital securities | | | 311 | | | 666 | | | (53.3 | )% | | 1,025 | | | 1,988 | | | (48.4 | )% |
| Total interest expense | | | 16,346 | | | 22,767 | | | (28.2 | )% | | 52,146 | | | 65,588 | | | (20.5 | )% |
| Net interest income | | | 29,410 | | | 29,417 | | | (0.0 | )% | | 86,073 | | | 89,421 | | | (3.7 | )% |
| Provision for loan and lease losses | | | 3,219 | | | 2,558 | | | 25.8 | % | | 8,935 | | | 6,012 | | | 48.6 | % |
| Net interest income after provision for loan and lease losses | | | 26,191 | | | 26,859 | | | (2.5 | )% | | 77,138 | | | 83,409 | | | (7.5 | )% |
| | | | | | | | | | | | | | | | | | | | |
| Noninterest income | | | | | | | | | | | | | | | | | | | |
| Service charges on deposit accounts | | | 5,348 | | | 5,396 | | | (0.9 | )% | | 14,906 | | | 15,436 | | | (3.4 | )% |
| Trust and wealth management fees | | | 4,390 | | | 4,721 | | | (7.0 | )% | | 13,666 | | | 13,407 | | | 1.9 | % |
| Bankcard income | | | 1,405 | | | 1,422 | | | (1.2 | )% | | 4,196 | | | 4,086 | | | 2.7 | % |
| Net gains from sales of loans | | | 376 | | | 203 | | | 85.2 | % | | 783 | | | 549 | | | 42.6 | % |
| Gain on sale of mortgage servicing rights | | | 0 | | | 0 | | | N/M | | | 0 | | | 1,061 | | | (100.0 | )% |
| Gains on sales of investment securities | | | 0 | | | 367 | | | (100.0 | )% | | 1,585 | | | 367 | | | 331.9 | % |
| (Loss) income on preferred securities | | | (3,400 | ) | | 0 | | | N/M | | | (3,601 | ) | | 0 | | | N/M | |
| Other | | | 2,359 | | | 2,341 | | | 0.8 | % | | 7,566 | | | 8,420 | | | (10.1 | )% |
| Total noninterest income | | | 10,478 | | | 14,450 | | | (27.5 | )% | | 39,101 | | | 43,326 | | | (9.8 | )% |
| | | | | | | | | | | | | | | | | | | | |
| Noninterest expenses | | | | | | | | | | | | | | | | | | | |
| Salaries and employee benefits | | | 16,879 | | | 17,288 | | | (2.4 | )% | | 49,847 | | | 53,383 | | | (6.6 | )% |
| Net occupancy | | | 2,538 | | | 2,728 | | | (7.0 | )% | | 8,000 | | | 8,019 | | | (0.2 | )% |
| Furniture and equipment | | | 1,690 | | | 1,684 | | | 0.4 | % | | 4,960 | | | 5,019 | | | (1.2 | )% |
| Data processing | | | 791 | | | 1,010 | | | (21.7 | )% | | 2,398 | | | 2,673 | | | (10.3 | )% |
| Marketing | | | 622 | | | 407 | | | 52.8 | % | | 1,613 | | | 1,918 | | | (15.9 | )% |
| Communication | | | 601 | | | 664 | | | (9.5 | )% | | 2,155 | | | 2,327 | | | (7.4 | )% |
| Professional services | | | 729 | | | 964 | | | (24.4 | )% | | 2,551 | | | 3,033 | | | (15.9 | )% |
| Other | | | 4,490 | | | 3,980 | | | 12.8 | % | | 13,805 | | | 13,003 | | | 6.2 | % |
| Total noninterest expenses | | | 28,340 | | | 28,725 | | | (1.3 | )% | | 85,329 | | | 89,375 | | | (4.5 | )% |
| Income before income taxes | | | 8,329 | | | 12,584 | | | (33.8 | )% | | 30,910 | | | 37,360 | | | (17.3 | )% |
| Income tax expense | | | 2,597 | | | 4,211 | | | (38.3 | )% | | 10,032 | | | 12,380 | | | (19.0 | )% |
| Net income | | $ | 5,732 | | $ | 8,373 | | | (31.5 | )% | $ | 20,878 | | $ | 24,980 | | | (16.4 | )% |
| | | | | | | | | | | | | | | | | | | | |
ADDITIONAL DATA | | | | | | | | | | | | | | | | | | | |
| Net earnings per common share - basic | | $ | 0.15 | | $ | 0.22 | | | | | $ | 0.56 | | $ | 0.64 | | | | |
| Net earnings per common share - diluted | | $ | 0.15 | | $ | 0.22 | | | | | $ | 0.56 | | $ | 0.64 | | | | |
| Dividends declared per common share | | $ | 0.17 | | $ | 0.16 | | | | | $ | 0.51 | | $ | 0.48 | | | | |
| Book value per common share | | $ | 7.40 | | $ | 7.26 | | | | | $ | 7.40 | | $ | 7.26 | | | | |
| | | | | | | | | | | | | | | | | | | | |
| Return on average assets | | | 0.66 | % | | 1.00 | % | | | | | 0.83 | % | | 1.01 | % | | | |
| Return on average shareholders' equity | | | 8.24 | % | | 12.03 | % | | | | | 10.05 | % | | 11.86 | % | | | |
| | | | | | | | | | | | | | | | | | | | |
| Interest income | | $ | 45,756 | | $ | 52,184 | | | (12.3 | )% | $ | 138,219 | | $ | 155,009 | | | (10.8 | )% |
| Tax equivalent adjustment | | | 424 | | | 564 | | | (24.8 | )% | | 1,448 | | | 1,720 | | | (15.8 | )% |
| Interest income - tax equivalent | | | 46,180 | | | 52,748 | | | (12.5 | )% | | 139,667 | | | 156,729 | | | (10.9 | )% |
| Interest expense | | | 16,346 | | | 22,767 | | | (28.2 | )% | | 52,146 | | | 65,588 | | | (20.5 | )% |
| Net interest income - tax equivalent | | $ | 29,834 | | $ | 29,981 | | | (0.5 | )% | $ | 87,521 | | $ | 91,141 | | | (4.0 | )% |
| | | | | | | | | | | | | | | | | | | | |
| Net interest margin | | | 3.68 | % | | 3.88 | % | | | | | 3.72 | % | | 3.99 | % | | | |
Net interest margin (fully tax equivalent) (1) | | | 3.73 | % | | 3.95 | % | | | | | 3.79 | % | | 4.07 | % | | | |
| | | | | | | | | | | | | | | | | | | | |
| Full-time equivalent employees | | | 1,052 | | | 1,078 | | | | | | 1,052 | | | 1,078 | | | | |
(1) The tax equivalent adjustment to net interest income recognizes the income tax savings when comparing taxable and tax-exempt assets and assumes a 35% tax rate. Management believes that it is a standard practice in the banking industry to present net interest income on a fully tax equivalent basis. Therefore, management believes, these measures provided useful information to investors by allowing them to make peer comparisons. Management also uses these measures to make peer comparisons.
N/M = Not meaningful.
FIRST FINANCIAL BANCORP.
CONSOLIDATED QUARTERLY STATEMENTS OF INCOME
(Dollars in thousands)
(Unaudited)
| | | 2008 | | | |
| | | Third | | Second | | First | | | | % Change | |
| | | Quarter | | Quarter | | Quarter | | Year-to-Date | | Linked Qtr. | |
| Interest income | | | | | | | | | | | | | | | | |
| Loans, including fees | | $ | 39,754 | | $ | 39,646 | | $ | 42,721 | | $ | 122,121 | | | 0.3 | % |
| Investment securities | | | | | | | | | | | | | | | | |
| Taxable | | | 5,349 | | | 4,387 | | | 3,521 | | | 13,257 | | | 21.9 | % |
| Tax-exempt | | | 631 | | | 792 | | | 791 | | | 2,214 | | | (20.3 | )% |
| Total investment securities interest | | | 5,980 | | | 5,179 | | | 4,312 | | | 15,471 | | | 15.5 | % |
| Federal funds sold | | | 22 | | | 40 | | | 565 | | | 627 | | | (45.0 | )% |
| Total interest income | | | 45,756 | | | 44,865 | | | 47,598 | | | 138,219 | | | 2.0 | % |
| | | | | | | | | | | | | | | | | |
| Interest expense | | | | | | | | | | | | | | | | |
| Deposits | | | 13,608 | | | 14,635 | | | 17,739 | | | 45,982 | | | (7.0 | )% |
| Short-term borrowings | | | 1,720 | | | 1,130 | | | 792 | | | 3,642 | | | 52.2 | % |
| Long-term borrowings | | | 707 | | | 384 | | | 406 | | | 1,497 | | | 84.1 | % |
| Subordinated debentures and capital securities | | | 311 | | | 302 | | | 412 | | | 1,025 | | | 3.0 | % |
| Total interest expense | | | 16,346 | | | 16,451 | | | 19,349 | | | 52,146 | | | (0.6 | )% |
| Net interest income | | | 29,410 | | | 28,414 | | | 28,249 | | | 86,073 | | | 3.5 | % |
| Provision for loan and lease losses | | | 3,219 | | | 2,493 | | | 3,223 | | | 8,935 | | | 29.1 | % |
| Net interest income after provision for loan and lease losses | | | 26,191 | | | 25,921 | | | 25,026 | | | 77,138 | | | 1.0 | % |
| | | | | | | | | | | | | | | | | |
| Noninterest income | | | | | | | | | | | | | | | | |
| Service charges on deposit accounts | | | 5,348 | | | 4,951 | | | 4,607 | | | 14,906 | | | 8.0 | % |
| Trust and wealth management fees | | | 4,390 | | | 4,654 | | | 4,622 | | | 13,666 | | | (5.7 | )% |
| Bankcard income | | | 1,405 | | | 1,493 | | | 1,298 | | | 4,196 | | | (5.9 | )% |
| Net gains from sales of loans | | | 376 | | | 188 | | | 219 | | | 783 | | | 100.0 | % |
| Gains on sales of investment securities | | | 0 | | | 0 | | | 1,585 | | | 1,585 | | | N/M | |
| (Loss) income on preferred securities | | | (3,400 | ) | | (221 | ) | | 20 | | | (3,601 | ) | | 1438.5 | % |
| Other | | | 2,359 | | | 2,683 | | | 2,524 | | | 7,566 | | | (12.1 | )% |
| Total noninterest income | | | 10,478 | | | 13,748 | | | 14,875 | | | 39,101 | | | (23.8 | )% |
| | | | | | | | | | | | | | | | | |
| Noninterest expenses | | | | | | | | | | | | | | | | |
| Salaries and employee benefits | | | 16,879 | | | 15,895 | | | 17,073 | | | 49,847 | | | 6.2 | % |
| Net occupancy | | | 2,538 | | | 2,510 | | | 2,952 | | | 8,000 | | | 1.1 | % |
| Furniture and equipment | | | 1,690 | | | 1,617 | | | 1,653 | | | 4,960 | | | 4.5 | % |
| Data processing | | | 791 | | | 814 | | | 793 | | | 2,398 | | | (2.8 | )% |
| Marketing | | | 622 | | | 474 | | | 517 | | | 1,613 | | | 31.2 | % |
| Communication | | | 601 | | | 749 | | | 805 | | | 2,155 | | | (19.8 | )% |
| Professional services | | | 729 | | | 1,061 | | | 761 | | | 2,551 | | | (31.3 | )% |
| Other | | | 4,490 | | | 4,849 | | | 4,466 | | | 13,805 | | | (7.4 | )% |
| Total noninterest expenses | | | 28,340 | | | 27,969 | | | 29,020 | | | 85,329 | | | 1.3 | % |
| Income before income taxes | | | 8,329 | | | 11,700 | | | 10,881 | | | 30,910 | | | (28.8 | )% |
| Income tax expense | | | 2,597 | | | 3,892 | | | 3,543 | | | 10,032 | | | (33.3 | )% |
| Net income | | $ | 5,732 | | $ | 7,808 | | $ | 7,338 | | $ | 20,878 | | | (26.6 | )% |
| | | | | | | | | | | | | | | | | |
ADDITIONAL DATA | | | | | | | | | | | | | | | | |
| Net earnings per common share - basic | | $ | 0.15 | | $ | 0.21 | | $ | 0.20 | | $ | 0.56 | | | | |
| Net earnings per common share - diluted | | $ | 0.15 | | $ | 0.21 | | $ | 0.20 | | $ | 0.56 | | | | |
| Dividends declared per common share | | $ | 0.17 | | $ | 0.17 | | $ | 0.17 | | $ | 0.51 | | | | |
| Book value per common share | | $ | 7.40 | | $ | 7.34 | | $ | 7.41 | | $ | 7.40 | | | | |
| | | | | | | | | | | | | | | | | |
| Return on average assets | | | 0.66 | % | | 0.93 | % | | 0.89 | % | | 0.83 | % | | | |
| Return on average shareholders’ equity | | | 8.24 | % | | 11.26 | % | | 10.66 | % | | 10.05 | % | | | |
| | | | | | | | | | | | | | | | | |
| Interest income | | $ | 45,756 | | $ | 44,865 | | $ | 47,598 | | $ | 138,219 | | | 2.0 | % |
| Tax equivalent adjustment | | | 424 | | | 510 | | | 514 | | | 1,448 | | | (16.9 | )% |
| Interest income - tax equivalent | | | 46,180 | | | 45,375 | | | 48,112 | | | 139,667 | | | 1.8 | % |
| Interest expense | | | 16,346 | | | 16,451 | | | 19,349 | | | 52,146 | | | (0.6 | )% |
| Net interest income - tax equivalent | | $ | 29,834 | | $ | 28,924 | | $ | 28,763 | | $ | 87,521 | | | 3.1 | % |
| | | | | | | | | | | | | | | | | |
| Net interest margin | | | 3.68 | % | | 3.72 | % | | 3.78 | % | | 3.72 | % | | | |
Net interest margin (fully tax equivalent) (1) | | | 3.73 | % | | 3.78 | % | | 3.85 | % | | 3.79 | % | | | |
| | | | | | | | | | | | | | | | | |
| Full-time equivalent employees | | | 1,052 | | | 1,058 | | | 1,056 | | | 1,052 | | | | |
(1) The tax equivalent adjustment to net interest income recognizes the income tax savings when comparing taxable and tax-exempt assets and assumes a 35% tax rate. Management believes that it is a standard practice in the banking industry to present net interest income on a fully tax equivalent basis. Therefore, management believes, these measures provided useful information to investors by allowing them to make peer comparisons. Management also uses these measures to make peer comparisons.
N/M = Not meaningful.
FIRST FINANCIAL BANCORP.
CONSOLIDATED QUARTERLY STATEMENTS OF INCOME
(Dollars in thousands)
(Unaudited)
| | | 2007 | |
| | | Fourth | | Third | | Second | | First | | Full | |
| | | Quarter | | Quarter | | Quarter | | Quarter | | Year | |
| Interest income | | | | | | | | | | | | | | | | |
| Loans, including fees | | $ | 45,709 | | $ | 46,606 | | $ | 45,291 | | $ | 45,064 | | $ | 182,670 | |
| Investment securities | | | | | | | | | | | | | | | | |
| Taxable | | | 3,641 | | | 3,667 | | | 3,762 | | | 3,891 | | | 14,961 | |
| Tax-exempt | | | 859 | | | 863 | | | 911 | | | 909 | | | 3,542 | |
| Total investment securities interest | | | 4,500 | | | 4,530 | | | 4,673 | | | 4,800 | | | 18,503 | |
| Federal funds sold | | | 1,224 | | | 1,048 | | | 1,241 | | | 1,756 | | | 5,269 | |
| Total interest income | | | 51,433 | | | 52,184 | | | 51,205 | | | 51,620 | | | 206,442 | |
| | | | | | | | | | | | | | | | | |
| Interest expense | | | | | | | | | | | | | | | | |
| Deposits | | | 20,238 | | | 20,528 | | | 19,409 | | | 19,009 | | | 79,184 | |
| Short-term borrowings | | | 1,211 | | | 1,041 | | | 984 | | | 996 | | | 4,232 | |
| Long-term borrowings | | | 466 | | | 532 | | | 542 | | | 559 | | | 2,099 | |
| Subordinated debentures and capital securities | | | 439 | | | 666 | | | 669 | | | 653 | | | 2,427 | |
| Total interest expense | | | 22,354 | | | 22,767 | | | 21,604 | | | 21,217 | | | 87,942 | |
| Net interest income | | | 29,079 | | | 29,417 | | | 29,601 | | | 30,403 | | | 118,500 | |
| Provision for loan and lease losses | | | 1,640 | | | 2,558 | | | 2,098 | | | 1,356 | | | 7,652 | |
| Net interest income after provision for loan and lease losses | | | 27,439 | | | 26,859 | | | 27,503 | | | 29,047 | | | 110,848 | |
| | | | | | | | | | | | | | | | | |
| Noninterest income | | | | | | | | | | | | | | | | |
| Service charges on deposit accounts | | | 5,330 | | | 5,396 | | | 5,296 | | | 4,744 | | | 20,766 | |
| Trust and wealth management fees | | | 4,989 | | | 4,721 | | | 4,526 | | | 4,160 | | | 18,396 | |
| Bankcard income | | | 1,165 | | | 1,422 | | | 1,424 | | | 1,240 | | | 5,251 | |
| Net gains from sales of loans | | | 295 | | | 203 | | | 184 | | | 162 | | | 844 | |
| Gain on sale of merchant payment processing portfolio | | | 5,501 | | | 0 | | | 0 | | | 0 | | | 5,501 | |
| Gain on sale of mortgage servicing rights | | | 0 | | | 0 | | | 0 | | | 1,061 | | | 1,061 | |
| Gains on sales of investment securities | | | 0 | | | 367 | | | 0 | | | 0 | | | 367 | |
| Other | | | 2,982 | | | 2,341 | | | 2,702 | | | 3,377 | | | 11,402 | |
| Total noninterest income | | | 20,262 | | | 14,450 | | | 14,132 | | | 14,744 | | | 63,588 | |
| | | | | | | | | | | | | | | | | |
| Noninterest expenses | | | | | | | | | | | | | | | | |
| Salaries and employee benefits | | | 16,508 | | | 17,288 | | | 17,134 | | | 18,961 | | | 69,891 | |
| Pension settlement charges | | | 2,222 | | | 0 | | | 0 | | | 0 | | | 2,222 | |
| Net occupancy | | | 2,842 | | | 2,728 | | | 2,484 | | | 2,807 | | | 10,861 | |
| Furniture and equipment | | | 1,742 | | | 1,684 | | | 1,708 | | | 1,627 | | | 6,761 | |
| Data processing | | | 825 | | | 1,010 | | | 818 | | | 845 | | | 3,498 | |
| Marketing | | | 523 | | | 407 | | | 642 | | | 869 | | | 2,441 | |
| Communication | | | 903 | | | 664 | | | 798 | | | 865 | | | 3,230 | |
| Professional services | | | 1,109 | | | 964 | | | 1,063 | | | 1,006 | | | 4,142 | |
| Other | | | 4,698 | | | 3,980 | | | 4,793 | | | 4,230 | | | 17,701 | |
| Total noninterest expenses | | | 31,372 | | | 28,725 | | | 29,440 | | | 31,210 | | | 120,747 | |
| Income before income taxes | | | 16,329 | | | 12,584 | | | 12,195 | | | 12,581 | | | 53,689 | |
| Income tax expense | | | 5,628 | | | 4,211 | | | 4,023 | | | 4,146 | | | 18,008 | |
| Net income | | $ | 10,701 | | $ | 8,373 | | $ | 8,172 | | $ | 8,435 | | $ | 35,681 | |
| | | | | | | | | | | | | | | | | |
ADDITIONAL DATA | | | | | | | | | | | | | | | | |
| Net earnings per common share - basic | | $ | 0.29 | | $ | 0.22 | | $ | 0.21 | | $ | 0.22 | | $ | 0.93 | |
| Net earnings per common share - diluted | | $ | 0.29 | | $ | 0.22 | | $ | 0.21 | | $ | 0.22 | | $ | 0.93 | |
| Dividends declared per common share | | $ | 0.17 | | $ | 0.16 | | $ | 0.16 | | $ | 0.16 | | $ | 0.65 | |
| Book value per common share | | $ | 7.40 | | $ | 7.26 | | $ | 7.18 | | $ | 7.29 | | $ | 7.40 | |
| | | | | | | | | | | | | | | | | |
| Return on average assets | | | 1.27 | % | | 1.00 | % | | 1.00 | % | | 1.04 | % | | 1.08 | % |
| Return on average shareholders' equity | | | 15.37 | % | | 12.03 | % | | 11.61 | % | | 11.94 | % | | 12.73 | % |
| | | | | | | | | | | | | | | | | |
| Interest income | | $ | 51,433 | | $ | 52,184 | | $ | 51,205 | | $ | 51,620 | | $ | 206,442 | |
| Tax equivalent adjustment | | | 561 | | | 564 | | | 580 | | | 576 | | | 2,281 | |
| Interest income - tax equivalent | | | 51,994 | | | 52,748 | | | 51,785 | | | 52,196 | | | 208,723 | |
| Interest expense | | | 22,354 | | | 22,767 | | | 21,604 | | | 21,217 | | | 87,942 | |
| Net interest income - tax equivalent | | $ | 29,640 | | $ | 29,981 | | $ | 30,181 | | $ | 30,979 | | $ | 120,781 | |
| | | | | | | | | | | | | | | | | |
| Net interest margin | | | 3.79 | % | | 3.88 | % | | 3.97 | % | | 4.12 | % | | 3.94 | % |
Net interest margin (fully tax equivalent) (1) | | | 3.86 | % | | 3.95 | % | | 4.05 | % | | 4.20 | % | | 4.01 | % |
| | | | | | | | | | | | | | | | | |
| Full-time equivalent employees | | | 1,057 | | | 1,078 | | | 1,158 | | | 1,166 | | | 1,057 | |
(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)
| | | Sep. 30, | | Jun. 30, | | Mar. 31, | | Dec. 31, | | Sep. 30, | | % Change | | % Change | |
| | | 2008 | | 2008 | | 2008 | | 2007 | | 2007 | | Linked Qtr. | | Comparable Qtr. | |
ASSETS | | | | | | | | | | | | | | | | | | | | | | |
| Cash and due from banks | | $ | 90,341 | | $ | 106,248 | | $ | 102,246 | | $ | 106,224 | | $ | 92,414 | | | (15.0 | )% | | (2.2 | )% |
| Federal funds sold | | | 0 | | | 4,005 | | | 2,943 | | | 106,990 | | | 71,700 | | | (100.0 | )% | | (100.0 | )% |
| Investment securities trading | | | 198 | | | 3,598 | | | 3,820 | | | 0 | | | 0 | | | (94.5 | )% | | N/M | |
| Investment securities available-for-sale | | | 492,554 | | | 421,697 | | | 345,145 | | | 306,928 | | | 307,908 | | | 16.8 | % | | 60.0 | % |
| Investment securities held-to-maturity | | | 5,037 | | | 5,316 | | | 5,414 | | | 5,639 | | | 5,467 | | | (5.2 | )% | | (7.9 | )% |
| Other investments | | | 34,976 | | | 34,632 | | | 34,293 | | | 33,969 | | | 33,969 | | | 1.0 | % | | 3.0 | % |
| Loans held for sale | | | 2,437 | | | 2,228 | | | 4,108 | | | 1,515 | | | 5,763 | | | 9.4 | % | | (57.7 | )% |
| Loans | | | | | | | | | | | | | | | | | | | | | | |
| Commercial | | | 819,430 | | | 814,779 | | | 789,922 | | | 785,143 | | | 774,059 | | | 0.6 | % | | 5.9 | % |
| Real estate - construction | | | 203,809 | | | 186,178 | | | 172,737 | | | 151,432 | | | 155,495 | | | 9.5 | % | | 31.1 | % |
| Real estate - commercial | | | 814,578 | | | 769,555 | | | 726,397 | | | 706,409 | | | 684,931 | | | 5.9 | % | | 18.9 | % |
| Real estate - residential | | | 424,902 | | | 499,002 | | | 519,790 | | | 539,332 | | | 556,255 | | | (14.8 | )% | | (23.6 | )% |
| Installment | | | 106,456 | | | 115,575 | | | 126,623 | | | 138,895 | | | 149,881 | | | (7.9 | )% | | (29.0 | )% |
| Home equity | | | 276,943 | | | 263,063 | | | 254,200 | | | 250,888 | | | 245,853 | | | 5.3 | % | | 12.6 | % |
| Credit card | | | 27,047 | | | 26,399 | | | 25,528 | | | 26,610 | | | 24,904 | | | 2.5 | % | | 8.6 | % |
| Lease financing | | | 92 | | | 111 | | | 258 | | | 378 | | | 500 | | | (17.1 | )% | | (81.6 | )% |
| Total loans | | | 2,673,257 | | | 2,674,662 | | | 2,615,455 | | | 2,599,087 | | | 2,591,878 | | | (0.1 | )% | | 3.1 | % |
| Less | | | | | | | | | | | | | | | | | | | | | | |
| Allowance for loan and lease losses | | | 30,353 | | | 29,580 | | | 29,718 | | | 29,057 | | | 29,136 | | | 2.6 | % | | 4.2 | % |
| Net loans | | | 2,642,904 | | | 2,645,082 | | | 2,585,737 | | | 2,570,030 | | | 2,562,742 | | | (0.1 | )% | | 3.1 | % |
| Premises and equipment | | | 81,989 | | | 79,380 | | | 78,585 | | | 78,994 | | | 78,214 | | | 3.3 | % | | 4.8 | % |
| Goodwill | | | 28,261 | | | 28,261 | | | 28,261 | | | 28,261 | | | 28,261 | | | 0.0 | % | | 0.0 | % |
| Other intangibles | | | 872 | | | 641 | | | 659 | | | 698 | | | 828 | | | 36.0 | % | | 5.3 | % |
| Accrued interest and other assets | | | 132,107 | | | 128,874 | | | 132,054 | | | 130,068 | | | 141,890 | | | 2.5 | % | | (6.9 | )% |
Total Assets | | $ | 3,511,676 | | $ | 3,459,962 | | $ | 3,323,265 | | $ | 3,369,316 | | $ | 3,329,156 | | | 1.5 | % | | 5.5 | % |
| | | | | | | | | | | | | | | | | | | | | | | |
LIABILITIES | | | | | | | | | | | | | | | | | | | | | | |
| Deposits | | | | | | | | | | | | | | | | | | | | | | |
| Interest-bearing | | $ | 580,417 | | $ | 575,236 | | $ | 610,154 | | $ | 603,870 | | $ | 611,764 | | | 0.9 | % | | (5.1 | )% |
| Savings | | | 608,438 | | | 615,613 | | | 617,059 | | | 596,636 | | | 595,664 | | | (1.2 | )% | | 2.1 | % |
| Time | | | 1,118,511 | | | 1,167,024 | | | 1,206,750 | | | 1,227,954 | | | 1,253,383 | | | (4.2 | )% | | (10.8 | )% |
| Total interest-bearing deposits | | | 2,307,366 | | | 2,357,873 | | | 2,433,963 | | | 2,428,460 | | | 2,460,811 | | | (2.1 | )% | | (6.2 | )% |
| Noninterest-bearing | | | 404,315 | | | 419,045 | | | 405,015 | | | 465,731 | | | 389,070 | | | (3.5 | )% | | 3.9 | % |
| Total deposits | | | 2,711,681 | | | 2,776,918 | | | 2,838,978 | | | 2,894,191 | | | 2,849,881 | | | (2.3 | )% | | (4.8 | )% |
| Short-term borrowings | | | | | | | | | | | | | | | | | | | | | | |
| Federal funds purchased and securities sold | | | | | | | | | | | | | | | | | | | | | | |
| under agreements to repurchase | | | 45,495 | | | 25,932 | | | 27,320 | | | 26,289 | | | 26,749 | | | 75.4 | % | | 70.1 | % |
| Federal Home Loan Bank | | | 215,000 | | | 237,900 | | | 6,500 | | | 0 | | | 0 | | | (9.6 | )% | | N/M | |
| Other | | | 53,000 | | | 54,000 | | | 53,000 | | | 72,000 | | | 74,500 | | | (1.9 | )% | | (28.9 | )% |
| Total short-term borrowings | | | 313,495 | | | 317,832 | | | 86,820 | | | 98,289 | | | 101,249 | | | (1.4 | )% | | 209.6 | % |
| Long-term debt | | | 152,568 | | | 41,263 | | | 42,380 | | | 45,896 | | | 55,317 | | | 269.7 | % | | 175.8 | % |
| Other long-term debt | | | 20,620 | | | 20,620 | | | 20,620 | | | 20,620 | | | 20,620 | | | 0.0 | % | | 0.0 | % |
| Accrued interest and other liabilities | | | 36,092 | | | 28,039 | | | 56,698 | | | 33,737 | | | 30,386 | | | 28.7 | % | | 18.8 | % |
Total Liabilities | | | 3,234,456 | | | 3,184,672 | | | 3,045,496 | | | 3,092,733 | | | 3,057,453 | | | 1.6 | % | | 5.8 | % |
| | | | | | | | | | | | | | | | | | | | | | | |
SHAREHOLDERS' EQUITY | | | | | | | | | | | | | | | | | | | | | | |
| Common stock | | | 391,249 | | | 390,545 | | | 389,986 | | | 391,962 | | | 391,355 | | | 0.2 | % | | (0.0 | )% |
| Retained earnings | | | 80,632 | | | 81,263 | | | 79,818 | | | 82,093 | | | 77,745 | | | (0.8 | )% | | 3.7 | % |
| Accumulated other comprehensive loss | | | (6,285 | ) | | (8,236 | ) | | (3,800 | ) | | (7,127 | ) | | (7,569 | ) | | (23.7 | )% | | (17.0 | )% |
| Treasury stock, at cost | | | (188,376 | ) | | (188,282 | ) | | (188,235 | ) | | (190,345 | ) | | (189,828 | ) | | 0.0 | % | | (0.8 | )% |
Total Shareholders' Equity | | | 277,220 | | | 275,290 | | | 277,769 | | | 276,583 | | | 271,703 | | | 0.7 | % | | 2.0 | % |
Total Liabilities and Shareholders' Equity | | $ | 3,511,676 | | $ | 3,459,962 | | $ | 3,323,265 | | $ | 3,369,316 | | $ | 3,329,156 | | | 1.5 | % | | 5.5 | % |
N/M = Not meaningful.
FIRST FINANCIAL BANCORP.
AVERAGE CONSOLIDATED STATEMENTS OF CONDITION
(Dollars in thousands)
(Unaudited)
| | | Quarterly Averages | | Year-to-Date Averages | |
| | | Sep. 30, | | Jun. 30, | | Mar. 31, | | Dec. 31, | | Sep. 30, | | Sep. 30, | |
| | | 2008 | | 2008 | | 2008 | | 2007 | | 2007 | | 2008 | | 2007 | |
ASSETS | | | | | | | | | | | | | | | | | | | | | | |
| Cash and due from banks | | $ | 89,498 | | $ | 81,329 | | $ | 86,879 | | $ | 84,771 | | $ | 85,576 | | $ | 85,915 | | $ | 91,468 | |
| Federal funds sold | | | 3,137 | | | 4,095 | | | 65,799 | | | 106,922 | | | 81,669 | | | 24,266 | | | 103,236 | |
| Investment securities | | | 467,524 | | | 422,463 | | | 345,303 | | | 350,346 | | | 349,686 | | | 411,967 | | | 360,316 | |
| Loans held for sale | | | 2,080 | | | 3,034 | | | 3,122 | | | 3,689 | | | 2,245 | | | 2,743 | | | 3,050 | |
| Loans | | | | | | | | | | | | | | | | | | | | | | |
| Commercial | | | 819,199 | | | 805,122 | | | 781,358 | | | 776,286 | | | 766,028 | | | 801,956 | | | 726,753 | |
| Real estate - construction | | | 192,731 | | | 179,078 | | | 162,008 | | | 154,208 | | | 139,291 | | | 177,993 | | | 119,446 | |
| Real estate - commercial | | | 797,143 | | | 747,077 | | | 708,779 | | | 693,038 | | | 681,920 | | | 751,168 | | | 661,394 | |
| Real estate - residential | | | 490,089 | | | 508,837 | | | 530,567 | | | 542,204 | | | 566,618 | | | 509,759 | | | 591,923 | |
| Installment | | | 110,933 | | | 121,000 | | | 132,876 | | | 145,787 | | | 155,478 | | | 121,564 | | | 171,750 | |
| Home equity | | | 270,659 | | | 257,954 | | | 251,706 | | | 248,071 | | | 239,585 | | | 260,145 | | | 233,598 | |
| Credit card | | | 26,692 | | | 26,043 | | | 25,745 | | | 25,271 | | | 24,586 | | | 26,162 | | | 24,116 | |
| Lease financing | | | 103 | | | 182 | | | 322 | | | 431 | | | 557 | | | 202 | | | 685 | |
| Total loans | | | 2,707,549 | | | 2,645,293 | | | 2,593,361 | | | 2,585,296 | | | 2,574,063 | | | 2,648,949 | | | 2,529,665 | |
| Less | | | | | | | | | | | | | | | | | | | | | | |
| Allowance for loan and lease losses | | | 29,739 | | | 29,248 | | | 28,860 | | | 29,503 | | | 28,278 | | | 29,284 | | | 27,845 | |
| Net loans | | | 2,677,810 | | | 2,616,045 | | | 2,564,501 | | | 2,555,793 | | | 2,545,785 | | | 2,619,665 | | | 2,501,820 | |
| Premises and equipment | | | 81,000 | | | 78,933 | | | 78,969 | | | 78,992 | | | 79,102 | | | 79,639 | | | 79,468 | |
| Goodwill | | | 28,261 | | | 28,261 | | | 28,261 | | | 28,261 | | | 28,261 | | | 28,261 | | | 28,261 | |
| Other intangibles | | | 639 | | | 652 | | | 680 | | | 749 | | | 915 | | | 657 | | | 2,475 | |
| Accrued interest and other assets | | | 126,699 | | | 126,837 | | | 125,149 | | | 129,305 | | | 136,561 | | | 126,230 | | | 130,245 | |
Total Assets | | $ | 3,476,648 | | $ | 3,361,649 | | $ | 3,298,663 | | $ | 3,338,828 | | $ | 3,309,800 | | $ | 3,379,343 | | $ | 3,300,339 | |
| | | | | | | | | | | | | | | | | | | | | | | |
LIABILITIES | | | | | | | | | | | | | | | | | | | | | | |
| Deposits | | | | | | | | | | | | | | | | | | | | | | |
| Interest-bearing | | $ | 609,992 | | $ | 590,464 | | $ | 623,206 | | $ | 607,009 | | $ | 632,890 | | $ | 607,895 | | $ | 628,536 | |
| Savings | | | 611,713 | | | 617,029 | | | 610,449 | | | 604,063 | | | 586,065 | | | 613,059 | | | 569,991 | |
| Time | | | 1,158,332 | | | 1,193,447 | | | 1,219,373 | | | 1,250,392 | | | 1,231,875 | | | 1,190,267 | | | 1,222,188 | |
| Total interest-bearing deposits | | | 2,380,037 | | | 2,400,940 | | | 2,453,028 | | | 2,461,464 | | | 2,450,830 | | | 2,411,221 | | | 2,420,715 | |
| Noninterest-bearing | | | 402,604 | | | 394,352 | | | 379,240 | | | 399,304 | | | 385,653 | | | 392,104 | | | 397,451 | |
| Total deposits | | | 2,782,641 | | | 2,795,292 | | | 2,832,268 | | | 2,860,768 | | | 2,836,483 | | | 2,803,325 | | | 2,818,166 | |
| Short-term borrowings | | | | | | | | | | | | | | | | | | | | | | |
| Federal funds purchased and securities sold under agreements to repurchase | | | 36,476 | | | 25,771 | | | 26,261 | | | 28,952 | | | 29,385 | | | 29,528 | | | 36,625 | |
| Federal Home Loan Bank | | | 206,741 | | | 114,654 | | | 614 | | | 0 | | | 0 | | | 107,699 | | | 0 | |
| Other | | | 53,836 | | | 53,758 | | | 66,154 | | | 77,772 | | | 58,914 | | | 57,901 | | | 51,361 | |
| Total short-term borrowings | | | 297,053 | | | 194,183 | | | 93,029 | | | 106,724 | | | 88,299 | | | 195,128 | | | 87,986 | |
| Long-term debt | | | 77,035 | | | 41,606 | | | 44,250 | | | 50,532 | | | 57,860 | | | 54,380 | | | 59,792 | |
| Other long-term debt | | | 20,620 | | | 20,620 | | | 20,620 | | | 20,620 | | | 30,369 | | | 20,620 | | | 30,741 | |
| Total borrowed funds | | | 394,708 | | | 256,409 | | | 157,899 | | | 177,876 | | | 176,528 | | | 270,128 | | | 178,519 | |
| Accrued interest and other liabilities | | | 22,705 | | | 31,145 | | | 31,681 | | | 23,915 | | | 20,606 | | | 28,489 | | | 22,029 | |
Total Liabilities | | | 3,200,054 | | | 3,082,846 | | | 3,021,848 | | | 3,062,559 | | | 3,033,617 | | | 3,101,942 | | | 3,018,714 | |
| | | | | | | | | | | | | | | | | | | | | | | |
SHAREHOLDERS' EQUITY | | | | | | | | | | | | | | | | | | | | | | |
| Common stock | | | 390,861 | | | 390,237 | | | 391,079 | | | 391,606 | | | 390,898 | | | 390,726 | | | 391,773 | |
| Retained earnings | | | 82,636 | | | 81,045 | | | 79,951 | | | 81,615 | | | 77,428 | | | 81,216 | | | 75,335 | |
| Accumulated other comprehensive loss | | | (8,594 | ) | | (4,211 | ) | | (4,977 | ) | | (6,670 | ) | | (15,097 | ) | | (5,937 | ) | | (14,192 | ) |
| Treasury stock, at cost | | | (188,309 | ) | | (188,268 | ) | | (189,238 | ) | | (190,282 | ) | | (177,046 | ) | | (188,604 | ) | | (171,291 | ) |
Total Shareholders' Equity | | | 276,594 | | | 278,803 | | | 276,815 | | | 276,269 | | | 276,183 | | | 277,401 | | | 281,625 | |
Total Liabilities and Shareholders' Equity | | $ | 3,476,648 | | $ | 3,361,649 | | $ | 3,298,663 | | $ | 3,338,828 | | $ | 3,309,800 | | $ | 3,379,343 | | $ | 3,300,339 | |
FIRST FINANCIAL BANCORP.
NET INTEREST MARGIN RATE / VOLUME ANALYSIS (1)
(Dollars in thousands)
(Unaudited)
| | | Quarterly Averages | | Year-to-Date Averages | |
| | Sep. 30, 2008 | | Jun. 30, 2008 | | Sep. 30, 2007 | | Sep. 30, 2008 | | Sep. 30, 2007 | |
| | Balance | | Yield | | Balance | | Yield | | Balance | | Yield | | Balance | | Yield | | Balance | | Yield | |
Earning assets | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Investment securities | | $ | 467,524 | | | 5.09 | % | $ | 422,463 | | | 4.93 | % | $ | 349,686 | | | 5.14 | % | $ | 411,967 | | | 5.02 | % | $ | 360,316 | | | 5.20 | % |
| Interest-bearing deposits with other banks | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Federal funds sold | | | 3,137 | | | 2.79 | % | | 4,095 | | | 3.93 | % | | 81,669 | | | 5.09 | % | | 24,266 | | | 3.45 | % | | 103,236 | | | 5.24 | % |
Gross loans (2) | | | 2,709,629 | | | 5.84 | % | | 2,648,327 | | | 6.02 | % | | 2,576,308 | | | 7.18 | % | | 2,651,692 | | | 6.15 | % | | 2,532,715 | | | 7.23 | % |
Total earning assets | | | 3,180,290 | | | 5.72 | % | | 3,074,885 | | | 5.87 | % | | 3,007,663 | | | 6.88 | % | | 3,087,925 | | | 5.98 | % | | 2,996,267 | | | 6.92 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Nonearning assets | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Allowance for loan and lease losses | | | (29,739 | ) | | | | | (29,248 | ) | | | | | (28,278 | ) | | | | | (29,284 | ) | | | | | (27,845 | ) | | | |
| Cash and due from banks | | | 89,498 | | | | | | 81,329 | | | | | | 85,576 | | | | | | 85,915 | | | | | | 91,468 | | | | |
| Accrued interest and other assets | | | 236,599 | | | | | | 234,683 | | | | | | 244,839 | | | | | | 234,787 | | | | | | 240,449 | | | | |
Total assets | | $ | 3,476,648 | | | | | $ | 3,361,649 | | | | | $ | 3,309,800 | | | | | $ | 3,379,343 | | | | | $ | 3,300,339 | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest-bearing liabilities | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total interest-bearing deposits | | $ | 2,380,037 | | | 2.27 | % | $ | 2,400,940 | | | 2.45 | % | $ | 2,450,830 | | | 3.32 | % | $ | 2,411,221 | | | 2.55 | % | $ | 2,420,715 | | | 3.26 | % |
| Borrowed funds | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Short-term borrowings | | | 297,053 | | | 2.30 | % | | 194,183 | | | 2.34 | % | | 88,299 | | | 4.68 | % | | 195,128 | | | 2.49 | % | | 87,986 | | | 4.59 | % |
| Long-term debt | | | 77,035 | | | 3.65 | % | | 41,606 | | | 3.71 | % | | 57,860 | | | 3.65 | % | | 54,380 | | | 3.68 | % | | 59,792 | | | 3.65 | % |
| Other long-term debt | | | 20,620 | | | 6.00 | % | | 20,620 | | | 5.89 | % | | 30,369 | | | 8.70 | % | | 20,620 | | | 6.64 | % | | 30,741 | | | 8.65 | % |
| Total borrowed funds | | | 394,708 | | | 2.76 | % | | 256,409 | | | 2.85 | % | | 176,528 | | | 5.03 | % | | 270,128 | | | 3.05 | % | | 178,519 | | | 4.97 | % |
Total interest-bearing liabilities | | | 2,774,745 | | | 2.34 | % | | 2,657,349 | | | 2.49 | % | | 2,627,358 | | | 3.44 | % | | 2,681,349 | | | 2.60 | % | | 2,599,234 | | | 3.37 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Noninterest-bearing liabilities | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Noninterest-bearing demand deposits | | | 402,604 | | | | | | 394,352 | | | | | | 385,653 | | | | | | 392,104 | | | | | | 397,451 | | | | |
| Other liabilities | | | 22,705 | | | | | | 31,145 | | | | | | 20,606 | | | | | | 28,489 | | | | | | 22,029 | | | | |
| Shareholders' equity | | | 276,594 | | | | | | 278,803 | | | | | | 276,183 | | | | | | 277,401 | | | | | | 281,625 | | | | |
Total liabilities & shareholders' equity | | $ | 3,476,648 | | | | | $ | 3,361,649 | | | | | $ | 3,309,800 | | | | | $ | 3,379,343 | | | | | $ | 3,300,339 | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net interest income (1) | | $ | 29,410 | | | | | $ | 28,414 | | | | | $ | 29,417 | | | | | $ | 86,073 | | | | | $ | 89,421 | | | | |
Net interest spread (1) | | | | | | 3.38 | % | | | | | 3.38 | % | | | | | 3.44 | % | | | | | 3.38 | % | | | | | 3.55 | % |
Net interest margin (1) | | | | | | 3.68 | % | | | | | 3.72 | % | | | | | 3.88 | % | | | | | 3.72 | % | | | | | 3.99 | % |
(1) Not tax equivalent.
(2) Loans held for sale and nonaccrual loans are both included in gross loans.
FIRST FINANCIAL BANCORP.
NET INTEREST MARGIN RATE / VOLUME ANALYSIS (1)
(Dollars in thousands)
(Unaudited)
| | | Linked Qtr. Income Variance | | Comparable Qtr. Income Variance | | Year-to-Date Income Variance | |
| | | Rate | | Volume | | Total | | Rate | | Volume | | Total | | Rate | | Volume | | Total | |
Earning assets | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Investment securities | | $ | 166 | | $ | 635 | | $ | 801 | | $ | (57 | ) | $ | 1,507 | | $ | 1,450 | | | (472 | ) | $ | 1,940 | | $ | 1,468 | |
| Federal funds sold | | | (12 | ) | | (6 | ) | | (18 | ) | | (475 | ) | | (551 | ) | | (1,026 | ) | | (1,378 | ) | | (2,040 | ) | | (3,418 | ) |
Gross loans (2) | | | (1,214 | ) | | 1,322 | | | 108 | | | (8,808 | ) | | 1,956 | | | (6,852 | ) | | (20,319 | ) | | 5,479 | | | (14,840 | ) |
Total earning assets | | | (1,060 | ) | | 1,951 | | | 891 | | | (9,340 | ) | | 2,912 | | | (6,428 | ) | | (22,169 | ) | | 5,379 | | | (16,790 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest-bearing liabilities | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total interest-bearing deposits | | $ | (1,057 | ) | $ | 30 | | $ | (1,027 | ) | $ | (6,515 | ) | $ | (405 | ) | $ | (6,920 | ) | $ | (12,783 | ) | $ | (181 | ) | $ | (12,964 | ) |
| Borrowed funds | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Short-term borrowings | | | (18 | ) | | 608 | | | 590 | | | (530 | ) | | 1,209 | | | 679 | | | (1,379 | ) | | 2,000 | | | 621 | |
| Long-term debt | | | (6 | ) | | 329 | | | 323 | | | (1 | ) | | 176 | | | 175 | | | 13 | | | (149 | ) | | (136 | ) |
| Other long-term debt | | | 6 | | | 3 | | | 9 | | | (208 | ) | | (147 | ) | | (355 | ) | | (460 | ) | | (503 | ) | | (963 | ) |
| Total borrowed funds | | | (18 | ) | | 940 | | | 922 | | | (739 | ) | | 1,238 | | | 499 | | | (1,826 | ) | | 1,348 | | | (478 | ) |
Total interest-bearing liabilities | | | (1,075 | ) | | 970 | | | (105 | ) | | (7,254 | ) | | 833 | | | (6,421 | ) | | (14,609 | ) | | 1,167 | | | (13,442 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net interest income (1) | | $ | 15 | | $ | 981 | | $ | 996 | | $ | (2,086 | ) | $ | 2,079 | | $ | (7 | ) | $ | (7,560 | ) | $ | 4,212 | | $ | (3,348 | ) |
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)
| | | Sep. 30, | | Jun. 30, | | Mar. 31, | | Dec. 31, | | Sep. 30, | |
| | | 2008 | | 2008 | | 2008 | | 2007 | | 2007 | |
| | | | | | | | | | | | |
ALLOWANCE FOR LOAN AND LEASE LOSS ACTIVITY | | | | | | | | | | | | |
| Balance at beginning of period | | $ | 29,580 | | $ | 29,718 | | $ | 29,057 | | $ | 29,136 | | $ | 28,060 | |
| Provision for loan and lease losses | | | 3,219 | | | 2,493 | | | 3,223 | | | 1,640 | | | 2,558 | |
| Gross charge-offs Commercial | | | 1,568 | | | 946 | | | 545 | | | 1,433 | | | 1,008 | |
| Real estate - commercial | | | 48 | | | 589 | | | 806 | | | 465 | | | 76 | |
| Real estate - residential | | | 335 | | | 227 | | | 39 | | | 33 | | | 49 | |
| Installment | | | 424 | | | 482 | | | 564 | | | 522 | | | 471 | |
| Home equity | | | 135 | | | 525 | | | 651 | | | 285 | | | 189 | |
| All other | | | 426 | | | 426 | | | 498 | | | 304 | | | 304 | |
Total gross charge-offs | | | 2,936 | | | 3,195 | | | 3,103 | | | 3,042 | | | 2,097 | |
| Recoveries | | | | | | | | | | | | | | | | |
| Commercial | | | 179 | | | 166 | | | 144 | | | 342 | | | 145 | |
| Real estate - commercial | | | 37 | | | 19 | | | 3 | | | 632 | | | 124 | |
| Real estate - residential | | | 4 | | | 5 | | | 11 | | | 3 | | | 25 | |
| Installment | | | 225 | | | 246 | | | 315 | | | 242 | | | 263 | |
| Home equity | | | 0 | | | 30 | | | 0 | | | 19 | | | 12 | |
| All other | | | 45 | | | 98 | | | 68 | | | 85 | | | 46 | |
| Total recoveries | | | 490 | | | 564 | | | 541 | | | 1,323 | | | 615 | |
| Total net charge-offs | | | 2,446 | | | 2,631 | | | 2,562 | | | 1,719 | | | 1,482 | |
| Ending allowance for loan and lease losses | | $ | 30,353 | | $ | 29,580 | | $ | 29,718 | | $ | 29,057 | | $ | 29,136 | |
| | | | | | | | | | | | | | | | | |
NET CHARGE-OFFS TO AVERAGE LOANS AND LEASES (ANNUALIZED) | | | | | | | | | |
| Commercial | | | 0.67 | % | | 0.39 | % | | 0.21 | % | | 0.56 | % | | 0.45 | % |
| Real estate - commercial | | | 0.01 | % | | 0.31 | % | | 0.46 | % | | (0.10 | )% | | (0.03 | )% |
| Real estate - residential | | | 0.27 | % | | 0.18 | % | | 0.02 | % | | 0.02 | % | | 0.02 | % |
| Installment | | | 0.71 | % | | 0.78 | % | | 0.75 | % | | 0.76 | % | | 0.53 | % |
| Home equity | | | 0.20 | % | | 0.77 | % | | 1.04 | % | | 0.43 | % | | 0.29 | % |
| All other | | | 0.69 | % | | 0.64 | % | | 0.92 | % | | 0.48 | % | | 0.62 | % |
Total net charge-offs | | | 0.36 | % | | 0.40 | % | | 0.40 | % | | 0.26 | % | | 0.23 | % |
| | | | | | | | | | | | | | | | | |
COMPONENTS OF NONPERFORMING LOANS, NONPERFORMING ASSETS, AND UNDERPERFORMING ASSETS |
| Nonaccrual loans | | | | | | | | | | | | | | | | |
| Commercial | | $ | 5,194 | | $ | 5,447 | | $ | 3,952 | | $ | 2,677 | | $ | 3,782 | |
| Real estate - commercial | | | 3,361 | | | 3,592 | | | 4,415 | | | 5,965 | | | 5,343 | |
| Real estate - residential | | | 3,742 | | | 4,461 | | | 4,529 | | | 3,063 | | | 2,147 | |
| Installment | | | 417 | | | 438 | | | 544 | | | 734 | | | 745 | |
| Home equity | | | 1,084 | | | 866 | | | 1,221 | | | 1,662 | | | 1,117 | |
| All other | | | 32 | | | 8 | | | 30 | | | 12 | | | 8 | |
| Total nonaccrual loans | | | 13,830 | | | 14,812 | | | 14,691 | | | 14,113 | | | 13,142 | |
| Restructured loans | | | 208 | | | 554 | | | 562 | | | 567 | | | 574 | |
| Total nonperforming loans | | | 14,038 | | | 15,366 | | | 15,253 | | | 14,680 | | | 13,716 | |
| Other real estate owned (OREO) | | | 4,610 | | | 3,763 | | | 2,368 | | | 2,636 | | | 3,124 | |
| Total nonperforming assets | | | 18,648 | | | 19,129 | | | 17,621 | | | 17,316 | | | 16,840 | |
| Accruing loans past due 90 days or more | | | 241 | | | 245 | | | 372 | | | 313 | | | 222 | |
| Total underperforming assets | | $ | 18,889 | | $ | 19,374 | | $ | 17,993 | | $ | 17,629 | | $ | 17,062 | |
| Total classified assets | | $ | 58,284 | | $ | 54,511 | | $ | 55,302 | | $ | 49,372 | | $ | 53,997 | |
| | | | | | | | | | | | | | | | | |
CREDIT QUALITY RATIOS | | | | | | | | | | | | | | | | |
| Allowance for loan and lease losses to | | | | | | | | | | | | | | | | |
| Nonaccrual loans | | | 219.47 | % | | 199.70 | % | | 202.29 | % | | 205.89 | % | | 221.70 | % |
| Nonperforming loans | | | 216.22 | % | | 192.50 | % | | 194.83 | % | | 197.94 | % | | 212.42 | % |
| Total ending loans | | | 1.14 | % | | 1.11 | % | | 1.14 | % | | 1.12 | % | | 1.12 | % |
| Nonperforming loans to total loans | | | 0.53 | % | | 0.57 | % | | 0.58 | % | | 0.56 | % | | 0.53 | % |
| Nonperforming assets to | | | | | | | | | | | | | | | | |
| Ending loans, plus OREO | | | 0.70 | % | | 0.71 | % | | 0.67 | % | | 0.67 | % | | 0.65 | % |
| Total assets | | | 0.53 | % | | 0.55 | % | | 0.53 | % | | 0.51 | % | | 0.51 | % |
FIRST FINANCIAL BANCORP.
CAPITAL ADEQUACY
(Dollars in thousands)
(Unaudited)
| | | | | | | | | | | | | Nine months ended, | |
| | | Sep. 30, | | Jun. 30, | | Mar. 31, | | Dec. 31, | | Sep. 30, | | Sep. 30, | | Sep. 30, | |
| | | 2008 | | 2008 | | 2008 | | 2007 | | 2007 | | 2008 | | 2007 | |
PER COMMON SHARE | | | | | | | | | | | | | | | | | | | | | | |
| Market Price | | | | | | | | | | | | | | | | | | | | | | |
| High | | $ | 14.80 | | $ | 13.88 | | $ | 13.81 | | $ | 13.89 | | $ | 15.12 | | $ | 14.80 | | $ | 16.76 | |
| Low | | $ | 8.10 | | $ | 9.20 | | $ | 10.19 | | $ | 10.12 | | $ | 10.76 | | $ | 8.10 | | $ | 10.76 | |
| Close | | $ | 14.60 | | $ | 9.20 | | $ | 13.45 | | $ | 11.40 | | $ | 12.78 | | $ | 14.60 | | $ | 12.78 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Average shares outstanding - basic | | | 37,132,864 | | | 37,114,451 | | | 37,066,754 | | | 37,370,618 | | | 38,383,228 | | | 37,104,793 | | | 38,820,545 | |
| Average shares outstanding - diluted | | | 37,504,231 | | | 37,524,789 | | | 37,431,918 | | | 37,370,650 | | | 38,383,228 | | | 37,487,037 | | | 38,825,940 | |
| Ending shares outstanding | | | 37,476,607 | | | 37,483,384 | | | 37,488,229 | | | 37,367,808 | | | 37,405,433 | | | 37,476,607 | | | 37,405,433 | |
| | | | | | | | | | | | | | | | | | | | | | | |
REGULATORY CAPITAL | | | Preliminary | | | | | | | | | | | | | | | Preliminary | | | | |
| Tier 1 Capital | | $ | 274,513 | | $ | 274,372 | | $ | 272,614 | | $ | 274,046 | | $ | 269,961 | | $ | 274,513 | | $ | 269,961 | |
| Tier 1 Ratio | | | 9.80 | % | | 9.99 | % | | 10.20 | % | | 10.29 | % | | 10.18 | % | | 9.80 | % | | 10.18 | % |
| Total Capital | | $ | 304,866 | | $ | 303,952 | | $ | 302,332 | | $ | 303,103 | | $ | 299,097 | | $ | 304,866 | | $ | 299,097 | |
| Total Capital Ratio | | | 10.89 | % | | 11.06 | % | | 11.31 | % | | 11.38 | % | | 11.27 | % | | 10.89 | % | | 11.27 | % |
| Total Capital in excess of minimum requirement | | $ | 80,806 | | $ | 84,147 | | $ | 88,553 | | $ | 90,062 | | $ | 86,857 | | $ | 80,806 | | $ | 86,857 | |
| Total Risk-Adjusted Assets | | $ | 2,800,753 | | $ | 2,747,559 | | $ | 2,672,242 | | $ | 2,663,007 | | $ | 2,652,999 | | $ | 2,800,753 | | $ | 2,652,999 | |
| Leverage Ratio | | | 7.95 | % | | 8.21 | % | | 8.32 | % | | 8.26 | % | | 8.21 | % | | 7.95 | % | | 8.21 | % |
| | | | | | | | | | | | | | | | | | | | | | | |
OTHER CAPITAL RATIOS | | | | | | | | | | | | | | | | | | | | | | |
| Ending shareholders' equity to ending assets | | | 7.89 | % | | 7.96 | % | | 8.36 | % | | 8.21 | % | | 8.16 | % | | 7.89 | % | | 8.16 | % |
| Ending tangible shareholders' equity to ending tangible assets | | | 7.13 | % | | 7.18 | % | | 7.55 | % | | 7.41 | % | | 7.35 | % | | 7.13 | % | | 7.35 | % |
| Average shareholders' equity to average assets | | | 7.96 | % | | 8.29 | % | | 8.39 | % | | 8.27 | % | | 8.34 | % | | 8.21 | % | | 8.53 | % |
| Average tangible shareholders' equity to average tangible assets | | | 7.18 | % | | 7.50 | % | | 7.58 | % | | 7.47 | % | | 7.53 | % | | 7.41 | % | | 7.72 | % |
| | | | | | | | | | | | | | | | | | | | | | | |
REPURCHASE PROGRAM (1) | | | | | | | | | | | | | | | | | | | | | | |
| Shares repurchased | | | 0 | | | 0 | | | 0 | | | 34,300 | | | 1,469,700 | | | 0 | | | 1,965,700 | |
| Average share repurchase price | | $ | 0.00 | | $ | 0.00 | | $ | 0.00 | | $ | 13.52 | | $ | 13.00 | | $ | 0.00 | | $ | 13.65 | |
| Total cost of shares repurchased | | $ | 0 | | $ | 0 | | $ | 0 | | $ | 464 | | $ | 19,105 | | $ | 0 | | $ | 26,834 | |
(1) Represents share repurchases as part of publicly announced plans.
