FFBC - Earnings call transcript Q4 2019 | First Financial Bancorp.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, and welcome to the First Financial Bancorp Fourth Quarter 2019 Earnings Conference Call and Webcast. [Operator Instructions]. Please note, this event is being recorded. I would now like to turn the conference over to Mr. Scott Crawley, Corporate Controller. ahead. go Please

Scott Crawley

Financial morning, Officer; -- Good Financial you joining Officer. President Year for First will today's Thanks, Archie Jamie be today's everyone. Anderson, conference today Brown, XXXX Full and on Fourth Chief First Participating call us on -- call Executive Alyssa. and Quarter Thank Results. and to Bancorp's Financial discuss Chief

Investor presentation Relations issued are release the we yesterday www.bankatfirst.com and under accompanying at press the on available slide section. our website Both the

make will slides in We to reference contained call. the the today's during accompanying presentation

Additionally, please the release of contained quarter for refer as to the earnings discussion disclosure full company's the risk filings forward-looking XXXX SEC a in statement factors. well our as fourth

December forward-looking and updating Archie call. over The not be Brown. to will statements I'll XX, call XXXX, circumstances information provide now as we will after any we to facts today reflect or is the this turn of accurate

Archie Brown

us Thank you, call. full morning, thank we everyone, XXXX. Yesterday quarter and Scott. for Good our results fourth for on year afternoon, and the today's announced financial joining you

call quarter. to successful for Before and the this first some performance results this like to over detail, another turn Jamie recap year's those to provide from highlights in XXXX I was greater recent discuss I'd Financial. year

faced the and was by actions record highlighted headwinds cuts and quartile single year the shareholder-focused the acquisition. fed capital we from While rate a earnings, the loan, large charge-off franchise of Bannockburn returns, top

for of bank, shareholders. capital offerings clients addition market will create The experienced our new opportunities team this its and and

further talent strategic enhance as will and which to continue in invest digital we such Additionally, longer term performance. technology, areas

on per a of adjusted tangible in interest common and when strength continued include backdrop. sub-XX% a items. average XX.XX% return challenging a equity demonstrates more on $X.XX and X.XX% full return nonoperating ratio a rate year assets, remove performance our efficiency businesses to average Highlights acquisition-related XXXX despite earnings share, Our

XXXth of full our and in the consecutive mark fourth the volume a were acquisition from quarter classified quarter of income results, loan pleased and our quarter highlighted by fee which improvement profitability assets. year, strongest were with significant Bannockburn We the of

For XX.XX% average average included equity efficiency per on a earnings tangible performance a and on assets, X.X% $X.XX, ratio. our quarter, return return a the common share adjusted metrics XX% of

Positive C&I core an include balances noninterest-bearing banking X% which on deposit balanced an growth quarter annualized strong on growth and total average resulted CRE XX% and record X% trends annualized demand, were trends average loan basis. originations balances in Deposit and with basis. our over growth in in encouraging fourth

interest charge-offs the Credit the Our during significantly strong classified remained number on of improved net margin and high normalize as significantly balances. asset provided. trends resulting we and net resolved lower a period of range problem loans, the end in quality previously

of with costs. performance banking of pleased acquisition our impact We variable period higher the strength growth are to mortgage with Expenses during this and and XX% fee the Bannockburn year-over-year quarter due the almost in driven by derivative income elevated fees quarter client were revenues. continued full

approach to disciplined our However, a managing on we focused be to efficiency. continue following

Lastly, continued million an program share the during shares. bought repurchase quarter, our and we additional X.X

up Jamie? that, details and further quarter discussion, call discuss fourth Jamie results. now the commentary our will After I closing remarks. to With some I'll over of to wrap Jamie's our turn with forward-looking

James Anderson

our X remain expectations. our results provide XXXX margin fourth and a performance. all and met fee Archie, quarter solid summary net everyone. quarter Fourth of Slides good interest as income growth, loan you, Thank morning, and X

primarily slightly in declined result make decline collection significant expenses of variable repurchases for earnings during expenses as was annual Capital strong direct year. the noninterest in ratio than a a elevated elevated a These ratios we willing overall was our related was remained and this liked, would While were bit more than higher have of but a compensation the we increase to efficiency the year trade-off and a strong result as classified share were expenses. assets. to

X.XX% X.XX% by equity XX%. during despite XXXX, the common increased increasing common to dividend shares repurchasing tangible and Our million X.X ratio from

to divestiture Slide X understanding believe adjusted earnings, items the quarterly million reconciles a million to of $XXX,XXX Adjusted credit highlighting costs of $X.X $X.X quarter, other write-down, our real income which branch excludes nonrecurring we our per expenses. important and share was including for $XX.X consolidation and GAAP are earnings million that estate merger-related tax and performance. severance other $X.XX costs, net or historic

merger-related negatively income executive for by compensation. impacted of addition, taxes In was $XXX,XXX net

adjusted As slight Slide X.XX% this increase of and average our diligent management. quarter, return of tangible adjusted return the on a to to expense earnings on remained equity and a equate Despite during XX.X%. these XX.X% X, shown ratio strong efficiency our approach reflects on average assets common

basis margin Net tax for a XXXX. X than Turning was interest on fully better the point quarter was the to from we of decline Slide X. third The equivalent fourth quarter anticipated. basis X.XX%

due declined fed September cuts. to interest yields Asset rate and the October

the However, mix. funding partially by impact and shift a in favorable was the to offset costs margin

deposits of XX portfolio delevering investment down on investment to higher basis in million by dropped the points lowering shown these basis the yield points X the approximately the X, yield As X pay half by Slide back proactively points. offset cost year borrowings. We declines $XXX basis on loans and declined our cost the partially and of

Street by slight mix quarter. which current small balances million, traditional Slide increases C&I loans. X linked depicts relatively and remainder End-of-period was our in changes increased driven mortgage the of primarily banking the as to business and $XXX portfolio originations. declines balance The loan was offset compared ICRE loan Oak and stable

basis the retail points. XX the interest-bearing as quarter. our to resulting and average the actively shows $XXX asset in XX linked growth mitigate basis point fund of base mix million the as deposit To progression Slide from manage a DDA we deposits grew deposit in outpaced public X yields, declining decrease fourth well non-interest-bearing, CDs. deposit reduction costs, a as Average balances of quarter during

we near pricing deposit continue conditions Over market based will our term, and needs. manage funding to the on

impacted XX as highlights Fourth of in Slide the noninterest was continued activity. banking well quarter mortgage the derivatives as income acquisition by positively full fee for Bannockburn impact our client momentum income quarter. the and quarter

Noninterest benefits driven the shown the as Slide strong derivative is for company and by tied banking client our mortgage quarter salaries were as the to overall income. incentives group well expense Higher on XX. outpacing peer performance aforementioned and

$XXX,XXX a other branch and such $X.X consolidation write-down noninterest million a severance as costs historic credit to of In costs million tax and recur, merger-related investment, approximately addition, costs. of $X.X expenses expected included not of

quarter, $XXX,XXX significant the unplanned incurred also which during reduction classified assets. drive in of We collection helped the expenses

We classified your which trends our assets which XX, were the turn Slide leading in to credit losses. fourth asset believe quarters, last I'll of Next, X attention the positive quality depicts for quarter. indicator are the overwhelmingly

During which the X.XX% loans, resulted million assets fourth classified of in a quarter, we as assets. or a problem able XX% to total decline percentage were resolve a in to number $XX of

quarter and fourth or growth. charge-offs of declined addition, points our provision $X.X to basis total net expense fourth which and net XX loan million to quarter charge-offs loans declined sufficiently million, In covered $X.X

Slides excess ratios of Finally, XX in shown remained stated are and on targets. our capital strong XX, and as

shares, further X.X repurchased million shareholder sustaining million During quarter, while focus on X.X our fourth operating demonstrates total we shares, financial value the which the success. to XXXX bringing and

we targets by us above future. all and other strategic as opportunities share deployment and will in the remain impacted repurchases modestly were ratios the serve surely well capital internal M&A evaluate capital Our but

Tangible the book points basis during share equity X.XX%. per tangible value X% common $XX.XX, and increased to to quarter XX declined

on our for it thoughts turn Archie over comments. XXXX to back now I'll closing and outlook

Archie Brown

you, Thank Jamie.

on full Before we XX. as remarks, prepared to shown year our provide XXXX outlook, commentary our end I on some Slide want

loan loan for strong ability to our full year. and Our about pipeline optimistic we remains mid the maintain single-digit growth are

no remain margin, relatively assuming interest expect excluding further net flat, we accounting. to the cuts, Regarding purchase it

rate As on actively margin fluctuate of depending factors, always, working mitigate pricing the disciplined and through are the interest deposit net to downward on variety side a asset can management. pressure we

outlook stable charge-offs remains growth. accounting loan covering Our normalized credit for provision for with and a quality

may loans to time volatility cause individual However, from time.

with expected respect to support our is income long-term on even seasonal fee to be $XXX million while focus we investments With success expected. of expenses, of fluctuations efficiency strategic business. range to XXXX the making continuously $XXX in million the to

our year expenses successful million to $XXX strategic talented to million related pleased be which $X of to the $X our we outstanding performance First expenses year reflects to $XXX with million effort includes range new Financial full and million, was strength the associates. expect We another of of of continue XXXX technology and in the investments. Overall, company. for

to sustain successes these are the about ability manage coming the in to our optimistic and positioned well environment year. current over We

concludes now call the prepared for we'll comments. up This Alyssa, open questions. the

Operator

[Operator Instructions].

from The Scott first Siefers comes Sandler. question Piper today of

Robert Siefers

is question first think I for you. Jamie,

grow? growth, overall little loan the how a base it's continue such should been for year earning little will I securities guess, we aligned? you're how thinking Will two to on Or disconnect? bit. there thought that has Just be just expect from that portfolio should looking that is about that the a we think I'm assets a growth what disconnected for shrinking curious expect to the this and in a revert I dynamic. of for the

James Anderson

Yes.

the -- -- depending portfolio be for like, be going side And the all is growth we're -- loan plan securities the deposit based looks moment to asset will so like to and the flat side. the at on on mean, keep I really what XXXX. the So then would looks earning growth funding

Robert Siefers

Perfect. Bannockburn's then curious any would And updated revenues. Okay. from separately, for thoughts you on just anticipate what

like were closer transaction of little when It looks annualized a is wasn't $XX the fee $XX million. we the thinking, think run rate income. what million a over to I maybe

up you're Just Or original that thinking build curious as anticipation. if about that should the how to well?

Archie Brown

Bannockburn revenue is month ramp we'll to that had we $XX stronger And quarter it revenue we what X to course do certainly expect a little million Archie. we We it anticipate see in saw this that the X in exceed in year. of the was QX. the Scott, this over year than The continue do up. Yes.

Operator

The next question from Chris today of McGratty KBW. comes

Christopher McGratty

margin Jamie, with commentary. just the starting

the we certainly say trying quarter? be? like just the and some fees? You get It quarter bit. When a a a of margin it fourth balance, I'm what you looks starting talking off core to your is little little because loan are helping is bit the which fourth of might the a that high expectations guys remixing base outperformed sense are stability,

James Anderson

would accounts, whatnot will the -- the in expect say, that asset costs flat on to point some from it's the made I down. we quarter. this are seeing of that the managing first we our Yes. We yields you that the -- market money asset that in asset would decline in out. decline side, are think revisions Any, trailing No, offset categories terms just CDs and we're deposit

we talking So about we're for core talk excluding and accounting. XXXX, margin -- when about purchase the margin, flat

margin core you'll terms see we've 'XX, decline flat been a having forecast that accounting purchase accounting. at looking for and XXXX. here on are -- That that on purchase we on So seeing that some in in should trailing continue then -- the of we

So the will down overall reported but to margin all that's purchase due accounting. slightly, come

Christopher McGratty

over you Okay. acquisition? be the little talking looks pivoting Maybe more? and come you left. That's for would great. like an you consider at. that a front, some X thinking towards priorities? deals can about strategic capital on you -- keep comments a the remind M&A. Or back million type for got Should of you maybe we maybe capital buyback question shares look finished on me Archie, you it Maybe just You just Can

Archie Brown

Chris. Sure,

year. pay it end of that will a going dividend if and given active regard in conditions on priorities. be buyback CECL. the would high see Qs little kind X, the high range if think stay probably, present -- we'll we over the again. through as With in the range, be us we'll and end And I'd buyback, quarter get I on favorable the pause to right we'll believe say, think about forward. more the earnings then we the outlined, of the I probably with at M&A opportunities of maybe we active also kind here for right, first just that more X think us -- payout to a regard of into think themselves we've the capital you'd of And We I are

Christopher McGratty

kind sneak could You on guess, I and the deals. the thinking? what's What's small have of both large in. done appetite? And the Board's just I M&A comment, if guys that

Archie Brown

capabilities funding social low-cost. that a are And be the priority changed Yes. those where us maybe more states last difficult Midwest MOE. to it. good to have wouldn't talked the would current in-market further certainly, contingent acquisitions we line another -- prefer far too it's say we the like maybe Metro time existing factors. the footprint, in about most we to maybe the on From finally, lot really don't of bank think the about maybe consider think conditions maybe that just geography that to year, are. desirable I We look see footprint. the or priority, the But you from would would from certainly, I rule perfectly afield quarter in say But would certain the certainly, that probably acquisitions be current do. of lines the have course, And if we footprint, deals of to in premium, -- our of I that a our going We've size. other a would would brought region, to know, out, you of the kind middle But would something be that out the where acquisitions, as more more acquisitions. more terms for -- a you business all of that's perspective, up started additional into think half not we low in last from we but year, seen last transaction be

Christopher McGratty

is then one. And that rate Great. XX%? Jamie, the or FTE non-FTE, that last tax

James Anderson

effective That rate. the tax be would Yes.

FTE. So

Operator

[Operator Instructions].

Arfstrom today Markets. RBC of from next Jon Our comes question Capital

Jon Arfstrom

happened stood A come more bit or the It's you wondering quarter? have what couple you little is Did The Jamie, there? for of a in positive. there things about obviously talk credit, could that? what you And Archie And accomplish to if exactly more just out. wanted improvement there?

Archie Brown

had small and John, we in small and to happened it fourth we quarters pleased. kind small worked were get the do trying we all those get Yes, so during nonaccrual you loan, diligently business to carrying payoffs together classified at certainly substandard where mean loans. really quarter in were or $XX million these about to credit that problems, certain of them kind value. moved able of We in comes we get $XX it the and time million all through on I so best a did were again, granular, and quarter. the the sale felt was work out, of And of We just probably areas. do that very loans that classification of are but done and

that any to have didn't we related So additional charges movement.

piece. So that was probably the other big

Jon Arfstrom

Okay.

your number linked other me comments, talked out increase the The to in a stood you XX% release loan about in that in originations quarter.

Archie Brown

Yes.

Jon Arfstrom

about Just if wondering if you could talk a changed, little what bit anything?

Archie Brown

year. group's Well, what all most about for were And been us, happened our on thing the has banking QX But certainly, the pleased CRE commercial quarter. was strongest think side. we strong CRE was I

XX% quarter strongest probably year, for other Our higher than in originations any quarter. the

origination as really commercial quarter side just nice a So -- on really well. the

that that So in payoff be successes stronger overall in we Loan in a I did of addition think it XXXX. think, the just I to was, jump originations. as had lot nice successful XXXX on. in And closed will accomplishing. momentum well will going have We we quarter started in during -- amount our again, the of than out quarter. larger to few a significant for a the work in growth were we moderate that highest QX, We say was we that work able to get had we're quarter. -- probably

a So the pleased lot very happened, originations with side. but

Jon Arfstrom

guidance, little Okay. than XXXX? I optimism your what And think is commercial maybe growth saying on more on bit loan a for you're

Archie Brown

that's right. Yes,

Jon Arfstrom

more XXXX. One small guidance one for expense on Okay. your

what Obviously, tech it that little million What's bit a is? $X you of $X is? a Can have but to little there? support that, You about bit about talk different investments. the line what million talk

Archie Brown

even us were we've a technology we our technology. in that, where We that established help to help digital and long-term a ago, Sure. but for to started of way during at long technology adding really actually Yes. commercial to us had be including and and we evaluating a we in this started about ramp mortgage, year loan do John, various year, we third use technologies, up digital talent out and where come that gaps industry-leading more origination. and on some want be priorities, year, And to we will set rolled the parties to term, grow. from relevant look just

digital This opening quarter, account we our will solution. in as roll out deposit in We've online our new digital groups. as adding our been talent IT marketing areas and areas digital well

some talent -- also processing in will include use of various implementing automation technologies and areas Some the this on of company. RPA working

that that technology a of lot of in So half be it's probably talent there's a but spend. half will in happening, is and combination,

Jon Arfstrom

Okay.

Okay. one things. Jamie, Maybe the noninterest I now for Good. income, on And other for flagging -- banking a can. obviously if you you and and have you, few Bannockburn what's seasonality guess, that? do you're have What just then mortgage I more, you message

James Anderson

Yes. there I quarter fee when light is our message it real to typically only income. mean, I think mean, -- first comes the I

of down the the the first quarter, are like those It's throughout -- equity then this of just XX% of year. just couple days back whatnot typically XX%, and a ramps and that linear in some for and more quarter. with up mortgage banking [Indiscernible] down down number John. banking quarter, categories and mortgage is Just and first the it are typically

Operator

to any closing turn concludes question-and-answer Brown the remarks. This would Archie our session. over conference to I like back for

Archie Brown

all call for Thank you, our today. you Alyssa. joining Thank

future. day. to doing, again We are and talk about you in story our look work excited we Have nice the forward and to we're the a

Operator

now for today's presentation. attending you The concluded. Thank conference has

disconnect. now may You

First Financial Bancorp. (FFBC) 24 Jan 202019 Q4 Earnings call transcript