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First Financial Bancorp Reports Fourth Quarter and Full Year 2014 Financial Results


News provided by

First Financial Bancorp

29 Jan, 2015, 04:15 ET

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CINCINNATI, Jan. 29, 2015 /PRNewswire/ -- First Financial Bancorp (Nasdaq: FFBC) ("First Financial" or the "Company") announced today financial and operational results for the fourth quarter 2014 and for the twelve month period ended December 31, 2014.

Fourth quarter net income was $18.6 million and earnings per diluted common share were $0.30.  This compares with third quarter net income of $15.3 million and earnings per diluted common share of $0.26 and fourth quarter 2013 net income of $3.8 million and earnings per diluted common share of $0.07.

For the twelve month period ended December 31, 2014, net income was $65.0 million and earnings per diluted common share were $1.09 as compared to net income of $48.3 million and earnings per diluted common share of $0.83 for the twelve month period ended December 31, 2013.

  • Continued solid quarterly performance
    • Quarterly results included several acquisition-related items and other items not expected to recur which reduced pre-tax income by $1.5 million or approximately $0.02 per diluted share
    • Return on average assets of 1.02%; 1.07% as adjusted for acquisition-related and other items
    • Return on average tangible common equity of 11.63%; 12.24% as adjusted for acquisition-related and other items
  • Columbus, Ohio market integration complete
    • Data platform conversions are now complete for all three banks acquired by the Company during 2014
    • Merger-related costs have largely been recognized and were in line with expectations
    • Majority of identified efficiency opportunities have been fully implemented
    • Loan and deposit growth in line with expectations
  • Fourth quarter average total loans increased $358.4 million, or 8.2%, and average total deposits increased by $442.8 million, or 8.5%, compared to third quarter averages largely related to the acquisitions in the Columbus, Ohio market and strong third quarter organic loan and deposit growth

The board of directors has authorized a quarterly dividend of $0.16 per common share for the next regularly scheduled dividend, payable on April 1, 2015 to shareholders of record as of February 27, 2015.

Claude Davis, Chief Executive Officer, commented, "We are extremely pleased with our solid earnings for the fourth quarter and for the full year 2014 in light of the prolonged low interest rate environment and continued runoff of higher yielding loans acquired under FDIC Shared Loss Agreements.

"Our loan production remains strong across our core product sets and we have been able to successfully grow low-cost deposits.  We continue to take advantage of strategic pricing opportunities and to introduce new products to better meet the financial needs of our clients.  Likewise, our disciplined approach to expense management provides a distinct advantage as we compete for new business.

"Although the benefit of commercial loss share coverage that we have enjoyed for the past five years from the FDIC-assisted transactions has now expired, we are confident in our ability to manage the limited exposure associated with the remaining portfolio.

"With the introduction of the First Financial brand into the Columbus, Ohio market through the acquisitions and successful integrations during 2014, we are excited about the future.  Our expansion into Columbus complements our metro-centric footprint of Cincinnati, Dayton, Indianapolis and Ft. Wayne.  We believe these markets provide the platform to generate solid organic loan, deposit and fee income growth.

"As we look forward to 2015, our focus remains centered on serving the financial needs of our commercial, small business, consumer and wealth management clients.  We will continue to listen to our clients, be responsive to their needs and will be innovative in our approach to serving them."

NET INTEREST INCOME AND NET INTEREST MARGIN
Net interest income for the fourth quarter was $61.1 million as compared to $58.4 million for the third  quarter 2014 and $55.8 million for the fourth quarter 2013.  Compared to the linked quarter, total interest income increased $3.4 million, or 5.3%, while total interest expense increased $0.6 million, or 11.7%.  Net interest margin was 3.67% for the fourth quarter, compared to 3.66% for the third quarter 2014 and 3.90% for the fourth quarter 2013. Excluding $0.4 million of higher interest income related to loans that returned to accrual status during the period, net interest margin was 3.64% for the fourth quarter. 

Interest income earned on loans increased $3.4 million, or 6.3%, compared to the prior quarter.  This increase was driven by a $358.4 million, or 8.2%, increase in average loan balances as a result of the Columbus acquisitions, higher loan fee income and strong, organic loan growth during the period, partially offset by continued runoff of the covered and formerly covered loan portfolio.

Interest income earned from investment securities decreased by $0.2 million compared to the prior quarter as average balances declined $53.3 million, or 2.9%.  The decline in investment securities balances was partially offset by a 3 bps increase in the yield earned on the portfolio to 2.40%.

The increase in total interest expense was due to a $331.3 million, or 8.2%, increase in average interest-bearing deposits as well as a 4 bps increase in the related cost of funds.  This increase, bringing the cost of interest-bearing deposits to 45 bps, is a result of longer term funding strategies and the full quarterly impact of the Columbus acquisitions.  Average borrowed funds decreased $162.6 million, or 18.1%, compared to the linked quarter and the related cost of funds decreased by 4 bps from 36 bps to 32 bps.

NONINTEREST INCOME
The following table presents noninterest income for the three months ended December 31, 2014 and for the trailing four quarters, adjusted to exclude the impact of covered and formerly covered loan activity and other select items.



















Table I


















For the Three Months Ended




December 31,


September 30,


June 30,


March 31,


December 31,



(Dollars in thousands)

2014



2014



2014



2014



2013





















Total noninterest income

$

16,942



$

16,511



$

16,337



$

14,175



$

13,043




Selected components of noninterest income

















Accelerated discount on covered / formerly covered loans1

1,759



789



621



1,015



1,572




FDIC loss sharing income

(43)



(192)



1,108



(508)



(3,385)




Gain on sale of investment securities

20



—



—



50



—




Other items not expected to recur

—



97



—



—



—




Total noninterest income excluding items noted above

$

15,206



$

15,817



$

14,608



$

13,618



$

14,856





















1  Net of the related valuation adjustment on the FDIC indemnification asset








Excluding the items highlighted in Table I, noninterest income earned in the fourth quarter was $15.2 million compared to $15.8 million in the third quarter 2014 and $14.9 million in the fourth quarter 2013.  The $0.6 million decrease compared to the linked quarter was driven primarily by a $0.3 million decrease in fee income related to the Company's client derivative program, a $0.2 million decrease in deposit service charges and a $0.2 million decrease in bankcard income, partially offset by a $0.2 million increase in fees related to the Company's trust & wealth management business.

NONINTEREST EXPENSE
The following table presents noninterest expense for the three months ended December 31, 2014 and for the trailing four quarters, adjusted to exclude the impact of covered and formerly covered asset activity and other select items.




















Table II



















For the Three Months Ended





December 31,


September 30,


June 30,


March 31,


December 31,




(Dollars in thousands)

2014



2014



2014



2014



2013























Total noninterest expense

$

49,662



$

51,419



$

47,111



$

47,842



$

70,285





   Selected components of noninterest expense


















      Loss (gain) - covered / formerly covered REO

(35)



(1,433)



398



33



946





      Loss sharing expense

650



1,002



1,465



1,569



1,495





      Pension settlement charges

—



—



—



—



462





      Expenses associated with efficiency initiative

123



309



(59)



350



1,450





      FDIC indemnification asset valuation adjustment

—



—



—



—



22,417





      Acquisition-related expenses

1,315



4,182



517



620



284





      Other items not expected to recur

41



728



—



465



—





Total noninterest expense excluding items noted above

$

47,568



$

46,631



$

44,790



$

44,805



$

43,231






















Excluding the items highlighted in Table II, noninterest expense was $47.6 million in the fourth quarter of 2014, $46.6 million in the third quarter of 2014 and $43.2 million in the fourth quarter 2013.  The $0.9 million increase compared to the linked quarter was primarily due to a $0.3 million increase in incentive compensation during the period, $0.3 million related to a banking center relocation and a $0.1 million increase in marketing expenses during the quarter.  Acquisition-related expenses during the period of $1.3 million included $0.8 million of personnel costs, $0.3 million of data processing related expenses and $0.2 million of other miscellaneous expenses.

INCOME TAXES
For the fourth quarter, income tax expense was $7.8 million, resulting in an effective tax rate of 29.5%, compared with income tax expense of $7.2 million and an effective tax rate of 32.0% during the third quarter 2014 and income tax benefit of $1.2 million and an effective tax rate of -47.4% during the fourth quarter 2013.  For the full year 2014, the Company's effective tax rate was 31.6%.  While the effective tax rate may fluctuate from quarter to quarter due to tax jurisdiction changes and the level of tax-enhanced assets, the normalized effective tax rate in future periods is expected to be in the range of 32.0% - 34.0%.

CREDIT QUALITY
Table III below and the paragraphs that follow present certain credit quality metrics related to the Company's loan portfolio.  Effective October 1, 2014, the five-year loss sharing coverage period for non-single family assets expired and the majority of the Company's formerly covered assets were no longer subject to FDIC loss sharing protection.  As a result, credit quality metrics for the three months ended December 31, 2014 have been updated to include those formerly covered assets, as well as the remaining covered assets that are subject to FDIC loss sharing protection for five more years.  This reclassification resulted in the addition of $11.5 million of allowance for loan and lease losses, $3.9 million of nonaccrual loans, $2.5 million of net charge-offs, $12.0 million of OREO, $45.7 million of classified assets and $4.7 million of delinquent loans during the fourth quarter.  Credit quality metrics for the preceding four quarters exclude covered assets due to the associated FDIC loss sharing protection in effect during those periods.



















Table III




Excludes covered assets*




As of or for the Three Months Ended




December 31,


September 30,


June 30,


March 31,


December 31,



(Dollars in thousands)

2014



2014



2014



2014



2013





















Total nonaccrual loans 1

$

48,469



$

41,646



$

32,418



$

35,334



$

37,605




Troubled debt restructurings - accruing

15,928



13,369



12,607



13,400



15,094




Total nonperforming loans

64,397



55,015



45,025



48,734



52,699




Total nonperforming assets

87,071



66,331



58,395



61,477



72,505




Nonperforming assets as a % of:

















   Period-end loans plus OREO

1.81

%


1.49

%


1.59

%


1.70

%


2.06

%



   Total assets

1.21

%


0.90

%


0.89

%


0.95

%


1.13

%



Nonperforming assets ex. accruing TDRs as a % of:


















   Period-end loans plus OREO

1.48

%


1.19

%


1.25

%


1.33

%


1.63

%



   Total assets

0.99

%


0.72

%


0.70

%


0.74

%


0.89

%



Nonperforming loans as a % of total loans

1.35

%


1.24

%


1.23

%


1.35

%


1.50

%



Provision for loan and lease losses

$

1,088



$

1,093



$

29



$

1,159



$

1,851




Provision for covered / formerly covered loan and lease losses

964



*



*



*



*




Total provision for loan and lease losses

$

2,052



$

1,093



$

29



$

1,159



$

1,851




Allowance for uncovered loan & lease losses

$

52,858



$

42,454



$

42,027



$

43,023



$

43,829




Allowance for loan & lease losses as a % of:

















   Total loans

1.11

%


0.95

%


1.15

%


1.19

%


1.25

%



   Nonaccrual loans

109.1

%


101.9

%


129.6

%


121.8

%


116.6

%



   Nonperforming loans

82.1

%


77.2

%


93.3

%


88.3

%


83.2

%



Allowance and loan marks, net of indemnification asset, as a % of total loans

1.51

%


*



*



*



*




Total net charge-offs

$

3,183



$

666



$

1,025



$

1,965



$

3,536




Annualized net-charge-offs as a % of average

















   loans & leases

0.27

%


0.07

%


0.11

%


0.23

%


0.41

%




















1 Includes nonaccrual troubled debt restructurings



* Amounts reclassified in the fourth quarter of 2014 due to the expiration of FDIC loss sharing coverage on non-single family assets effective October 1, 2014.


Net Charge-offs
For the fourth quarter, net charge-offs totaled $3.2 million, an increase of $2.5 million, or 377.9% compared to the linked quarter.  Excluding the impact from covered / formerly covered loans during the period, net charge-offs increased $0.1 million during the quarter to $0.7 million, or 6 bps as a percentage of loans on an annualized basis, as a $0.4 million decline in charge-offs was largely offset by a similar decline in recoveries during the period.

Nonperforming Assets
Nonaccrual loans, including nonaccrual troubled debt restructurings, increased $6.8 million, or 16.4%, to $48.5 million as of December 31, 2014 from $41.6 million as of September 30, 2014.  Excluding the impact from covered / formerly covered loans, the increase in nonaccrual loans was primarily related to the addition of a single commercial real estate relationship totaling $1.4 million during the period.

Accruing troubled debt restructurings increased $2.6 million, or 19.1%, to $15.9 million as of December 31, 2014 from $13.4 million as of September 30, 2014.  The increase in accruing troubled debt restructurings during the fourth quarter was primarily related to the addition of a $1.7 million commercial real estate credit.

OREO increased $11.4 million, or 100.4%, to $22.7 million during the fourth quarter due to the addition of covered / formerly covered OREO during the period.  In addition to covered and previously covered OREO included during the quarter, $0.5 million of other additions were offset by $0.7 million of sales and $0.5 million of valuation adjustments during the period.

Total classified assets increased $48.9 million, or 46.2%, to $154.8 million as of December 31, 2014 from $105.9 million as of September 30, 2014.  Excluding the impact from covered / formerly covered assets, classified assets increased $3.2 million, or 3.0% during the period.  Classified assets are defined by the Company as nonperforming assets plus performing loans internally rated substandard or worse.

Delinquent Loans
As of December 31, 2014, loans 30-to-89 days past due totaled $17.1 million, or 0.36% of period-end loans, compared to $12.1 million, or 0.27%, as of September 30, 2014 and $13.6 million, or 0.39%, as of December 31, 2013. The increase in loans 30-to-89 days past due was driven primarily by the addition of covered / formerly covered loans during the period.

Provision for Loan & Lease Losses
Fourth quarter provision expense was $2.1 million.  Excluding the impact from covered / formerly covered loans, provision expense was unchanged from the third quarter.

The total allowance for loan and lease losses as of December 31, 2014 was $52.9 million, or 1.11% as a percentage of period-end loans, compared to 0.95% as of September 30, 2014.  Excluding the impact from covered / formerly covered loans, the allowance for loan and lease losses as of December 31, 2014 was $42.8 million, or 0.96% as a percentage of period-end loans.

Given the applications of acquisition accounting and the resulting estimated fair value marks embedded in the carrying value of loans acquired in the Columbus transactions during the third quarter, First Financial has experienced an increase in loan balances, without a corresponding increase in the allowance.  As such, the Company considers the total allowance for loan and lease losses and the remaining net fair value marks on all acquired loans, less the remaining indemnification asset balance, to be a relevant measure of the Company's loan loss protection.  The balance of the Company's total allowance and loan marks, net of the indemnification asset, was 1.51% of total loans and leases as of December 31, 2014.

LOANS
The following table presents the loan portfolio as of December 31, 2014, September 30, 2014 and December 31, 2013.






















Table IV





















As of




December 31, 2014


September 30, 2014


December 31, 2013







Percent





Percent





Percent



(Dollars in thousands)

Balance


of Total


Balance


of Total


Balance


of Total























Commercial

$

1,315,114



27.5

%


$

1,328,526



27.8

%


$

1,077,984



27.2

%



Real estate - construction

197,571



4.1

%


195,524



4.1

%


89,297



2.3

%



Real estate - commercial

2,140,667



44.8

%


2,135,968



44.7

%


1,765,620



44.5

%



Real estate - residential

501,894



10.5

%


498,873



10.4

%


433,664



10.9

%



Installment

47,320



1.0

%


51,131



1.1

%


52,774



1.3

%



Home equity

458,627



9.6

%


460,957



9.6

%


426,078



10.8

%



Credit card

38,475



0.8

%


38,042



0.8

%


37,962



1.0

%



Lease financing

77,567



1.6

%


73,216



1.5

%


80,135



2.0

%



     Total loans

$

4,777,235



100.0

%


$

4,782,237



100.0

%


$

3,963,514



100.0

%






















Total loans were $4.8 billion as of December 31, 2014, decreasing $5.0 million, or 0.1%, compared to the linked quarter and increasing $813.7 million, or 20.5%, compared to December 31, 2013.  Average total loans for the fourth quarter increased by $358.4 million, or 8.2%, compared to the third quarter due to originated loan volume during the third quarter combined with the full quarterly impact of the Columbus acquisitions.  Total loans decreased modestly during the quarter due primarily to continued runoff of the covered and formerly covered loan portfolio and late quarter payoff activity in the uncovered portfolio, partially offset by growth in the commercial real estate and lease financing portfolios.

INVESTMENTS
The following table presents a summary of the total investment portfolio at December 31, 2014.




















Table V




















As of December 31, 2014





Held-to-


Available-for-








Percent



(Dollars in thousands)

Maturity


Sale


Other


Total


of Portfolio





















Debt obligations of the U.S. Government


$

—



$

19,714



$

—



$

19,714



1.1

%



Debt obligations of U.S. Government Agency


17,570



11,881



—



29,451



1.7

%



Residential Mortgage Backed Securities


















   Pass-through securities:


















        Agency fixed rate


73,932



79,573



—



153,505



8.7

%



        Agency adjustable rate


140,268



13,635



—



153,903



8.7

%



        Non-Agency fixed rate


—



8,240



—



8,240



0.5

%



   Collateralized mortgage obligations:


















        Agency fixed rate


308,874



236,696



—



545,570



31.0

%



        Agency variable rate


—



90,549



—



90,549



5.1

%



Agency collateralized and insured municipal securities


82,280



99,728



—



182,008



10.3

%



Commercial mortgage backed securities


237,870



121,145



—



359,015



20.4

%



Municipal bond securities


2,405



26,766



—



29,171



1.7

%



Corporate securities


4,797



69,278



—



74,075



4.2

%



Asset-backed securities


—



54,840



—



54,840



3.1

%



Regulatory stock


—



—



47,227



47,227



2.7

%



Other


—



8,423



5,399



13,822



0.8

%





$

867,996



$

840,468



$

52,626



$

1,761,090



100.0

%






































The investment portfolio decreased $119.0 million, or 6.3%, to $1.8 billion during the fourth quarter as $7.7 million of purchases were offset by sales of $73.8 million, amortization and other portfolio reductions.  As of December 31, 2014, the overall duration of the investment portfolio decreased to 3.4 years from 3.7 years as of September 30, 2014.  The yield earned on the portfolio during the quarter increased 3 bps to 2.40% from 2.37% for the linked quarter, driven by the sale of lower yielding assets and a decline in prepayment speeds.  The net unrealized loss included in accumulated other comprehensive loss related to the investment portfolio decreased from $6.2 million as of September 30, 2014 to $2.5 million as of December 31, 2014 due primarily to lower rates.

DEPOSITS
Total deposits were $5.7 billion as of December 31, 2014, increasing $122.7 million, or 2.2%, compared to the linked quarter.  Average total deposits were $5.7 billion as of December 31, 2014, increasing $442.8 million, or 8.5%, compared to the linked quarter due primarily to the full quarterly impact of the Columbus acquisitions.  The increase in period-end balances was driven by a $42.2 million, or 13.5% annualized increase in non-interest bearing deposits and an $80.6 million increase, or 7.5% annualized increase in interest bearing deposits.

Non-time deposit balances totaled $4.4 billion as of December 31, 2014, increasing $114.7 million, or 2.7%, compared to the linked quarter.  The average balance of non-time deposits totaled $4.4 billion as of December 31, 2014, increasing $316.4 million, or 7.7%, compared to the linked quarter. 

Time deposit balances increased $8.0 million, or 0.6%, to $1.3 billion as of December 31, 2014.  Average time deposit balances totaled $1.3 billion as of December 31, 2014, increasing $126.5 million, or 11.3%, compared to the linked quarter.

The Company's total cost of deposit funding, inclusive of noninterest-bearing balances, was 35 bps for the quarter, representing an increase of 3 bps compared to the prior quarter and 8 bps compared to the fourth quarter 2013.  The higher cost of deposit funding during the quarter is primarily the result of the modestly higher cost of acquired deposits in the Columbus, Ohio market, hedging strategies and the Company's efforts to attract longer-term fixed rate deposits.

CAPITAL MANAGEMENT
The following table presents First Financial's regulatory and other capital ratios as of December 31, 2014, September 30, 2014 and December 31, 2013.













Table VI












As of




December 31,


September 30,


December 31,




2014



2014



2013















Leverage Ratio

9.44

%


9.70

%


10.11

%



Tier 1 Capital Ratio

12.69

%


12.74

%


14.61

%



Total Risk-Based Capital Ratio

13.71

%


13.80

%


15.88

%



Ending tangible shareholders' equity











   to ending tangible assets

9.02

%


8.71

%


9.20

%



Ending tangible common shareholders'











   equity to ending tangible assets

9.02

%


8.71

%


9.20

%














Tangible book value per share

$

10.38



$

10.23



$

10.10




























Shareholders' equity increased $10.2 million during the quarter due primarily to net income for the quarter which was partially offset by declared dividends. 

The Company's Tier I and total risk-based capital ratios declined during the quarter due primarily to an increase in risk-weighted assets resulting from the expiration of loss share coverage on the previously covered non-single family loan portfolio as well as an increase in originated loan balances.  The Company's tangible common equity ratio increased during the quarter due to higher tangible common equity and lower tangible assets.  The Company's leverage ratio decreased primarily as a result of the overall growth in the average balance sheet during the quarter.

Regulatory capital ratios as of December 31, 2014 are considered preliminary pending the filing of the Company's regulatory reports.

Teleconference / Webcast Information
First Financial's executive management will host a conference call to discuss the Company's financial and operating results on Friday, January 30, 2015 at 8:30 a.m. Eastern Time.  Members of the public who would like to listen to the conference call should dial (877) 506-6873 (U.S. toll free), (855) 669-9657 (Canada toll free) or +1 (412) 380-2003 (International) (no passcode required).  The number should be dialed five to ten minutes prior to the start of the conference call.  The conference call will also be accessible as an audio webcast via the Investor Relations section of the Company's website at www.bankatfirst.com.  A replay of the conference call will be available beginning one hour after the completion of the live call at (877) 344-7529 (U.S. toll free), (855) 669-9658 (Canada toll free) and +1 (412) 317-0088 (International); conference number 10059329.  The webcast will be archived on the Investor Relations section of the Company's website through January 30, 2016.

Press Release and Additional Information on Website
This press release as well as supplemental information and any non-GAAP reconciliations related to this release is available to the public through the Investor Relations section of First Financial's website at www.bankatfirst.com/investor.

About First Financial Bancorp
First Financial Bancorp is a Cincinnati, Ohio based bank holding company.  As of December 31, 2014, the Company had $7.2 billion in assets, $4.8 billion in loans, $5.7 billion in deposits and $784 million in shareholders' equity.  The Company's subsidiary, First Financial Bank, N.A., founded in 1863, provides banking and financial services products through its four lines of business: commercial, consumer, wealth management and mortgage.  The commercial, consumer and mortgage units provide traditional banking services to business and retail clients.  First Financial Wealth Management provides wealth planning, portfolio management, trust and estate, brokerage and retirement plan services and had approximately $2.4 billion in assets under management as of December 31, 2014.  The Company's strategic operating markets are located in Ohio, Indiana and Kentucky where it operates 106 banking centers.  Additional information about the Company, including its products, services and banking locations is available at www.bankatfirst.com.

Forward-Looking Statement
Certain statements contained in this release which are not statements of historical fact constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act.  Examples of forward-looking statements include, but are not limited to, projections of revenues, income or loss, earnings or loss per share, the payment or non-payment of dividends, capital structure and other financial items, statements of plans and objectives of First Financial or its management or board of directors and statements of future economic performances and statements of assumptions underlying such statements.  Words such as ''believes,'' ''anticipates,'' "likely," "expected," ''intends,'' and other similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements.  Management's analysis contains forward-looking statements that are provided to assist in the understanding of anticipated future financial performance.  However, such performance involves risks and uncertainties that may cause actual results to differ materially.  These factors include, but are not limited to: economic, market, liquidity, credit, interest rate, operational and technological risks associated with the Company's business; the effect of and changes in policies and laws or regulatory agencies (notably the recently enacted Dodd-Frank Wall Street Reform and Consumer Protection Act); management's ability to effectively execute its business plan; mergers and acquisitions, including costs or difficulties related to the integration of acquired companies; the Company's ability to comply with the terms of loss sharing agreements with the FDIC; the effect of changes in accounting policies and practices; and the costs and effects of litigation and of unexpected or adverse outcomes in such litigation.  Please refer to the Company's Annual Report on Form 10-K for the year ended December 31, 2013, as well as its other filings with the SEC, for a more detailed discussion of these risks, uncertainties and other factors that could cause actual results to differ from those discussed in the forward-looking statements.  Such forward-looking statements are meaningful only on the date when such statements are made, and the Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such a statement is made to reflect the occurrence of unanticipated events.

FIRST FINANCIAL BANCORP.

CONSOLIDATED FINANCIAL HIGHLIGHTS

(Dollars in thousands, except per share data)

(Unaudited)























Three Months Ended,


Twelve months ended,


Dec. 31,


Sep. 30,


June 30,


Mar. 31,


Dec. 31,


Dec. 31,


2014


2014


2014


2014


2013


2014


2013

RESULTS OF OPERATIONS





















Net income

$

18,599



$

15,344



$

15,953



$

15,104



$

3,785



$

65,000



$

48,349


Net earnings per share - basic

$

0.31



$

0.26



$

0.28



$

0.26



$

0.07



$

1.11



$

0.84


Net earnings per share - diluted

$

0.30



$

0.26



$

0.28



$

0.26



$

0.07



$

1.09



$

0.83


Dividends declared per share

$

0.16



$

0.15



$

0.15



$

0.15



$

0.15



$

0.61



$

0.94























KEY FINANCIAL RATIOS





















Return on average assets

1.02

%


0.88

%


0.99

%


0.96

%


0.24

%


0.96

%


0.77

%

Return on average shareholders' equity

9.46

%


8.16

%


9.19

%


8.95

%


2.15

%


8.94

%


6.89

%

Return on average tangible shareholders' equity

11.63

%


10.15

%


10.73

%


10.49

%


2.51

%


11.18

%


8.05

%






















Net interest margin

3.67

%


3.66

%


3.70

%


3.82

%


3.90

%


3.71

%


3.97

%

Net interest margin (fully tax equivalent) (1)

3.72

%


3.71

%


3.76

%


3.87

%


3.94

%


3.76

%


4.01

%






















Ending shareholders' equity as a percent of ending assets

10.86

%


10.52

%


10.78

%


10.64

%


10.63

%


10.86

%


10.63

%

Ending tangible shareholders' equity as a percent of:





















Ending tangible assets

9.02

%


8.71

%


9.39

%


9.23

%


9.20

%


9.02

%


9.20

%

Risk-weighted assets

12.02

%


12.07

%


13.56

%


13.50

%


13.59

%


12.02

%


13.59

%






















Average shareholders' equity as a percent of average assets

10.77

%


10.75

%


10.79

%


10.69

%


11.23

%


10.75

%


11.17

%

Average tangible shareholders' equity as a percent of





















    average tangible assets

8.94

%


8.83

%


9.38

%


9.27

%


9.77

%


8.79

%


9.72

%






















Book value per share

$

12.76



$12.61



$12.23



$11.98



$11.86



$12.76



$11.86


Tangible book value per share

$

10.38



$10.23



$10.49



$10.24



$10.10



$10.38



$10.10























Tier 1 Ratio (2)

12.69

%


12.74

%


14.34

%


14.42

%


14.61

%


12.69

%


14.61

%

Total Capital Ratio (2)

13.71

%


13.80

%


15.59

%


15.67

%


15.88

%


13.71

%


15.88

%

Leverage Ratio (2)

9.44

%


9.70

%


9.99

%


9.94

%


10.11

%


9.44

%


10.11

%






















AVERAGE BALANCE SHEET ITEMS





















Loans (3)

$

4,758,374



$

4,403,591



$

4,025,074



$

3,966,838



$

3,940,141



$

4,290,953



$

3,955,536


FDIC indemnification asset

24,172



28,050



33,987



43,799



78,313



32,436



95,126


Investment securities

1,811,941



1,865,241



1,811,175



1,807,571



1,654,374



1,824,107



1,696,211


Interest-bearing deposits with other banks

22,617



29,433



10,697



2,922



4,906



16,507



6,464


  Total earning assets

$

6,617,104



$

6,326,315



$

5,880,933



$

5,821,130



$

5,677,734



$

6,164,003



$

5,753,337


Total assets

$

7,241,869



$

6,937,283



$

6,454,252



$

6,399,235



$

6,232,971



$

6,760,959



$

6,281,411


Noninterest-bearing deposits

$

1,290,754



$

1,179,207



$

1,110,697



$

1,096,509



$

1,129,097



$

1,169,851



$

1,078,800


Interest-bearing deposits

4,372,529



4,041,255



3,832,295



3,695,177



3,720,809



3,987,323



3,737,946


  Total deposits

$

5,663,283



$

5,220,462



$

4,942,992



$

4,791,686



$

4,849,906



$

5,157,174



$

4,816,746


Borrowings

$

733,726



$

896,328



$

745,990



$

842,479



$

583,522



$

804,584



$

657,265


Shareholders' equity

$

780,131



$

745,729



$

696,609



$

684,332



$

700,063



$

727,015



$

701,425























CREDIT QUALITY RATIOS (4)



















Allowance to ending loans

1.11

%


0.95

%


1.15

%


1.19

%


1.25

%


1.11

%


1.25

%

Allowance to nonaccrual loans

109.06

%


101.94

%


129.64

%


121.76

%


116.55

%


109.06

%


116.55

%

Allowance to nonperforming loans

82.08

%


77.17

%


93.34

%


88.28

%


83.17

%


82.08

%


83.17

%

Nonperforming loans to total loans

1.35

%


1.24

%


1.23

%


1.35

%


1.50

%


1.35

%


1.50

%

Nonperforming assets to ending loans, plus OREO

1.81

%


1.49

%


1.59

%


1.70

%


2.06

%


1.81

%


2.06

%

Nonperforming assets to total assets

1.21

%


0.90

%


0.89

%


0.95

%


1.13

%


1.21

%


1.13

%

Net charge-offs to average loans (annualized)

0.27

%


0.07

%


0.11

%


0.23

%


0.41

%


0.63

%


0.38

%




(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) December 31, 2014 regulatory capital ratios are preliminary.


(3)  Includes loans held for sale.


(4)  Credit quality ratios for the three months ended September 30, 2014, June 30, 2014, March 31, 2014, and December 31, 2013 and for the twelve months ended December 31, 2013 exclude covered assets.

FIRST FINANCIAL BANCORP.

CONSOLIDATED STATEMENTS OF INCOME

(Dollars in thousands, except per share data)

(Unaudited)






Three months ended,


Twelve months ended,


Dec. 31,


Dec. 31,


2014



2013



% Change


2014



2013



% Change

Interest income


















  Loans, including fees

$

57,087



$

52,351



9.0%



$

208,836



$

216,306



(3.5)%


  Investment securities


















     Taxable

9,905



9,209



7.6%



40,924



34,147



19.8%


     Tax-exempt

1,060



719



47.4%



3,560



2,400



48.3%


        Total investment securities interest

10,965



9,928



10.4%



44,484



36,547



21.7%


  Other earning assets

(1,299)



(2,432)



(46.6)%



(5,461)



(7,645)



(28.6)%


       Total interest income

66,753



59,847



11.5%



247,859



245,208



1.1%




















Interest expense


















  Deposits

5,013



3,247



54.4%



16,153



13,247



21.9%


  Short-term borrowings

293



257



14.0%



1,268



1,177



7.7%


  Long-term borrowings

308



539



(42.9)%



1,813



2,464



(26.4)%


      Total interest expense

5,614



4,043



38.9%



19,234



16,888



13.9%


      Net interest income

61,139



55,804



9.6%



228,625



228,320



0.1%


  Provision for loan and lease losses

2,052



(4,006)



(151.2)%



1,528



8,909



(82.8)%


      Net interest income after provision for loan and lease losses

59,087



59,810



(1.2)%



227,097



219,411



3.5%




















Noninterest income


















  Service charges on deposit accounts

5,102



5,226



(2.4)%



20,274



20,595



(1.6)%


  Trust and wealth management fees

3,376



3,506



(3.7)%



13,634



14,319



(4.8)%


  Bankcard income

2,639



2,699



(2.2)%



10,740



10,914



(1.6)%


  Net gains from sales of loans

1,571



604



160.1%



4,364



3,150



38.5%


  Gain on sale of investment securities

20



0



N/M



70



1,724



(95.9)%


  FDIC loss sharing income

(43)



(3,385)



98.7%



365



3,720



(90.2)%


  Accelerated discount on covered/formerly covered loans

1,759



1,572



11.9%



4,184



7,153



(41.5)%


  Other

2,518



2,821



(10.7)%



10,334



12,072



(14.4)%


      Total noninterest income

16,942



13,043



29.9%



63,965



73,647



(13.1)%




















Noninterest expenses


















  Salaries and employee benefits

28,140



24,023



17.1%



107,702



101,402



6.2%


  Pension settlement charges

0



462



(100.0)%



0



6,174



(100.0)%


  Net occupancy

4,806



4,557



5.5%



19,187



21,207



(9.5)%


  Furniture and equipment

2,229



2,136



4.4%



8,554



8,970



(4.6)%


  Data processing

2,942



2,617



12.4%



12,963



10,229



26.7%


  Marketing

1,048



999



4.9%



3,603



4,270



(15.6)%


  Communication

551



728



(24.3)%



2,277



3,207



(29.0)%


  Professional services

1,429



1,781



(19.8)%



6,170



6,876



(10.3)%


  State intangible tax

175



901



(80.6)%



2,111



3,929



(46.3)%


  FDIC assessments

1,128



1,121



0.6%



4,462



4,501



(0.9)%


  Loss (gain) - other real estate owned

289



1,294



(77.7)%



862



31



2,680.6%


  Loss sharing expense

650



1,495



(56.5)%



4,686



7,083



(33.8)%


  FDIC indemnification impairment

—



22,417



(100.0)%



0



22,417



(100.0)%


  Other

6,275



5,754



9.1%



23,457



25,179



(6.8)%


      Total noninterest expenses

49,662



70,285



(29.3)%



196,034



225,475



(13.1)%


Income before income taxes

26,367



2,568



926.8%



95,028



67,583



40.6%


Income tax expense

7,768



(1,217)



(738.3)%



30,028



19,234



56.1%


      Net income

$

18,599



$

3,785



391.4%



$

65,000



$

48,349



34.4%




















ADDITIONAL DATA


















Net earnings per share - basic

$

0.31



$

0.07






$

1.11



$

0.84





Net earnings per share - diluted

$

0.30



$

0.07






$

1.09



$

0.83





Dividends declared per share

$

0.16



$

0.15






$

0.61



$

0.94























Return on average assets

1.02%



0.24%






0.96%



0.77%





Return on average shareholders' equity

9.46%



2.15%






8.94%



6.89%























Interest income

$

66,753



$

59,847



11.5%



$

247,859



$

245,208



1.1%


Tax equivalent adjustment

946



635



49.0%



3,224



2,142



50.5%


   Interest income - tax equivalent

67,699



60,482



11.9%



251,083



247,350



1.5%


Interest expense

5,614



4,043



38.9%



19,234



16,888



13.9%


   Net interest income - tax equivalent

$

62,085



$

56,439



10.0%



$

231,849



$

230,462



0.6%




















Net interest margin

3.67%



3.90%






3.71%



3.97%





Net interest margin (fully tax equivalent) (1)

3.72%



3.94%






3.76%



4.01%























Full-time equivalent employees

1,369



1,306
































(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, except per share data)

(Unaudited)




















2014


Fourth


Third


Second


First





% Change


Quarter


Quarter


Quarter


Quarter


YTD


Linked Qtr.

Interest income


















  Loans, including fees

$

57,087



$

53,725



$

48,877



$

49,147



$

208,836



6.3%


  Investment securities


















     Taxable

9,905



10,227



10,355



10,437



40,924



(3.1)%


     Tax-exempt

1,060



894



796



810



3,560



18.6%


        Total investment securities interest

10,965



11,121



11,151



11,247



44,484



(1.4)%


  Other earning assets

(1,299)



(1,455)



(1,301)



(1,406)



(5,461)



(10.7)%


       Total interest income

66,753



63,391



58,727



58,988



247,859



5.3%




















Interest expense


















  Deposits

5,013



4,218



3,606



3,316



16,153



18.8%


  Short-term borrowings

293



354



292



329



1,268



(17.2)%


  Long-term borrowings

308



456



525



524



1,813



(32.5)%


      Total interest expense

5,614



5,028



4,423



4,169



19,234



11.7%


      Net interest income

61,139



58,363



54,304



54,819



228,625



4.8%


  Provision for loan and lease losses

2,052



893



(384)



(1,033)



1,528



129.8%


      Net interest income after provision for loan and lease losses

59,087



57,470



54,688



55,852



227,097



2.8%




















Noninterest income


















  Service charges on deposit accounts

5,102



5,263



5,137



4,772



20,274



(3.1)%


  Trust and wealth management fees

3,376



3,207



3,305



3,746



13,634



5.3%


  Bankcard income

2,639



2,859



2,809



2,433



10,740



(7.7)%


  Net gains from sales of loans

1,571



1,660



737



396



4,364



(5.4)%


  Gain on sale of investment securities

20



0



0



50



70



N/M


  FDIC loss sharing income

(43)



(192)



1,108



(508)



365



(77.6)%


  Accelerated discount on covered/formerly covered loans

1,759



789



621



1,015



4,184



122.9%


  Other

2,518



2,925



2,620



2,271



10,334



(13.9)%


      Total noninterest income

16,942



16,511



16,337



14,175



63,965



2.6%




















Noninterest expenses


















  Salaries and employee benefits

28,140



28,686



25,615



25,261



107,702



(1.9)%


  Net occupancy

4,806



4,577



4,505



5,299



19,187



5.0%


  Furniture and equipment

2,229



2,265



1,983



2,077



8,554



(1.6)%


  Data processing

2,942



4,393



2,770



2,858



12,963



(33.0)%


  Marketing

1,048



939



830



786



3,603



11.6%


  Communication

551



541



562



623



2,277



1.8%


  Professional services

1,429



1,568



1,449



1,724



6,170



(8.9)%


  State intangible tax

175



648



644



644



2,111



(73.0)%


  FDIC assessments

1,128



1,126



1,074



1,134



4,462



0.2%


  Loss (gain) - other real estate owned

289



(589)



711



451



862



(149.1)%


  Loss sharing expense

650



1,002



1,465



1,569



4,686



(35.1)%


  Other

6,275



6,263



5,503



5,416



23,457



0.2%


      Total noninterest expenses

49,662



51,419



47,111



47,842



196,034



(3.4)%


Income before income taxes

26,367



22,562



23,914



22,185



95,028



16.9%


Income tax expense

7,768



7,218



7,961



7,081



30,028



7.6%


      Net income

$

18,599



$

15,344



$

15,953



$

15,104



$

65,000



21.2%




















ADDITIONAL DATA


















Net earnings per share - basic

$

0.31



$

0.26



$

0.28



$

0.26



$

1.11





Net earnings per share - diluted

$

0.30



$

0.26



$

0.28



$

0.26



$

1.09





Dividends declared per share

$

0.16



$

0.15



$

0.15



$

0.15



$

0.61























Return on average assets

1.02%



0.88%



0.99%



0.96%



0.96%





Return on average shareholders' equity

9.46%



8.16%



9.19%



8.95%



8.94%























Interest income

$

66,753



$

63,391



$

58,727



$

58,988



$

247,859



5.3%


Tax equivalent adjustment

946



818



758



702



3,224



15.6%


   Interest income - tax equivalent

67,699



64,209



59,485



59,690



251,083



5.4%


Interest expense

5,614



5,028



4,423



4,169



19,234



11.7%


   Net interest income - tax equivalent

$

62,085



$

59,181



$

55,062



$

55,521



$

231,849



4.9%




















Net interest margin

3.67%



3.66%



3.70%



3.82%



3.71%





Net interest margin (fully tax equivalent) (1)

3.72%



3.71%



3.76%



3.87%



3.76%























Full-time equivalent employees

1,369



1,395



1,296



1,286


























(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, except per share data)

(Unaudited)



















2013



Fourth


Third


Second


First


Full



Quarter


Quarter


Quarter


Quarter


Year

Interest income
















  Loans, including fees


$

52,351



$

52,908



$

55,022



$

56,025



$

216,306


  Investment securities
















     Taxable


9,209



8,267



8,295



8,376



34,147


     Tax-exempt


719



541



560



580



2,400


        Total investment securities interest


9,928



8,808



8,855



8,956



36,547


  Other earning assets


(2,432)



(2,185)



(1,556)



(1,472)



(7,645)


       Total interest income


59,847



59,531



62,321



63,509



245,208


















Interest expense
















  Deposits


3,247



2,856



3,284



3,860



13,247


  Short-term borrowings


257



286



305



329



1,177


  Long-term borrowings


539



617



654



654



2,464


      Total interest expense


4,043



3,759



4,243



4,843



16,888


      Net interest income


55,804



55,772



58,078



58,666



228,320


  Provision for loan and lease losses


(4,006)



6,706



(5,874)



12,083



8,909


      Net interest income after provision for loan and lease losses


59,810



49,066



63,952



46,583



219,411


















Noninterest income
















  Service charges on deposit accounts


5,226



5,447



5,205



4,717



20,595


  Trust and wealth management fees


3,506



3,366



3,497



3,950



14,319


  Bankcard income


2,699



2,637



3,145



2,433



10,914


  Net gains from sales of loans


604



751



1,089



706



3,150


  Gain on sale of investment securities


0



0



188



1,536



1,724


  FDIC loss sharing income


(3,385)



5,555



(7,384)



8,934



3,720


  Accelerated discount on covered/formerly covered loans


1,572



1,711



1,935



1,935



7,153


  Other


2,821



2,824



3,940



2,487



12,072


      Total noninterest income


13,043



22,291



11,615



26,698



73,647


















Noninterest expenses
















  Salaries and employee benefits


24,023



23,834



26,216



27,329



101,402


  Pension settlement charges


462



1,396



4,316



0



6,174


  Net occupancy


4,557



5,101



5,384



6,165



21,207


  Furniture and equipment


2,136



2,213



2,250



2,371



8,970


  Data processing


2,617



2,584



2,559



2,469



10,229


  Marketing


999



1,192



1,182



897



4,270


  Communication


728



865



781



833



3,207


  Professional services


1,781



1,528



1,764



1,803



6,876


  State intangible tax


901



1,010



1,004



1,014



3,929


  FDIC assessments


1,121



1,107



1,148



1,125



4,501


  Loss (gain) - other real estate owned


1,294



388



(1,996)



345



31


  Loss sharing expense


1,495



1,724



1,578



2,286



7,083


  FDIC indemnification impairment


22,417



0



0



0



22,417


  Other


5,754



5,859



7,097



6,469



25,179


      Total noninterest expenses


70,285



48,801



53,283



53,106



225,475


Income before income taxes


2,568



22,556



22,284



20,175



67,583


Income tax expense


(1,217)



7,645



6,455



6,351



19,234


      Net income


$

3,785



$

14,911



$

15,829



$

13,824



$

48,349


















ADDITIONAL DATA
















Net earnings per share - basic


$

0.07



$

0.26



$

0.28



$

0.24



$

0.84


Net earnings per share - diluted


$

0.07



$

0.26



$

0.27



$

0.24



$

0.83


Dividends declared per share


$

0.15



$

0.27



$

0.24



$

0.28



$

0.94


















Return on average assets


0.24

%


0.96

%


1.01

%


0.88

%


0.77

%

Return on average shareholders' equity


2.15

%


8.53

%


9.02

%


7.91

%


6.89

%

















Interest income


$

59,847



$

59,531



$

62,321



$

63,509



$

245,208


Tax equivalent adjustment


635



516



514



477



2,142


   Interest income - tax equivalent


60,482



60,047



62,835



63,986



247,350


Interest expense


4,043



3,759



4,243



4,843



16,888


   Net interest income - tax equivalent


$

56,439



$

56,288



$

58,592



$

59,143



$

230,462


















Net interest margin


3.90

%


3.91

%


4.02

%


4.04

%


3.97

%

Net interest margin (fully tax equivalent) (1)


3.94

%


3.95

%


4.06

%


4.07

%


4.01

%

















Full-time equivalent employees


1,306



1,292



1,338



1,385





















(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.

FIRST FINANCIAL BANCORP.

CONSOLIDATED STATEMENTS OF CONDITION

(Dollars in thousands)

(Unaudited)























Dec. 31,


Sep. 30,


Jun. 30,


Mar. 31,


Dec. 31,


% Change


% Change


2014


2014


2014


2014


2013


Linked Qtr.


Comparable Qtr.

ASSETS





















     Cash and due from banks

$

110,122



$

121,360



$

123,160



$

161,515



$

117,620



(9.3)%



(6.4)%


     Interest-bearing deposits with other banks

22,630



22,365



39,237



9,681



25,830



1.2%



(12.4)%


     Investment securities available-for-sale

840,468



929,594



897,715



862,526



913,601



(9.6)%



(8.0)%


     Investment securities held-to-maturity

867,996



900,521



899,502



890,806



837,272



(3.6)%



3.7%


     Other investments

52,626



49,986



47,640



47,659



47,427



5.3%



11.0%


     Loans held for sale

11,005



16,816



13,108



6,171



8,114



(34.6)%



35.6%


     Loans (1)





















       Commercial

1,315,114



1,328,526



1,171,181



1,152,442



1,077,984



(1.0)%



22.0%


       Real estate - construction

197,571



195,524



115,703



96,476



89,297



1.0%



121.3%


       Real estate - commercial

2,140,667



2,135,968



1,700,069



1,748,688



1,765,620



0.2%



21.2%


       Real estate - residential

501,894



498,873



447,561



438,439



433,664



0.6%



15.7%


       Installment

47,320



51,131



47,753



50,017



52,774



(7.5)%



(10.3)%


       Home equity

458,627



460,957



426,846



420,746



426,078



(0.5)%



7.6%


       Credit card

38,475



38,042



37,937



37,008



37,962



1.1%



1.4%


       Lease financing

77,567



73,216



81,212



79,792



80,135



5.9%



(3.2)%


          Total loans

4,777,235



4,782,237



4,028,262



4,023,608



3,963,514



(0.1)%



20.5%


       Less





















          Allowance for loan and lease losses(2)

52,858



53,989



54,452



53,596



62,730



(2.1)%



(15.7)%


                Net loans

4,724,377



4,728,248



3,973,810



3,970,012



3,900,784



(0.1)%



21.1%


     Premises and equipment

141,381



141,851



133,418



135,105



137,110



(0.3)%



3.1%


     Goodwill

137,739



137,458



95,050



95,050



95,050



0.2%



44.9%


     Other intangibles

8,114



8,542



5,344



5,566



5,924



(5.0)%



37.0%


     FDIC indemnification asset

22,666



24,160



30,420



39,003



45,091



(6.2)%



(49.7)%


     Accrued interest and other assets

278,697



272,568



287,340



275,995



283,390



2.2%



(1.7)%


       Total Assets

$

7,217,821



$

7,353,469



$

6,545,744



$

6,499,089



$

6,417,213



(1.8)%



12.5%























LIABILITIES





















     Deposits





















       Interest-bearing demand

$

1,225,378



$

1,214,726



$

1,105,031



$

1,102,029



$

1,125,723



0.9%



8.9%


       Savings

1,889,473



1,827,590



1,656,798



1,639,495



1,612,005



3.4%



17.2%


       Time

1,255,364



1,247,334



973,100



956,049



952,327



0.6%



31.8%


          Total interest-bearing deposits

4,370,215



4,289,650



3,734,929



3,697,573



3,690,055



1.9%



18.4%


       Noninterest-bearing

1,285,527



1,243,367



1,140,198



1,122,816



1,147,452



3.4%



12.0%


          Total deposits

5,655,742



5,533,017



4,875,127



4,820,389



4,837,507



2.2%



16.9%


     Federal funds purchased and securities sold





















         under agreements to repurchase

103,192



113,303



128,013



112,293



94,749



(8.9)%



8.9%


     FHLB short-term borrowings

558,200



806,000



686,300



722,800



654,000



(30.7)%



(14.6)%


          Total short-term borrowings

661,392



919,303



814,313



835,093



748,749



(28.1)%



(11.7)%


     Long-term debt

48,241



52,656



59,693



60,163



60,780



(8.4)%



(20.6)%


          Total borrowed funds

709,633



971,959



874,006



895,256



809,529



(27.0)%



(12.3)%


     Accrued interest and other liabilities

68,369



74,581



90,780



92,097



88,016



(8.3)%



(22.3)%


       Total Liabilities

6,433,744



6,579,557



5,839,913



5,807,742



5,735,052



(2.2)%



12.2%























SHAREHOLDERS' EQUITY





















     Common stock

574,643



574,209



574,206



573,243



577,076



0.1%



(0.4)%


     Retained earnings

352,893



344,118



337,971



330,672



324,192



2.5%



8.9%


     Accumulated other comprehensive loss

(21,409)



(20,888)



(21,569)



(27,648)



(31,281)



2.5%



(31.6)%


     Treasury stock, at cost

(122,050)



(123,527)



(184,777)



(184,920)



(187,826)



(1.2)%



(35.0)%


       Total Shareholders' Equity

784,077



773,912



705,831



691,347



682,161



1.3%



14.9%


       Total Liabilities and Shareholders' Equity

$

7,217,821



$

7,353,469



$

6,545,744



$

6,499,089



$

6,417,213



(1.8)%



12.5%























(1)  Covered loans of $135.7 million, $332.3 million, $365.6 million, $409.4 million, and $457.9 million as of December 31, 2014, September 30, 2014, June 30, 2014, March 31, 2014, and December 31, 2013, respectively, have been reclassified into Loans due to the expiration of loss sharing coverage on non-single family assets effective October 1, 2014.














(2)  Allowance for loan and lease losses covered and formerly covered under loss sharing agreements with the FDIC of $10.0 million, $11.5 million, $12.4 million, $10.6 million, and $18.9 million as of December 31, 2014, September 30, 2014, June 30, 2014, March 31, 2014, and December 31, 2013, respectively, have been reclassified into allowance for loan and lease losses due to the expiration of loss sharing coverage on non-single family assets effective October 1, 2014.







FIRST FINANCIAL BANCORP.

AVERAGE CONSOLIDATED STATEMENTS OF CONDITION

(Dollars in thousands)

(Unaudited)










Quarterly Averages


Year-to-Date Averages


Dec. 31,


Sep. 30,


Jun. 30,


Mar. 31,


Dec. 31,


Dec. 31,


2014


2014


2014


2014


2013


2014



2013


ASSETS





















     Cash and due from banks

$

124,216



$

125,528



$

118,947



$

123,583



$

110,246



$

123,077



$

115,486


     Federal funds sold

0



8,795



0



0



0



2,217



0


     Interest-bearing deposits with other banks

22,617



20,638



10,697



2,922



4,906



14,290



6,464


     Investment securities

1,811,941



1,865,241



1,811,175



1,807,571



1,654,374



1,824,107



1,696,211


     Loans held for sale

11,774



15,357



8,464



4,924



7,990



10,163



15,497


     Loans (1)





















       Commercial

1,282,752



1,221,637



1,147,876



1,100,904



1,033,780



1,188,882



994,361


       Real estate - construction

192,626



154,515



103,033



91,570



87,742



135,765



96,104


       Real estate - commercial

2,158,336



1,927,003



1,733,739



1,743,976



1,783,654



1,891,998



1,835,806


       Real estate - residential

493,895



475,510



441,383



434,595



434,476



461,547



429,601


       Installment

49,356



49,958



48,538



51,048



53,601



49,721



58,159


       Home equity

456,494



444,745



423,937



422,656



425,236



437,072



423,153


       Credit card

38,966



38,381



37,649



37,068



37,327



38,022



36,538


       Lease financing

74,175



76,485



80,455



80,097



76,335



77,783



66,317


          Total loans

4,746,600



4,388,234



4,016,610



3,961,914



3,932,151



4,280,790



3,940,039


       Less





















          Allowance for loan and lease losses(2)

54,656



55,697



55,149



61,902



68,264



56,828



84,033


                Net loans

4,691,944



4,332,537



3,961,461



3,900,012



3,863,887



4,223,962



3,856,006


     Premises and equipment

141,871



136,956



134,522



136,624



138,644



137,506



143,036


     Goodwill

137,551



118,756



95,050



95,050



95,050



111,738



95,050


     Other intangibles

8,321



7,138



5,445



5,723



6,075



6,665



6,666


     FDIC indemnification asset

24,172



28,050



33,987



43,799



78,313



32,436



95,126


     Accrued interest and other assets

267,462



278,287



274,504



279,027



273,486



274,798



251,869


       Total Assets

$

7,241,869



$

6,937,283



$

6,454,252



$

6,399,235



$

6,232,971



$

6,760,959



$

6,281,411























LIABILITIES





















     Deposits





















       Interest-bearing demand

$

1,217,852



$

1,135,126



$

1,169,350



$

1,107,844



$

1,150,275



$

1,157,783



$

1,125,836


       Savings

1,904,568



1,782,472



1,702,521



1,633,910



1,637,657



1,756,682



1,626,025


       Time

1,250,109



1,123,657



960,424



953,423



932,877



1,072,858



986,085


          Total interest-bearing deposits

4,372,529



4,041,255



3,832,295



3,695,177



3,720,809



3,987,323



3,737,946


       Noninterest-bearing

1,290,754



1,179,207



1,110,697



1,096,509



1,129,097



1,169,851



1,078,800


          Total deposits

5,663,283



5,220,462



4,942,992



4,791,686



4,849,906



5,157,174



4,816,746


     Federal funds purchased and securities sold





















          under agreements to repurchase

119,712



125,094



123,682



110,533



107,738



119,795



115,486


     FHLB short-term borrowings

564,062



710,879



562,466



671,579



414,892



627,181



472,062


          Total short-term borrowings

683,774



835,973



686,148



782,112



522,630



746,976



587,548


     Long-term debt

49,952



60,355



59,842



60,367



60,892



57,608



69,717


       Total borrowed funds

733,726



896,328



745,990



842,479



583,522



804,584



657,265


     Accrued interest and other liabilities

64,729



74,764



68,661



80,738



99,480



72,186



105,975


       Total Liabilities

6,461,738



6,191,554



5,757,643



5,714,903



5,532,908



6,033,944



5,579,986























SHAREHOLDERS' EQUITY





















     Common stock

574,588



574,187



573,716



575,828



577,851



574,576



577,409


     Retained earnings

347,435



340,680



332,944



324,875



337,034



336,557



331,817


     Accumulated other comprehensive loss

(18,841)



(20,966)



(25,189)



(29,251)



(28,380)



(23,527)



(23,884)


     Treasury stock, at cost

(123,051)



(148,172)



(184,862)



(187,120)



(186,442)



(160,591)



(183,917)


       Total Shareholders' Equity

780,131



745,729



696,609



684,332



700,063



727,015



701,425


       Total Liabilities and Shareholders' Equity

$

7,241,869



$

6,937,283



$

6,454,252



$

6,399,235



$

6,232,971



$

6,760,959



$

6,281,411























(1) Covered loans of $319.6 million, $350.9 million, $387.6 million, $434.5 million and $490.1 million for the three months ending December 31, 2014, September 30, 2014, June 30, 2014, March 31, 2014, and December 31, 2013, respectively and $372.8 million and $609.8 million for the twelve months ended December 31, 2014 and December 31, 2013, respectively, have been reclassified into Loans due to the expiration of loss sharing coverage on non-single family assets effective October 1, 2014.


 

(2) Allowance for loan and lease losses covered and formerly covered under loss sharing agreements with the FDIC of $11.9 million, $13.1 million, $11.6 million, $17.6 million, and $21.7 million for the three months ending December 31, 2014, September 30, 2014, June 30, 2014, March 31, 2014, and December 31, 2013, respectively and $13.5 and $35.1 for the twelve months ending December 31, 2014 and December 31, 2013, respectively, have been reclassified into allowance for loan and lease losses due to the expiration of loss sharing coverage on non-single family assets effective October 1, 2014.

FIRST FINANCIAL BANCORP.

NET INTEREST MARGIN RATE/VOLUME ANALYSIS (1)

(Dollars in thousands)

(Unaudited)








 Quarterly Averages


Year-to-Date Averages



Dec. 31, 2014


Sep. 30, 2014


Dec. 31, 2013


Dec. 31, 2014


Dec. 31, 2013



Balance


Yield


Balance