•Earnings per diluted share of $0.73

•Return on average assets of 1.63%

•Net interest margin on FTE basis(1) of 4.47%; 49 bp increase from linked quarter

•Loan growth of $501.5 million; 20.3% on an annualized basis

•Record quarterly revenue driven by increase in net interest income and record fee income

•Strong credit quality with net recoveries and declining nonperforming assets

Cincinnati, Ohio - January 26, 2023. First Financial Bancorp. (Nasdaq: FFBC) (“First Financial” or the “Company”) announced financial results for the three and twelve months ended December 31, 2022.

For the three months ended December 31, 2022, the Company reported net income of $69.1 million, or $0.73 per diluted common share. These results compare to net income of $55.7 million, or $0.59 per diluted common share, for the third quarter of 2022. For the twelve months ended December 31, 2022, First Financial had earnings per diluted share of $2.30 compared to $2.14 for the same period in 2021.

Return on average assets for the fourth quarter of 2022 was 1.63% while return on average tangible common equity was 29.93%(1). These compare to return on average assets of 1.35% and return on average tangible common equity of 22.29%(1) in the third quarter of 2022.

Fourth quarter 2022 highlights include:

•Strong loan growth when compared to linked quarter(2)

◦Loan balances increased $501.5 million compared to the third quarter

◦Growth of 20.3% on an annualized basis

◦Broad based portfolio growth; Summit contributed $129.7 million of the quarterly growth

•Net interest margin of 4.43%, or 4.47% on a fully tax-equivalent basis(1), exceeded expectations

◦49 bp increase to 4.47% from 3.98% in the third quarter due to higher asset yields resulting from higher interest rates

◦96 bp increase in loan yields offset 31 bp increase in cost of deposits

◦Stable core deposit balances; $58.0 million decline in total deposit balances, excluding $319.3 million increase in brokered CD's

•Record noninterest income of $56.0 million, or $55.1 million as adjusted(1)

◦Record foreign exchange income of $19.6 million; 66.7% increase from third quarter

◦Record leasing business income of $11.1 million; 56.1% increase from third quarter

◦Adjusted(1) for $0.9 million gain on investment securities

________________________________________________________________________________________

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

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

•Noninterest expenses of $124.4 million, or $117.3 million as adjusted(1)

◦Adjustments(1) include $6.4 million tax credit investment writedown and $0.7 million of other costs not expected to recur such as acquisition, severance and branch consolidation costs

◦Increase driven by elevated incentive costs tied to record foreign exchange income during the period

◦$2.5 million contribution to First Financial Foundation

◦Efficiency ratio of 58.2%; 55.1% as adjusted(1)

•Total Allowance for Credit Losses of $151.4 million; Total quarterly provision expense of $10.0 million

◦Loans and leases - ACL of $133.0 million; increased 2 bps to 1.29% of total loans

◦Unfunded Commitments - ACL of $18.4 million

◦Provision expense driven by loan growth and slower prepayment speeds

◦Net recoveries of 1 bp of average loans and leases

◦Nonperforming assets declined 16% compared to the linked quarter to 23 bps of total assets

•Regulatory capital ratios remain in excess of internal targets

◦Total capital ratio of 13.64%

◦Tier 1 common equity increased 1 bps to 10.83%

◦Tangible common equity increased 16 bps to 5.95%(1); 8.20%(1) excluding impact from AOCI

◦Tangible book value per share of $9.97(1)

Additionally, the board of directors approved a quarterly dividend of $0.23 per common share for the next regularly scheduled dividend, payable on March 15, 2023 to shareholders of record as of March 1, 2023.

Archie Brown, President and CEO, commented on the quarter, “I am extremely pleased with our fourth quarter performance, which was exceptional on many levels. Earnings per diluted share were $0.73, return on assets was 1.63% and our adjusted(1) efficiency ratio improved to 55%. Diluted earnings per common share increased 24% from the third quarter, and we achieved record operating revenue of $214 million driven by a 15% increase in net interest income and a 32% increase in fee income. Rate increases continued to positively impact our asset sensitive balance sheet, with our net interest margin expanding by 49 basis points to 4.47% as increasing asset yields outpaced deposit costs. The growth in noninterest income was due to record quarters from Bannockburn and Summit, which more than offset softness in mortgage, client derivative fees and service charge income."

Mr. Brown continued, “We were also very pleased with $502 million of broad-based loan growth in the quarter, which is 20.3% on an annualized basis and included a $130 million increase in finance leases at Summit. We expect loan growth to moderate in the first quarter of 2023 due to seasonal and economic uncertainty. We experienced modest outflows in personal interest-bearing transaction accounts, however this was offset by seasonal inflows in our public fund and business deposits. The result was a stable core deposit base and a loan to deposit ratio of 81%."

Mr. Brown continued, “Loan quality remained strong across our portfolio, with nonperforming assets declining by 16% to 23 basis points of total assets and 1 basis point of net recoveries for the period. Our ACL to total loan coverage increased slightly during the fourth quarter due to slowing prepayments and the general outlook for the U.S. economy.”

Mr. Brown discussed full year results, “2022 was a great year for First Financial. Adjusted(1) earnings per share of $2.36 was a record, and increased 3% compared to 2021, resulting in a 1.36% adjusted(1) return on assets and an adjusted(1) efficiency ratio of 60%. Revenue increased 14% compared to the prior year to $709 million, which was a record for our Company. Net interest income grew by 15% with short-term rate increases providing a catalyst, while record fee income increased by 11% for the year as our acquisition of Summit Funding drove new fees and Bannockburn revenue grew by 23% to a record $55 million. Our recent acquisitions have diversified our income sources as we intended, and we are very pleased that they effectively insulated the Company from much of the fee pressure that impacted the broader industry in 2022.”

Mr. Brown continued, “Loan growth exceeded $1 billion for the year, representing an 11% increase from 2021. We were pleased that the growth was broad-based, and included strong contributions from Summit Funding, which we acquired at the end of 2021. Summit's originations exceeded $400 million for the year, which was an all time high for them and surpassed our expectations, contributing over 20% of the Company's overall loan growth.”

Mr. Brown commented on asset quality, “Asset Quality was very strong for the year. Net Charge-offs were 6 basis points of total loans, which was a 20 basis point decline compared to 26 basis points in 2021. In addition, nonperforming assets declined $20 million, or 34%, to 23 basis points of total assets.”

Mr. Brown concluded, “The outstanding performance we achieved this year is the direct result of our associates executing at a very high level. I want to thank them for their commitment to our clients, our communities and each other. While we are proud of our 2022 financial results, we believe we have further opportunity to improve our execution and are committed to doing so. As we look forward to 2023, we remain focused on delivering consistent, sustained, industry leading results.”

Full detail of the Company’s fourth quarter and full year 2022 performance is provided in the accompanying financial statements and slide presentation.

First Financial’s executive management will host a conference call to discuss the Company’s financial and operating results on Friday, January 27, 2023 at 8:30 a.m. Eastern Time. Members of the public who would like to listen to the conference call should dial (844) 200-6205 (U.S. toll free), (646) 904-5544 (U.S. local) or +1 (929) 526-1599 (International), access code 329103. The number should be dialed five to ten minutes prior to the start of the conference call. A replay of the conference call will be available beginning one hour after the completion of the live call at (866) 813-9403 (U.S. toll free), (929) 458-6194 (U.S. local) and +44 204 525-0658 (all other locations), access code 347122. The recording will be available until February 10, 2023. The conference call will also be accessible as an audio webcast via the Investor Relations section of the Company’s website at www.bankatfirst.com. The webcast will be archived on the Investor Relations section of the Company’s website for 12 months.

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

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

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

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

•economic, market, liquidity, credit, interest rate, operational and technological risks associated with the Company’s business;

•future credit quality and performance, including our expectations regarding future loan losses and our allowance for credit losses

•the effect of and changes in policies and laws or regulatory agencies, including the Dodd-Frank Wall Street Reform and Consumer Protection Act and other legislation and regulation relating to the banking industry;

•Management’s ability to effectively execute its business plans;

•mergers and acquisitions, including costs or difficulties related to the integration of acquired companies;

•the possibility that any of the anticipated benefits of the Company’s acquisitions will not be realized or will not be realized within the expected time period;

•the effect of changes in accounting policies and practices;

•changes in consumer spending, borrowing and saving and changes in unemployment;

•changes in customers’ performance and creditworthiness;

•the costs and effects of litigation and of unexpected or adverse outcomes in such litigation;  

•current and future economic and market conditions, including the effects of changes in housing prices, fluctuations in unemployment rates, U.S. fiscal debt, budget and tax matters, geopolitical matters, and any slowdown in global economic growth;

•the adverse impact on the U.S. economy, including the markets in which we operate, of the novel coronavirus, which causes the Coronavirus disease 2019 (“COVID-19”), global pandemic, and the impact on the performance of our loan and lease portfolio, the market value of our investment securities, the availability of sources of funding and the demand for our products;

•our capital and liquidity requirements (including under regulatory capital standards, such as the Basel III capital standards) and our ability to generate capital internally or raise capital on favorable terms;

•financial services reform and other current, pending or future legislation or regulation that could have a negative effect on our revenue and businesses, including the Dodd-Frank Act and other legislation and regulation relating to bank products and services;

•the effect of the current interest rate environment or changes in interest rates or in the level or composition of our assets or liabilities on our net interest income, net interest margin and our mortgage originations, mortgage servicing rights and mortgage loans held for sale;

•the effect of a fall in stock market prices on our brokerage, asset and wealth management businesses;

•a failure in or breach of our operational or security systems or infrastructure, or those of our third-party vendors or other service providers, including as a result of cyber attacks;

•the effect of changes in the level of checking or savings account deposits on our funding costs and net interest margin; and

•our ability to develop and execute effective business plans and strategies.

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

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

First Financial Bancorp. is a Cincinnati, Ohio based bank holding company. As of December 31, 2022, the Company had $17.0 billion in assets, $10.3 billion in loans, $12.7 billion in deposits and $2.0 billion in shareholders’ equity. The Company’s subsidiary, First Financial Bank, founded in 1863, provides banking and financial services products through its six lines of business: Commercial, Retail Banking, Investment Commercial Real Estate, Mortgage Banking, Commercial Finance and Wealth Management. These business units provide traditional banking services to business and retail clients. Wealth Management provides wealth planning, portfolio management, trust and estate, brokerage and retirement plan services and had approximately $3.2 billion in assets under management as of December 31, 2022. The Company operated 132 full service banking centers as of December 31, 2022, located in Ohio, Indiana, Kentucky and Illinois, while the Commercial Finance business lends into targeted industry verticals on a nationwide basis. Additional information about the Company, including its products, services and banking locations, is available at www.bankatfirst.com.

Investors/Analysts                    Media

Jamie Anderson                        Tim Condron

Chief Financial Officer                    Marketing Communications Manager

(513) 887-5400                        (513) 979-5796

InvestorRelations@bankatfirst.com            media@bankatfirst.com    

(unaudited)

    

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

(2) The tax equivalent adjustment to net interest income recognizes the income tax savings when comparing taxable and tax-exempt assets and assumes a 21% 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.

(3) December 31, 2022 regulatory capital ratios are preliminary.

(4) Includes loans held for sale.