•Earnings per diluted share of $0.60; $0.62 on an adjusted(1) basis

•Return on average assets of 1.31%; 1.37% on an adjusted(1) basis

•Net interest margin on FTE basis(1) of 4.26%; 7 bp decrease from linked quarter

•Loan growth of $286.4 million; 10.7% on an annualized basis

•Average deposit balances increased 12.9% on an annualized basis

•Credit trends stable to improving in the quarter

•Tangible Book Value increased $1.47, or 13.5% from linked quarter

•Quarterly dividend of $0.23 approved by Board of Directors

Cincinnati, Ohio - January 25, 2024. First Financial Bancorp. (Nasdaq: FFBC) (“First Financial” or the “Company”) announced financial results for the three and twelve months ended December 31, 2023.

For the three months ended December 31, 2023, the Company reported net income of $56.7 million, or $0.60 per diluted common share. These results compare to net income of $63.1 million, or $0.66 per diluted common share, for the third quarter of 2023. For the twelve months ended December 31, 2023, First Financial had earnings per diluted share of $2.69 compared to $2.30 for the same period in 2022.

Return on average assets for the fourth quarter of 2023 was 1.31% while return on average tangible common equity was 21.36%(1). These compare to return on average assets of 1.48% and return on average tangible common equity of 23.60%(1) in the third quarter of 2023.

Fourth quarter 2023 highlights include:

•Net interest margin of 4.21%, or 4.26% on a fully tax-equivalent basis(1)

◦7 bp decrease to 4.26% from 4.33% in the third quarter due to increasing funding costs

◦Higher asset yields and earning asset mix significantly offset 31 bp increase in cost of deposits

•Noninterest income of $47.0 million, or $47.6 million as adjusted(1)

◦Bannockburn income of $8.7 million included $4.6 million loss on a trade; loss was offset by lower noninterest expenses

◦Strong leasing business income of $12.9 million

◦Higher other noninterest income driven by increase in syndication fees

◦Adjusted(1) $0.6 million for losses on investment securities and other items not expected to recur

•Noninterest expenses of $119.1 million, or $116.8 million as adjusted(1)

◦$2.9 million decrease from linked quarter driven primarily by lower employee costs and marketing expenses

◦Fourth quarter adjustments(1) include $0.9 million FDIC special assessment and other costs not expected to recur such as acquisition, severance and branch consolidation costs

◦Efficiency ratio of 59.3%; 58.0% as adjusted(1)

______________________________________________________________________________

(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.

•Accelerating loan growth during the quarter

◦Loan balances increased $286.4 million compared to the third quarter

◦Growth of 10.7% on an annualized basis

◦CRE, specialty lending, residential mortgages and finance leases drove quarterly growth

•Robust deposit growth during the quarter

◦Total deposits increased $445.2 million, or 3.4%, from linked quarter

•Total Allowance for Credit Losses of $159.9 million; Total quarterly provision expense of $10.2 million

◦Loans and leases - ACL of $141.4 million; decreased 7 bps to 1.29% of total loans

◦Unfunded Commitments - ACL of $18.4 million; increased $1.4 million from linked quarter

◦Provision expense driven by net charge-offs and loan growth; Classified assets were stable at $141.0 million

◦Annualized net charge-offs were 46 bps of total loans and included $9.2 million related to a single relationship that was previously reserved for

•Capital ratios remain solid

◦Total capital ratio increased 24 bps to 13.75%

◦Tier 1 common equity increased 25 bps to 11.85%

◦Tangible common equity increased 67 bps to 7.17%(1); 9.05%(1) excluding impact from AOCI

◦Tangible book value per share of $12.38(1); 13.5% increase from linked quarter

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, 2024 to shareholders of record as of March 1, 2024.

Archie Brown, President and CEO, commented on the quarter, “I am pleased with our fourth quarter performance. Adjusted(1) earnings per share were $0.62, which resulted in an adjusted(1) return on assets of 1.37% and an adjusted(1) return on tangible common equity ratio of 22.2%. As expected, rising funding costs outpaced our asset yields, however our net interest margin remained very strong at 4.26%. Additionally, balance sheet trends were positive during the quarter, with loans increasing $286 million, or 11% on an annualized basis, and average deposits increasing $416 million, or 13% on an annualized basis."

Mr. Brown continued, “Noninterest income and expenses were both lower than we expected during the quarter. The decline in noninterest income included a $4.6 million loss on a trade at Bannockburn, however excluding this loss, foreign exchange income was within our range of expectations. Leasing income also declined during the period due to lower end of term fees and lease originations shifting to a greater mix of finance leases. While this shift increased interest income and the net interest margin, it resulted in lower noninterest income during the period. Noninterest expenses declined for the quarter primarily due to lower incentive compensation, which is tied directly to noninterest income.”

Mr. Brown commented on asset quality, “Asset quality was stable for the quarter with underlying credit trends improving. Net charge-offs were 46 basis points during the quarter and were driven by a relationship that included borrower fraud. This loan had been on non-accrual for most of the year and was almost fully reserved coming into the fourth quarter. Additionally, nonperforming assets declined by 12% to 0.38% of total assets and classified asset balances were relatively unchanged from the third quarter."

Mr. Brown discussed full year results, “2023 was a record year for First Financial. Adjusted(1) earnings per share increased 17% from the prior year to $2.77, while adjusted(1) return on assets was 1.55%, adjusted (1) return on tangible common equity was 25.4% and our adjusted(1) efficiency ratio was 56%. Total revenue of $840.2 million was the highest in the Company's history, increasing 18.5% over the prior year. Our balance sheet responded favorably to the interest rate environment, resulting in a 21% increase in net interest income. Additionally, record years from wealth management and Summit drove a 12% increase in noninterest income.”

Mr. Brown continued, “We are extremely pleased with the performance of our balance sheet during 2023, especially given the turmoil in the banking industry in the first half of the year. Loan production was solid, exceeding 6% in balance growth, while average deposit balances increased 2.4% compared to the prior year. We are also very happy with the 122 basis point expansion in the tangible common equity ratio and 24% increase in tangible book value per share for the year.”

Mr. Brown commented on full year asset quality, “Asset quality trends were elevated during the year. Net charge-offs increased to 33 basis points for 2023, after we achieved a record low of 6 basis points in 2022. This increase was driven by two large relationships, as well as the loss on the sale of a small portfolio of ICRE loans. Non-performing assets to total assets ended the year at 38 basis points. We believe we are well positioned to manage the coming year and we are cautiously optimistic regarding asset quality in 2024.”

Mr. Brown concluded, “Finally, I'd like to commend our associates for their exemplary performance in 2023. They were client focused and executed at a very high level despite the industry uncertainty earlier in the year.

During the year we have strengthened our team with the addition of talent in Wealth Management and in expansion markets, including Chicago, IL, Evansville, IN and Cleveland, OH. I'm extremely proud of the work our team accomplished in 2023 and believe we are positioned to have sustained success in 2024 and beyond.”

Full detail of the Company’s fourth quarter 2023 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 26, 2024 at 8:30 a.m. Eastern Time. Members of the public who would like to listen to the conference call should dial (888) 550-5723 (U.S. toll free) or (646) 960-0471 (U.S. local), access code 5048068. 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 (800) 770-2030 (U.S. toll free), (647) 362-9199 (U.S. local), access code 5048068. The recording will be available until February 9, 2024. 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, 2022, 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, 2023, the Company had $17.5 billion in assets, $10.9 billion in loans, $13.4 billion in deposits and $2.3 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 $3.5 billion in assets under management as of December 31, 2023. The Company operated 130 full service banking centers as of December 31, 2023, 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, 2023 regulatory capital ratios are preliminary.

(4) Includes loans held for sale.

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,
			2023						2022						% Change						2023						2022						% Change
Interest income
Loans and leases, including fees			$	197,416					$	152,299					29.6		%				$	743,770					$	458,742					62.1		%
Investment securities
Taxable			30,294						30,248						0.2		%				125,520						102,314						22.7		%
Tax-exempt			3,402						4,105						(17.1)		%				13,901						18,466						(24.7)		%
Total investment securities interest			33,696						34,353						(1.9)		%				139,421						120,780						15.4		%
Other earning assets			7,325						3,262						124.6		%				19,813						5,484						261.3		%
Total interest income			238,437						189,914						25.5		%				903,004						585,006						54.4		%
Interest expense
Deposits			69,193						16,168						328.0		%				202,010						28,140						617.9		%
Short-term borrowings			10,277						11,091						(7.3)		%				53,378						19,132						179.0		%
Long-term borrowings			5,202						4,759						9.3		%				19,846						18,591						6.8		%
Total interest expense			84,672						32,018						164.5		%				275,234						65,863						317.9		%
Net interest income			153,765						157,896						(2.6)		%				627,770						519,143						20.9		%
Provision for credit losses-loans and leases			8,804						8,689						1.3		%				43,074						6,731						539.9		%
Provision for credit losses-unfunded commitments			1,426						1,341						6.3		%				33						4,982						(99.3)		%
Net interest income after provision for credit losses			143,535						147,866						(2.9)		%				584,663						507,430						15.2		%
Noninterest income
Service charges on deposit accounts			6,846						6,406						6.9		%				27,289						28,062						(2.8)		%
Wealth management fees			6,091						5,648						7.8		%				26,081						23,506						11.0		%
Bankcard income			3,349						3,736						(10.4)		%				14,039						14,380						(2.4)		%
Client derivative fees			711						1,822						(61.0)		%				5,155						5,441						(5.3)		%
Foreign exchange income			8,730						19,592						(55.4)		%				54,051						54,965						(1.7)		%
Leasing business income			12,856						11,124						15.6		%				51,322						31,574						62.5		%
Net gains from sales of loans			2,957						2,206						34.0		%				13,217						15,048						(12.2)		%
Net gain (loss) on sale of investment securities			(851)						(393)						116.5		%				(1,258)						(569)						121.1		%
Net gain (loss) on equity securities			202						1,315						(84.6)		%				206						(639)						(132.2)		%
Other			6,102						4,579						33.3		%				22,320						17,873						24.9		%
Total noninterest income			46,993						56,035						(16.1)		%				212,422						189,641						12.0		%
Noninterest expenses
Salaries and employee benefits			70,637						73,621						(4.1)		%				292,731						269,368						8.7		%
Net occupancy			5,890						5,434						8.4		%				22,990						22,208						3.5		%
Furniture and equipment			3,523						3,234						8.9		%				13,543						13,224						2.4		%
Data processing			8,488						8,567						(0.9)		%				35,852						33,662						6.5		%
Marketing			2,087						2,198						(5.1)		%				9,647						8,744						10.3		%
Communication			707						690						2.5		%				2,729						2,683						1.7		%
Professional services			3,148						3,015						4.4		%				9,926						9,734						2.0		%
State intangible tax			984						974						1.0		%				3,914						4,285						(8.7)		%
FDIC assessments			3,651						2,173						68.0		%				11,948						7,194						66.1		%
Intangible amortization			2,601						2,573						1.1		%				10,402						11,185						(7.0)		%
Leasing business expense			8,955						6,061						47.7		%				32,500						20,363						59.6		%
Other			8,466						15,902						(46.8)		%				32,307						52,699						(38.7)		%
Total noninterest expenses			119,137						124,442						(4.3)		%				478,489						455,349						5.1		%
Income before income taxes			71,391						79,459						(10.2)		%				318,596						241,722						31.8		%
Income tax expense (benefit)			14,659						10,373						41.3		%				62,733						24,110						160.2		%
Net income			$	56,732					$	69,086					(17.9)		%				$	255,863					$	217,612					17.6		%
ADDITIONAL DATA
Net earnings per share - basic			$	0.60					$	0.74											$	2.72					$	2.33
Net earnings per share - diluted			$	0.60					$	0.73											$	2.69					$	2.30
Dividends declared per share			$	0.23					$	0.23											$	0.92					$	0.92
Return on average assets			1.31		%				1.63		%										1.51		%				1.33		%
Return on average shareholders' equity			10.50		%				13.64		%										12.01		%				10.34		%
Interest income			$	238,437					$	189,914					25.5		%				$	903,004					$	585,006					54.4		%
Tax equivalent adjustment			1,672						1,553						7.7		%				6,356						6,357						0.0		%
Interest income - tax equivalent			240,109						191,467						25.4		%				909,360						591,363						53.8		%
Interest expense			84,672						32,018						164.5		%				275,234						65,863						317.9		%
Net interest income - tax equivalent			$	155,437					$	159,449					(2.5)		%				$	634,126					$	525,500					20.7		%
Net interest margin			4.21		%				4.43		%										4.36		%				3.73		%
Net interest margin (fully tax equivalent) (1)			4.26		%				4.47		%										4.40		%				3.77		%
Full-time equivalent employees			2,129						2,070
(1) 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 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.