First Financial Bancorp. — 2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023; filed February 22, 2024. First Financial is a regional bank holding company headquartered in Cincinnati, serving primarily Ohio, Indiana, Kentucky and Illinois, with nationwide specialty lending, equipment finance, foreign exchange and wealth management businesses. The filing incorporates its shareholder annual report by reference; the supplied text does not include the full financial statements or detailed MD&A.
Financial performance and condition
- Net interest margin: Fully tax-equivalent margin rose to 4.40% from 3.77% in 2022. The company attributed the increase to higher earning-asset yields, which rose 206 basis points, partly offset by a 190-basis-point increase in the cost of interest-bearing liabilities.
- Interest-rate sensitivity: The company described its balance sheet as asset-sensitive and said 2023 rate increases generated $108.6 million of incremental net income. The filing notes that future rate changes could affect earnings differently.
- Credit costs: 2023 provision for credit losses was $43.1 million, up from $6.7 million in 2022, reflecting loan growth, increased net charge-offs, longer portfolio duration and slower prepayments. The supplied text does not give net income, revenue, cash flow, loan balances or charge-off totals.
- Securities and equity: Accumulated other comprehensive loss declined to $309.8 million from $358.7 million in 2022, attributed to improved available-for-sale securities valuations.
- Debt and liquidity: Indebtedness was $1.3 billion at year-end. The Bank had $248.7 million available to pay dividends to the holding company without prior regulatory approval. The supplied text does not provide a clear consolidated cash, deposit, liquidity coverage or borrowing-capacity figure.
- Capital: The Bank met regulatory requirements to be deemed “well-capitalized”; specific year-end capital ratios are not provided in the supplied text.
- Other scale indicators: The company reported $3.5 billion in wealth-management assets under management, approximately 2,165 employees and 130 full-service banking centers.
Material changes and notable items
- Provision for credit losses increased materially year over year, as noted above.
- The FDIC special assessment related to protection of uninsured depositors at failed banks resulted in a $0.9 million expense recorded in the fourth quarter of 2023. The Bank reported $5.3 billion of uninsured deposits for the assessment’s December 31, 2022 measurement date.
- The company’s 2022 stock repurchase authorization expired at year-end 2023; no shares were repurchased under it in the fourth quarter. A new plan effective January 1, 2024 authorizes repurchases of up to 5 million shares over two years.
- The full-year financial statements and further year-over-year comparisons are incorporated by reference from the 2023 Annual Report to Shareholders and are not reproduced in the supplied filing text.
Outlook, risks and contingencies
The supplied text provides no numerical earnings, revenue or margin guidance. Management cautions that actual results may differ from forward-looking statements and identifies economic weakness, persistent inflation and higher-for-longer rates as potential pressures on borrowers, credit quality, funding costs and loan demand. Other highlighted risks include commercial and residential real-estate values, deposit competition and outflows, securities valuation, capital-market access, regulatory change, cybersecurity and third-party service disruptions, and concentration and counterparty risks in foreign-exchange activities.
- Management said cybersecurity threats remain significant and evolving, but reported that no cybersecurity risk or prior incident had materially affected the company’s strategy, results or financial condition.
- The company is involved in ordinary-course litigation. It said pending matters are not expected to be material to consolidated financial position or results of operations; ultimate liability cannot be determined for certain matters.
- The bank’s most recent Community Reinvestment Act examination rating was “outstanding.”
- Future common dividends remain subject to board discretion, regulatory limits and the Bank’s ability to upstream funds.
Key facts for investors to verify
- Review the incorporated annual report for full-year and quarterly revenue, net income, earnings per share, cash flows, balance-sheet totals and detailed credit-quality data.
- Check year-end capital ratios, liquidity measures, deposit composition and uninsured-deposit trends, as these figures are not clearly provided in the supplied text.
- Assess the drivers and outlook for the increase in credit-loss provision, including net charge-offs, criticized loans and commercial real-estate exposure.
- Evaluate sensitivity of net interest income and margin to changes in rates, deposit pricing and funding mix.
- Confirm the terms and actual use of the 2024 repurchase authorization, and consider dividend capacity and regulatory restrictions.