First Financial Bancorp.(US:FFBC)2019-01-24 18:12Financial Data and Key Metrics Changes - Full-year 2018 earnings per share were $2.28, with a return on average assets of 1.62% and a return on average tangible common equity of 20.5% [8] - Fourth quarter adjusted net income was $59.7 million or $0.61 per share, with a return on average assets of 1.72% and a return on average tangible common equity of 21.3% [14][15] - The efficiency ratio was 49.3% for the fourth quarter, reflecting continued expense management post-merger [15] Business Line Data and Key Metrics Changes - Loan originations in the fourth quarter increased by 10% compared to the linked quarter, although overall loan balances remained flat due to elevated payoffs in commercial real estate [18] - Average deposit balances increased by $162 million, driven by growth in non-interest-bearing deposits and brokered CDs [19] Market Data and Key Metrics Changes - The net interest margin increased by nine basis points to 4.21% in the fourth quarter, driven by higher asset yields and a favorable shift in funding mix [16] - Classified asset balances, a leading indicator of credit losses, declined by 5%, while net charge-offs increased to 29 basis points of loans on an annualized basis [20][21] Company Strategy and Development Direction - The company completed a merger with MainSource Financial Group, successfully integrating management and sales teams while investing in strategic areas such as technology [7] - The company plans to pursue strategic acquisitions to enhance non-interest income, particularly in wealth and capital markets [28] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for continued loan portfolio growth, expecting low to mid-single-digit increases in loan balances for the first quarter of 2019 [23] - The near-term credit outlook is stable, with expected losses similar to 2018 levels, and a focus on growing non-interest income over the long term [26] Other Important Information - The Board of Directors approved a 10% increase in the quarterly dividend to $0.22 per share and announced a share repurchase plan of up to 5 million shares [11] - Capital ratios expanded during the period and remain above stated targets, with tangible book value dilution from the merger substantially recovered [22] Q&A Session Summary Question: Increase in NPA and charge-offs - Management confirmed that the increase was related to specific credits that had migrated to non-accrual status, with no systemic issues in the overall portfolio [32][33] Question: Confidence in loan growth despite pay-downs - Management indicated that some pay-downs were accelerated and expressed confidence in pipelines showing decent growth across various business lines [42][43] Question: Tax rate fluctuations - Management clarified that the effective tax rate for the first quarter is expected to be 19.5%, with adjustments made for the previous year [37][39] Question: Capital management and buyback plans - Management stated that buybacks will be opportunistic, evaluating against other potential uses of capital [47][48] Question: M&A strategy and branch rationalization - Management indicated a focus on smaller, strategic acquisitions within footprint and confirmed that branch rationalization related to the merger is nearly complete [61][63]