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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
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(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES ACT OF
1934
Commission File Number 0-12379
FIRST FINANCIAL BANCORP.
(Exact name of registrant as specified in its charter)
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Ohio 31-1042001
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
300 High Street 45011
Hamilton, Ohio (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (513) 867-4700
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SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
None
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
Common Stock, $8 Par Value
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (section 229.405 of this chapter) is not contained
herein, and will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K.[ ]
As of March 1, 1997, there were issued and outstanding 15,035,362 shares of
Registrant's Common Stock. The aggregate market value of the voting stock held
by non-affiliates of the Registrant, computed by reference to the sales price
of the last trade of such stock as of March 1, 1997, was $507,443,000. (The
exclusion from such amount of the market value of the shares owned by any
person shall not be deemed an admission by the Registrant that such person is
an affiliate of the Registrant.)
DOCUMENTS INCORPORATED BY REFERENCE:
Portions of the registrant's Annual Report to Shareholders for the year ended
December 31, 1996 are incorporated by reference into Parts I, II, and IV.
Portions of the proxy statement dated March 17, 1997 for the annual meeting
of shareholders to be held April 22, 1997 are incorporated by reference into
Part III.
2
FORM 10-K CROSS REFERENCE INDEX
Page
PART I Item 1 Business F-1
Item 2 Properties F-6
Item 3 Legal Proceedings F-6
Item 4 Submission of Matters to a Vote of Security Holders
(during the fourth quarter of 1996) F-6
Additional Item - Executive Officers F-6
- --------------------------------------------------------------------------------------------------
PART II Item 5 Market for the Registrant's Common Equity and Related
Shareholder Matters F-8
Item 6 Selected Financial Data F-8
Item 7 Management's Discussion and Analysis of Financial
Condition and Results of Operations F-8
Item 8 Financial Statements and Supplementary Data F-11
Item 9 Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure F-11
- --------------------------------------------------------------------------------------------------
PART III Item 10 Directors and Executive Officers of the Registrant F-12
Item 11 Executive Compensation F-12
Item 12 Security Ownership of Certain Beneficial Owners and
Management F-12
Item 13 Certain Relationships and Related Transactions F-12
- --------------------------------------------------------------------------------------------------
PART IV Item 14 Exhibits, Financial Statement Schedules, and Reports
on Form 8-K F-13
- --------------------------------------------------------------------------------------------------
SIGNATURES F-15
3
F-1
PART I
ITEM 1. BUSINESS.
FIRST FINANCIAL BANCORP.
First Financial Bancorp., an Ohio corporation (Bancorp), is a bank and savings
and loan holding company that engages in the business of commercial banking,
and other permissible activities closely related to banking, through fourteen
wholly owned subsidiaries: First National Bank of Southwestern Ohio (First
Southwestern), Van Wert National Bank (Van Wert National), Bright National Bank
(Bright National), all national banking associations, Citizens Commercial Bank
& Trust Company (Citizens Commercial), Clyde Savings Bank Company (Clyde), both
Ohio banking corporations, Union Trust Bank (Union Trust), Indiana Lawrence
Bank (Indiana Lawrence), Citizens First State Bank (Citizens First), Union Bank
& Trust Company (Union Bank), Peoples Bank and Trust Company (Peoples Bank),
and Farmers State Bank (Farmers), all Indiana banking corporations, Fidelity
Federal Savings Bank (Fidelity Federal), and Home Federal Bank, A Federal
Savings Bank (Home Federal), both federal savings banks. First Finance Mortgage
Company of Southwestern Ohio (First Finance), is Bancorp's only finance
company. Bancorp provides management and similar services for its fourteen
subsidiary financial institutions. Since it does not itself conduct any
operating businesses, Bancorp must depend largely upon its fourteen
subsidiaries for funds with which to pay the expenses of its operation and, to
the extent applicable, any dividends on its outstanding shares of stock. For
further information see Note 6 of the Notes to Consolidated Financial
Statements appearing on page 37 of Bancorp's Annual Report to Shareholders,
which is incorporated by reference in response to this item.
Bancorp was formed in 1982 for the purpose of becoming the parent holding
company of First Southwestern. For additional information, please see
"Subsidiaries" on page F-2.
Bancorp is registered as a bank holding company under the Bank Holding Company
Act of 1956, as amended. Bancorp is also a savings and loan holding company
under the savings and loan holding company provisions of the Home Owners' Loan
Act of 1933, as amended by the Financial Institutions Reform, Recovery, and
Enforcement Act of 1989 (FIRREA). As such, Bancorp is subject to strict
regulation regarding the acquisition of additional financial institutions and
the conduct, through subsidiaries, of non-banking activities (see "Regulation"
on page F-4).
Bancorp faces strong competition from both financial institutions and other
non-financial organizations. Its competitors include local and regional
financial institutions, savings and loans, and bank holding companies, as well
as some of the largest banking organizations in the United States. In addition,
other types of financial institutions, such as credit unions, also offer a wide
range of loan and deposit services that are directly competitive with those
offered by Bancorp's subsidiaries. The consumer is also served by brokerage
firms and mutual funds that provide checking services, credit cards, and other
services similar to those offered by Bancorp's subsidiaries. Major stores
compete for loans by offering credit cards and retail installment contracts. It
is anticipated that competition from entities other than financial institutions
will continue to grow.
The range of banking services provided by Bancorp's subsidiaries to their
customers includes commercial lending, real estate lending, consumer credit,
credit card, and other personal loan financing. Fidelity Federal and Home
Federal are full service savings banks with their primary business being the
promotion of thrift through the solicitation of savings accounts from the
general public and the promotion of home ownership through the granting of
mortgage loans,
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F-2
primarily to finance the purchase, construction, and improvement of residential
real estate. First Southwestern, Citizens Commercial, Van Wert National,
Citizens First, Clyde, and Bright National also offer lease financing. In
addition, the institutions offer deposit services that include interest-bearing
and noninterest-bearing deposit accounts and time deposits. Most subsidiaries
provide safe deposit facilities. A full range of trust and asset management
services is provided by Bancorp's subsidiaries, excluding the savings banks and
the finance company. Each subsidiary retains its local identity and operates
under the direction of its own board of directors and officers.
Bancorp and its subsidiaries operate in one business segment--the financial
institutions industry. Foreign transactions are nominal. Information regarding
statistical disclosure required by Industry Guide 3 is included in Bancorp's
Annual Report to Shareholders for the year ended December 31, 1996, and is
incorporated herein by reference.
At December 31, 1996, Bancorp and its subsidiaries employed 1,315 employees.
Bancorp's executive office is located at 300 High Street, Hamilton, Ohio 45011,
and its telephone number is (513) 867-4700.
SUBSIDIARIES
First Southwestern was formed as the result of a consolidation of the First
National Bank and Trust Company of Hamilton and the First National Bank of
Middletown in 1980. On April 26, 1983, Bancorp acquired all of the outstanding
capital stock of First Southwestern. At December 31, 1996, First Southwestern
had 31 offices located in Butler, Warren, Preble, and Hamilton Counties in Ohio
with total deposits of $745 million. First Southwestern has a total of 30
automated teller machines (ATM) of which five ATM's are at sites other than
branches.
Bancorp acquired 100% of the outstanding stock of Citizens Commercial on April
29, 1983. Citizens Commercial operates five offices and three ATM's in Mercer
County, Ohio (one of which is at a site other than a branch) and had deposits
of $174 million at December 31, 1996.
On July 31, 1988, NB Banc Corp, the parent holding company of Van Wert
National, merged into and out of existence with Bancorp leaving Van Wert
National as a wholly owned subsidiary of Bancorp. Van Wert National operates
five offices and has two ATM's in Van Wert County, Ohio with deposits of $101
million at December 31, 1996.
Union Trust merged with Bancorp on September 1, 1989, as a wholly owned
subsidiary. Union Trust has one ATM and operates two offices in Randolph
County, Indiana and had $40 million in deposits on December 31, 1996.
On September 1, 1989, ILB Financial Corp. was merged into and out of existence
with Bancorp. ILB Financial Corp. was the one bank holding company of Indiana
Lawrence. This merger resulted in Indiana Lawrence becoming a wholly owned
subsidiary of Bancorp. In April 1996, Bancorp's new affiliate, Farmers &
Merchants Bank of Rochester, Rochester, Indiana was merged with Indiana
Lawrence. As of December 31, 1996, Indiana Lawrence had deposits of $139
million, two ATM's, of which one is at a remote site, and operated five offices
in Wabash County, Indiana and three offices in Fulton County, Indiana.
5
F-3
Fidelity Federal merged with Bancorp on September 21, 1990 as a wholly owned
subsidiary. Fidelity Federal operates three offices in Grant County, Indiana
and has one ATM. Total deposits at December 31, 1996 were $61 million.
Citizens First joined Bancorp on October 1, 1990 as two separate entities,
Trustcorp Bank, Hartford City, and Trustcorp Bank, Dunkirk. These two entities
were purchased from Society Corporation for cash. On that same date, Trustcorp
Bank, Hartford City was renamed Citizens First State Bank of Hartford City and
Trustcorp Bank, Dunkirk was renamed Citizens First State Bank of Dunkirk. On
July 1, 1991, those two banks merged to become one wholly owned subsidiary of
Bancorp. Citizens First operates four offices in Blackford County, Indiana, one
office in Jay County, Indiana, and one office in Delaware County, Indiana.
Citizens First has four ATM's of which one is at a site other than branches,
and had total deposits of $89 million at December 31, 1996.
Bancorp purchased Home Federal on October 1, 1991. In November, 1995, Home
Federal and Fayette Federal combined operations, with Fayette Federal operating
as a division of Home Federal. Home Federal operates five offices in Butler
County, Ohio, two offices in Hamilton County, Ohio, one office in Fayette
County, Indiana and one office in Franklin County, Indiana, with total deposits
of $234 million at December 31, 1996. Home Federal has six ATM's of which three
are at sites other than branches.
On January 4, 1993, Jennings Union Bankcorp, the parent holding company of
Union Bank, merged into and out of existence with Bancorp leaving Union Bank as
a wholly owned subsidiary of Bancorp. Union Bank operates two offices in
Jennings County, Indiana with total deposits at December 31, 1996 of $78
million. Union Bank has two ATM's, both of which are at sites other than
branches.
On June 1, 1994, First Clyde Banc Corp., the parent holding company of Clyde,
merged into and out of existence with Bancorp leaving Clyde as a wholly owned
subsidiary of Bancorp. Clyde operates two offices and one ATM in Sandusky
County in Ohio, with $59 million in total deposits as of December 31, 1996.
On July 16, 1995, Peoples Bank and Trust Company merged with Bancorp. Located
in Sunman, Indiana, Peoples Bank operates one office in Ripley County, Indiana
with total deposits of $46 million at December 31, 1996.
On October 1, 1995, Bright Financial Services, Inc., Flora, Indiana merged with
and into Bancorp leaving its subsidiary, Bright National Bank, as a wholly
owned Bancorp subsidiary. With deposits at December 31, 1996 of $116 million,
Bright National operates four offices in Carroll County, Indiana, two offices
in Tippecanoe County, Indiana and one office in Clinton County, Indiana.
Bright National has six ATM's.
First Finance Mortgage Company of Southwestern Ohio, Inc. (First Finance) began
full operations on May 8, 1996. First Finance, incorporated and wholly owned by
Bancorp, is a retail finance company and operates from an office in Fairfield,
Ohio.
Bancorp purchased Farmers State Bancorp, Liberty, Indiana, on December 1, 1996.
Farmers State Bancorp was dissolved, leaving its only subsidiary, Farmers State
Bank, (Farmers) as a
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F-4
wholly owned Bancorp subsidiary. Farmers operates two offices in Union County,
Indiana and four offices in Rush County, Indiana. At December 31, 1996, Farmers
had total deposits of $55 million and has 1 ATM location.
REGULATION
First Southwestern, Van Wert National and Bright National, as national banking
associations, are subject to supervision and regular examination by the
Comptroller of the Currency. Citizens Commercial and Clyde, as Ohio state
chartered banks, are subject to supervision and regular examination by the
Superintendent of Banks of the State of Ohio. First Southwestern, Citizens
Commercial, Van Wert National, Clyde, Peoples Bank and Bright National are
members of the Federal Reserve System and, as such, are subject to the
applicable provisions of the Federal Reserve Act. Citizens Commercial is also
subject to regular examination by the Federal Reserve System. Union Trust,
Indiana Lawrence, Citizens First, Union Bank, Peoples Bank and Farmers, as
Indiana state chartered banks, are subject to supervision and regular
examination by the Indiana Department of Financial Institutions. Fidelity
Federal and Home Federal, as federal savings banks, are subject to supervision
and regular examination by the Office of Thrift Supervision. Since Fidelity
Federal is located in Indiana, it is also subject to examination by the Indiana
Department of Financial Institutions. First Finance is subject to supervision
and regular examinations by the State of Ohio Division of Consumer Finance. All
depository institutions are insured by the Federal Deposit Insurance
Corporation and are subject to the provisions of the Federal Deposit Insurance
Act.
To the extent that the information below consists of summaries of certain
statutes or regulations, it is qualified in its entirety by reference to the
statutory or regulatory provisions described.
Bancorp is subject to the provisions of the Bank Holding Company Act of 1956,
as amended (the Act), which requires a bank holding company to register under
the Act and to be subject to supervision and examination by the Board of
Governors of the Federal Reserve System. As a bank holding company, Bancorp is
required to file with the Board of Governors an annual report and such
additional information as the Board of Governors may require pursuant to the
Act. The Act requires prior approval by the Board of Governors of the
acquisition by a bank holding company, or any subsidiary thereof, of 5% or more
of the voting stock or substantially all the assets of any bank within the
United States. Prior to the passage of FIRREA, it was not possible for bank
holding companies, such as Bancorp, to acquire "healthy" thrift institutions.
Although such acquisitions are now authorized, mergers between bank holding
companies and thrift institutions must be approved by the Federal Reserve Board
and the Office of Thrift Supervision. Once a bank holding company acquires a
thrift institution, it is then considered a savings and loan holding company,
as well, which is subject to regulation and examination by the Office of Thrift
Supervision. As a bank holding company located in the State of Ohio, Bancorp is
not permitted to acquire a bank or other financial institution located in
another state unless such acquisition is specifically authorized by the
statutes of such state, as is the case in Indiana. The Act further provides
that the Board of Governors shall not approve any such acquisition that would
result in a monopoly or would be in furtherance of any combination or
conspiracy to monopolize or attempt to monopolize the business of banking in
any part of the United States, or the effect of which may be to substantially
lessen competition or to create a monopoly in any section of the country, or
that in any other manner would be in restraint of trade, unless the
anti-competitive effects of the proposed transaction are clearly outweighed in
the public interest by the probable effect of the transaction in meeting the
convenience and needs of the community to be served.
7
F-5
The Act also prohibits a bank holding company, with certain exceptions, from
acquiring 5% or more of the voting stock of any company that is not a bank and
from engaging in any business other than banking or performing services for its
banking subsidiaries without the approval of the Board of Governors. In
addition, the acquisition of a thrift institution must be approved by the
Office of Thrift Supervision pursuant to the savings and loan holding company
provisions of the Home Owners' Loan Act of 1933, as amended by FIRREA. The
Board of Governors is also authorized to approve, among other things, the
ownership of shares by a bank holding company in any company the activities of
which the Board of Governors has determined to be so closely related to banking
or managing or controlling banks as to be a proper incident thereto. The Board
of Governors has, by regulation, determined that certain activities, including
mortgage banking, operating small loan companies, factoring, furnishing certain
data processing operations, holding or operating properties used by banking
subsidiaries or acquired for such future use, providing certain investment and
financial advice, leasing (subject to certain conditions) real or personal
property, providing management consulting advice to certain depository
institutions, providing securities brokerage services, arranging commercial
real estate equity financing, underwriting and dealing in government
obligations and money market instruments, providing consumer financial
counseling, operating a collection agency, owning and operating a savings
association, operating a credit bureau and conducting certain real estate
investment activities and acting as insurance agent for certain types of
insurance, are closely related to banking within the meaning of the Act. It
also has determined that certain other activities, including real estate
brokerage and syndication, land development, and property management, are not
related to credit transactions and are not permissible.
The Act and the regulations of the Board of Governors prohibit a bank holding
company and its subsidiaries from engaging in certain tie-in arrangements in
connection with any extension of credit, lease or sale of property, or
furnishing of services. The Act also imposes certain restrictions upon dealings
by affiliated banks with the holding company and among themselves including
restrictions on interbank borrowing and upon dealings in respect to the
securities or obligations of the holding company or other affiliates.
The earnings of banks, and therefore the earnings of Bancorp (and its
subsidiaries), are affected by the policies of regulatory authorities,
including the Board of Governors of the Federal Reserve System. An important
function of the Federal Reserve Board is to regulate the national supply of
bank credit in an effort to prevent recession and to restrain inflation. Among
the procedures used to implement these objectives are open market operations in
U.S. Government securities, changes in the discount rate on member bank
borrowings, and changes in reserve requirements against member bank deposits.
These procedures are used in varying combinations to influence overall growth
and distribution of bank loans, investments and deposits, and their use also
may affect interest rates charged on loans or paid for deposits.
Monetary policies of the Federal Reserve Board have had a significant effect on
the operating results of commercial banks in the past and are expected to
continue to do so in the future. The effect, if any, of such policies upon the
future business and earnings of Bancorp cannot accurately be predicted.
8
F-6
Bancorp makes no attempt to predict the effect on its revenues and earnings of
changes in general economic, industrial, and international conditions or in
legislation and governmental regulations.
ITEM 2. PROPERTIES.
The registrant and its subsidiaries operate from 52 offices in Ohio, including
Bancorp's executive office in Hamilton, Ohio, and 35 offices in Indiana. Thirty
of the offices are located in Butler County, Ohio, of which four branches are
built on leased land and there are seven branches wherein the land and building
are leased. Excess space in three facilities is leased to third parties. Five
offices are located in Mercer County, Ohio, five in Van Wert County, Ohio,
three in Preble County, Ohio, three in Warren County, Ohio, three in Hamilton
County, Ohio, and two in Sandusky County, Ohio. Five offices are located in
Wabash County, Indiana, of which one office is built on leased land with a
purchase option on the land. Two offices are in Randolph County, Indiana, three
in Grant County, Indiana, one in Jay County, Indiana, four in Blackford County,
Indiana, one in Fayette County, Indiana, one in Franklin County, Indiana, two
in Jennings County, Indiana, four in Carroll County, Indiana, two in Tippecanoe
County, Indiana, three in Fulton, County, Indiana, two in Union County,
Indiana, four in Rush County, Indiana, and one in Clinton County, Indiana. One
office is located in Delaware County, Indiana, of which both the land and
building are leased. All leases are comparable to other leases in the
respective market areas and do not contain provisions detrimental to the
registrant or its subsidiaries.
ITEM 3. LEGAL PROCEEDINGS.
Except for routine litigation incident to their business, the registrant and
its subsidiaries are not a party to any material pending legal proceedings and
none of their property is the subject of any such proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to the shareholders during the fourth quarter of
1996.
ADDITIONAL ITEM - EXECUTIVE OFFICERS.
Listed below are the Executive Officers of Bancorp as of December 31, 1996. The
Executive Officers will serve until the first meeting of the Board of Directors
following the next annual meeting of shareholders, scheduled to be held on
April 22, 1997 or until their successors are elected and duly qualified. All
Executive Officers are chosen by the Board of Directors by a majority vote.
Name Age Position
- ----------------- --- ----------------------------------------------
Stanley N. Pontius 50 President and Chief Executive Officer, Director
James J. Ashburn 66 Senior Vice President
Rick L. Blossom 49 Senior Vice President, Chief Lending Officer
Michael R. O'Dell 45 Senior Vice President, Chief Financial Officer
and Secretary
Michael T. Riley 46 Senior Vice President
Brian D. Moriarty 54 Senior Vice President
Joseph M. Gallina 41 Comptroller
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F-7
The following is a brief description of the business experience over the past
five years of the individuals named above.
Stanley N. Pontius became Chief Executive Officer of Bancorp in July 1992. Mr.
Pontius was Chief Operating Officer from March 1991 until July 1992. Upon
joining Bancorp in March, 1991 he assumed the responsibilities of President and
Chief Operating Officer, as well as a director. He also became President, Chief
Executive Officer, and a director of First Southwestern. Prior to coming to
Bancorp, Mr. Pontius served as President and Chief Executive Officer of Bank
One, Mansfield, Mansfield, Ohio from 1988 to 1991.
James J. Ashburn retired in the first quarter 1997. He became Senior Vice
President of Bancorp on December 30, 1988. He had been Vice President of
Bancorp since April 1983. He had served as a Senior Vice President and Senior
Trust Officer of First Southwestern for over five years.
Rick L. Blossom became Chief Lending Officer of Bancorp effective January 12,
1996. Mr. Blossom remains Senior Vice President of Bancorp, a position he has
held since September 26, 1990. On January 12, 1996, he also became Executive
Vice President of First Southwestern, retaining his Chief Lending Officer
status. He previously held the title of Senior Vice President/Retail Lending of
First Southwestern. On March 4, 1991, he was promoted to Chief Lending Officer
of First Southwestern, while retaining his Senior Vice President status. He had
served as First Vice President/Retail Lending of First Southwestern since
March, 1989.
Michael R. O'Dell became Senior Vice President, Chief Financial Officer and
Secretary of Bancorp on January 12, 1996. He had served as Bancorp's
Comptroller since December 1994. Mr. O'Dell was also promoted to Senior Vice
President and Chief Financial Officer of First Southwestern in January 1996. He
had served as First Vice President and Comptroller of First Southwestern since
1991.
Michael T. Riley became Senior Vice President of Bancorp, responsible for
communications and public relations, on January 12, 1996. Mr. Riley was also
promoted to Senior Vice President of First Southwestern in January 1996, where
his duties include marketing, data processing, and operations. He had served as
First Vice President of Marketing since 1989.
Brian D. Moriarty became Senior Vice President of Bancorp, responsible for the
human resources function, on January 12, 1996. Mr. Moriarty also became Senior
Vice President of First Southwestern in January 1996, where he had been First
Vice President since 1991.
Joseph M. Gallina became Comptroller of Bancorp effective January 12, 1996. He
had served as Bancorp's Auditor since April 1, 1992. Prior to joining Bancorp
in 1992, he worked for an international accounting firm and specialized in
financial reporting and auditing of financial institutions. On January 12,
1996, Mr. Gallina was also appointed First Vice President of Acocunting and
Financial Control of First Southwestern.
10
F-8
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER
MATTERS.
Bancorp had 4,088 common stock shareholders of record as of March 1, 1997.
Bancorp's common equity is listed with the National Association of
Securities Dealers, Inc. (NASDAQ) and is traded on the Over-the-Counter Market.
The information contained on page 48 of Bancorp's Annual Report to Shareholders
for the year ended December 31, 1996 is incorporated herein by reference in
response to this item.
ITEM 6. SELECTED FINANCIAL DATA.
The information contained in Table 1 on page 22 of Bancorp's Annual Report to
Shareholders for the year ended December 31, 1996 is incorporated herein by
reference in response to this item.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The information contained on pages 21 through 30 of Bancorp's Annual Report to
Shareholders for the year ended December 31, 1996 is incorporated herein by
reference in response to this item.
The financial and statistical data presented on the following pages, when
viewed along with the financial and statistical data presented in pages 21
through 48 of Bancorp's Annual Report to Shareholders, provides a detailed
review of Bancorp's business activities.
INVESTMENT PORTFOLIO
At December 31, 1996, Bancorp's investment portfolio included no investments
which were not issued by the U.S. Government, its agencies, or corporations and
which exceeded ten percent of Bancorp's shareholders' equity.
LOAN PORTFOLIO
The following table shows the composition of Bancorp's loan portfolio at the
end of each of the last five years:
December 31
--------------------------------------------------------
1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- -----------
(Dollars in thousands)
Commercial $ 398,034 $ 340,942 $ 286,635 $ 247,052 $ 237,935
Real estate--construction 43,262 41,845 29,273 31,597 15,283
Real estate--mortgage 863,414 788,805 746,150 665,390 658,689
Installment 366,051 329,034 285,412 214,600 195,947
Credit card 16,107 15,406 15,599 16,703 17,946
Lease financing 14,821 16,557 16,102 14,872 13,035
---------- ---------- ---------- ---------- ----------
Total loans $1,701,689 $1,532,589 $1,379,171 $1,190,214 $1,138,835
========== ========== ========== ========== ==========
NONPERFORMING ASSETS
The accrual of interest on a loan is discontinued and interest collected on
such loan is credited to loan principal if, in the opinion of management, full
collection of principal is doubtful. The following table summarizes Bancorp's
nonaccrual loans, restructured loans, other real estate owned/in-substance
foreclosures, and past due loans as of the end of each of the last five years:
11
F-9
December 31
---------------------------------------------------
1996 1995 1994 1993 1992
------- ------- ------- ------- -------
(Dollars in thousands)
Nonaccrual loans $ 4,850 $ 2,764 $ 2,412 $ 4,679 $ 9,216
Restructured loans 890 517 1,429 605 719
OREO and ISF* 264 1,677 2,116 3,673 9,549
------- ------- ------- ------- -------
Total nonperforming assets $ 6,004 $ 4,958 $ 5,957 $ 8,957 $19,484
======= ======= ======= ======= =======
Nonperforming assets as a
percent of total loans plus
OREO and ISF 0.35% 0.32% 0.43% 0.75% 1.70%
Accruing loans past due
90 days or more $ 906 $ 1,071 $ 683 $ 1,321 $ 1,547
*Other Real Estate Owned and In-Substance Foreclosures
As a result of management's continued effort to improve asset quality, OREO and
ISF decreased $1,413,000 in 1996, $439,000 in 1995 and $1,557,000 in 1994.
While the dollar amount of nonaccrual loans has increased, the percentage of
total nonperforming assets to total loans remains lower than historical levels.
POTENTIAL PROBLEM LOANS
At December 31, 1996, Bancorp had $1,195,000 in loans for which payments were
presently current, but the borrowers were experiencing financial difficulties.
These loans are a combination of commercial, real estate, and installment loans
and are not included as part of nonaccrual loans, nor are they included within
restructured loans or loans past due 90 days or more and still accruing.
However, these loans are subject to constant monitoring by management, and
their status is reviewed on a continual basis. These loans were considered by
management in determining the adequacy of the recorded allowance for loan
losses at December 31, 1996.
12
F-10
LOAN LOSS DATA
1996 1995 1994 1993 1992
------- ------- ------- ------- -----
(Dollars in thousands)
Transactions in the allowance for
loan losses:
Balance at January 1 $20,437 $18,609 $18,380 $17,014 $17,739
Loans Charged off:
Commercial 1,210 790 648 1,634 3,600
Real estate--construction 1,059
Real estate--mortgage 226 26 124 320 1,763
Installment and other
consumer financing 2,340 1,721 1,248 1,580 1,936
Lease financing 187 107 132 155 44
------- ------- ------- ------- -------
Total loans charged off 3,963 2,644 2,152 3,689 8,402
------- ------- ------- ------- -------
Recoveries of loans previously charged off:
Commercial 346 546 384 538 346
Real estate--construction 8 56
Real estate--mortgage 54 39 41 65 143
Installment and other
consumer financing 711 592 653 676 582
Lease financing 62 17 35 29 7
------- ------- ------- ------- -------
Total recoveries 1,173 1,202 1,113 1,308 1,134
------- ------- ------- ------- -------
Net charge-offs 2,790 1,442 1,039 2,381 7,268
Allowance acquired through mergers
and acquisitions 1,592 1,162
Provision for loan losses 3,433 2,108 1,268 3,747 6,543
------- ------- ------- ------- -------
Balance at December 31 $22,672 $20,437 $18,609 $18,380 $17,014
======= ======= ======= ======= =======
Ratios:
Net charge-offs as a percent of:
Average loans outstanding 0.17% 0.10% 0.08% 0.21% 0.63%
Provision 81.27% 68.41% 81.94% 63.54% 111.08%
Allowance 12.31% 7.06% 5.58% 12.95% 42.72%
Allowance as a percent of:
5 year moving average of
net charge-offs 759.79% 603.64% 402.18% 347.24% 313.95%
Year-end loans, net of
unearned income 1.33% 1.33% 1.35% 1.54% 1.50%
13
F-11
ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES
The following table shows an allocation of the allowance for loan losses for
each of the five years indicated:
December 31
-----------------------------------------------------------------------
1996 1995 1994 1993 1992
------------- ------------- ------------- ------------ -----------
$ % $ % $ % $ % $ %
------- ---- ------- ---- ------- ---- ------- ---- ------ ---
(Dollars in thousands)
Balance at End
of Period Appli-
cable to:
Commercial $ 4,826 23% $ 4,254 22% $ 4,395 21% $ 4,457 21% $ 5,088 21%
Real estate-
construction 172 3% 210 3% 340 2% 300 3% 64 1%
Real estate-
mortgage 3,510 51% 3,713 52% 2,552 54% 4,305 56% 4,796 58%
Installment &
credit card 5,419 22% 4,184 22% 3,298 22% 3,104 19% 3,308 19%
Lease financing 327 1% 196 1% 154 1% 512 1% 733 1%
Unallocated 8,418 N/A 7,880 N/A 7,870 N/A 5,702 N/A 3,025 N/A
------- ---- ------- ---- ------- ---- ------- ---- ------- ----
$22,672 100% $20,437 100% $18,609 100% $18,380 100% $17,014 100%
======= ==== ======= ==== ======= ==== ======= ==== ======= ====
$ - Dollar Amount
% - Percent of Loans in Each Category to Total Loans
DIVIDEND PAYOUT RATIO
The dividend payout ratios for 1996, 1995 and 1994 were 48.1%, 42.5%, and
41.9%, respectively.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The consolidated financial statements and report of independent auditors
included on pages 31 through 47 of the Annual Report to Shareholders for the
year ended December 31, 1996 are incorporated herein by reference.
The Quarterly Financial and Common Stock Data on page 48 of the Annual Report
to Shareholders for the year ended December 31, 1996 is incorporated herein by
reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
No disagreements with accountants on any accounting or financial disclosure
occurred during the periods covered by this report.
14
F-12
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Information called for by Item 10 is contained under "Shareholdings of
Directors, Executive Officers, and Nominees for Director" on pages 3 through 5
of Bancorp's Proxy Statement, dated March 17, 1997 with respect to the Annual
Meeting of Shareholders to be held on April 22, 1997 which was filed pursuant
to Regulation 14(A) of the Securities Exchange Act of 1934 and which is
incorporated herein by reference in response to this item.
Reference is also made to "Additional Item - Executive Officers" included in
Part I of this Form 10-K in partial response to Item 10.
ITEM 11. EXECUTIVE COMPENSATION.
The information appearing under "Meetings of the Board of Directors and
Committees of the Board" on page 16, "Executive Compensation" on pages 18
through 22, and under "Compensation Committee Report" on pages 24 through 26 of
Bancorp's Proxy Statement dated March 17, 1997 is incorporated herein by
reference in response to this item.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information appearing under "Shareholdings of Directors, Executive
Officers, and Nominees for Director" on pages 3 through 5 of Bancorp's Proxy
Statement dated March 17, 1997 is incorporated herein by reference in response
to this item.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information appearing in Note 15 of the Notes to Consolidated Financial
Statements included on page 44 of Bancorp's Annual Report to Shareholders is
incorporated herein by reference in response to this item.
15
F-13
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) Documents filed as a part of the Report: Page*
----
(1) Report of Ernst & Young LLP, Independent Auditors ................... 47
Consolidated Balance Sheets as of December 31, 1996 and 1995.......... 31
Consolidated Statements of Earnings for year ended
December 31, 1996, 1995 and 1994 .................................... 32
Consolidated Statements of Cash Flows for year ended
December 31, 1996, 1995 and 1994 .................................... 33
Consolidated Statements of Changes in Shareholders' Equity
for year ended December 31, 1996, 1995 and 1994 ..................... 34
Notes to Consolidated Financial Statements............................ 35
(2) Financial Statement Schedules:
Schedules to the consolidated financial statements required by
Regulation S-X are not required under the related instructions, or
are inapplicable, and therefore have been omitted .................... N/A
- -------------------------------------------------------------------------------
*THE PAGE NUMBERS INDICATED REFER TO PAGES OF THE REGISTRANT'S ANNUAL REPORT TO
SHAREHOLDERS FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996 WHICH ARE INCORPORATED
HEREIN BY REFERENCE.
16
F-14
(3) Exhibits:
Exhibit
Number
-------
(3)a* Articles of Incorporation, revised April 26,
1994 and incorporated herein by reference to
Exhibit (3)a to Form 10-K for the year ended
December 31, 1994.
(3)b Restated Code of Regulations, revised April 23, 1996.
(10)* First Financial Bancorp. 1991 Stock Incentive Plan, dated
September 24, 1991 and incorporated herein by reference to a
Registration Statement on Form S-8, Registration No. 33-46819.
(11) Computation of Consolidated Net Earnings Per Share for the
Year Ended December 31, 1996, 1995 and 1994.
(13) Registrant's annual report to security holders for the year
ended December 31, 1996.
(22) First Financial Bancorp. Subsidiaries.
(23) Consent of Ernst & Young LLP, Independent Auditors.
(b) Reports on Form 8-K:
During the fourth quarter of the year ended December 31, 1996, the
registrant did not file any reports on Form 8-K.
- --------------------------------------------------------------------------------
*COPIES OF THIS EXHIBIT HAVE BEEN FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION. SHAREHOLDERS MAY OBTAIN A COPY OF ANY EXHIBIT, UPON PAYMENT OF
REPRODUCTION COSTS, BY WRITING JOSEPH M. GALLINA, COMPTROLLER, FIRST FINANCIAL
BANCORP, 2 NORTH MAIN STREET, MIDDLETOWN, OHIO, 45042.
17
F-15
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized.
FIRST FINANCIAL BANCORP.
By: /s/ Stanley N. Pontius
-----------------------------------
Stanley N. Pontius, Director
President and Chief Executive Officer
Date 3/19/97
----------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934, the report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
/s/ Richard J. Fitton /s/ Michael R. O'Dell
- -------------------------------------- ----------------------------------
Richard J. Fitton, Director Michael R. O'Dell,
Chairman of the Board Senior Vice President, Chief
Financial Officer, and Secretary
Date 3/19/97 Date 3/19/97
---------------------------------- ------------------------------
/s/ Stanley N. Pontius /s/ Charles T. Koehler
- -------------------------------------- ----------------------------------
Stanley N. Pontius, Director Charles T. Koehler, Director
President and Chief Executive Officer
Date 3/19/97 Date 3/11/97
---------------------------------- ------------------------------
/s/ Carl R. Fiora /s/ Lauren N. Patch
- -------------------------------------- ----------------------------------
Carl R. Fiora, Director Lauren N. Patch, Director
Date 3/11/97 Date 3/10/97
---------------------------------- ------------------------------
/s/ Don M. Cisle /s/ Thomas C. Blake
- -------------------------------------- ----------------------------------
Don M. Cisle, Director Thomas C. Blake, Director
Date 3/10/97 Date 3/11/97
---------------------------------- ------------------------------
18
F-16
SIGNATURES (CONT'D)
/s/ Barry S. Porter /s/ F. Elden Houts
- -------------------------------------- ----------------------------------
Barry S. Porter, Director F. Elden Houts, Director
Date 3/10/97 Date 3/18/97
---------------------------------- ------------------------------
/s/ Murph Knapke /s/ Joseph M. Gallina
- -------------------------------------- ----------------------------------
Murph Knapke, Director Joseph M. Gallina, Comptroller
Date 3/18/97 Date 3/10/97
---------------------------------- ------------------------------