First Financial Bancorp. · NASDAQ:FFBC
First Financial Bancorp — Q3 2014 Earnings Presentation
27 slides from First Financial Bancorp's earnings presentation, Nov 13, 2014
Slide 1: First Financial Bancorp Investor Presentation Third Quarter 2014
First Financial Bancorp Investor Presentation Third Quarter 2014 EXHIBIT 99.1
Slide 2: Forward-looking statements
2 Certain statements contained in this release which are not statements of historical fact constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act. Examples of forward-looking statements include, but are not limited to, projections of revenues, income
Slide 3: Focused Business Strategy
3 Focused Business Strategy Client-intimate strategy focused on long-term, profitable relationships with clients Strong sales culture across all business lines Lines of business Commercial Consumer Wealth Management Mortgage Target clients – individuals and small / mid-size businesses located in-mar
Slide 4: Credit Product Diversity
4 Credit Product Diversity During the third quarter, the Company’s comprehensive set of credit products produced solid loan growth driven though multiple channels led by specialty finance, C&I / owner occupied CRE and franchise finance lending Category As of Percent As of Percent As of Percent (Doll
Slide 5: Third Quarter 2014 Financial Highlights
5 Third Quarter 2014 Financial Highlights Third quarter net income of $15.3 million, or $0.26 per diluted common share; $0.31 per diluted common share adjusted for the impact of non-operating items YTD net income of $46.4 million, or $0.79 per diluted common share; $0.86 adjusted for non- operating
Slide 6: Adjusted Pre-Tax, Pre-Provision Income Trend
6 Adjusted Pre-Tax, Pre-Provision Income Trend Adjusted pre-tax, pre-provision (“PTPP”) income represents income before taxes plus provision for all loans less FDIC loss sharing income and accelerated discount adjusted for significant non-operating and non-recurring items Third quarter adjusted PTPP
Slide 7: Components of Net Interest Income
7 Components of Net Interest Income Net interest margin decreased 4 bps during the third quarter to 3.66% Quarterly average balance of loans increased 9.2% while the portfolio yield declined 2 bps to 4.68% (2) Quarterly average investment balances increased 3.0% while the portfolio yield declined 10
Slide 8: Loan Composition
8 Loan Composition Total Gross Loans – $4.8 billion As of September 30, 2014 (Dollars in millions) Covered loans likely to retain – performing credits both in- and out-of-market Expected to retain past the expiration of applicable loss sharing agreements with the FDIC Covered loans likely to exit –
Slide 9: Loan Composition
9 Loan Composition Total loans, excluding loans acquired during the period, increased $147.7 million, or 14.6% on an annualized basis, compared to the linked quarter Third quarter growth driven by performance in specialty finance, C&I / owner-occupied CRE and franchise finance Uncovered loan growth
Slide 10: Commercial Lending
10 Commercial Lending C&I / Owner Occupied CRE Investment Real Estate Target loan size is $1 million to $15 million, with flexibility to increase based on relationship criteria Increased focus on middle market business clients (generally up to $30 million of revenue) Specialty finance designed to ex
Slide 11: Consumer Lending
11 Consumer Lending Consumer lending focused primarily on residential mortgage, home equity and credit cards Serving consumer households in Ohio, Indiana and Kentucky markets Mortgage loan originators located across footprint with concentrations in Cincinnati, Columbus, Dayton, Fort Wayne and Indian
Slide 12: Delivery Channels and Product Innovation
12 Delivery Channels and Product Innovation Deliver a consistent brand experience in a cost-effective manner Launched new online banking platform in 2012 Added mobile apps to accommodate client preferences with further enhancements such as Snap Deposit Client usage of mobile and online channels has
Slide 13: Wealth Management Business Overview
13 Wealth Management Business Overview 2014 WM Revenue as a % of Total Noninterest Income* 2014 Revenue by Primary Unit $2.4 billion of assets under management at September 30, 2014 Fee income generated through our three main business units represented 28% of First Financial’s 2014 noninterest incom
Slide 14: Capital Management
14 Capital Management Long-term capital return target to shareholders of 60% - 80% of earnings through combination of dividends and share repurchases Quarterly dividend of $0.16 per share Translates into yield of 3.5% compared to current peer median dividend yield of 2.5% Announced a share repurchas
Slide 15: Capitalization
15 Capitalization Primary component of capital is common equity Capitalization levels have declined as company deployed capital through organic growth and recent acquisitions in addition to the strong return of capital to shareholders Long-term goal is to deploy capital above target levels though gr
Slide 16: Credit Quality (Excluding Covered Assets)
16 Credit Quality (Excluding Covered Assets) Classified assets have declined $14.5 million, or 12.0%, since the third quarter 2013 Continued problem asset resolution activity during the quarter NPLs, NPAs and classified assets impacted by acquisitions as well as the addition of a single CRE relation
Slide 17: Recent Transaction Summary
17 Recent Transaction Summary In August 2014, First Financial completed the previously announced acquisitions of The First Bexley Bank, Insight Bank, and Guernsey Bancorp, all headquartered in the Columbus, OH market Entered the growth-oriented Columbus market through the acquisition of three highly
Slide 18: Entrance to the Columbus, Ohio Market
18 Entrance to the Columbus, Ohio Market Third fastest growing metropolitan market in the Midwest Population of 1.9 million with projected growth of 4.3% through 2017 – highest in Ohio Diverse economy anchored by 15 Fortune 1000 companies Columbus MSA Market Highlights1 1 Source: the Columbus Chambe
Slide 19: Prior Acquisition History
19 Prior Acquisition History Supplements organic growth strategy through expansion in strategic markets Transactions met all internal criteria for acquisitions Loss sharing agreements provided significant protection on covered loans Peoples (FDIC) July 31, 2009 19 banking centers $521mm deposits $33
Slide 20: Franchise Highlights
20 Franchise Highlights 1. Strong operating fundamentals – 96 consecutive quarters of profitability 2. Investments to create long-term growth are producing results 3. Strong loan growth momentum driven by comprehensive portfolio of credit products 4. Well positioned in current markets and executing
Slide 21: Appendix Third Quarter 2014
Appendix Investor Presentation Third Quarter 2014
Slide 22: Adjusted Pre-Tax, Pre-Provision Income
22 Adjusted Pre-Tax, Pre-Provision Income For the three months ended September 30, June 30, March 31, December 31, September 30, (Dollars in thousands) 2014 2014 2014 2013 2013 Pre-tax, pre-provision income 1 23,647$ 22,422$ 21,660$ 1,947$ 23,707$ Less: accelerated discount on covered loans 789 621
Slide 23: Investment Portfolio
23 Investment Portfolio Investment portfolio represents 25.6% of total assets Yield earned on portfolio decreased to 2.37% from 2.47% for the linked quarter Overall duration of the portfolio declined to 3.7 years from 3.9 years at the end of the second quarter As of September 30, 2014 Category Held-
Slide 24: Deposit Composition
24 Deposit Composition Total deposits increased $657.9 million, or 13.5%, during the quarter Average total deposits increased $277.5 million, or 5.6%, during the quarter Increases primarily driven by $569 million of deposits from acquisitions The total cost of deposit funding during the quarter rema
Slide 25: Funding Structure and Cost of Funds
25 Funding Structure and Cost of Funds Average Balances – Total Interest Bearing Liability Composition Average Balances – Deposit Composition Total Cost of Funds (1) Not included in cost of funds calculation Total Cost of Deposits Co s t of F u n d s 0.37% 0.37% 0.39% 0.40% 0.27% 0.28% 0.29% 0.32% 0
Slide 26: Covered Loan Activity
26 Covered Loan Activity Covered loans declined $33.3 million, or 9.1%, during the quarter The FDIC indemnification asset declined $6.3 million, or 20.6%, during the quarter to $24.2 million, or 7.3% of the balance of covered loans outstanding Successful execution of resolution strategies related to
Slide 27: First Financial Bancorp Third Quarter 2014
First Financial Bancorp Investor Presentation Third Quarter 2014
First Financial Bancorp — Q3 2014 Earnings Presentation on 6ix