First Financial Bancorp. · NASDAQ:FFBC
First Financial Bancorp — Q4 2017 Earnings Presentation
37 slides from First Financial Bancorp's earnings presentation, Feb 8, 2018
Slide 1: Investor Presentation Fourth Quarter 2017
Investor Presentation Fourth Quarter 2017 EXHIBIT 99.1
Slide 2: Forward-looking statements
2 Certain statements contained in this presentation which are not statements of historical fact constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, certain plans, expectations, goals, proje
Slide 3: Presentation Contents
3 About First Financial Bancorp Financial Performance MainSource Merger Update Appendix Presentation Contents
Slide 4: Company Overview
4 Company Overview NASDAQ: FFBC Overview Founded: 1863 Headquarters: Cincinnati, Ohio Banking Centers: 94 Assets: $8.9 billion Loans: $6.0 billion Deposits: $6.9 billion Wealth Mgmt: $2.7 billion AUM Lines of Business Commercial / Private Banking C&I, O-CRE, ABL, Equipment Finance, Treasury, Wealth
Slide 5: Our Markets
Central OH Loans $1.1 billion Loan Growth (Y-o-Y) 6.7% Deposits $0.5 billion Deposit Market Share #13 (0.8%) Banking Centers 5 Fortune 500 Companies 4 5 Our Markets Indianapolis Loans $0.5 billion Loan Growth (Y-o-Y) 16.6% Deposits $0.5 billion Deposit Market Share #13 (1.3%) Banking Centers 7 Fortu
Slide 6: Proven Acquirer Through the Cycle
Proven Acquirer Two FDIC-assisted acquisitions totaling $2.5 billion in assets & generating a $343 million pre- tax bargain purchase gain (2009) Two branch acquisitions of 38 offices in Indiana & Ohio (2011) Three banks in Columbus, Ohio totaling $727 million in assets (2014) Oak Street Funding, spe
Slide 7: Investments in our Business
Product expansions (since 2009) Specialty lending (~ $1.2 billion across Franchise, Oak Street, ABL, and Equipment Finance) Mobile banking & other technology enhancements for clients Re-entry into mortgage business (2010) 2017 originations of $229 million Wealth infrastructure improvements Investmen
Slide 8: Invest with First Financial
Proven & sustainable business model Well managed through the cycle Conservative operating philosophy Consistent profitability – 109 consecutive quarters Robust capital management Prudent steward of shareholders‟ capital Strong asset quality Well defined M&A strategy Selective markets, products & ass
Slide 9: Invest with First Financial: Total Shareholder Return
9 1 Includes dividend reinvestment 2 Peer group includes KBW regional bank index peers 3 Based on stock price as of 12/29/2017 4 Based on stock price as of 01/26/2018 Invest with First Financial Total Shareholder Return1,2 117.5% 55.4% -4.9% 7.8% 117.5% 50.5% 1.4% 3.9% 148.4% 66.1% 6.6% 7.3% 5 Year
Slide 10: Strategic Priorities
10 Strategic Priorities Deliver long term top quartile shareholder returns Successfully integrate MainSource merger – achieve operational, cultural, & financial objectives Deploy capital in an opportunistic & risk-appropriate manner Invest in innovative solutions that enable our clients to bank with
Slide 11: Financial Performance
11 About First Financial Bancorp Financial Performance MainSource Merger Update Appendix
Slide 12: 4Q 2017 Highlights – 109th Consecutive Quarter of Profitability
12 4Q 2017 Highlights – 109th Consecutive Quarter of Profitability Total assets increased $135.2 million, to $8.9 billion, or 6.1% annualized, compared to the linked quarter. EOP loans increased $36.1 million, or 2.4% annualized, compared to the linked quarter. EOP deposits increased $169.0 million,
Slide 13: Profitability
13 Profitability Net Income & EPS Return on Average Assets Return on Tangible Common Equity All dollars shown in millions, except per share data $24.8 $24.8 $22.7 $24.4 $23.3 $0.40 $0.40 $0.37 $0.39 $0.38 4Q173Q172Q171Q174Q16 Net Income EPS - diluted $8,732 $8,717 $8,583 $8,409 $8,360 1.13% 1.13% 1.
Slide 14: Adjusted Net Income
Adjusted Net Income* * See appendix for non-GAAP reconciliation All dollars shown in thousands, except per share amounts The table below lists certain items that we believe are significant to understanding our quarterly performance. 4Q 2017 As Reported Adjusted Net interest income $ 75,614 $ 75,614
Slide 15: Net Interest Income / Net Interest Margin
15 Net Interest Income / Net Interest Margin 1 Gross loans include loans held for sale & FDIC indemnification asset All dollars shown in millions Net Interest Income Average Loans1 Average Securities Average Deposits $75.6 $70.5 $68.5 $68.9 $70.2 3.82% 3.57% 3.56% 3.70% 3.71% 4Q173Q172Q171Q174Q16 Ne
Slide 16: Net Interest Margin
16 Net Interest Margin Net Interest Margin (FTE) 4Q17 NIM (FTE) Progression 3.58% 3.43% 3.41% 3.48% 3.48% 0.24% 0.14% 0.15% 0.22% 0.23% 3.82% 3.57% 3.56% 3.70% 3.71% 4Q173Q172Q171Q174Q16 Basic Margin (FTE) Loan Fees 3Q17 3.57% Earning asset mix 0.05% Interest recapture 0.02% Interest recapture from
Slide 17: Interest Rate Sensitivity
17 Interest Rate Sensitivity Loan Portfolio – Floating Loan Growth (1) Sensitivity Trend (Up100, Up200) (3,4) 16% Y-o-Y growth in floating rate lending (1) 24% Y-o-Y growth in client derivatives (2) % of loans repricing: <=3 months 65% Securities portfolio duration – 2.9 years +100 scenario 3.6 year
Slide 18: Loan Portfolio
18 Loan Portfolio Loan Product Mix (EOP) Net Loan Change (Linked Quarter) * Includes residential mortgage, home equity, installment, & credit card loans. All dollars shown in millions Net Loan Change (Year-over-year) 33% 33% 33% 32% 33% 11% 12% 12% 12% 13% 30% 30% 30% 29% 29% 8% 7% 8% 8% 7% 18% 18%
Slide 19: Loan Portfolio by Geography
19 Loan Portfolio Loan Portfolio By Geography 1 Average Loan Size & Rate 2 Nationwide Lending Platforms 1 Includes loans held for sale. Excludes purchase accounting loan marks. 2 Average loan balances in $000s, rate represents weighted average coupon & does not include loan fees 3 Includes Oak Stree
Slide 20: Loan Portfolio: C&I Loans by Industry, CRE Loans by Collateral
20 Loan Portfolio C&I Loans By Industry 1 CRE Loans By Collateral 2 1 Industry types included in Other representing greater than 1% of total C&I loans include Agriculture, Retail Trade, Public Administration, Other Services, Educational Services, Waste Management, Arts, and Transportation. 2 Collate
Slide 21: Investment Portfolio
21 Investment Portfolio Total EOP investments of $2.1 billion Investment Portfolio / Total Assets = 23.1% Effective yield = 2.90% Portfolio duration = 2.9 years Portfolio Composition Portfolio Quality Agency, 56% AAA, 20% AA-, 4% BBB, 3% AA+, 3% FRB/FHLB Stock, 3% A+, 2% AA, 2% NR, 2% BBB+, 2% Other
Slide 22: Asset Quality
22 Asset Quality Nonperforming Assets / Total Assets Classified Assets / Total Assets Allowance / Total Loans Net Charge Offs & Provision Expense All dollars shown in millions $87.3 $94.3 $98.4 $114.6 $125.2 0.98% 1.08% 1.13% 1.34% 1.48% 4Q173Q172Q171Q174Q16 Classified Assets Classified Assets / Tot
Slide 23: Capital
23 Capital Tier 1 Common Equity Tangible Book Value Total Capital Tangible Common Equity All capital numbers are considered preliminary All dollars shown in millions $721.3 $705.2 $688.1 $669.7 $654.6 $11.62 $11.36 $11.07 $10.78 $10.56 4Q173Q172Q171Q174Q16 Tangible Book Value Tangible Book Value per
Slide 24: Outlook
Outlook Taxes Full year 2018 loan growth expected to be in the mid-single digits on a percentage basis 1Q18 NIM (FTE) projected to be 3.70% – 3.75% Includes lower FTE adjustment due to tax reform 1Q18 loan fees likely to approximate 2Q17 & 3Q17 levels 1Q18 interest income will reflect 2 fewer days v
Slide 25: MainSource Merger Update
25 About First Financial Bancorp Financial Performance MainSource Merger Update Appendix
Slide 26: Complementary Midwest Footprint
Complementary Midwest Footprint 1) All branches located in Northwest Indiana and within the Chicago MSA Note: Deposit market share data shown pro forma as of 6/30/16 Source: SNL Financial Deposit Concentration By State OH, 56% IN, 41% KY, 3% FFBC Pro Forma Dollars in Millions Top 10 Pro Forma Market
Slide 27: Transaction Summary
Transaction Summary Fixed exchange ratio of 1.3875 shares of First Financial for each share of MainSource common stock 100% Stock Consideration $1.0 billion in aggregate transaction value¹ $38.99 purchase price per share¹ MainSource options will be exchanged for comparable First Financial options Fi
Slide 28: Financial Impact & Assumptions
Financial Impact & Assumptions Estimated $48 million; ~40% of MSFG‟s total noninterest expense base (~14.5% on a combined basis)5 ~40% of cost saves from consolidation of 45 – 50 banking centers ~75% of cost saves realized in first year post-close, 100% thereafter Gross credit mark on MSFG‟s loan po
Slide 29: Pro Forma Capital & Profitability
14.1% 14.1% 15.8% 0.0% 4.0% 8.0% 12.0% 16.0% 20.0% FFBC LTM 6/30/17 MSFG LTM 6/30/17 Pro Forma 2019 1.1 % 1.17% 1.30% 0.00% 0.25% 0.50% 0.75% 1.00% 1.25% 1.50% FFBC LTM 6/30/17 MSFG LTM 6/30/17 Pro Forma 2019 Capital & Profitability Total Assets Total Risk Based Capital ROAA⁴ ROATCE⁴ Tang. Common Eq
Slide 30: MainSource Merger Update
MainSource Merger Update Regulatory & Shareholder Approval Merger Integration Financial Considerations Shareholders approved on December 4, 2017 Regulatory applications completed – September 2017 Phase 1 substantially complete Technology Assessment – Complete Organization Structure / Staffing Assess
Slide 31: Branch Divestiture
Branch Divestiture Letter of Agreement with United States Department of Justice to divest five branch locations to resolve competitive concerns Includes $125 million in loans, $160mm in deposits and all personal property associated with the branches 4 MainSource Bank branch locations in Columbus, In
Slide 32: MSFG 4Q 2017 Highlights
MSFG 4Q 2017 Highlights Profitability Net Interest Income & Net Interest Margin Income Statement Balance Sheet Asset Quality Capital Net income = $16.6 million, or $14.4 million excluding non-operating items(1) EPS = $0.64 per diluted share, or $0.55 per diluted share excluding non-operating ite
Slide 33: Appendix
33 About First Financial Bancorp Financial Performance MainSource Merger Update Appendix
Slide 34: Appendix: Non-GAAP to GAAP Reconciliation
34 Appendix: Non-GAAP to GAAP Reconciliation Net interest income and net interest margin - fully tax equivalent Dec. 31, Sep. 30, June 30, Mar. 31, Dec. 31, Dec. 31, Dec. 31, 2017 2017 2017 2017 2016 2017 2016 Net interest income 75,614$ 70,479$ 68,520$ 68,932$ 70,166$ 283,545$ 272,671$ Tax equivale
Slide 35: Appendix: Non-GAAP to GAAP Reconciliation
35 Appendix: Non-GAAP to GAAP Reconciliation Additional non-GAAP ratios Dec. 31, Sep. 30, June 30, Mar. 31, Dec. 31, Dec. 31, Dec. 31, (Dollars in thousands, except per share data) 2017 2017 2017 2017 2016 2017 2016 Net income (a) 24,811$ 24,826$ 22,736$ 24,414$ 23,294$ 96,787$ 88,526$ Average total
Slide 36: Appendix: Non-GAAP to GAAP Reconciliation
36 Appendix: Non-GAAP to GAAP Reconciliation Additional non-GAAP ratios As Reported Adjusted As Reported Adjusted As Reported Adjusted As Reported Adjusted As Reported Adjusted Net interest income (f) 75,614$ 75,614$ 70,479$ 70,479$ 68,520$ 68,520$ 68,932$ 68,932$ 70,166$ 70,166$ Provision for loan
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