First Financial Bancorp. · NASDAQ:FFBC
First Financial Bancorp — Q4 2018 Earnings Presentation
35 slides from First Financial Bancorp's earnings presentation, Feb 13, 2019
Slide 1: Investor Presentation Fourth Quarter 2018
Exhibit 99.1 Investor Presentation Fourth Quarter 2018
Slide 2: Forward Looking Statement Disclosure
Forward Looking Statement Disclosure Certain statements contained in this report which are not statements of historical fact constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as ‘‘believes,’’ ‘‘anticipates,’’ “likely,” “expec
Slide 3: Presentation Contents
Presentation Contents About First Financial Bancorp Financial Performance Appendix 3
Slide 4: Company Overview
Company Overview Overview Lines of Business Founded: 1863 Commercial Headquarters: Cincinnati, Ohio C&I, O-CRE, ABL, Equipment Finance, Treasury Retail Banking Banking Centers: 159 Consumer, Business Banking, Small Business Assets: $14.0 billion Mortgage Banking Loans: $8.8 billion Wealth Management
Slide 5: Current Priorities
Current Priorities . Achieve targeted income and balance sheet growth objectives . Develop / begin implementation of strategic technology roadmap . Execute acquisition strategy . Prioritize fee based businesses: wealth, capital markets . In-market bank acquisitions that provide improved market share
Slide 6: Product & Pricing
Product & Pricing ‘+ Regional pricing strategy ‘Increased Commercial lending limits '* New Consumer product line-up ‘Treasury Management product investments Talent Expansion ‘+ Up-Market Commercial talent acquisition ‘+ New business line leadership in Mortgage - focused on building out capabilities
Slide 7: Go-to-Market Strategies
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Slide 8: Market Centric Strategies
Market Centric Strategies METRO MARKETS COMMUNITY MARKETS HEADQUARTERS NATIONAL Louisville, KY Southeastern IN Columbus, OH South Central IN Greater Cincinnati Industry Specific Indianapolis, IN Northwest IN Northern KY Dayton, OH Northern OH th Low brand awareness High brand awareness 4 in market s
Slide 9: Capital Strategy & Deployment
Capital Strategy & Deployment Tangible Book Value Per Share Strategy & Deployment • Tangible Book Value Per Share dilution from the merger substantially recovered in 4Q18 $11.75 $11.72 $11.62 • Announced in 1Q19 share repurchase $11.25 plan of up to 5 million shares, or $11.01 approximately 5.0% of
Slide 10: Invest in First Financial
Invest in First Financial . Experienced and proven management team . Increased scale to invest in franchise . Proven & sustainable business model . Well managed through the cycle . Conservative operating philosophy . Consistent profitability – 113 consecutive quarters . Top quartile performer – ROAA
Slide 11: Invest in First Financial: Total Shareholder Return
Invest in First Financial Total Shareholder Return1,2,3,4 58.8% 48.2% 42.7% 37.3% 28.0% 15.1% -7.6% -9.9% -18.6% 5 Year 3 Year 1 Year FFBC KBW Peer Median KBW Peer Top Quartile 1 Includes dividend reinvestment. 2 Peer group includes KBW regional bank index peers. 3 Based on stock price as of 12/31/2
Slide 12: Presentation Contents
Presentation Contents About First Financial Bancorp Financial Performance Appendix 12
Slide 13: 4Q 2018 Results
4Q 2018 Results 113th Consecutive Quarter of Profitability . Net income = $55.0 million or $0.56 per diluted share. Adjusted net income = $59.7 million or $0.61 per diluted share1,2. . Return on average assets = 1.59%. Adjusted return on average assets = 1.72%1. . Profitability Return on average sha
Slide 14: Full Year 2018 Results
Full Year 2018 Results 113th Consecutive Quarter of Profitability . Net income = $172.6 million or $1.93 per diluted share. Adjusted net income = $204.7 million or $2.28 per diluted share1. . Return on average assets = 1.37%. Adjusted return on average assets = 1.62%1. . Profitability Return on aver
Slide 15: 4Q 2018 Highlights
4Q 2018 Highlights Strong quarterly earnings Adjusted1 earnings per share - $0.61 Adjusted1 return on assets – 1.72% Adjusted1 return on average tangible common equity – 21.29% Expansion in capital ratios Higher net interest margin Increase driven by higher asset yields and loan fees as well as a sh
Slide 16: Adjusted Net Income
Adjusted Net Income 1 The table below lists certain adjustments that we believe are significant to understanding our quarterly performance. 4Q 2018 3Q 2018 As Reported Adjusted As Reported Adjusted Net interest income $ 125,959 $ 125,959 $ 123,485 $ 123,485 Provision for loan and lease losses $ 5,31
Slide 17: Profitability
Profitability Diluted EPS Return on Average Assets 1.72% 1.60% 1.64% $0.61 1.49% $0.57 $0.58 $0.52 1.26% $0.45 1.59% $0.56 1.40% 1.45% $0.49 $0.51 1.13% 1.05% $0.40 $0.37 4Q17 1Q18 2Q18 3Q18 4Q18 4Q17 1Q18 2Q18 3Q18 4Q18 1 1 DilutedEPS Adjusted EPS ROA Adjusted ROA Return on Avg Tangible Common Equi
Slide 18: Net Interest Margin
Net Interest Margin Net Interest Margin (FTE) 4Q18 NIM (FTE) Progression 3Q18 4.12% 4.21% 4.15% 4.12% Asset yields 0.12% 0.29% 0.29% 0.29% 3.82% 3.84% Asset mix -0.01% 0.17% 0.15% 0.15% 0.13% 0.24% Loan fees 0.04% 3.69% 3.71% 3.70% 3.75% Funding costs -0.10% 3.58% Funding mix 0.04% 4Q17 1Q18 2Q18 3Q
Slide 19: Interest Rate Sensitivity
Interest Rate Sensitivity Loan Portfolio – Floating Loan Mix1 . Asset sensitive position 65% 67% . 55% 55% 56% Majority of loans are variable rate: . $4,916 $4,910 $4,955 56% reprice <=3 months $3,908 $4,099 . Securities portfolio duration – 3.3 years . +100 scenario 3.7 years 4Q17 1Q18 2Q18 3Q18 4Q
Slide 20: Average Balance Sheet
Average Balance Sheet Average Loans Average Deposits 5.73% 0.68% 0.60% 0.57% 0.59% 5.49% 5.53% 0.54% 5.05% 4.90% $10,383 $10,050 $8,933 $8,849 $8,766 $9,888 $6,840 $6,903 $5,960 $6,018 4Q17 1Q18 2Q18 3Q18 4Q18 4Q17 1Q18 2Q18 3Q18 4Q18 Gross Loans Loan Yield (Gross) Total Deposits Cost of Deposits Av
Slide 21: Loan Portfolio
Loan Portfolio Loan LOB Mix (EOP) Net Loan Change-LOB (Linked Quarter) Total $8.8 billion ICRE -$55.9 $1,112 13% Commercial $7.9 $2,699 2 $997 31% Small Business Banking -$36.8 11% Consumer -$10.1 $911 Mortgage $26.0 10% Commercial Finance $38.9 $1,323 $1,782 20% 1 15% Other $6.8 ICRE Commercial Sma
Slide 22: Loan Portfolio: C&I by Industry, CRE by Collateral
Loan Portfolio C&I Loans by Industry 1 CRE Loans by Collateral 2 C&I Loans: $3.7B CRE Loans: $3.2B Real Estate 8% Nursing/Assisted Living Manufacturing Agriculture Strip Hotel/Motel 6% 12% 7% Center 11% 7% Residential, 1-4 Office Family Accommodation Wholesale 13% 5% and Food Trade Services 6% 15% R
Slide 23: Deposits
Deposits Deposit Product Mix (Avg) 4Q18 Average Deposit Progression Total $10.0 billion Interest-bearing demand $1.9 $1,410 14% $2,477 Public Funds $4.0 25% Savings -$19.3 $1,249 12% Money Markets $28.6 $626 6% $886 9% Other Time -$1.4 $1,068 11% Retail CDs $10.5 $380 $1,953 4% 19% Brokered CDs $49.
Slide 24: Investment Portfolio
Investment Portfolio . Total EOP investments of approximately $3.3 billion . Investment portfolio / total assets = approximately 24% . Portfolio duration = estimated 3.3 years Portfolio Composition Portfolio Quality Debt obligations of U.S. Government Agency, 1.0% Corporate securities, 2.2% AA+, 4.6
Slide 25: Noninterest Income and Noninterest Expense
Noninterest Income and Noninterest Expense Noninterest Income 1 Noninterest Expense 2 Total $29.5 million Total $83.4 million $16,428 $6,508 19% 22% $10,185 34% $1,428 $5,599 5% 7% $51,505 62% $9,820 $1,433 12% 5% $6,247 $3,703 21% 13% Service Charges Wealth Mgmt Salaries and benefits Occupancy and
Slide 26: Asset Quality
Asset Quality Classified Assets / Total Assets Nonperforming Assets / Total Assets 0.63% 0.98% 0.98% 1.00% 1.00% 0.94% 0.50% 0.52% 0.46% 0.47% $139.3 $138.9 $131.7 $88.2 $64.2 $64.6 $44.4 $46.3 $87.3 $87.6 4Q17 1Q18 2Q18 3Q18 4Q18 4Q17 1Q18 2Q18 3Q18 4Q18 Classified Assets Classified Assets / Total
Slide 27: Capital
Capital Total Capital Ratio Tier 1 Common Equity Ratio 14.10% 11.87% 13.77% 11.52% 12.50% 13.07% 13.17% 13.36% 11.15% 10.50% 10.63% 10.77% 4Q17 1Q18 2Q18 3Q18 4Q18 4Q17 1Q18 2Q18 3Q18 4Q18 Tier 1 Common Equity Ratio Target Total Capital Ratio Target Tangible Common Equity Ratio 8.79% 8.53% 8.30% 8.4
Slide 28: 1Q19 Outlook
1Q19 Outlook1 . Annualized loan growth expected to be in the low to mid single digits on a percentage Balance Sheet basis . NIM (FTE) 3.87 - 3.92%, excluding purchase accounting impact . Net Interest Margin Compares to 3.92% in 4Q18 . Day count impact approximately $1 - $2 million . Credit Stable cr
Slide 29: Presentation Contents
Presentation Contents About First Financial Bancorp Financial Performance Appendix 29
Slide 30: Appendix: Our Markets
Appendix: Our Markets . . Greater Cincinnati Indianapolis . . Loans $2.5 billion Loans $1.1 billion . . Deposits $2.5 billion Deposits $0.7 billion . . Deposit Market Share #4 (3.2%) Deposit Market Share #14 (1.6%) . . Banking Centers 54 Banking Centers 10 . . Fortune 500 Companies 9 Fortune 500 Com
Slide 31: Appendix: Non-GAAP Measures
Appendix: Non-GAAP Measures The Company’s earnings release and accompanying presentation contain certain financial information determined by methods other than in accordance with accounting principles generally accepted in the United States (GAAP). Such non-GAAP financial information should be consi
Slide 32: Appendix: Non-GAAP to GAAP Reconciliation
Appendix: Non-GAAP to GAAP Reconciliation Net interest income and net interest margin - fully tax equivalent Three months ended Dec. 31, Sep. 30, June 30, Mar. 31, Dec. 31, 2018 2018 2018 2017 2017 Net interest income $ 125,959 $ 123,485 $ 123,979 $ 75,812 $ 75,614 Tax equivalent adjustment 1,442 1,
Slide 33: Appendix: Non-GAAP to GAAP Reconciliation
Appendix: Non-GAAP to GAAP Reconciliation Additional non-GAAP ratios Three months ended YTD Dec. 31, Sep. 30, June 30, Mar. 31, Dec. 31, Dec. 31, Dec. 31, (Dollars in thousands, except per share data) 2018 2018 2018 2018 2017 2018 2017 Net income (a) $ 55,014 $ 50,657 $ 36,418 $ 30,506 $ 24,811 $ 17
Slide 34: Appendix: Non-GAAP to GAAP Reconciliation
Appendix: Non-GAAP to GAAP Reconciliation Additional non-GAAP measures 4Q18 3Q18 2Q18 1Q18 4Q17 (Dollars in thousands, except per share data) As Reported Adjusted As Reported Adjusted As Reported Adjusted As Reported Adjusted As Reported Adjusted Net interest income (f) $ 125,959 $ 125,959 $ 123,485
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