First Financial Bancorp. · NASDAQ:FFBC
First Financial Bancorp — Q1 2013 Earnings Presentation
32 slides from First Financial Bancorp's earnings presentation, May 21, 2013
Slide 1: First Financial Bancorp Investor Presentation First Quarter 2013
First Financial Bancorp Investor Presentation First Quarter 2013 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 (the ‘‘Act’’). In addition, certain statements in future filings by First Financial with the SEC, i
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 Retail Wealth Management Target clients – individuals and small / mid-size businesses located in-market Ohio, I
Slide 4: Strategy and Execution – Recent History
4 Strategy and Execution – Recent History Franchise Repositioning 2005 – 2008 FDIC Acquisitions 2009 Integration / Operational Execution 2010 Capital Mgmt. / Redeployment 2011 – 2012 While the industry was pursuing growth via high-priced acquisitions and real estate lending, First Financial: While t
Slide 5: Investing for Long Term Growth
5 Investing for Long Term Growth Significant investments have been made to create franchise value and drive long-term growth Focusing on positive operating leverage while investing in growth and innovation Strategic Initiative Full Year 2012 Results 44% of annual uncovered loan growth came from thes
Slide 6: Disciplined Cost Management
6 Disciplined Cost Management Completed a comprehensive efficiency study during 2012 across all business lines and support functions Long-term positive operating leverage through delivering superior client solutions in cost-effective manner Programs Targets Banking center rationalization Increased u
Slide 7: First Quarter 2013 Financial Highlights
7 First Quarter 2013 Financial Highlights Quarterly net income of $13.8 million, or $0.24 per diluted common share Incurred pre-tax expenses of $2.9 million related to the efficiency initiative and $0.4 million related to an isolated fraud loss; offset by pre-tax gains of $1.5 million resulting from
Slide 8: Pre-Tax, Pre-Provision Income Trend
8 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 share income and accelerated discount adjusted for significant nonrecurring items The decrease in first quarter 2013 adjusted PTPP income w
Slide 9: Components of Net Interest Income
9 Components of Net Interest Income Net interest margin decreased 7 bps during the first quarter to 4.04%, excluding impact of $2.2 million prepayment fee Quarterly average balance of covered loans declined 8.8% and average balance of uncovered loans increased 3.1% Quarterly average investment balan
Slide 10: Loan Composition
10 Loan Composition Total Gross Loans – $3.9 billion As of March 31, 2013 (Dollars in millions) Covered loans likely to retain Performing credits In- and out-of-market Expected to retain past the expiration of applicable loss sharing agreements with the FDIC Covered loans likely to exit Classified c
Slide 11: Loan Composition
11 Loan Composition Total uncovered loans increased $69.8 million, or 8.9% on an annualized basis, compared to the linked quarter Growth driven by performance in the commercial, owner- occupied CRE, construction and residential mortgage portfolios Uncovered loan growth exceeded covered loan decline
Slide 12: Commercial Lending
12 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 13: Consumer Lending
13 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, Dayton and Indianapolis Mortgage origin
Slide 14: Credit Product Diversity
14 Credit Product Diversity The addition of specialty finance products and renewed focus on mortgage provides a comprehensive set of credit products, driving loan and revenue growth through multiple channels Category As of Percent As of Percent (Dollars in thousands) December 31, 2008 of Portfolio M
Slide 15: Building the "fIRST" Brand
15 Building the “fIRST” Brand Significant growth in brand awareness Award-winning sales center prototype Proactive marketing and media relations Expands presence and market share Deeper relationships and differentiated client experience 2012 Metropolitan Brand Awareness Cincinnati 64% Dayton 47% Ind
Slide 16: Delivery Channels and Product Innovation
16 Delivery Channels and Product Innovation Launched new online banking platform Mobile apps to accommodate client preferences with further enhancements expected later in 2013 Sales centers focused on relationship vs. transactions Deployed image-capture ATMs Launched Snap Deposit and online account
Slide 17: Capital Management
17 Capital Management Current dividend policy consists of a 100% payout ratio comprised of two components: Regular dividend based on payout of between 40% - 60% of earnings; currently $0.15 per share Variable dividend based on the remainder of quarterly EPS; $0.09 per share based on first quarter re
Slide 18: Capitalization
18 Capitalization Primary component of capital is common equity Capitalization levels still remain high despite the strong return of capital to shareholders Can support estimated asset growth capacity of approximately $1.3 billion under current regulatory guidelines 10.38% 10.33% 10.40% 11.11% 10.38
Slide 19: Credit Quality (Excluding Covered Assets)
19 Credit Quality (Excluding Covered Assets) Classified assets have declined $24.2 million, or 15.7%, since the first quarter 2012 First quarter net charge-offs declined $2.8 million, or 52.6%, compared to the linked quarter The quarterly increases in total NPLs and NPAs of 1.7% and 0.9%, respective
Slide 20: Selective Acquisitions
20 Selective Acquisitions Supplements organic growth strategy through expansion in strategic markets Transactions met all internal criteria for acquisitions Loss sharing arrangements provide significant protection on acquired loans Developed scalable covered asset and loss share management team comp
Slide 21: Franchise Highlights
21 Franchise Highlights 1. Strong operating fundamentals – 90 consecutive quarters of profitability 2. Investments to create long-term growth are producing results 3. Comprehensive portfolio of credit products to drive loan and revenue growth 4. Strong capital levels with ability to support signific
Slide 22: Appendix First Quarter 2013
Appendix Investor Presentation First Quarter 2013
Slide 23: Pre-Tax, Pre-Provision Income
23 Pre-Tax, Pre-Provision Income For the three months ended March 31, December 31, September 30, June 30, March 31, (Dollars in thousands) 2013 2012 2012 2012 2012 Pre-tax, pre-provision income 1 23,324$ 28,869$ 26,894$ 32,636$ 30,020$ Less: accelerated discount on covered loans 1,935 2,455 3,798 3,
Slide 24: Investment Portfolio
24 Investment Portfolio Investment portfolio represents 27.5% of total assets Average balance of investments increased $91.8 million, or 5.3%, during the first quarter Yield earned on portfolio was 1.98% for the first quarter As of March 31, 2013 Category Securities Securities Other Total Percent (D
Slide 25: Deposit Composition
25 Deposit Composition Non-time deposit balances decreased $96.0 million, or 2.5%, during the first quarter due to seasonal declines in commercial and public fund balances Time deposit balances decreased $38.5 million, or 3.6%, during the first quarter The total cost of deposit funding declined to 3
Slide 26: Funding Structure and Cost of Funds
26 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 0.64% 0.60% 0.51% 0.43% 0.49% 0.45% 0.38% 0.32% 0
Slide 27: Covered Loan Activity
27 Covered Loan Activity The majority of the loans acquired as part of the FDIC-assisted transactions are accounted for under ASC Topic 310-30 which requires the Company to periodically update its forecast of expected cash flows from these loans. As of March 31, 2013, the allowance for loan and leas
Slide 28: Covered Loan Performance
28 Covered Loan Performance While covered loans continue to decline, better than expected performance has resulted in a consistently high yield on the portfolio Improvement and impairment result from quarterly re-estimation of cash flows expectations The FDIC indemnification asset has declined 28.1%
Slide 29: Components of Covered Asset Credit Losses
29 Components of Covered Asset Credit Losses $2,084 $1,685 $1,439 $2,234 2Q12 3Q12 4Q12 1Q13 Covered Asset Credit Losses For the three months ended March 31, (Dollars in thousands) 2013 Description Net incremental impairment / (relief) for period $306 Reduction in expected cash flows related to cert
Slide 30: Reinvestment of Covered Loan Proceeds
30 Reinvestment of Covered Loan Proceeds What happens when the covered loan portfolio pays down? Interest Income Comparison The “Bear Case” assumes cash proceeds from repayment of covered loans are used to purchase investment securities. The “Bull Case” assumes proceeds are used to fund loan growth.
Slide 31: Comparison of Financial Impact
31 Comparison of Financial Impact The tables below present a comparison of the impact on diluted earnings per share under various scenarios Extreme Cases If all acquired loans were to prepay immediately, diluted EPS would benefit by $0.26 per share as of the first quarter 2013 The absolute worst
Slide 32: First Financial Bancorp First Quarter 2013
First Financial Bancorp Investor Presentation First Quarter 2013
First Financial Bancorp — Q1 2013 Earnings Presentation on 6ix