Slide 1: First Financial Bancorp Investor Presentation Fourth Quarter 2012
First Financial Bancorp Investor Presentation Fourth Quarter 2012 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 2012 Results 44% of annual uncovered loan growth came from these markets
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: Franchise Summary Comparison
7 Franchise Summary Comparison Consistent and solid profitability LTM ROAA of 1.07% compared to peer median of 0.96% LTM ROAE of 9.43% compared to peer median of 8.34% LTM net interest margin of 4.37% compared to peer median of 3.69% Capital levels extremely robust and have capacity to support signi
Slide 8: Fourth Quarter 2012 Financial Highlights
8 Fourth Quarter 2012 Financial Highlights Quarterly net income of $16.3 million, or $0.28 per diluted common share Adjusted pre-tax, pre-provision income increased $4.2 million, or 17.1%, to $28.6 million Continued solid profitability Return on average assets of 1.03% Return on average risk-weighte
Slide 9: Pre-Tax, Pre-Provision Income Trend
9 Pre-Tax, Pre-Provision Income Trend Adjusted pre-tax, pre-provision income represents income before taxes plus provision for all loans less FDIC loss share income and accelerated discount adjusted for significant nonrecurring items The increase in fourth quarter 2012 adjusted PTPP income was drive
Slide 10: Components of Net Interest Income
10 Components of Net Interest Income Net interest margin decreased 10 bps during the fourth quarter to 4.11% after excluding impact of $2.2 million prepayment fee Quarterly average balance of covered loans declined 8.3% and average balance of uncovered loans increased 2.6% Quarterly average investme
Slide 11: Commercial Lending
11 Commercial Lending Commercial & Industrial Real Estate Loan Portfolio by Geography Loan Portfolio by Industry Target loan size is $1 million to $15 million Increased focus on middle market business clients (generally up to $30 million revenue) Specialty finance designed to expand product set and
Slide 12: Retail Lending
12 Retail Lending $1.1 billion in total strategic loans, including home equity, mortgage, business banking and credit cards Serving retail households in Ohio, Indiana and Kentucky markets Mortgage loan originators located across footprint with concentrations in Cincinnati, Dayton and Indianapolis Bu
Slide 13: Credit Product Diversity
13 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 D
Slide 14: Building the "fIRST" Brand
14 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 15: Delivery Channels and Product Innovation
15 Delivery Channels and Product Innovation Launched new online banking platform Enhanced mobile apps to accommodate client preferences Sales centers focused on relationship vs. transactions Deployed image-capture ATMs Launching Snap Deposit and online account opening Deliver a consistent brand expe
Slide 16: Capital Management
16 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; $0.13 per share based on fourth quarter r
Slide 17: Capitalization
17 Capitalization Primary component of capital is common equity Capital ratios declined during the fourth quarter due to increases in tangible and risk weighted assets combined with lower shareholders’ equity resulting from share repurchases Capitalization levels still remain among industry leaders
Slide 18: Credit Quality (Excluding Covered Assets)
18 Credit Quality (Excluding Covered Assets) Classified assets have declined for nine consecutive quarters Fourth quarter net charge-offs totaled $5.3 million, including a cumulative effect of $1.1 million resulting from recent OCC guidance related to consumer loans discharged in bankruptcy Nonaccru
Slide 19: Selective Acquisitions
19 Selective Acquisitions Supplements organic growth strategy through expansion in strategic markets Transactions met all internal criteria for acquisitions Loss sharing arrangements provide significant protection on acquired loans Developed scalable covered asset and loss share management team comp
Slide 20: Franchise Highlights
20 Franchise Highlights 1. Strong operating fundamentals – 89 consecutive quarters of profitability 2. Investments to create long-term growth are beginning to produce results 3. Comprehensive portfolio of credit products to drive loan and revenue growth 4. Strong capital levels with ability to suppo
Slide 21: Appendix Fourth Quarter 2012
Appendix Investor Presentation Fourth Quarter 2012
Slide 22: Pre-Tax, Pre-Provision Income
22 Pre-Tax, Pre-Provision Income For the three months ended December 31, September 30, June 30, March 31, December 31, (Dollars in thousands) 2012 2012 2012 2012 2011 Pre-tax, pre-provision income 1 28,869$ 26,894$ 32,636$ 30,020$ 33,015$ Less: accelerated discount on covered loans 2,455 3,798 3,764
Slide 23: Low Risk Balance Sheet
23 Low Risk Balance Sheet 49% of First Financial’s total assets are 100% risk-weighted assets compared to the peer group median of 54% First Financial’s percentage of total risk- weighted assets to total assets is 60.1% compared to the peer group median of 69.7% The lower percentages are driven by t
Slide 24: Revenue by Source
24 Revenue by Source Strategic – Elements of the business that either existed prior to the acquisitions or were acquired with the intent to retain and grow. On a reported basis, approximately 82% of total revenue is derived from strategic businesses. Not including the FDIC loss sharing income and ot
Slide 25: Noninterest Income and Expense
25 Noninterest Income and Expense Components of Noninterest Income For the Three Months Ended December 31, 2012 (Dollars in millions) Components of Noninterest Expense For the Three Months Ended December 31, 2012 (Dollars in millions) $16.7 64% $5.7 22% $1.2 5% $2.5 9% Strategic FDIC loss sharing in
Slide 26: Deposit and Loan Composition
26 Deposit and Loan Composition Total Deposits – $5.0 billion As of December 31, 2012 (Dollars in millions) Gross Loans – $3.9 billion As of December 31, 2012 (Dollars in millions) Market exits are complete; acquired-non-strategic deposits consist primarily of time deposits in Western, Michigan and
Slide 27: Loan Composition
27 Loan Composition 19.0% of total loans covered under FDIC loss share agreements Total uncovered loans increased $113.0 million, or 14.7% on an annualized basis, compared to the linked quarter driven by growth in commercial, CRE, specialty finance and residential mortgage Total Loan Portfolio – $3.
Slide 28: Uncovered Loans – Real Estate Collateral
28 Uncovered Loans – Real Estate Collateral Construction and acquisition and land development loans represent small portion of overall portfolio Commercial real estate and constructions loans located primarily in Ohio and Indiana markets Total Uncovered Loan Portfolio – $3.2 billion December 31, 201
Slide 29: Investment Portfolio
29 Investment Portfolio Investment portfolio represents 28.8% of total assets Average balance of investments increased $140.6 million, or 8.8%, during the fourth quarter Yield earned on portfolio was 1.99% for the fourth quarter As of December 31, 2012 Category Securities Securities Other Total Perc
Slide 30: Deposit Composition
30 Deposit Composition Non-time deposit balances increased $141.9 million, or 15.1% on an annualized basis, during the fourth quarter Time deposit balances decreased $130.7 million during the fourth quarter The total cost of deposit funding declined to 38 bps, or 15.6%, compared to the third quarter
Slide 31: Funding Structure and Cost of Funds
31 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 0.72% 0.64% 0.60% 0.51% 0.57% 0.49% 0.45% 0.38% 0
Slide 32: Covered Loan Activity
32 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 December 31, 2012, the allowance for loan and l
Slide 33: Covered Loan Performance
33 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; net present value of expected cash flows are inf
Slide 34: Components of Covered Asset Credit Losses
34 Components of Covered Asset Credit Losses $3,178 $2,084 $1,685 $1,439 1Q12 2Q12 3Q12 4Q12 Covered Asset Credit Losses For the three months ended December 31, (Dollars in thousands) 2012 Description Net incremental impairment / (relief) for period ($3,705) Reduction in expected cash flows related
Slide 35: Reinvestment of Covered Loan Proceeds
35 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 36: Comparison of Financial Impact
36 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 $0.38 per share as of the fourth quarter 2012 The absolute wors
Slide 37: First Financial Bancorp Fourth Quarter 2012
First Financial Bancorp Investor Presentation Fourth Quarter 2012