First Financial Bancorp. · NASDAQ:FFBC
First Financial Bancorp — Q3 2009 Earnings Presentation
54 slides from First Financial Bancorp's earnings presentation, Nov 10, 2009
Slide 1: First Financial Bancorp Investor Presentation Third Quarter 2009
First Financial Bancorp Investor Presentation Third Quarter 2009 Exhibit 99.1
Slide 2: Forward-Looking Statement Disclosure
2 Forward-Looking Statement Disclosure This presentation should be read in conjunction with the consolidated financial statements, notes and tables in First Financial Bancorp’s most recent Annual Report on Form 10-K for the year ended December 31, 2008. Management’s analysis contains forward-looking
Slide 3: Investment Highlights
3 Issued 13.8 million shares of common stock resulting in net proceeds of $98 million Overall credit quality remained relatively strong throughout most of the economic downturn 2009 results impacted by higher credit costs reflecting the continued adverse impact of the prolonged downturn Stress prima
Slide 4: History
4 First Financial Bank was founded in 1863 16 bank/thrift acquisitions from 1989 through 1999 resulted in multiple bank charters and brand identities Established Strategic (Rebuilding & Reorganization) Plan in March 2005 History Consolidated and streamlined company to establish one charter and one b
Slide 5: Recent Acquisitions
Recent Acquisitions Purchased $145 mm in select performing commercial and consumer loans Purchased 19 banking centers, $521 mm in deposits and $336 mm in loans from Peoples in FDIC-assisted transaction 1 Purchased 3 banking centers in Indiana from Irwin, $85 mm in deposits and $41 mm in select perfo
Slide 6: Acquisition Highlights
Consistent with the company’s stated conservative strategy Acquisitions are compelling relative to cost and time to build profitable de novo banking centers Adds banking centers in key areas that will leverage the First Financial brand to increase market share Compliments existing locations and prov
Slide 7: Market Expansion
7 Market Expansion Acquisitions provided market expansion opportunities in key locations Added 39 banking centers in strategic operating markets Solidifies position in key markets and accelerates market expansion strategy by several years largest banking center network in Cincinnati MSA 1 nd 1 Based
Slide 8: Transaction Overview (Peoples)
Further solidifies position in this very attractive market Accelerates growth-market expansion strategy by several years Acquisition is compelling relative to cost and time to build 19 profitable de novo banking centers Assets, at estimated fair value Including cash received from the FDIC, acquired
Slide 9: Loss Share Covered Assets
Loss Share Covered Assets Loss Share Covered Assets million in fair value Loss Share Agreement million, no first loss position and million million Uncovered Assets Cash (at book value), securities (at fair market value) and other tangible assets 9
Slide 10: Transaction Overview (Irwin)
10 Transaction Overview Includes 17 banking centers in strategic operating markets Indiana (12), Kentucky (1) and Michigan (4) nd 1 Assets, at estimated fair value Including cash received from the FDIC, acquired $3.3 billion in assets, including $1.8 billion in loans Loans acquired under a modified
Slide 11: Loss Share Covered Assets: Irwin
Loss Share Covered Assets Loss Share Covered Assets billion in fair value Purchase excluded ORE, acquisition, development and construction loans (“ADC”), residential and commercial land loans Loss Share Agreement million, no first loss position and million million million) is significantly less than
Slide 12: Transactions Overview
12 Transactions Overview Purchased $145.1 million in select performing commercial and consumer loans, as well as strategic client relationships in a separate and unrelated transaction Purchased 3 banking centers in Indiana in another separate and unrelated transaction 84.6 million in deposits $41.1
Slide 13: Business Units
13 Business Units Retail Banking Commercial Banking Wealth Management
Slide 14: Corporate Goals
14 Corporate Goals Top-quartile performance for all stakeholders Sustained and consistent excellence Commitment to growth Effective management of all risks
Slide 15: Business Strategy
15 Business Strategy Client “Intimate” Strategy Strategic Focus: build long-term relationships with clients by identifying and meeting their financial needs Target clients Individuals and small / mid-size private businesses located within the regional markets we serve Ohio, Indiana, Kentucky, Michig
Slide 16: Credit Quality Trends
16 September 30, 2009 Credit quality trends remained relatively stable and within expected range throughout most of the economic downturn Reflects discipline of originating loans within existing footprint, strong underwriting policies, and proactive management of resolution strategies for problem cr
Slide 17: Credit Quality: Net Charge-offs to Average Loans
17 Credit Quality (excludes covered assets) Peer Group I is comprised of approximately 99 bank holding companies located throughout the United States with total asset size ranging from $3 - $10 billion; 3Q-09 data not yet available Peer Group II is comprised of 30 bank holding companies conducting b
Slide 18: Allowance for Loans to Nonperforming Loans
18 Peer Group I is comprised of approximately 99 bank holding companies located throughout the United States with total asset size ranging from $3 - $10 billion; 3Q-09 data not yet available Peer Group II is comprised of 30 bank holding companies conducting business primarily in Ohio, Kentucky and I
Slide 19: Nonperforming Loans to Total Loans
19 Peer Group I is comprised of approximately 99 bank holding companies located throughout the United States with total asset size ranging from $3 - $10 billion; 3Q-09 data not yet available Peer Group II is comprised of 30 bank holding companies conducting business primarily in Ohio, Kentucky and I
Slide 20: Nonperforming Assets to Total Assets
20 Peer Group I is comprised of approximately 99 bank holding companies located throughout the United States with total asset size ranging from $3 - $10 billion; 3Q-09 data not yet available Peer Group II is comprised of 30 bank holding companies conducting business primarily in Ohio, Kentucky and I
Slide 21: Texas Ratio
21 Peer Group I is comprised of approximately 99 bank holding companies located throughout the United States with total asset size ranging from $3 - $10 billion; 3Q-09 data not yet available Peer Group II is comprised of 30 bank holding companies conducting business primarily in Ohio, Kentucky and I
Slide 22: Capital
22 Capital Excess consolidated capital of $380.5 million over regulatory minimum required level Based on “well-capitalized” requirements, can support bank-level asset growth up to $2.4 billion Announced dividend reduction to common shareholders in January 2009 Further improved already strong capital
Slide 23: Capital Raise
Capital Raise 23 Common Share Offering Completed a public offering of 13.8 million shares at $7.50 per share Net proceeds of approximately $98 million after deducting underwriting discounts, commissions and estimated offering expenses Positively impacted already strong capital levels Additional capi
Slide 24: Participation in the U.S. Treasury Capital Purchase Program
Participation in the U.S. Treasury Capital Purchase Program 24 1 Board of directors continues to evaluate capital plan and structure Including the merits of continued participation in the program after having successfully raised $98 million in common equity and the additional capital generated from
Slide 25: Capital Scenario – CPP Redemption & Runoff Comparisons
25 Capital Scenario – CPP Redemption & Runoff Comparisons
Slide 26: Growth Plan
26 Growth Plan Primary focus and value creation is through organic growth in key regional markets 2008 expansion included a commercial lending team in Indianapolis (IN), a new business office and banking center in Kettering (OH) and a new banking center in Crown Point (IN) Year-to-date 2009 plans in
Slide 27: Well-Positioned Franchise
Well-Positioned Franchise Strong operating fundamentals have produced positive results throughout the recessionary period Strong market share in strategic operating markets Low risk balance sheet Capital and liquidity significantly exceed amounts necessary to be classified as well-capitalized Solid
Slide 28: Financial Information
fiRST first financial bancorp Financial Information
Slide 29: Third Quarter 2009 Results
29 Third Quarter 2009 Results Reported net income available to common shareholders of $225.2 million or $4.38 per diluted common share Results were impacted by the following significant items Irwin transaction: the estimated fair value of assets acquired exceeded the estimated fair value of liabilit
Slide 30: Outlook
30 Expanding margin Declining earning assets near-term due to strategic runoff Service charge pricing similar to legacy First Financial Efficiency ratio between 55 and 60 percent after integration Outlook
Slide 31: Earnings Per Diluted Common Share
31 Earnings Per Diluted Common Share Reflects the impact of certain non-recurring items. A reconciliation presenting a summary of items impacting earnings per share is on page 53 1
Slide 32: Net Interest Margin
32 Net Interest Margin Represents the Fed Funds Target Rate at the end of the quarter 1
Slide 33: Yield: Earning Assets and Loan Portfolio Composition
33 YTD-2009 = January 1, 2009 – September 30, 2009 Yield presented is not tax-equivalent Excludes covered loans acquired under loss share agreements 6.6% 6.9% 5.9% Average Earning Assets End of Period Loan Portfolio Composition 8.0% 6.7% 5.5% 6.5% 8.0% 7.9% 7.1% 5.6% 7.9% 8.2% 5.7% 6.1% 5.6% 7.8% 5.
Slide 34: Average Total Loans
34 1 Average total loans increased $179.1 million or 6.6% from third quarter 2008, and $148.5 million or 21.7% from second quarter 2009 Driven primarily by growth in commercial lending portfolios Overall declines in the average consumer lending portfolios are a result of the company’s strategy to de
Slide 35: Loan Portfolio Strategy
35 Gross loan CAGR = 2.0% due to planned runoff in indirect loans and residential mortgages 60% (50%) (95%) December 31, 2005 through September 30, 2009; excludes covered loans 1 Loan Portfolio Strategy (450,000) (350,000) (250,000) (150,000) (50,000) 50,000 150,000 250,000 350,000 450,000 550,000 6
Slide 36: Loan Composition
(at estimated fair value) 3% 9% 16% 44% 28% Loan Composition 36 June 30, 2009 - $2.9 billion September 30, 2009 - $4.9 billion Covered Loans - $2.1 billion Uncovered Loans - $2.9 billion 4% 11% 12% 43% 30% 1% 6% 22% 43% 28% 28% 45% 12% 11% 4%
Slide 37: Investment Portfolio Summary
37 Investment Portfolio Summary September 30, 2009 On-going review of various strategies to increase the size of the investment portfolio and its absolute level of earnings, while balancing capital and liquidity targets Represents approximately 8.7% of total assets Portfolio selection criteria avoid
Slide 38: Third Quarter 2009 Progression of Investment Portfolio
38 September 30, 2009 Increases in the investment portfolio during the third quarter was the result of acquired investment securities from the Peoples and Irwin transactions All acquired securities are conforming investments as outlined in First Financial’s investment policy The investment securitie
Slide 39: Sector Allocation and Credit Quality
39 Sector Allocation Credit Quality Investment Grade = A-rated securities Other Investment Grade = B-rated securities * Other includes regulatory stock September 30, 2009
Slide 40: Yield: Liability Mix & Deposit Composition
40 3.0% 3.4% 2.5% * Not included in yield calculation Average Liability Mix End of Period Deposit Portfolio Composition 1.8% 2.0% 0.8% 3.9% 4.5% 4.0% Yield Liability Mix & Deposit Composition 0.0% 0.0% 0.0% 0.2% 2.8% 0.0% 1.6% YTD-2009 = January 1, 2009 – September 30, 2009
Slide 41: Deposit Strategy
41 Deposit Strategy Excluding impact of acquisitions, third quarter 2009 deposit portfolio performed consistent with expectations and showed improvement from the second quarter of 2009 Growth seen primarily in core business transaction accounts All other deposit categories remained stable with modes
Slide 42: Deposit Composition
$5.8 billion in deposits WAR = 1.26% $2.8 billion in deposits WAR = 1.29% September 30, 2009 June 30, 2009 42 46% 14% 23% 17% Deposit Composition 15% 21% 24% 40%
Slide 43: Borrowed Funds
43 Borrowed Funds First Financial assumed additional Federal Home Loan Bank debt with the Peoples and Irwin acquisitions Approximately $83.7 million in short-term advances from Irwin matured prior to the end of the third quarter of 2009 At September 30, 2009, First Financial had available overnight
Slide 44: Noninterest Income
44 Noninterest Income ($ in millions) ($ in millions) Year-to-Date 2009 1 YTD-2009 = January 1, 2009 – September 30, 2009 Excludes $383.3 million 3Q-09 gain on acquisition
Slide 45: Efficiency
45 Efficiency Long-Term Target = 55% to 60% Efficiency Ratio 01/01/09 – 06/30/09
Slide 46: Staffing Level
46 Staffing Level Full-Time Equivalent Personnel Does not include associates from acquisitions who are currently in a temporary hire status 1
Slide 47: Leadership
fiRST first financial bancorp Leadership
Slide 48: Leadership: Claude E. Davis and C. Douglas Lefferson
48 Claude E. Davis President & Chief Executive Officer Claude E. Davis joined First Financial in 2004 as President, Chief Executive Officer, and a member of the Board of Directors. Mr. Davis also serves as Chairman of the Board of Directors of First Financial Bank. Prior to joining the company, he s
Slide 49: Leadership: Al Roszczyk and Richard Barbercheck
49 Al Roszczyk Indiana Regional President Al Roszczyk joined First Financial in June 2009. Mr. Roszczyk oversees the company’s Indiana markets. He has 26 years of banking experience with a strong background in executive management and leadership as well as extensive experience in commercial lending,
Slide 50: Leadership: John Sabath and Jill A. Stanton
50 John Sabath Senior Vice President & Chief Risk Officer John Sabath joined First Financial in 2005 as Regulatory Risk Manager. Mr. Sabbath was then promoted to Senior Risk Officer and First Vice President, and assumed his current position in 2008. He is responsible for management of the company’s
Slide 51: About First Financial Bancorp
Financial data at September 30, 2009 Banking Centers at October 31, 2009 About First Financial Bancorp First Financial Bancorp is a Cincinnati, Ohio based bank holding company with $7.3 billion in assets. Its banking subsidiary, First Financial Bank, N.A., founded in 1863, provides retail and commer
Slide 52: Another step on the path to success
Another step on the path to success
Slide 53: Summary of Items Impacting Earnings Per Diluted Common Share
53 Summary of Items Impacting Earnings Per Diluted Common Share The company believes that excluding these items presents a more representative comparison of operational performance for each period without the volatility of credit quality that is typically present in times of economic stress, as well
Slide 54: Pre-Tax, Pre-Provision Income Excluding Significant Items
54 Pre-Tax, Pre-Provision Income Excluding Significant Items The company believes that excluding these items presents a more representative comparison of operational performance for each period without the volatility of credit quality that is typically present in times of economic stress, as well as
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