First Financial Bancorp. · NASDAQ:FFBC
First Financial Bancorp — Investor Presentation (September 2012)
35 slides from First Financial Bancorp's investor presentation, Sep 11, 2012
Slide 1: First Financial Bancorp Investor Presentation Second Quarter 2012
First Financial Bancorp Investor Presentation Second 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: Franchise Summary Comparison
5 Franchise Summary Comparison Consistent and solid profitability LTM ROAA of 1.07% compared to peer median of 0.92% LTM ROAE of 9.53% compared to peer median of 7.79% LTM net interest margin of 4.47% compared to peer median of 3.78% Capital levels extremely robust and have capacity to support signi
Slide 6: Second Quarter 2012 Financial Highlights
6 Second Quarter 2012 Financial Highlights Quarterly net income of $17.8 million, or $0.30 per diluted common share Adjusted pre-tax, pre-provision income remained solid, totaling $30.2 million, or 1.92% of average assets Continued strong profitability Return on average assets of 1.13% Return on ave
Slide 7: Pre-Tax, Pre-Provision Income Trend
7 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 decrease in second quarter 2012 adjusted PTPP income was drive
Slide 8: Components of Net Interest Income
8 Components of Net Interest Income Net interest margin decreased 2 bps during the second quarter 2012 to 4.49% Deposit strategies continued to positively impact net interest margin as higher cost time deposits decreased $159.4 million and the cost of deposit funding declined to 49 bps Yield earned
Slide 9: Commercial Lending
9 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 i
Slide 10: Retail Lending
10 Retail Lending $1.1 billion in total strategic loans, including home equity, mortgage, business banking and credit cards Mortgage loan originators located across footprint with concentrations in Cincinnati, Dayton and Indianapolis Business banking sales managers located in sales centers Serving r
Slide 11: Investment Portfolio
11 Investment Portfolio Investment portfolio represents 26.6% of total assets Average balance of investments increased $48.9 million, or 2.9%, during the second quarter 2012 Yield earned on portfolio was 2.46% during the second quarter 2012 As of June 30, 2012 Securities Securities Other Total Perce
Slide 12: Cost of Interest Bearing Deposits
12 Cost of Interest Bearing Deposits Cost of interest-bearing deposits declined 7 basis points to 0.61% as a result of rationalization strategies Over 30% of total time deposits represent single service relationships with a weighted average cost of 1.82% Retained single service time deposits are ren
Slide 13: Capitalization
13 Capitalization Primary component of capital is common equity Capital ratios varied slightly from prior quarter due to decrease in total tangible assets but increase in risk-weighted assets Capitalization levels still remain among industry leaders and provide ability to support $1.6 billion in add
Slide 14: Variable Dividend / 100% Payout Ratio
14 Variable Dividend / 100% Payout Ratio 100% dividend payout ratio comprised of two components: Regular dividend based on stated payout of between 40% - 60% of quarterly earnings; currently $0.15 per share Variable dividend based on the remainder of quarterly EPS; $0.15 per share based on second qu
Slide 15: Low Risk Balance Sheet
15 Low Risk Balance Sheet Only 48% of First Financial’s total assets are 100% risk-weighted assets, over 14% lower than the peer group median First Financial’s percentage of total risk- weighted assets to total assets is 59.5%, over 11% lower than the peer group median The lower percentages are driv
Slide 16: Credit Quality (Excluding Covered Assets)
16 Credit Quality (Excluding Covered Assets) Classified assets totaled $145.6 million as of June 30, 2012, declining 5.9% compared to the linked quarter and 21.2% compared to June 30, 2011 Second quarter 2012 provision for loan losses increased $5.1 million primarily as a result of establishing or i
Slide 17: Selective Acquisitions
17 Selective Acquisitions Supplements organic growth strategy through expansion in strategic markets Transactions met all internal criteria for acquisitions Loss sharing arrangements provide significant protection on acquired loans Developed scalable covered asset and loss share management team comp
Slide 18: Franchise Highlights
18 Franchise Highlights 1. Strong operating fundamentals – 87 consecutive quarters of profitability 2. Strong capital levels 3. Dividend yield in excess of 7.0% 4. Low risk balance sheet 5. Credit metrics have remained strong throughout the economic downturn 6. Solid market share in strategic operat
Slide 19: Appendix
Appendix Investor Presentation Second Quarter 2012
Slide 20: Pre-Tax, Pre-Provision Income
20 Pre-Tax, Pre-Provision Income For the three months ended June 30, March 31, December 31, September 30, June 30, Dollars in thousands 2012 2012 2011 2011 2011 Pre-tax, pre-provision income 1 32,636$ 30,020$ 33,015$ 31,814$ 32,845$ Less: accelerated discount on covered loans 3,764 3,645 4,775 5,207
Slide 21: Revenue by Source
21 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 75% of total revenue is derived from strategic businesses. Not including the FDIC loss sharing income and
Slide 22: Noninterest Income and Expense
22 Noninterest Income and Expense Components of Noninterest Income For the Three Months Ended June 30, 2012 (Dollars in millions) Components of Noninterest Expense For the Three Months Ended June 30, 2012 (Dollars in millions) $16.4 49% $8.3 25% $5.0 15% $3.8 11% Strategic FDIC Loss Sharing Income O
Slide 23: Deposit and Loan Composition
23 Deposit and Loan Composition Total Deposits – $5.1 billion As of June 30, 2012 (Dollars in millions) Gross Loans – $3.9 billion As of June 30, 2012 (Dollars in millions) $5,046 99% $56 1% Strategic Acquired-Non-Strategic $3,480 89% $436 11% Market exits are complete; acquired-non-strategic deposi
Slide 24: Loan Composition
24 Loan Composition In-house lending limit of $15 million – significantly below legal limit 23.1% of total loans covered under FDIC loss share agreements Total uncovered loans increased $49.1 million, or 6.7% on an annualized basis, compared to the linked quarter driven by growth in CRE and specialt
Slide 25: Uncovered Loans – Real Estate Collateral
25 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 – $3.0 billion June 30, 2012 3%
Slide 26: Deposit Composition
26 Deposit Composition Non-time deposit balances declined $139.8 million during the second quarter 2012, driven by a $162.2 million decrease in public fund interest-bearing demand and money market balances Offsetting the decline in public fund balances was an increase of $64.5 million in core nonint
Slide 27: Funding Structure and Cost of Funds
27 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 19.9%17.0%15.7%14.4% 22.7% 23.5%25.3% 22.6% 30.6%
Slide 28: Covered Loan Balances
28 Covered Loan Balances During the second quarter 2012, the total balance of covered loans decreased $82.8 million, 8.4%, as compared to March 31, 2012 Covered Loan Activity - Second Quarter 2012 Reduction in Recorded Investment Due to: March 31, Contractual Net Loans With June 30, (Dollars in thou
Slide 29: Covered Loan Activity
29 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 June 30, 2012, the allowance for loan and lease
Slide 30: Covered Loan Performance
30 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 31: Components of Covered Asset Credit Losses
31 Components of Covered Asset Credit Losses For the three months ended June 30, Dollars in thousands 2012 Description Net incremental impairment for period $2,171 Reduction in expected cash flows related to certain loan pools net of prior period impairment relief / recapture Net charge-offs 3,876 R
Slide 32: Reinvestment of Covered Loan Proceeds
32 Reinvestment of Covered Loan Proceeds As of June 30, Dollars in thousands 2012 Recorded investment 1 $903,862 Unamortized discount 132,942 Unpaid principal balance $1,036,804 If all covered loans repaid today at 100% UPB, this is the amount of cash that would be received and reinvested in other i
Slide 33: Comparison of Financial Impact
33 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 $0.66 per share as of the second quarter 2012 The absolute wors
Slide 34: Accounting for Covered Loans
34 Accounting for Covered Loans Accounting treatment options regarding income recognition when a loan accounted for under ASC Topic 310-30 exits the pool prior to maturity: Income recognition options subsequent to paid in full exit event Covered Loan Portfolio Accounting Treatment: ASC Topic 310 - 3
Slide 35: First Financial Bancorp Second Quarter 2012
First Financial Bancorp Investor Presentation Second Quarter 2012
First Financial Bancorp — Investor Presentation (September 2012) on 6ix