First Financial Bancorp. · NASDAQ:FFBC
First Financial Bancorp — Q4 2020 Earnings Presentation
39 slides from First Financial Bancorp's earnings presentation, Feb 9, 2021
Slide 1: Investor Presentation Fourth Quarter 2020
Investor Presentation Fourth Quarter 2020
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: Forward Looking Statement Disclosure
Forward Looking Statement Disclosure • financial services reform and other current, pending or future legislation or regulation that could have a negative effect on our revenue and businesses, including the Dodd-Frank Act and other legislation and regulation relating to bank products and services; •
Slide 4: Presentation Contents
Presentation Contents About First Financial Bancorp Financial Performance Appendix 4
Slide 5: Our Franchise
Our Franchise $16.0B NASDAQ: FFBC in assets Headquarters: Cincinnati, Ohio $9.9B/$12.2B Founded: 1863 loans / deposits Banking Centers: 143 Employees: 2,075 $4.6B wealth management Market Cap (12/31/20): $1.7B Dividend Yield (12/31/20): 5.2% 1.79% TCE Ratio: 8.47% Adj. PTPP ROAA(1) Lines of Business
Slide 6: Key Investment Highlights
Key Investment Highlights Proven & sustainable business model spanning 150+ years • Well managed through past credit cycles • Conservative operating philosophy • Consistent profitability – 121 consecutive quarters Premier Midwest franchise with top quartile performance High quality balance sheet & r
Slide 7: Complementary Market Centric Strategies
Complementary Market Centric Strategies Loans $3.0B / Deposits $2.0B Loans $1.7B / Deposits $5.0B Loans $3.0B / Deposits $4.1B Loans $1.1B 7 Note: Loan and deposit balances exclude special assets, loan marks, other out of market and corporately held balances.
Slide 8: Diversified Lines of Business
Diversified Lines of Business 8
Slide 9: Revenue Growth Strategies
Revenue Growth Strategies LOB | Go-to-Market Distribution Technology Talent Product & Pricing Defined Models Enterprise Data Management Staffing Model • Regional pricing strategy • Community • Investment in data warehouse • Defined new company FTE targets • Treasury Management product • Metro • Enablin
Slide 10: Digital + Technology Investments
Digital + Technology Investments “ Enabling a simple, consistent & seamless customer experience across digital & physical channels & making it easier for associates to provide best- in-class customer service. 10
Slide 11: Digital + Technology Investments
Digital + Technology Investments Continued investment in digital solutions, automation + data enablement Early successes include mortgage, PPP origination + enhanced OLB experience Enterprise Digital Solutions formed, led by Digital consumer deposit Consumer online Digital small Commercial online ne
Slide 12: Presentation Contents
Presentation Contents About First Financial Bancorp Financial Performance Appendix 12
Slide 13: 4Q 2020 Results
4Q 2020 Results 121st Consecutive Quarter of Profitability Net income = $48.3 million or $0.49 per diluted share. Adjusted1 net income = $49.7 million or $0.51 per diluted share2 Return on average assets = 1.20%. Adjusted1 return on average assets = 1.23% Profitability Return on average shareholders
Slide 14: 4Q 2020 Highlights
4Q 2020 Highlights Quarterly earnings bolstered by strong fee income; negatively impacted by provision expense Adjusted1 earnings per share - $0.51 Adjusted1 return on assets – 1.23% Adjusted1 pre-tax, pre-provision return on assets – 1.79% Adjusted1 return on average tangible common equity – 15.94%
Slide 15: Adjusted Net Income
Adjusted Net Income1 The table below lists certain adjustments that the Company believes are significant to understanding its quarterly performance. 4Q 2020 3Q 2020 As Reported Adjusted As Reported Adjusted Net interest income $ 118,473 $ 118,473 $ 112,180 $ 112,180 Provision for credit losses-loans
Slide 16: Profitability
Profitability Diluted EPS Return on Average Assets 1.41% $0.52 $0.51 1.23% $0.44 1.09% $0.40 1.00% 0.85% $0.31 1.34% $0.49 $0.49 1.20% $0.42 0.96% 1.04% $0.38 0.79% $0.29 4Q19 1Q20 2Q20 3Q20 4Q20 4Q19 1Q20 2Q20 3Q20 4Q20 1 Diluted EPS Adjusted EPS 1 ROA Adjusted ROA Return on Avg Tangible Common Equ
Slide 17: Net Interest Income & Margin
Net Interest Income & Margin Net Interest Margin (FTE) Net Interest Income 3.89% 3.77% 0.21% 0.16% 0.14% 3.44% 3.49% 0.10% 3.36% 0.12% $118.9 $118.5 0.17% 0.08% 0.16% $114.3 $112.2 0.31% $6.7 $111.6 0.10% 0.12% $4.5 $4.9 $12.5 0.11% 0.15% $3.1 $4.5 $6.2 $5.8 $5.4 $3.9 $3.3 $5.5 3.54% 3.51% $3.8 3.09
Slide 18: Diverse and Growing Fee Revenues
Diverse and Growing Fee Revenues Noninterest Income 4Q20 Highlights Total $61.5 million Total fee income 34.2% of net revenue Other $5,896 $13.1 million of mortgage origination income Service Charges 10% $7,654 12% Wealth Mgmt $13.4 million gain on Visa B shares $4,093 7% Gain on Visa B shares Bankc
Slide 19: Well Managed Expenses
Well Managed Expenses Noninterest Expense 4Q20 Highlights Total $114.8 million Core expenses declined $0.7 million from the linked quarter, driven by decline in incentive compensation Other $29,709 $7.3 million of debt extinguishment 26% costs Intangible amortization $2,764 $5.1 million tax credit i
Slide 20: Average Balance Sheet
Average Balance Sheet Average Loans Average Deposits 5.33% 0.74% 0.64% 5.04% 4.25% 0.40% 4.00% 4.18% 0.27% 0.20% $10,002 $10,253 $10,128 $9,149 $9,221 $11,731 $11,563 $11,925 $10,222 $10,234 4Q19 1Q20 2Q20 3Q20 4Q20 4Q19 1Q20 2Q20 3Q20 4Q20 Gross Loans Loan Yield (Gross)1 Total Deposits Cost of Depo
Slide 21: Attractive Deposit Portfolio
Attractive Deposit Portfolio Deposit Product Mix (Avg) 4Q20 Average Deposit Progression Total $11.9 billion Interest-bearing demand $48.9 Public Funds Interest-bearing Noninterest-bearing $172.8 $1,823 demand 15% $1,660 14% Savings $44.6 Brokered CDs $614 5% Money Markets $104.6 Retail CDs $1,138 10
Slide 22: Loan Portfolio
Loan Portfolio Loan LOB Mix (EOP) Net Loan Change-LOB (Linked Quarter) Total $9.9 Billion ICRE $91.2 Franchise $424 Mortgage Commercial $26.4 Oak Street 4% $1,074 11% $584 6% Small Business Banking -$25.0 Consumer 1 $835 PPP Other 8% $595 Consumer -$11.9 $63 6% 1% Small Business Mortgage -$25.9 Bank
Slide 23: Loan Concentrations
Loan Concentrations C&I Loans by Industry 1 CRE Loans by Collateral 2 C&I Loans: $4.0B CRE Loans: $3.9B Accommodation Office & Food Services 14% Hotel/Motel Strip Center 12% 11% 6% Manufacturing Real Estate 15% Nursing/Assisted 11% Living 5% Retail Health Care 16% Residential, 1-4 7% Family Finance
Slide 24: CARES Act Modifications as of 12/31/20
CARES Act Modifications as of 12/31/20 $29 million of full principal and interest Active deferrals by round deferrals $291 million of loan modifications making Round 3 interest only payments $247 77% $320 million of total active modifications $186 million, or 58% of total deferrals are Round 1 hotel
Slide 25: Area of Focus - Hotel Portfolio
Area of Focus - Hotel Portfolio $433 million balance represents 5% of the Hotels by Flag total loan portfolio $186 million, or 43% of total hotel loans, $64 15% making interest only payments as of $34 12/31/20 $154 35% 8% $39 The overall health of the hotel portfolio was 9% strong Pre-COVID with an
Slide 26: Area of Focus - Franchise Portfolio
Area of Focus - Franchise Portfolio $424 million in balances or 4% of total loans Top 10 Concepts Drive thru and delivery are demonstrating strong performance while a portion of our sit- $120 25.0% down book, particularly buffet style, has $100 encountered pandemic related headwinds 20.0% % of Portf
Slide 27: Current Expected Credit Losses - Loans and Leases
Current Expected Credit Losses - Loans and Leases ACL / Total Loans 4Q20 Highlights $175.7 million, or 1.77% of loan balances; 1.89% 1.77% 1.55% 1.56% 1.65% excluding PPP $175.7 1.29% $168.5 $158.7 $13.8 million provision expense driven by expected $143.9 economic impact of COVID-19, partially offse
Slide 28: Asset Quality
Asset Quality Classified Assets / Total Assets Nonperforming Assets / Total Assets 0.89% 0.83% 0.84% 0.79% 0.55% 0.56% 0.42% 0.48% 0.49% 0.62% $134.0 $142.0 $124.5 $125.5 $89.1 $87.3 $78.1 $72.2 $89.3 $61.6 4Q19 1Q20 2Q20 3Q20 4Q20 4Q19 1Q20 2Q20 3Q20 4Q20 Classified Assets Classified Assets / Total
Slide 29: Investment Portfolio and Liquidity
Investment Portfolio and Liquidity Investment Portfolio Composition Liquidity Sources Non-Agency pass-through securities Total: $3.7B Corporate securities 2% Duration: ~3.2 Yrs In addition to deposits, First Financial has 3% approximately $6.3 billion of readily available Regulatory stock 3% funding
Slide 30: Capital
Capital Tier 1 Common Equity Ratio Tier 1 Capital Ratio 11.30% 11.49% 11.63% 11.82% 11.27% 11.69% 11.87% 12.02% 12.20% 11.66% 7.00% 8.50% 4Q19 1Q20 2Q20 3Q20 4Q20 Tier 1 Common Equity Ratio Basel III minimum 4Q19 1Q20 2Q20 3Q20 4Q20 Tier 1 Capital Ratio Basel III minimum Total Capital Ratio Tangible
Slide 31: Capital Strategy
Capital Strategy Tangible Book Value Per Share Strategy & Deployment 5.2% annualized dividend yield $12.93 $12.42 $12.56 November 2020 stress testing $12.26 indicates capital ratios above regulatory minimums in all modeled scenarios $11.82 Dividend payout ratio to remain elevated in near-term, but i
Slide 32: Outlook Commentary
Outlook Commentary1 Loan balances expected to remain flat in near term, excluding impact of PPP, with Balance Sheet mid single digit growth for the year Deposit balances expected to increase further with additional stimulus activity Will be positively impacted by PPP forgiveness fees over first half
Slide 33: Presentation Contents
Presentation Contents About First Financial Bancorp Financial Performance Appendix 33
Slide 34: Appendix: Our Markets
Appendix: Our Markets Greater Cincinnati Indianapolis Loans $3.0 billion Loans $1.2 billion Deposits $4.1 billion Deposits $0.8 billion Deposit Market Share #4 (3.0%) Deposit Market Share #14 (1.4%) Banking Centers 51 Banking Centers 10 Fortune 500 Companies 8 Fortune 500 Companies 2 Columbus, OH Lo
Slide 35: Appendix: Non-GAAP Measures
Appendix: Non-GAAP Measures The Company’s Investor Presentation contains 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 considered supplemental to, a
Slide 36: Appendix: Non-GAAP to GAAP Reconciliation
Appendix: Non-GAAP to GAAP Reconciliation Three months ended Dec. 31, Sep. 30, June 30, Mar. 31, Dec. 31, 2020 2020 2020 2020 2019 Net interest income $ 118,473 $ 112,180 $ 111,576 $ 114,282 $ 118,902 Tax equivalent adjustment 1,613 1,628 1,664 1,624 1,630 Net interest income - tax equivalent $ 120,
Slide 37: Appendix: Non-GAAP to GAAP Reconciliation
Appendix: Non-GAAP to GAAP Reconciliation Additional non-GAAP ratios Three months ended Dec. 31, Sep. 30, June 30, Mar. 31, Dec. 31, (Dollars in thousands, except per share data) 2020 2020 2020 2020 2019 Net income (a) $ 48,312 $ 41,477 $ 37,393 $ 28,628 $ 48,677 Average total shareholders' equity 2
Slide 38: Appendix: Non-GAAP to GAAP Reconciliation
Appendix: Non-GAAP to GAAP Reconciliation Additional non-GAAP measures 4Q20 3Q20 2Q20 1Q20 4Q19 (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) $ 118,473 $ 118,473 $ 112,180
Slide 39: First Financial Bancorp
First Financial Bancorp First Financial Center 225 East Fifth Street Cincinnati, OH 45202 39
First Financial Bancorp. — Q4 2020 Earnings Presentation on 6ix