First Financial Bancorp. · NASDAQ:FFBC
First Financial Bancorp — Q2 2013 Earnings Presentation
29 slides from First Financial Bancorp's earnings presentation, Jul 29, 2013
Slide 1: First Financial Bancorp Investor Presentation Second Quarter 2013
First Financial Bancorp Investor Presentation Second 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 Consumer Wealth Management Target clients – individuals and small / mid-size businesses located in-market Ohio,
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: Credit Product Diversity
5 Credit Product Diversity Significant investments made in building out credit product set, including specialty finance and mortgage platforms During the second quarter, strong loan growth was driven though multiple channels led by specialty finance, commercial real estate and traditional C&I / owne
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: Second Quarter 2013 Financial Highlights
7 Second Quarter 2013 Financial Highlights Quarterly net income of $15.8 million, or $0.27 per diluted common share compared to $0.24 for the linked quarter Diluted earnings per share of $0.29 adjusted for the impact of non-operating items Adjusted pre-tax, pre-provision income increased 4.7% to $26
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 increase in second quarter 2013 adjusted PTPP income
Slide 9: Components of Net Interest Income
9 Components of Net Interest Income Net interest margin decreased 2 bps during the second quarter to 4.02% Quarterly average balance of covered loans declined 9.8% and average balance of uncovered loans increased 3.4% Quarterly average investment balances declined 7.3% while the portfolio yield incr
Slide 10: Loan Composition
10 Loan Composition Total Gross Loans – $4.0 billion As of June 30, 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 cr
Slide 11: Loan Composition
11 Loan Composition Total uncovered loans increased $133.3 million, or 16.5% on an annualized basis, compared to the linked quarter Growth driven by performance in the specialty finance, investment CRE and C&I / owner-occupied portfolios Uncovered loan growth exceeded covered loan decline for the th
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: 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 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 16: Capital Management
16 Capital Management Recently announced quarterly dividend of $0.27 per share consisting of $0.15 regular dividend and $0.12 variable dividend under the 100% payout ratio plan in place since the October 2011 dividend This will be the last variable dividend paid Subsequent quarterly dividends expect
Slide 17: Capitalization
17 Capitalization Primary component of capital is common equity Capitalization levels still remain high despite the strong return of capital to shareholders Long term goal is to deploy capital above target levels though growth initiatives, including organic growth and acquisitions 10.38% 10.33% 10.4
Slide 18: Credit Quality (Excluding Covered Assets)
18 Credit Quality (Excluding Covered Assets) Classified assets have declined $15.8 million, or 10.8%, since the second quarter 2012 Total NPLs decreased $2.3 million, or 2.9%, during the quarter driven by a decline in nonaccrual TDRs Several large nonperforming credits currently in the later stages
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 agreements provide significant protection on covered loans Peoples (FDIC) July 31, 2009 19 banking centers $521mm deposits $331mm
Slide 20: Franchise Highlights
20 Franchise Highlights 1. Strong operating fundamentals – 91 consecutive quarters of profitability 2. Investments to create long-term growth are producing results 3. Comprehensive portfolio of credit products to drive loan and revenue growth 4. Strong capital levels with ability to support signific
Slide 21: Appendix Second Quarter 2013
Appendix Investor Presentation Second Quarter 2013
Slide 22: Pre-Tax, Pre-Provision Income
22 Pre-Tax, Pre-Provision Income For the three months ended June 30, March 31, December 31, September 30, June 30, (Dollars in thousands) 2013 2013 2012 2012 2012 Pre-tax, pre-provision income 1 23,794$ 23,324$ 28,869$ 26,894$ 32,636$ Less: accelerated discount on covered loans 1,935 1,935 2,455 3,7
Slide 23: Investment Portfolio
23 Investment Portfolio Investment portfolio represents 26.0% of total assets Average balance of investments decreased $133.6 million, or 7.3%, during the second quarter as the Company began to unwind its pre-funding/wholesale borrowing initiative early in 2013 Yield earned on portfolio was 2.08% fo
Slide 24: Deposit Composition
24 Deposit Composition The total cost of deposit funding declined to 27 bps from 32 bps for the first quarter Time deposit balances decreased $51.4 million, or 5.0%, during the second quarter The quality of the deposit base has improved significantly as the balance of higher cost, non-core relations
Slide 25: Funding Structure and Cost of Funds
25 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 0.60% 0.51% 0.43% 0.38% 0.45% 0.38% 0.32% 0.27% 0
Slide 26: Covered Loan Activity
26 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, 2013, the allowance for loan and lease
Slide 27: Covered Loan Performance
27 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 $57.8
Slide 28: Components of Covered Asset Credit Losses
28 Components of Covered Asset Credit Losses $1,685 $1,439 $2,234 $(1,846) 3Q12 4Q12 1Q13 2Q13 Covered Asset Credit Losses For the three months ended June 30, (Dollars in thousands) 2013 Description Net incremental impairment / (relief) for period ($12,535) Reduction in expected cash flows related t
Slide 29: First Financial Bancorp Second Quarter 2013
First Financial Bancorp Investor Presentation Second Quarter 2013
First Financial Bancorp — Q2 2013 Earnings Presentation on 6ix