First Financial Bancorp. · NASDAQ:FFBC
First Financial Bancorp — Q2 2020 Earnings Presentation
44 slides from First Financial Bancorp's earnings presentation, Aug 18, 2020
Slide 1: Investor Presentation Second Quarter 2020
Investor Presentation Second 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 COVID-19 Related Information Financial Performance Appendix 4
Slide 5: Our Franchise
Our Franchise $15.9B NASDAQ: FFBC in assets Headquarters: Cincinnati, Ohio $10.2B/$11.7B Founded: 1863 loans / deposits Banking Centers: 141 Employees: 2,076 $4.3B wealth management Market Cap (6/30/20): $1.4B Dividend Yield (6/30/20): 6.6% 1.73% TCE Ratio: 8.09% 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 – 119 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 $3.1B / Deposits $2.0B Loans $1.8B / Deposits $4.7B Loans $2.9B / Deposits $3.8B 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 2020 expenses include $6 – 8 million of strategic technology investments Continued investment in foundational data enablement + automation capabilities Enterprise Digital Solutions formed, led by Digital consumer deposit Consumer digital Digital consumer new Chief Di
Slide 12: Presentation Contents
Presentation Contents About First Financial Bancorp COVID-19 Related Information Financial Performance Appendix 12
Slide 13: Leading our Response
Leading our Response We were prepared to immediately implement our Pandemic Plan and adapt our business continuity planning to navigate the evolving circumstances of our associates, clients and communities. 13
Slide 14: Relief Program Overview
Relief Program Overview Associates Consumers Businesses Communities •More than half of our associates •Introductions of hardship relief •Prudently working with clients to •Many organizations in our are working from home. programs like, payment deferrals, provide access to capital, defer communities
Slide 15: Presentation Contents
Presentation Contents About First Financial Bancorp COVID-19 Related Information Financial Performance Appendix 15
Slide 16: 2Q 2020 Results
2Q 2020 Results 119th Consecutive Quarter of Profitability Net income = $37.4 million or $0.38 per diluted share. Adjusted1 net income = $39.0 million or $0.40 per diluted share2 Return on average assets = 0.96%. Adjusted1 return on average assets = 1.00% Profitability Return on average shareholders
Slide 17: 2Q 2020 Highlights
2Q 2020 Highlights Quarterly earnings impacted by elevated provision expense Adjusted1 earnings per share - $0.40 Adjusted1 return on assets – 1.00% Adjusted1 pre-tax, pre-provision return on assets – 1.73% Adjusted1 return on average tangible common equity – 13.47% Strong loan and deposit growth Lo
Slide 18: Adjusted Net Income
Adjusted1 Net Income The table below lists certain adjustments that the Company believes are significant to understanding its quarterly performance. 2Q 2020 1Q 2020 As Reported Adjusted As Reported Adjusted Net interest income $ 111,576 $ 111,576 $ 114,282 $ 114,282 Provision for credit losses-loans
Slide 19: Profitability
Profitability Diluted EPS Return on Average Assets 1.63% 1.54% $0.58 $0.56 1.41% $0.52 $0.40 1.00% $0.31 0.85% $0.53 $0.51 1.50% 1.41% $0.49 1.34% $0.38 0.96% $0.29 0.79% 2Q19 3Q19 4Q19 1Q20 2Q20 2Q19 3Q19 4Q19 1Q20 2Q20 1 1 Diluted EPS Adjusted EPS ROA Adjusted ROA Return on Avg Tangible Common Equ
Slide 20: Net Interest Income & Margin
Net Interest Income & Margin Net Interest Margin (FTE) Net Interest Income 4.04% 3.96% 3.89% 0.23% 3.77% 0.21% 0.12% 0.21% 0.15% 0.16% 0.14% 0.10% 3.44% $122.3 $121.5 0.17% $118.9 0.10% $7.4 $6.8 $114.3 $6.7 $111.6 $3.6 $4.6 $4.9 $4.5 $4.5 3.69% 3.60% $3.1 3.54% 3.51% $5.8 $3.3 3.17%1 2Q19 3Q19 4Q19
Slide 21: Diverse and Growing Fee Revenues
Diverse and Growing Fee Revenues Noninterest Income 2Q20 Highlights Total $42.7 million $16.7 million of gains from sales of loans; a $13.8 million, or 488.6% Other increase from 1Q20 $3,544 8% Service Charges $6,001 14% $6.6 million of foreign exchange income despite COVID-19 headwinds Wealth Mgmt
Slide 22: Well Managed Expenses
Well Managed Expenses Noninterest Expense 2Q20 Highlights Includes $0.7 million of COVID-19 Intangible Total $88.7 million amortization related expenses $2,791 3% Other Professional $11,690 $1.5 million related to other non- services recurring expenses such as merger 13% $2,205 3% related and branch
Slide 23: Average Balance Sheet
Average Balance Sheet Average Loans Average Deposits 5.73% 5.58% 5.33% 0.82% 0.80% 5.04% 0.74% 4.25% 0.64% 0.40% $9,221 $10,002 $8,853 $9,014 $9,149 $10,222 $10,234 $11,731 $10,096 $10,018 2Q19 3Q19 4Q19 1Q20 2Q20 1 2Q19 3Q19 4Q19 1Q20 2Q20 Gross Loans Loan Yield (Gross) Total Deposits Cost of Depos
Slide 24: Attractive Deposit Portfolio
Attractive Deposit Portfolio Deposit Product Mix (Avg) 2Q20 Average Deposit Progression Total $11.7 billion Noninterest-bearing $666.6 Public Funds Interest-bearing $1,664 demand 14% $1,522 Interest-bearing demand $128.3 13% Brokered CDs Savings $83.8 $1,187 10% Noninterest- Money Markets $155.6 bea
Slide 25: Loan Portfolio
Loan Portfolio Loan LOB Mix (EOP) Net Loan Change-LOB (Linked Quarter) Total $10.2 Billion Franchise ICRE $107.9 $462 5% Commercial Oak Street -$54.0 Mortgage $626 $1,108 6% Small Business Banking -$37.3 11% 1 PPP $885 Consumer -$20.2 Consumer Other 9% $79 $848 1% Mortgage -$21.5 8% Oak Street $16.2
Slide 26: Loan Concentrations
Loan Concentrations C&I Loans by Industry 1 CRE Loans by Collateral 2 C&I Loans: $4.4B CRE Loans: $3.8B Accommodation & Food Services Office Hotel/Motel Strip Center 13% 15% 11% 6% Real Estate Manufacturing 10% Nursing/Assisted 13% Living 6% Health Care 7% Retail Residential, 1-4 17% Finance & Famil
Slide 27: Loan Portfolio - Areas of Focus
Loan Portfolio - Areas of Focus Loans (EOP) Areas of Focus Total $10.2 Billion Franchise Asset classes with areas of focus $462 5% PPP: $913 million in balances or 9% Hotels $410 of total loans 4% Franchise: $462 million in balances, or 5% of total loans Retail ICRE $838 8% All other loans Hotels: $
Slide 28: Area of Focus – Paycheck Protection Program
Area of Focus – Paycheck Protection Program $913MM, or 9% of the total portfolio; PPP Portfolio by Division $27.6 million of unearned fees as of Total $912.9 Million June 30 Commercial Finance $65.0 Program remains open but demand Consumer Banking 7% is minimal $399.6 44% ICRE $26.0 3% Forgiveness p
Slide 29: Area of Focus - Franchise Portfolio
Area of Focus - Franchise Portfolio $462 million in balances or 5% of total loans Top 10 Concepts 93% of portfolio was pass rated as of 6/30 $100 25.0% $90 9 of top 10 largest relationships include some real $80 20.0% estate collateral $70 % of Portfolio Balances $60 15.0% $296 million, or 64%, secu
Slide 30: Area of Focus - Hotel Portfolio
Area of Focus - Hotel Portfolio $410 million balance represents 4% of the total loan portfolio $67 16% 76% of the hotel portfolio is located within the $31 8% Bank’s geographic footprint $152 37% $41 $370 million, or 90%, secured an initial 90 day 10% payment deferral; given continued low occupancy
Slide 31: Area of Focus - ICRE Retail
Area of Focus - ICRE Retail $838 million, or 8% of the total portfolio State $300 60% of the portfolio is located within the Bank’s geographic footprint $250 $200 Bank has focused on strong locations with adequately capitalized sponsors $150 $100 2019 data (pre-COVID) indicates the portfolio has an
Slide 32: Asset Quality
Asset Quality Classified Assets / Total Assets Nonperforming Assets / Total Assets 1.02% 0.92% 0.83% 0.62% 0.56% 0.79% 0.42% 0.48% 0.49% $147.8 0.62% $132.5 $125.5 $90.2 $124.5 $80.8 $78.1 $72.2 $89.3 $61.6 2Q19 3Q19 4Q19 1Q20 2Q20 2Q19 3Q19 4Q19 1Q20 2Q20 Classified Assets Classified Assets / Total
Slide 33: Current Expected Credit Losses - Loans and Leases
Current Expected Credit Losses - Loans and Leases ACL/Total Loans 2Q20 Highlights $158.7 million, or 1.56% of loan balances; 1.55% 1.56% 1.71% excluding PPP 1.29% $158.7 $143.9 $17.9 million provision expense substantially $119.2 0.69% 0.62% 0.63% driven by expected economic impact of COVID-19 $61.5
Slide 34: Investment Portfolio and Liquidity
Investment Portfolio and Liquidity Investment Portfolio Composition Liquidity Sources Corporate Non-Agency pass- Total: $3.2B through securities securities 3% Duration: ~3.0 Yrs In addition to deposits, First Financial has approximately $6.1 billion of readily available Regulatory 3% funding sources
Slide 35: Solid Capital Base
Solid Capital Base Tier 1 Common Equity Ratio Tier 1 Capital Ratio 12.00% 11.52% 11.49% 12.40% 11.30% 11.27% 11.91% 11.69% 11.66% 11.87% 7.00% 8.50% 2Q19 3Q19 4Q19 1Q20 2Q20 2Q19 3Q19 4Q19 1Q20 2Q20 Tier 1 Common Equity Ratio Basel III minimum Tier 1 Capital Ratio Basel III minimum Total Capital Rat
Slide 36: Capital Strategy
Capital Strategy Tangible Book Value Per Share Strategy & Deployment 6.6% annualized dividend yield $12.79 $12.33 $12.42 July 2020 stress testing indicates $12.26 capital ratios above regulatory $11.82 minimums in all modeled scenarios Targeted dividend payout ratio remains 40 - 45% over the long te
Slide 37: Outlook Commentary
Outlook Commentary1 Loan growth expected to be in low single digits, excluding impact of PPP Balance Sheet Deposit balances expected to remain elevated in near-term; gradual decline with eventual spending of PPP/stimulus Expected to be positively impacted by PPP forgiveness Net Interest Margin Under
Slide 38: Presentation Contents
Presentation Contents About First Financial Bancorp COVID-19 Related Information Financial Performance Appendix 38
Slide 39: Appendix: Our Markets
Appendix: Our Markets Greater Cincinnati Indianapolis Loans $2.9 billion Loans $1.2 billion Deposits $3.8 billion Deposits $0.9 billion Deposit Market Share #4 (2.8%) Deposit Market Share #14 (1.5%) Banking Centers 50 Banking Centers 10 Fortune 500 Companies 8 Fortune 500 Companies 2 Central OH Loui
Slide 40: 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 41: Appendix: Non-GAAP to GAAP Reconciliation
Appendix: Non-GAAP to GAAP Reconciliation Net interest income and net interest margin - fully tax equivalent Three months ended June 30, Mar. 31, Dec. 31, Sep. 30, June 30, 2020 2020 2019 2019 2019 Net interest income $ 111,576 $ 114,282 $ 118,902 $ 121,535 $ 122,302 Tax equivalent adjustment 1,664
Slide 42: Appendix: Non-GAAP to GAAP Reconciliation
Appendix: Non-GAAP to GAAP Reconciliation Additional non-GAAP ratios Three months ended June 30, Mar. 31, Dec. 31, Sep. 30, June 30, (Dollars in thousands, except per share data) 2020 2020 2019 2019 2019 Net income (a) $ 37,393 $ 28,628 $ 48,677 $ 50,856 $ 52,703 Average total shareholders' equity 2
Slide 43: Appendix: Non-GAAP to GAAP Reconciliation
Appendix: Non-GAAP to GAAP Reconciliation Additional non-GAAP measures 2Q20 1Q20 4Q19 3Q19 2Q19 (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) $ 111,576 $ 111,576 $ 114,282
Slide 44: First Financial Bank
First Financial Bank First Financial Center 225 East Fifth Street Suite 800 Cincinnati, OH 45202-4248 44
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