Slide 1: Investor Presentation Fourth Quarter 2011
Another step on the path to success 1 Investor Presentation Fourth Quarter 2011 EXHIBIT 99.1
Slide 2: Forward-looking statements
Another step on the path to success 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 filing
Slide 3: Focused Business Strategy
Another step on the path to success 3 Focused Business Strategy Client intimate strategy focused on long-term, profitable relationships with clients Strong sales culture that is aggressive in attracting business with the appropriate risk and return Lines of business – Commercial – Retail – Wea
Slide 4: Strategy and Execution – Recent History
Another step on the path to success 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 esta
Slide 5: Franchise Summary Comparison
Another step on the path to success Franchise Summary Comparison Consistent and solid profitability – LTM ROAA of 1.06% compared to peer median of 0.90% – LTM ROAE of 9.37% compared to peer median of 7.58% – LTM net interest margin of 4.55% compared to peer median of 3.80% Capital levels extreme
Slide 6: Fourth Quarter 2011 Financial Highlights
Another step on the path to success 6 Fourth Quarter 2011 Financial Highlights Quarterly net income of $17.9 million, or $0.31 per diluted common share Strong quarterly and annual growth in diluted earnings per common share – Fourth quarter 2011 increased 14.8% compared to linked quarter – Full
Slide 7: Pre-Tax, Pre-Provision Income Trend
Another step on the path to success 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 decline in fourth quar
Slide 8: Components of Net Interest Margin
Another step on the path to success 8 Components of Net Interest Margin Yield on covered loans was 11.16% during the fourth quarter, continuing to enhance net interest margin Elevated cash balances resulting from the branch acquisitions pressured net interest margin and net interest income as pr
Slide 9: Capitalization
Another step on the path to success 9 Capitalization Primary component of capital is common equity Capital ratios declined during the fourth quarter 2011 as a result of intangible assets recognized in connection with the Flagstar transaction and pension valuation adjustments Capitalization lev
Slide 10: Variable Dividend / 100% Payout Ratio
Another step on the path to success 10 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 $0.12 per share – Variable dividend based on the remainder of quarter
Slide 11: Low Risk Balance Sheet
Another step on the path to success 11 Low Risk Balance Sheet Total Assets by Risk Weighting % As of December 31, 2011 (Dollars in millions) Return on Risk Weighted Assets = 1.95% (Peer Median(1) = 1.30%) Risk Weighted Assets / Total Assets = 54.64% (Peer Median(1) = 66.69%) (1) Peer Group compr
Slide 12: Credit Quality Review
Another step on the path to success 12 Credit Quality Review Nonperforming assets declined $10.1 million, or 10.4%, compared to December 31, 2010 Total classified assets totaled $162.4 million as of December 31, 2011, declining 5.9% compared to the linked quarter and 19.7% compared to December 3
Slide 13: Selective Acquisitions
Another step on the path to success 13 Selective Acquisitions Supplements organic growth strategy through expansion in strategic markets Transactions met all internal criteria for acquisitions Loss sharing arrangements provide significant protection on acquired loans Developed scalable cover
Slide 14: Liberty Savings Bank Branch Acquisition
Another step on the path to success 14 Liberty Savings Bank Branch Acquisition Branch Map and Deposit Market Share Significantly enhances presence in key market of Dayton Deposit composition and cost of funds similar to existing First Financial deposit base Strong growth potential in all busin
Slide 15: Flagstar Bank Branch Acquisition
Another step on the path to success 15 Flagstar Bank Branch Acquisition Branch Map and Deposit Market Share Indiana Pro Forma Deposit Market Share Indianapolis, IN MSA FDIC Deposit Data as of June 30, 2011 - Holding Company Level Number Total Market 2011 of Deposits Share Rank Name City, State Branc
Slide 16: Franchise Highlights
Another step on the path to success 16 Franchise Highlights 1. Strong operating fundamentals – 85 consecutive quarters of profitability 2. Strong capital levels 3. Dividend yield of 7.0% 4. Solid growth in commercial and commercial real estate business lines 5. Low risk balance sheet 6. Credit metri
Slide 17: Appendix
Another step on the path to success 17 Appendix
Slide 18: Pre-Tax, Pre-Provision Income
Another step on the path to success 18 Pre-Tax, Pre-Provision Income For the three months ended December 31, September 30, June 30, March 31, December 31, Dollars in thousands 2011 2011 2011 2011 2010 Pre-tax, pre-provision income 1 33,015$ 31,814$ 32,845$ 29,768$ 34,844$ Less: accelerated discount
Slide 19: Revenue by Source
Another step on the path to success 19 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 78% of total revenue is derived from strategic businesses. Not includi
Slide 20: Noninterest Income and Expense
Another step on the path to success 20 Noninterest Income and Expense Components of Noninterest Expense For the Three Months Ended December 31, 2011 (Dollars in millions) Components of Noninterest Income For the Three Months Ended December 31, 2011 (Dollars in millions) $2.3 8% $15.1 51% $7.4 25% $4
Slide 21: Deposit and Loan Composition
Another step on the path to success 21 Deposit and Loan Composition Total Deposits = $5.6 billion As of December 31, 2011 (Dollars in millions) Gross Loans = $4.0 billion As of December 31, 2011 (Dollars in millions) Market exits are complete; acquired-non-strategic deposits consist primarily of t
Slide 22: Loan Composition
Another step on the path to success 22 Loan Composition Covered Loans - $1.0 billion Uncovered Loans - $3.0 billion Total Loan Portfolio – December 31, 2011 $4.0 billion In-house lending limit of $15 million – significantly below legal limit 26.2% of total loans covered under FDIC loss share agr
Slide 23: Uncovered Loans – RE Collateral
Another step on the path to success 23 Uncovered Loans – RE Collateral Total Uncovered Loan Portfolio 1 – December 31, 2011 $3.0 Billion 1 Excludes loans covered by FDIC loss sharing agreements Construction and acquisition and land development loans represent small portion of overall portfolio C
Slide 24: Deposit Composition
Another step on the path to success 24 Deposit Composition Non-time deposit balances increased $347.1 million during the fourth quarter 2011, primarily driven by $272.4 million assumed in connection with the Flagstar acquisition Excluding Flagstar activity, non-time deposit balances increased $7
Slide 25: Funding Structure and Cost of Funds
Another step on the path to success 25 1.11% 1.04% 0.93% * Not included in cost of funds calculation Average Balances – Total Interest Bearing Liability Composition Average Balances – Deposit Composition 0.32% 2.03% Co s t of F u n d s Total Cost of Funds Funding Structure and Cost of Funds 0.00% 0.
Slide 26: Investment Portfolio
Another step on the path to success 26 Investment Portfolio Investment portfolio represents 22.7% of total assets Purchased $578.2 million during the quarter consisting primarily of agency MBS with a weighted average yield of 2.38% and a duration of 3.5 years; overall duration of portfolio incre
Slide 27: Investment Portfolio Composition
Another step on the path to success 27 Sector Allocation Credit Quality Investment Grade = A rated securities Other Investment Grade = B rated securities Not Rated includes an immaterial amount of securities with a non-investment grade rating * Other consists primarily of regulatory stock; includes
Slide 28: Covered Loan Balances
Another step on the path to success 28 Covered Loan Balances Covered Loan Activity - Fourth Quarter 2011 Reduction in Recorded Investment Due to: September 30, Contractual Net Loans With December 31, (Dollars in thousands) 2011 Sales Prepayments Activity 1 Charge-Offs 2 Coverage Rem. 2011 Commercial
Slide 29: Covered Loan Activity
Another step on the path to success 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 Decembe
Slide 30: Covered Loan Performance
Another step on the path to success 30 Covered Loan Performance While covered loans continue to decline, better than expected performance has resulted in a consistently high yield on the portfolio Despite net impairment being recognized in a majority of the loan pools life-to-date, impairment re
Slide 31: Components of Credit Losses
Another step on the path to success Components of Credit Losses Covered Assets 31 For the three months ended December 31, Dollars in thousands 2011 Description Net incremental impairment for period ($5,277) Reduction in expected cash flows related to certain loan pools net of prior period impairment
Slide 32: Comparison of Financial Impact Extreme Cases
Another step on the path to success 32 Comparison of Financial Impact 1 Extreme Cases If all acquired loans were to prepay immediately, diluted EPS would benefit by $0.97 per share as of the fourth quarter 2011 The absolute worst case scenario – a 100% loss on all acquired loans – would negative
Slide 33: Accounting for Covered Loans
Another step on the path to success 33 Accounting for Covered Loans Impact on Profitability Metrics of Accounting Treatment Covered Loan Portfolio Accounting Treatment: ASC Topic 310 - 30 Accounting Unit Consideration: Accounting Pools Prospective Yield Adjustment on Pool Recognize Accelerated Disco
Slide 34: Summary of Acquisition-Related Items
Another step on the path to success 34 Summary of Acquisition-Related Items For the Three Months Ended December 31 September 30 December 31 (Dollars in thousands) 2011 2011 2010 Income effect: Accelerated discount on covered loans 1,2 4,775$ 5,207$ 6,113$ Acquired-non-strategic net interest income 8
Slide 35: Effect on Noninterest Items
Another step on the path to success 35 Effect on Noninterest Items Noninterest Income Noninterest Expense For the Three Months Ended December 31 September 30 December 31 (Dollars in thousands) 2011 2011 2010 Total noninterest income 29,640$ 28,115$ 34,534$ Signif icant components of noninterest inco
Slide 36: Another step on the path to success 36 Another step on the path to success
Another step on the path to success 36 Another step on the path to success