First Financial Bancorp. · NASDAQ:FFBC
First Financial Bancorp — Q4 2013 Earnings Presentation
29 slides from First Financial Bancorp's earnings presentation, Feb 26, 2014
Slide 1: First Financial Bancorp Investor Presentation Fourth Quarter 2013
First Financial Bancorp Investor Presentation Fourth Quarter 2013 EXHIBIT 99.1
Slide 2: Forward-looking statements
2 Certain statements contained in this release which are not statements of historical fact constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act. Examples of forward-looking statements include, but are not limited to, projections of revenues, income
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 Mortgage Target clients – individuals and small / mid-size businesses located in-mar
Slide 4: Credit Product Diversity
4 Credit Product Diversity During the fourth quarter, the Company’s comprehensive set of credit products produced solid loan growth driven through multiple channels led by C&I / owner-occupied CRE lending, franchise finance and specialty finance Category As of Percent As of Percent As of Percent (Do
Slide 5: Disciplined Cost Management
5 Disciplined Cost Management Completed a comprehensive efficiency study across all business lines and support functions during 2012 Long-term positive operating leverage through the delivery of superior client solutions in a cost- effective manner Programs Targets Banking center rationalization Inc
Slide 6: Fourth Quarter 2013 Financial Highlights
6 Fourth Quarter 2013 Financial Highlights Quarterly net income of $3.8 million, or $0.07 per diluted common share Diluted earnings per share of $0.31 adjusted for the impact of non-operating items Adjusted pre-tax, pre-provision income increased 4.0% to $27.4 million, or 1.75% of average assets Con
Slide 7: Adjusted Pre-Tax, Pre-Provision Income Trend
7 Adjusted 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 sharing income and accelerated discount adjusted for significant non-operating and non-recurring items Fourth quarter adjusted PTP
Slide 8: Components of Net Interest Income
8 Components of Net Interest Income Net interest margin decreased 5 bps during the fourth quarter to 3.86% excluding the impact of loans returning to accrual status Quarterly average balance of covered loans declined 14.5% and average balance of uncovered loans increased 1.3% Quarterly average inves
Slide 9: Loan Composition
9 Loan Composition Total Gross Loans – $4.0 billion As of December 31, 2013 (Dollars in millions) Covered loans likely to retain – performing credits both in- and out-of-market Expected to retain past the expiration of applicable loss sharing agreements with the FDIC Covered loans likely to exit – p
Slide 10: Loan Composition
10 Loan Composition Total uncovered loans increased $74.7 million, or 8.6% on an annualized basis, compared to the linked quarter Growth driven by performance in C&I / owner-occupied, franchise and specialty finance Uncovered loan growth has exceeded covered loan decline for four of the past five qu
Slide 11: Commercial Lending
11 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 12: Consumer Lending
12 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, Fort Wayne and Indianapolis Fou
Slide 13: Building the "fIRST" Brand
13 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 14: Delivery Channels and Product Innovation
14 Delivery Channels and Product Innovation Launched new online banking platform in 2012 Added mobile apps to accommodate client preferences with further enhancements such as Snap Deposit Client usage of mobile and online channels increased significantly during 2013 Deployed image-capture ATMs Sales
Slide 15: Capital Management
15 Capital Management Long-term capital return target to shareholders of 60% - 80% of earnings through combination of dividends and share repurchases Quarterly dividend of $0.15 per share Translates into yield of 3.7% compared to current peer median dividend yield of 2.4% Announced a share repurchas
Slide 16: Capitalization
16 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 17: Credit Quality (Excluding Covered Assets)
17 Credit Quality (Excluding Covered Assets) Classified assets have declined $18.5 million, or 14.4%, since the fourth quarter 2012 Significant problem asset resolution activity during the quarter Total nonperforming loans declined $21.5 million, or 29.0% Total nonperforming assets declined $13.5 mi
Slide 18: Fourth Quarter 2013 Transaction Summary
18 Fourth Quarter 2013 Transaction Summary During the fourth quarter, First Financial announced the acquisitions of The First Bexley Bank and Insight Bank, both headquartered in the Columbus, OH market Entering the growth-oriented Columbus market through the acquisition of two highly successful inst
Slide 19: Entrance to the Columbus, Ohio Market
19 Entrance to the Columbus, Ohio Market Third fastest growing metropolitan market in the Midwest Population of 1.9 million with projected growth of 4.3% through 2017 – highest in Ohio Diverse economy anchored by 15 Fortune 1000 companies Pro Forma Deposit Market Share Columbus MSA FDIC Deposit Data
Slide 20: Prior Acquisition History
20 Prior Acquisition History 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 $331
Slide 21: Franchise Highlights
21 Franchise Highlights 1. Strong operating fundamentals – 93 consecutive quarters of profitability 2. Investments to create long-term growth are producing results 3. Strong loan growth momentum driven by comprehensive portfolio of credit products 4. Well positioned in current markets and executing
Slide 22: Appendix Fourth Quarter 2013
Appendix Investor Presentation Fourth Quarter 2013
Slide 23: Adjusted Pre-Tax, Pre-Provision Income
23 Adjusted Pre-Tax, Pre-Provision Income For the three months ended December 31, September 30, June 30, March 31, December 31, (Dollars in thousands) 2013 2013 2013 2013 2012 Pre-tax, pre-provision income 1 1,947$ 23,707$ 23,794$ 23,324$ 28,869$ Less: accelerated discount on covered loans 1,572 1,7
Slide 24: Investment Portfolio
24 Investment Portfolio Investment portfolio represents 28.0% of total assets Yield earned on portfolio increased to 2.38% from 2.20% for the linked quarter As of December 31, 2013 Category Held-to- Available-for- Other Percent (Dollars in thousands) Maturity Sale Investments Total of Portfolio Debt
Slide 25: Deposit Composition
25 Deposit Composition Total deposits increased $108.5 million, or 2.3%, during the quarter The total cost of deposit funding during the quarter remained low at 27 bps The quality of the deposit base has improved significantly as the balance of higher cost, non-core relationship deposits has decline
Slide 26: Funding Structure and Cost of Funds
26 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 0.43% 0.38% 0.35% 0.37% 0.32% 0.27% 0.24% 0.27% 0
Slide 27: Covered Loan Activity
27 Covered Loan Activity Covered loans declined $60.7 million, or 11.7%, during the quarter The FDIC indemnification asset declined $33.0 million, or 42.3%, during the quarter to $45.1 million, or 9.8% of the balance of covered loans outstanding The decline was driven by a $22.4 million pre-tax non-
Slide 28: Components of Covered Asset Credit Losses
28 Components of Covered Asset Credit Losses $2,234 $(1,846) $1,388 $(250) 1Q13 2Q13 3Q13 4Q13 Covered Asset Credit Losses For the three months ended December 31, (Dollars in thousands) 2013 Description Net incremental impairment / (relief) for period ($4,358) Reduction / (increase) in expected cash
Slide 29: First Financial Bancorp Fourth Quarter 2013
First Financial Bancorp Investor Presentation Fourth Quarter 2013
First Financial Bancorp — Q4 2013 Earnings Presentation on 6ix