First Financial Bancorp. · NASDAQ:FFBC
First Financial Bancorp — Q1 2020 Earnings Presentation
43 slides from First Financial Bancorp's earnings presentation, May 5, 2020
Slide 1: Investor Presentation First Quarter 2020
Investor Presentation First 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 $15.1B NASDAQ: FFBC in assets Headquarters: Cincinnati, Ohio $9.3B/$10.6B Founded: 1863 loans / deposits Banking Centers: 145 Employees: 2,067 $3.9B wealth management Market Cap (3/31/20): $1.5B Dividend Yield (3/31/20): 6.2% 1.73% TCE Ratio: 8.25% Adj. PTPP ROAA(1) Lines of Business C
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 – 118 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 $1.6B Loans $1.8B / Deposits $4.2B Loans $2.9B / Deposits $3.4B 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 The number of Trust & Investments and RPS relationships are updated as of 12/31/19. All other data as of 3/31/20. 8
Slide 9: Revenue Growth Strategies
Revenue Growth Strategies B | Go-to-Market Regional pricing strategy ¢ Treasury Management product investments Investments in Product Management e Up-Market Commercial talent acquisition e Added Chief Digital Officer; building out team e Added Enterprise Product Executive e Added Client Experience E
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 Expanded Solutions formed, Digital commercial Digital deposit Consumer Digital wealth Salesforce
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 » More than half our associates are working from home. Up to four weeks of pandemic pay is available for associates who cannot work on-site or at home. Protocols have been implemented for cleaning and distancing at all worksites. Financial assistance, like payment
Slide 15: Presentation Contents
Presentation Contents About First Financial Bancorp COVID-19 Related Information Financial Performance Appendix 15
Slide 16: 1Q 2020 Results
1Q 2020 Results 118th Consecutive Quarter of Profitability Net income = $28.6 million or $0.29 per diluted share. Adjusted1 net income = $30.7 million or $0.31 per diluted share2 Profitability Return on average assets = 0.79%. Adjusted1 return on average assets = 0.85% Return on average shareholders
Slide 17: 1Q 2020 Highlights
1Q 2020 Highlights Quarterly earnings impacted by elevated provision expense Adjusted1 earnings per share - $0.31 Adjusted1 return on assets – 0.85% Adjusted1 return on average tangible common equity – 10.41% Loan and deposit growth in line with expectations Loan balances increased $106.2 million co
Slide 18: Adjusted Net Income
Adjusted1 Net Income The table below lists certain adjustments that the Company believes are significant to understanding our quarterly performance. 1Q 2020 4Q 2019 As Reported Adjusted As Reported Adjusted Net interest income $ 114,282 $ 114,282 $ 118,902 $ 118,902 Provision for credit losses-loans
Slide 19: Consistent Profitability
Consistent Profitability Diluted EPS Return on Average Assets 1.63% 1.54% $0.58 $0.56 1.38% 1.41% $0.52 $0.48 0.85% $0.31 1.50% 1.41% $0.53 1.33% 1.34% $0.47 $0.51 $0.49 0.79% $0.29 1Q19 2Q19 3Q19 4Q19 1Q20 1Q19 2Q19 3Q19 4Q19 1Q20 1 1 Diluted EPS Adjusted EPS ROA Adjusted ROA Return on Avg Tangible
Slide 20: Net Interest Margin
Net Interest Margin Net Interest Margin (FTE) 1Q20 NIM (FTE) Progression 4Q19 3.89% 4.10% Asset yield -0.16% 4.04% 3.96% 0.23% 3.89% 0.23% Asset mix 0.01% 0.21% 3.77% 0.11% 0.21% 0.12% 0.15% 0.16% Loan fees -0.04% 0.14% 0.10% Funding costs 0.13% 3.76% 3.69% 3.60% 3.54% 3.51% Purchase accounting -0.0
Slide 21: Diverse and Growing Fee Revenues
Diverse and Growing Fee Revenues Noninterest Income 1Q20 Highlights Total $35.4 million $10.0 million of foreign exchange income; Gains from sales of loans Other a $4.0 million, or 65.7%, increase from $2,831 8% $3,880 11% Service 4Q19 Charges $8,435 24% Continued momentum with $3.1 million of clien
Slide 22: Well Managed Expenses
Well Managed Expenses Noninterest Expense 1Q20 Highlights Total $89.7 million Intangible Includes $1.0 million contribution to First amortization Financial Foundation for COVID-19 relief $2,792 Other 3% $13,231 Professional 15% $1.5 million related to other non-recurring expenses such as merger rela
Slide 23: Balance Sheet
Balance Sheet Average Loans Average Deposits 5.69% 5.73% 5.58% 0.82% 0.78% 0.80% 0.74% 5.33% 0.64% 5.04% $8,773 $8,853 $9,014 $9,149 $9,221 $10,068 $10,096 $10,018 $10,222 $10,234 1Q19 2Q19 3Q19 4Q19 1Q20 1Q19 2Q19 3Q19 4Q19 1Q20 Gross Loans Loan Yield (Gross) 1 Total Deposits Cost of Deposits Avera
Slide 24: Attractive Deposit Portfolio
Attractive Deposit Portfolio Deposit Product Mix (Avg) 1Q20 Average Deposit Progression Total $10.2 billion Interest-bearing demand $26.9 Public Funds Interest-bearing $1,602 demand Noninterest-bearing $22.0 16% $1,394 13% Savings $12.4 Brokered CDs $703 Money Markets -$11.4 7% Noninterest- bearing
Slide 25: Loan Portfolio
Loan Portfolio Loan LOB Mix (EOP) Net Loan Change-LOB (Linked Quarter) Total $9.3 Billion Franchise $457 5% ICRE $115.1 Oak Street Mortgage $609 $1,129 7% Commercial $4.7 12% Small Business Banking -$25.2 Consumer $868 Consumer $3.1 9% Mortgage $8.8 Small Business Banking Oak Street $14.4 $1,063 ICR
Slide 26: Diversified & Granular Commercial Portfolios
Diversified & Granular Commercial Portfolios C&I Loans by Industry 1 CRE Loans by Collateral 2 C&I Loans: $3.6B CRE Loans: $3.7B Real Estate Office 12% 14% Accommodation Hotel/Motel Nursing/Assisted & Food Services 11% Living 13% Manufacturing 6% 12% Residential, 1-4 Family Retail 3% Health Care Fin
Slide 27: Asset Classes – Areas of Focus
Asset Classes – Areas of Focus Loans (EOP) Areas of Focus Total $9.3 Billion Franchise Asset classes with areas of focus $455 5% Franchise: $455 million in balances, or Hotels $401 5% of total loans 4% Hotels: $401 million in balances, or 4% Retail CRE of total loans $846 9% Retail CRE: $846 million
Slide 28: Areas of Focus - Franchise Portfolio
Areas of Focus - Franchise Portfolio $455 million in balances or 5% of total loans Top 10 Concepts 69% or $312 million of the portfolio has $100 25% $90 secured either a payment deferral through the $80 20% FFB COVID-19 relief program or a PPP loan % of Portfolio $70 $60 15% approval Balances $50 $4
Slide 29: Areas of Focus - Hotel Portfolio
Areas of Focus - Hotel Portfolio Flag $401 million in balances or 4% of total loans Other $44 96% or $387 million of the portfolio has secured Choice 11% Marriot $110 $30 either a payment deferral through the FFB 8% 27% COVID-19 relief program or a PPP loan approval IHG $69 Majority concentrated in
Slide 30: Areas of Focus – Retail CRE Portfolio
Areas of Focus – Retail CRE Portfolio State $846 million in balances or 9% of total loans $250 30% 52% or $437 million of the portfolio has $200 25% secured either a payment deferral through the % of Portfolio 20% $150 FFB COVID-19 relief program or a PPP loan Balances 15% approval $100 10% 100% of
Slide 31: Strong Credit Quality
Strong Credit Quality Classified Assets / Total Assets Nonperforming Assets / Total Assets 1.01% 1.02% 0.92% 0.60% 0.62% 0.83% 0.56% 0.48% 0.42% $147.8 0.62% $142.0 $132.5 $124.5 $90.2 $83.9 $80.8 $72.2 $89.3 $61.6 1Q19 2Q19 3Q19 4Q19 1Q20 1Q19 2Q19 3Q19 4Q19 1Q20 Classified Assets Classified Assets
Slide 32: Current Expected Credit Losses (CECL)
Current Expected Credit Losses (CECL) ACL/Total Loans 1Q20 Highlights 1.29% 1.55% Adoption impact $143.9 $119.2 million, an increase of $61.5 0.64% 0.69% 0.62% 0.63% $119.2 million from 12/31/19 $61.5 Day 1 increase driven by acquired loans $56.7 $56.6 $57.7 and life of loan expectations compared 1
Slide 33: Investment Portfolio and Liquidity
Investment Portfolio and Liquidity Investment Portfolio Composition Liquidity Sources Non-Agency pass- Corporate Total: $3.2B through securities securities 3% 2% Duration: ~3.1 Yrs In addition to deposits, First Financial has Regulatory stock approximately $4.6 billion of readily available 5% fundin
Slide 34: Solid Capital Base
Solid Capital Base Tier 1 Common Equity Ratio Tier 1 Capital Ratio 12.03% 12.00% 11.52% 11.30% 11.27% 12.43% 12.40% 11.91% 11.69% 11.27% 7.00% 8.50% 1Q19 2Q19 3Q19 4Q19 1Q20 1Q19 2Q19 3Q19 4Q19 1Q20 Tier 1 Common Equity Ratio Basel III minimum Tier 1 Capital Ratio Basel III minimum Total Capital Rat
Slide 35: Capital Strategy
Capital Strategy Tangible Book Value Per Share Strategy & Deployment $12.79 Repurchased 880,000 shares in first $12.19 $12.33 $12.42 quarter; suspended share buybacks on $11.82 March 13th 6.2% annualized dividend yield Stress testing indicates sufficient capital to absorb elevated credit losses and
Slide 36: Outlook Commentary
Outlook Commentary1 Loan growth expected to be in low single digits, excluding impact of PPP Balance Sheet Deposit growth expected to be in mid single digits Expected to decline due to impact of Fed rate cuts and gradually declining LIBOR Net Interest Margin NIM (FTE) expected to decline 6 - 8 bps f
Slide 37: Presentation Contents
Presentation Contents About First Financial Bancorp COVID-19 Related Information Financial Performance Appendix 37
Slide 38: Appendix: Our Markets
Appendix: Our Markets Greater Cincinnati Indianapolis Loans $2.9 billion Loans $1.2 billion Deposits $3.4 billion Deposits $0.7 billion Deposit Market Share #4 (2.8%) Deposit Market Share #14 (1.5%) Banking Centers 52 Banking Centers 10 Fortune 500 Companies 8 Fortune 500 Companies 2 Central OH Loui
Slide 39: 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 40: 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 Mar. 31, Dec. 31, Sep. 30, June 30, Mar. 31, 2020 2019 2019 2019 2019 Net interest income $ 114,282 $ 118,902 $ 121,535 $ 122,302 $ 121,515 Tax equivalent adjustment 1,624
Slide 41: Appendix: Non-GAAP to GAAP Reconciliation
Appendix: Non-GAAP to GAAP Reconciliation Additional non-GAAP ratios Three months ended Mar. 31, Dec. 31, Sep. 30, June 30, Mar. 31, (Dollars in thousands, except per share data) 2020 2019 2019 2019 2019 Net income (a) $ 28,628 $ 48,677 $ 50,856 $ 52,703 $ 45,839 Average total shareholders' equity 2
Slide 42: Appendix: Non-GAAP to GAAP Reconciliation
Appendix: Non-GAAP to GAAP Reconciliation Additional non-GAAP measures 1Q20 4Q19 3Q19 2Q19 1Q19 (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) $ 114,282 $ 114,282 $ 118,902
Slide 43: First Financial Bank
First Financial Bank First Financial Center 255 East Fifth Street Suite 800 Cincinnati, OH 45202-4248 43
First Financial Bancorp. — Q1 2020 Earnings Presentation on 6ix