First Financial Bancorp. · NASDAQ:FFBC
First Financial Bancorp — Q2 2012 Earnings Presentation
33 slides from First Financial Bancorp's earnings presentation, Jul 31, 2012
Slide 1: Investor Presentation Second Quarter 2012
Another step on the path to success 1 Investor Presentation Second Quarter 2012 EXHIBIT 99.1
Slide 2: Forward-Looking Statement Disclosure
Another step on the path to success 2 Forward-Looking Statement Disclosure 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
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 1.07% compared to peer median of 0.88% – LTM ROAE of 9.53% compared to peer median of 7.63% – LTM net interest margin of 4.47% compared to peer median of 3.79% Capital levels extreme
Slide 6: Second Quarter 2012 Financial Highlights
Another step on the path to success 6 Second Quarter 2012 Financial Highlights Quarterly net income of $17.8 million, or $0.30 per diluted common share Adjusted pre-tax, pre-provision income remained solid, totaling $30.2 million, or 1.92% of average assets Continued strong profitability – Ret
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 decrease in second qua
Slide 8: Components of Net Interest Margin
Another step on the path to success 8 Components of Net Interest Margin Net interest margin decreased 2 bps during the second quarter 2012 to 4.49% Deposit strategies continued to positively impact net interest margin as higher cost time deposits decreased $159.4 million and the cost of deposit
Slide 9: Cost of Interest Bearing Deposits
Another step on the path to success 9 Cost of Interest Bearing Deposits Cost of interest-bearing deposits declined 7 basis points to 0.61% as a result of rationalization strategies Over 30% of total time deposits represent single service relationships with a weighted average cost of 1.82% Reta
Slide 10: Investment Portfolio
Another step on the path to success 10 Investment Portfolio Investment portfolio represents 26.6% of total assets Average balance of investments increased $48.9 million, or 2.9%, during the second quarter 2012 Yield earned on portfolio was 2.46% during the second quarter 2012 As of June 30, 20
Slide 11: Capitalization
Another step on the path to success 11 Capitalization Primary component of capital is common equity Capital ratios varied slightly from prior quarter due to decrease in total tangible assets but increase in risk-weighted assets Capitalization levels still remain among industry leaders and prov
Slide 12: Variable Dividend / 100% Payout Ratio
Another step on the path to success 12 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 $0.15 per share – Variable dividend based on the remainder of quarter
Slide 13: Low Risk Balance Sheet
Another step on the path to success 13 Low Risk Balance Sheet Total Assets by Risk Weighting % As of June 30, 2012 (Dollars in millions) Return on Average Risk Weighted Assets = 1.92% (Peer Median(1) = 1.30%) Risk Weighted Assets / Total Assets = 59.49% (Peer Median(1) = 67.54%) (1) Peer Group c
Slide 14: Credit Quality Review Excluding Covered Assets
Another step on the path to success 14 Credit Quality Review Excluding Covered Assets Classified assets totaled $145.6 million as of June 30, 2012, declining 5.9% compared to the linked quarter and 21.2% compared to June 30, 2011 Second quarter 2012 provision for loan losses increased $5.1 milli
Slide 15: Selective Acquisitions
Another step on the path to success 15 Selective Acquisitions Supplements organic growth strategy through expansion in strategic markets Transactions met all internal criteria for acquisitions Loss sharing arrangements provide significant protection on acquired loans Developed scalable cover
Slide 16: Franchise Highlights
Another step on the path to success 16 Franchise Highlights 1. Strong operating fundamentals – 87 consecutive quarters of profitability 2. Strong capital levels 3. Dividend yield in excess of 7.0% 4. Low risk balance sheet 5. Credit metrics have remained strong throughout the economic downturn 6. So
Slide 17: Appendix
Another step on the path to success 17 Appendix
Slide 18: Pre-Tax, Pre-Provision Income
Another step on the path to success 18 Pre-Tax, Pre-Provision Income For the three months ended June 30, March 31, December 31, September 30, June 30, Dollars in thousands 2012 2012 2011 2011 2011 Pre-tax, pre-provision income 1 32,636$ 30,020$ 33,015$ 31,814$ 32,845$ Less: accelerated discount on c
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 75% 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 June 30, 2012 (Dollars in millions) Components of Noninterest Income For the Three Months Ended June 30, 2012 (Dollars in millions) $49.2 85% $1.0 2% $7.3 13% Strategic
Slide 21: Deposit and Loan Composition
Another step on the path to success 21 Deposit and Loan Composition Total Deposits = $5.1 billion As of June 30, 2012 (Dollars in millions) Gross Loans = $3.9 billion As of June 30, 2012 (Dollars in millions) Market exits are complete; acquired-non-strategic deposits consist primarily of time depo
Slide 22: Loan Composition
Another step on the path to success 22 Loan Composition Covered Loans - $0.9 billion Uncovered Loans - $3.0 billion Total Loan Portfolio – June 30, 2012 $3.9 billion In-house lending limit of $15 million – significantly below legal limit 23.1% of total loans covered under FDIC loss share agreeme
Slide 23: Uncovered Loans – RE Collateral
Another step on the path to success 23 Uncovered Loans – RE Collateral Total Uncovered Loan Portfolio 1 – June 30, 2012 $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 Comme
Slide 24: Deposit Composition
Another step on the path to success 24 Deposit Composition Non-time deposit balances declined $139.8 million during the second quarter 2012, driven by a $162.2 million decrease in public fund interest-bearing demand and money market balances Offsetting the decline in public fund balances was an
Slide 25: Funding Structure and Cost of Funds
Another step on the path to success 25 0.93% 0.79% 0.72% * Not included in cost of funds calculation Average Balances – Total Interest Bearing Liability Composition Average Balances – Deposit Composition 0.24% 1.97% Co s t of F u n d s Total Cost of Funds Funding Structure and Cost of Funds 0.00% 0.
Slide 26: Covered Loan Balances
Another step on the path to success 26 Covered Loan Balances During the second quarter 2012, the total balance of covered loans decreased $82.8 million, 8.4%, as compared to March 31, 2012 Covered Loan Activity - Second Quarter 2012 Reduction in Recorded Investment Due to: March 31, Contractual Ne
Slide 27: Covered Loan Activity
Another step on the path to success 27 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
Slide 28: Covered Loan Performance
Another step on the path to success 28 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; net pres
Slide 29: Components of Credit Losses Covered Assets
Another step on the path to success Components of Credit Losses Covered Assets 29 For the three months ended June 30, Dollars in thousands 2012 Description Net incremental impairment for period $2,171 Reduction in expected cash flows related to certain loan pools net of prior period impairment relie
Slide 30: Reinvestment of Covered Loan Proceeds “Bear Case” vs. “Bull Case”
Another step on the path to success 30 Reinvestment of Covered Loan Proceeds “Bear Case” vs. “Bull Case” Scenarios The “Bear Case” assumes cash proceeds from repayment of covered loans are used to purchase investment securities. The “Bull Case” assumes proceeds are used to fund loan growth. What h
Slide 31: Comparison of Financial Impact Extreme Cases
Another step on the path to success 31 Comparison of Financial Impact 1 Extreme Cases If all acquired loans were to prepay immediately, diluted EPS would benefit by $0.66 per share as of the second quarter 2012 The absolute worst case scenario – a 100% loss on all acquired loans – would negative
Slide 32: Accounting for Covered Loans
Another step on the path to success 32 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 33: Another step on the path to success 33 Another step on the path to success
Another step on the path to success 33 Another step on the path to success
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