First Financial Bancorp. · NASDAQ:FFBC
First Financial Bancorp — Q4 2010 Earnings Presentation
38 slides from First Financial Bancorp's earnings presentation, Mar 1, 2011
Slide 1: Investor Presentation Fourth Quarter 2010
EXHIBIT 99.1 Investor Presentation Fourth Quarter 2010
Slide 2: Forward-Looking Statement Disclosure
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, certain statements in future filin
Slide 3: Business & Strategy Review
fiRST first financial bancorp Business & Strategy Review
Slide 4: Franchise Highlights
Franchise Highlights Another step on the path to success Strong operating fundamentals and prudent management have resulted in solid performance and profitability throughout the recessionary period 2010 ROAA of 0.91% and ROAE of 8.68% 81 consecutive quarters of profitability Capital levels remain am
Slide 5: Opportunities to Build Shareholder Value
Opportunities to Build Shareholder Value Opportunities and Risks Risks to be Managed Another step on the path to success Efficient and prudent use of capital in future periods Support organic growth in core strategic markets Dividend policy Acquisitions that meet internal criteria Share repurchase p
Slide 6: Focused Business Strategy
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 – Wealth Management Target clients – Individuals
Slide 7: Selective Acquisitions
3 banking centers Peoples in Indiana (FDIC) July 31, 2009 $85 mm deposits $41 mm in select 19 banking centers performing commercial and Loan Portfolio $521 mm deposits consumer loans June 30, 2009 $331 mm in loss share covered loans1 $145 mm select performing No first loss commercial and position co
Slide 8: Stress Case
Stress Case Illustrates the strength of our balance sheet assuming a full charge -off of all acquired loans under FDIC loss share agreements and a full charge -off of all uncovered non-performing loans. Nonperforming Assets = $98 million Covered Loans = $1.5 billion Risk Based Capital Ratio 2.35% 1.
Slide 9: Credit Quality Review
34.5% of total loans covered under FDIC loss share agreement Seeing isolated areas of improvement but overall weakness still exists in Company’s strategic markets Stress remains primarily in commercial, construction and CRE portfolios Credit Quality Trends 1 Quarter Year 4Q10 3Q10 2Q10 1Q10 4Q09 201
Slide 10: Financial Review
fiRST first financial bancorp Financial Review
Slide 11: 2010 Financial Highlights
2010 Financial Highlights Fourth Quarter and Full Year Quarterly net income of $14.3 million, or $0.24 per diluted common share Full year 2010 net income available to shareholders’ of $57.4 million, or $0.99 per diluted common share Continued strong profitability – Quarterly and annual return on ave
Slide 12: Capital Strength and Dividend
Primary component of capital is common equity; continues to grow as a result of earnings power Announced 20% increase in the quarterly dividend to $0.12 per share Strong capitalization levels remain among industry leaders and provides ability to take advantage of strategic opportunities Long-term ta
Slide 13: Net Interest Margin Summary
Net interest margin continues to be positively impacted by the lower cost of funds related to the expected runoff of retail and brokered certificates of deposit Additionally lowering the cost of funds was the full quarter impact of the prepayment of $232 million of FHLB advances Available liquidity
Slide 14: Deposit and Loan Composition
Deposit and Loan Composition Total Deposits = $5.1 billion As of December 31, 2010 (Dollars in millions) Gross Loans = $4.3 billion As of December 31, 2010 (Dollars in millions) $393 8% $857 20% $3,441 $4,753 80% 92% Strategic Acquired -Non-Strategic Western market (acquired -non-strategic) branch e
Slide 15: Noninterest Income and Expense
Noninterest Income and Expense Components of Noninterest Income Components of Noninterest Expense For the Three Months Ended December 31, 2010 For the Three Months Ended December 31, 2010 (Dollars in millions) (Dollars in millions) $1.2 2% $3.4 6% $6.1 $4.1 18% 7% $1.1 3% $16.0 46% $11.3 $47.6 33% 8
Slide 16: Acquisition-Related Items
fiRST first financial bancorp Acquisition-Related Items
Slide 17: Pre-Tax, Pre-Provision Income
Pre-Tax, Pre-Provision Income For the three months ended December 31, September 30, June 30, March 31, December 31, 2010 2010 2010 2010 2009 Pre-tax, pre-provision income 1 $ 34,844 $ 33,631 $ 37,216 $ 31,126 $ 35,724 Accelerated discount on covered loans related to: Loan sales - 362 - 1,927 2,919 P
Slide 18: Fourth Quarter 2010 Loan Valuation
Fourth Quarter 2010 Loan Valuation 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 a result of valuation procedures perform
Slide 19: Comparison of Financial Impact Various Scenarios
Comparison of Financial Impact Various Scenarios Related to Acquired Loans The tables below present a comparison of the impact on per share amounts under various scenarios related to acquired loans 1 Extreme Cases Best Estimate If all acquired loans were to prepay immediately, after-tax revenue per
Slide 20: What is the Embedded Value?
What is the Embedded Value? Higher reinvestment balances – Book value of acquired loans is less than the unpaid principal balance – Full payoff = increase in earning assets • Interest income is not fully offset by lower reinvestment yield Additional capital to leverage from discount accretion • Imme
Slide 21: Appendix
fiRST first financial bancorp Appendix
Slide 22: Total Loan Portfolio
Strategic portfolio: no significant industry concentrations; geography distributed throughout footprint In-house lending limit of $15 million – significantly below legal limit Experienced quarterly growth in commercial loans of 4.8%; commercial and CRE new originations and renewals totaled approxima
Slide 23: Uncovered Loans – RE Collateral
Uncovered Loans – RE Collateral Construction and acquisition and land development loans represent small portion of overall portfolio Commercial real estate and constructions loans located primarily in Ohio and Indiana markets Total Uncovered Loan Portfolio 1 – December 31, 2010 $2.8 Billion 6% $163,
Slide 24: Covered Loan Activity
Covered Loan Activity Covered Loan Activity - Fourth Quarter 2010 Reduction in Balance Due to: September 30, Prepayments / Contractual Loans With December 31, (Dollars in thousands) 2010 Loan Sales Renewals Activity 1 Charge -Offs 2 Coverage Rem. 2010 Commercial $ 386,593 $ - $ 25,446 $ 25,618 $ 795
Slide 25: Strategic and Acquired-Non-Strategic Definitions
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 73% of total revenue is derived from strategic businesses . Not including the FDIC loss sharing income, strategic operations repr
Slide 26: Funding Structure and Cost of Funds
Funding Structure and Cost of Funds Average Interest Bearing Liability Balances Total Cost of Funds 1.51% 1.45% 1.39% 1.23% 8% 8% 6% 4% 35% 36% 36% 38% 48% 41% 43% 44% 13% 13% 13% 14% 1Q10 2Q10 3Q10 4Q10 Noninterest -bearing deposits* Interest -bearing deposits and savings Time deposits Borrowed fun
Slide 27: Deposit Activity
Deposit Activity Deposit Activity - Fourth Quarter 2010 Balance as of Acquired - Balance as of September 30, Strategic Non-Strategic December 31, (Dollars in thousands) 2010 Portfolio Portfolio 2010 Transaction and savings accounts $ 3,120,611 $ 212,149 $ 18,646 $ 3,351,406 Time deposits 1,742,059 (
Slide 28: Credit Quality Comparison
Credit Quality Comparison 1 NPLs / Loans 4 .0 0 % 3 .50 % 3 .0 0 % 2 .50 % 2 .0 0 % 1.50 % 1.0 0 % 0 .50 % 0 .0 0 % 1Q0 8 2 Q0 8 3 Q0 8 4 Q0 8 1Q0 9 2 Q0 9 3 Q0 9 4 Q0 9 1Q10 2 Q10 3 Q10 4 Q10 Reserves / NPLs 3 0 0 % 2 50 % 2 0 0 % 150 % 10 0 % 50 % 0 % 1Q0 8 2 Q0 8 3 Q0 8 4 Q0 8 1Q0 9 2 Q0 9 3 Q0 9
Slide 29: Investment Portfolio
Investment portfolio represents 16.2% of total assets Investment philosophy includes avoidance of credit and geographic concentration risks within the MBS portfolio while balancing the Company’s overall asset / liability management objectives During the fourth quarter 2010, the Company purchased $36
Slide 30: Investment Portfolio Composition
Investment Portfolio Composition As of December 31, 2010 Sector Allocation Agencies MBSs (agency) 10% 45% Other * 9% CMOs (Agency) UST Notes Municipal 33% CMOs (private) 0% 1% 2% Credit Quality Investment Grade 98% Not Rated 2% Other Investment Grade 0% * Other consists primarily of regulatory stock
Slide 31: Summary of Acquisition-Related Items
Summary of Acquisition -Related Items For the Twelve For the Three Months Ended Months Ended December 31, September 30, June 30, March 31, December 31, (Dollars in thousands) 2010 2010 2010 2010 2010 Income effect: Accelerated discount on loan prepayments and dispositions 1, 2 $ 6,113 $ 9,448 $ 7,40
Slide 32: Effect on Noninterest Items
Effect on Noninterest Items Another step on the path to success Noninterest Income For the Twelve For the Three Months Ended Months Ended December 31, September 30, June 30, March 31, December 31, (Dollars in thousands) 2010 2010 2010 2010 2010 Total noninterest income $ 34,534 $ 44,895 $ 40,467 $ 2
Slide 33: Leadership
fiRST first financial bancorp Leadership
Slide 34: Executive Management
Executive Management Claude E. Davis President & Chief Executive Officer Mr. Davis joined First Financial in 2004 as President, Chief Executive Officer and a member of the Board of Directors . Mr. Davis also serves as Chairman of the Board of Directors of First Financial Bank. Prior to joining the c
Slide 35: Executive Management (continued)
Executive Management (continued) Michael Cassani Executive Vice President, First Financial Wealth Management Mr. Cassani joined First Financial in 2007 as Senior Vice President and Chief Administrative Officer to oversee the company’s wealth management group. Prior to joining the company, Mr. Cassan
Slide 36: Executive Management (continued)
Executive Management (continued) Jill L. Wyman Executive Vice President, Co-Chief Retail Banking Officer Ms. Wyman joined First Financial in 2003 as Vice President and Sales Director . In her current position, Ms. Wyman has responsibility for leading the retail sales process, growing retail deposits
Slide 37: Executive Management (continued)
Executive Management (continued) John Sabath Senior Vice President, Chief Risk Officer Mr. Sabath joined First Financial in 2005 as Regulatory Risk Manager . Mr. Sabath was then promoted to Senior Risk Officer and First Vice President and assumed his current position in 2008. He is responsible for m
Slide 38: Another step on the path to success
Another step on the path to success
First Financial Bancorp — Q4 2010 Earnings Presentation on 6ix