First Financial Bancorp. · NASDAQ:FFBC
First Financial Bancorp — Q4 2019 Earnings Presentation
39 slides from First Financial Bancorp's earnings presentation, Feb 12, 2020
Slide 1: Investor Presentation Fourth Quarter 2019
Exhibit 99.1 Investor Presentation Fourth Quarter 2019
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: Presentation Contents
Presentation Contents About First Financial Bancorp Financial Performance Appendix 3
Slide 4: Company Overview
Company Overview Overview Lines of Business Founded: 1863 Commercial C&I, O-CRE, ABL, Equipment Finance, Treasury, Headquarters: Cincinnati, Ohio Bannockburn Global Forex Banking Centers: 145 Retail Banking Assets: $14.5 billion Consumer, Business Banking, Small Business Loans: $9.2 billion Mortgage
Slide 5: Current Priorities
Current Priorities Achieve targeted income and balance sheet growth objectives Realize expected benefits of Bannockburn acquisition Implement strategic technology and bank transformation roadmap Transform branch distribution network Open second innovation hub location Re-imagine Greater Cincinnati d
Slide 6: Bannockburn Transaction Overview
Bannockburn Transaction Overview First Financial acquired Cincinnati based Bannockburn Global Forex, LLC (“BGF”), a capital markets firm specializing in foreign exchange payments, hedging, and other fee- based advisory services to small and medium enterprise (“SME”) clients Highly-additive transacti
Slide 7: 4th & Vine – Opened 8/12/19
4th & Vine – Opened 8/12/19 New 15,000 sq. ft. First Innovation Center and Downtown Cincinnati Banking Hub Site Dedicated landing page www.4thvine.com Multi-use spaces free for the community including multiple conference rooms, areas for shared workspace, and 5,000 sq. ft. for seminars and events Of
Slide 8: 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. 8
Slide 9: Digital + Technology Investments
Digital + Technology Investments 2020 noninterest expense includes $6 – 8 million of strategic technology investments Continued investment in foundational data enablement + automation capabilities Formed Enterprise Digital Solutions group, Digital commercial loan Expanded Salesforce led by new Chief
Slide 10: Capital Strategy & Deployment
Capital Strategy & Deployment Tangible Book Value Per Share Strategy & Deployment Repurchased 1.6 million shares in $12.79 $12.33 $12.42 fourth quarter; 2.8 million repurchased $12.19 in 2019 $11.72 3.6% dividend yield Targeted dividend payout ratio remains 40 - 45% Strategic M&A 4Q18 1Q19 2Q19 3Q19
Slide 11: Revenue Growth Strategies
Revenue Growth Strategies 11
Slide 12: Business line vision and goals
first first financial bank Vision ‘Toibe known and operate as the Premier Business Bank and to provide banking ‘solutions to the business, to the owner(s) and to their employees. Target Audience Current Portfolio ‘High Demander ‘Approx 500 Relationships ‘+ SIOMM-100MM Sales Revenue 3248 Cormeen 5+ E
Slide 13: Market Centric Strategies
Market Centric Strategies 13
Slide 14: Invest in First Financial
Invest in First Financial Experienced and proven management team Increased scale to invest in technology Proven & sustainable business model Well managed through the cycle Conservative operating philosophy Consistent profitability – 117 consecutive quarters Top quartile performer – ROAA, ROATCE, Eff
Slide 15: Presentation Contents
Presentation Contents About First Financial Bancorp Financial Performance Appendix 15
Slide 16: 4Q 2019 Results
4Q 2019 Results 117th Consecutive Quarter of Profitability Net income = $48.7 million or $0.49 per diluted share. Adjusted1 net income = $51.4 million or $0.52 per diluted share2. Profitability Return on average assets = 1.34%. Adjusted1 return on average assets = 1.41%. Return on average shareholde
Slide 17: 4Q 2019 Highlights
4Q 2019 Highlights Solid quarterly earnings Adjusted1 earnings per share - $0.52 Adjusted1 return on assets – 1.41% Adjusted1 return on average tangible common equity – 16.73% Loan and deposit growth in line with expectations Loan balances increased $138.0 million compared to the linked quarter; 6.0
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. 4Q 2019 3Q 2019 As Reported Adjusted As Reported Adjusted Net interest income $ 118,902 $ 118,902 $ 121,535 $ 121,535 Provision for loan and lease loss
Slide 19: Profitability
Profitability Diluted EPS Return on Average Assets 1.72% $0.61 1.63% $0.58 1.54% $0.56 1.41% $0.52 1.38% $0.48 1.59% $0.56 1.50% $0.53 $0.51 1.41% 1.34% $0.47 $0.49 1.33% 4Q18 1Q19 2Q19 3Q19 4Q19 4Q18 1Q19 2Q19 3Q19 4Q19 1 Diluted EPS Adjusted EPS ROA Adjusted ROA1 Return on Avg Tangible Common Equi
Slide 20: Net Interest Margin
Net Interest Margin Net Interest Margin (FTE) 4Q19 NIM (FTE) Progression 4.21% 3Q19 3.96% 4.10% 4.04% 0.29% 3.96% 0.23% 3.89% Asset yield -0.19% 0.23% 0.21% 0.17% 0.11% 0.12% 0.21% 0.15% Asset mix 0.02% 0.14% Funding costs 0.07% 3.75% 3.76% 3.69% 3.60% 3.54% Funding mix 0.03% 4Q18 1Q19 2Q19 3Q19 4Q1
Slide 21: Average Balance Sheet
Average Balance Sheet Average Loans Average Deposits 5.73% 5.69% 5.73% 5.58% 0.78% 0.82% 0.80% 0.74% 5.33% 0.68% $8,766 $8,773 $8,853 $9,014 $9,149 $10,050 $10,068 $10,096 $10,018 $10,222 4Q18 1Q19 2Q19 3Q19 4Q19 4Q18 1Q19 2Q19 3Q19 4Q19 1 Gross Loans Loan Yield (Gross) Total Deposits Cost of Deposi
Slide 22: Loan Portfolio
Loan Portfolio Loan LOB Mix (EOP) Net Loan Change-LOB (Linked Quarter) Total $9.2 Billion ICRE $165.1 $468 $595 5% Commercial -$16.8 7% Small Business Banking -$27.3 $1,120 $3,257 12% 35% Consumer -$8.5 Mortgage $7.8 $864 9% Oak Street $16.8 $1,175 Franchise -$8.2 13% $1,723 19% Other $9.1 ICRE Comm
Slide 23: Loan Portfolio
Loan Portfolio C&I Loans by Industry 1 CRE Loans by Collateral 2 C&I Loans: $3.7B CRE Loans: $3.5B Nursing/Assisted Accommodation Hotel/Motel Living & Food Services Office 12% 6% Real Estate 13% 14% 14% Strip Center Manufacturing 6% 12% Residential, 1-4 Family Health Care Finance & 4% 6% Insurance R
Slide 24: Deposits
Deposits Deposit Product Mix (Avg) 4Q19 Average Deposit Progression Total $10.2 billion Interest-bearing demand $26.8 $1,624 $1,367 16% 13% Noninterest-bearing $114.2 $683 7% Savings -$4.4 $2,474 24% $1,438 Money Markets -$8.3 14% Retail CDs -$35.9 $881 $1,755 9% 17% Brokered CDs $12.0 Interest-bear
Slide 25: Investment Portfolio
Investment Portfolio Total EOP investments of approximately $3.1 billion Investment portfolio / total assets = approximately 21.5% Portfolio duration approximately 3.4 years Portfolio Composition Portfolio Quality Non-Agency pass- Corporate through securities, 3% securities, 3% Regulatory stock, 4%
Slide 26: Noninterest Income
Noninterest Income Noninterest Income 4Q19 Highlights Total $36.8 million $6.0 million of foreign exchange income $5,176 represents full quarter impact of 14% Bannockburn acquisition $9,343 26% $4.2 million of derivative fees in line with $4,723 record second and third quarters 13% Continued momentu
Slide 27: Noninterest Expense
Noninterest Expense Noninterest Expense 4Q19 Highlights Total $93.1 million Includes $0.7 million of severance and merger related costs $17,295 19% $2.9 million write-down of historic tax credit investment $3,150 3% $2,192 $1.7 million related to other non-recurring 2% costs such as branch consolida
Slide 28: Asset Quality
Asset Quality Classified Assets / Total Assets Nonperforming Assets / Total Assets 1.01% 1.02% 0.94% 0.92% 0.63% 0.60% 0.62% 0.56% $142.0 $147.8 0.62% $131.7 $132.5 0.42% $88.2 $90.2 $83.9 $80.8 $89.3 $61.6 4Q18 1Q19 2Q19 3Q19 4Q19 4Q18 1Q19 2Q19 3Q19 4Q19 Classified Assets Classified Assets / Total
Slide 29: Capital
Capital Tier 1 Common Equity Ratio Tier 1 Capital Ratio 12.03% 12.00% 11.87% 11.52% 12.28% 11.30% 12.43% 12.40% 9.00% 11.91% 10.50% 11.69% 4Q18 1Q19 2Q19 3Q19 4Q19 4Q18 1Q19 2Q19 3Q19 4Q19 Tier 1 Common Equity Ratio Target Tier 1 Capital Ratio Target Total Capital Ratio Tangible Common Equity Ratio
Slide 30: Franchise Lending Portfolio
Franchise Lending Portfolio Overview Quality Portfolio Well-regarded national brand concepts Total $466.4 million Financing for acquisition, development of new stores, $19.0 $16.1 4% and remodeling of existing stores 3% Top 15 concepts comprise 85% of portfolio outstandings Disciplined portfolio man
Slide 31: 2020 Outlook
2020 Outlook1 Annualized loan growth expected to be in the mid-single digits on a percentage Balance Sheet basis NIM (FTE) expected to remain relatively flat, assuming no further rate cuts and Net Interest Margin excluding purchase accounting NIM (FTE) expected to decline 6 - 8 bps for each 25 bps d
Slide 32: CECL Update
CECL Update Established cross-functional Steering Committee tasked with managing the implementation Developed a transparent, consistent model Multiple model dry/parallel runs Qualitative framework to account for the drivers of credit losses not captured by the quantitative model Model validated by i
Slide 33: Presentation Contents
Presentation Contents About First Financial Bancorp Financial Performance Appendix 33
Slide 34: Appendix: Our Markets
Appendix: Our Markets Greater Cincinnati Indianapolis Loans $2.8 billion Loans $1.2 billion Deposits $3.2 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 35: Appendix: Non-GAAP Measures
Appendix: Non-GAAP Measures The Company’s earnings release and accompanying presentation contain 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 consi
Slide 36: 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 Dec. 31, Sep. 30, June 30, Mar. 31, Dec. 31, 2019 2019 2019 2019 2018 Net interest income $ 118,902 $ 121,535 $ 122,302 $ 121,515 $ 125,959 Tax equivalent adjustment 1,630
Slide 37: Appendix: Non-GAAP to GAAP Reconciliation
Appendix: Non-GAAP to GAAP Reconciliation Additional non-GAAP ratios Three months ended YTD Dec. 31, Sep. 30, June 30, Mar. 31, Dec. 31, Dec. 31, Dec. 31, (Dollars in thousands, except per share data) 2019 2019 2019 2019 2018 2019 2018 Net income (a) $ 48,677 $ 50,856 $ 52,703 $ 45,839 $ 55,014 $ 19
Slide 38: Appendix: Non-GAAP to GAAP Reconciliation
Appendix: Non-GAAP to GAAP Reconciliation Additional non-GAAP measures 4Q19 3Q19 2Q19 1Q19 4Q18 (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) $ 118,902 $ 118,902 $ 121,535
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First Financial Bancorp — Q4 2019 Earnings Presentation on 6ix