First Financial Bancorp. · NASDAQ:FFBC
First Financial Bancorp — Q3 2019 Earnings Presentation
39 slides from First Financial Bancorp's earnings presentation, Nov 13, 2019
Slide 1: Investor Presentation Third Quarter 2019
Investor Presentation Third 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 Headquarters: Cincinnati, Ohio C&I, O-CRE, ABL, Equipment Finance, Treasury Retail Banking Banking Centers: 145 Consumer, Business Banking, Small Business Assets: $14.5 billion Mortgage Banking Loans: $9.1 billion Wealth Management
Slide 5: Current Priorities
Current Priorities Achieve targeted income and balance sheet growth objectives Develop / begin implementation of strategic technology roadmap Execute acquisition strategy Prioritize fee based businesses: wealth, capital markets In-market bank acquisitions that provide improved market share or niche
Slide 6: Bannockburn Transaction Overview
Bannockburn Transaction Overview First Financial acquired Cincinnati based Bannockburn Global Forex, LLC (“BBFX”), 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 transact
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 Multi-use spaces free for the community including multiple conference rooms, areas for shared workspace, and 5,000 sq. ft. for seminars and events Financial wellbeing tech table Office/wor
Slide 8: Technology Investments
Technology Investments Rolled out Salesforce CRM across enterprise (Jan 2019) Formed Enterprise Digital Solutions Group (April 2019) Led by new Chief Digital Officer with Retail / Consumer Products background EDS team 2x growth by YE 2019 Implemented Enterprise Workflow Solution across enterprise (1
Slide 9: Capital Strategy & Deployment
Capital Strategy & Deployment Tangible Book Value Per Share Strategy & Deployment Successfully closed Bannockburn $12.79 acquisition $12.33 $12.19 $11.72 Repurchased 1.1 million shares $11.25 Third quarter dividend increased $0.01 to $0.23; results in a 3.8% dividend yield Targeted dividend payout r
Slide 10: Revenue Growth Strategies
Revenue Growth Strategies 10
Slide 11: Commercial Banking and Wealth Management
fiRST first financial bank COMMERCIAL BANKING ‘To be 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 SSS corerertee { SIOMNCIOOMM Sales Revenue 228 Gonminert ras HES eee: ‘Val
Slide 12: Market Centric Strategies
Market Centric Strategies 12
Slide 13: 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 – 116 consecutive quarters Top quartile performer – ROAA, ROATCE, Eff
Slide 14: Invest in First Financial: Total Shareholder Return
Invest in First Financial Total Shareholder Return1,2,3,4 80.5% 79.0% 51.8% 33.0% 22.2% 22.1% 21.0% 14.3% 6.1% 0.8% -7.2% -14.7% 5 Year 3 Year 1 Year YTD 2019 FFBC KBW Peer Median KBW Peer Top Quartile 1 Includes dividend reinvestment. 2 Peer group includes KBW regional bank index peers. 3 Based on
Slide 15: Presentation Contents
Presentation Contents About First Financial Bancorp Financial Performance Appendix 15
Slide 16: 3Q 2019 Results
3Q 2019 Results 116th Consecutive Quarter of Profitability Net income = $50.9 million or $0.51 per diluted share. Adjusted1 net income = $55.5 million or $0.56 per diluted share,2. Profitability Return on average assets = 1.41%. Adjusted1 return on average assets = 1.54%. Return on average sharehold
Slide 17: 3Q 2019 Highlights
3Q 2019 Highlights Solid quarterly earnings Adjusted1 earnings per share - $0.56 Adjusted1 return on assets – 1.54% Adjusted1 return on average tangible common equity – 17.63% Net income reduced by $5.2 million of severance and merger related expenses Loan growth in line with expectations Loan balan
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. 3Q 2019 2Q 2019 As Reported Adjusted As Reported Adjusted Net interest income $ 121,535 $ 121,535 $ 122,302 $ 122,302 Provision for loan and lease loss
Slide 19: Profitability
Profitability Diluted EPS Return on Average Assets 1.72% 1.64% 1.63% $0.61 1.54% $0.58 $0.58 $0.56 1.38% $0.48 1.59% $0.56 1.45% 1.50% 1.41% $0.51 $0.53 $0.51 1.33% $0.47 3Q18 4Q18 1Q19 2Q19 3Q19 3Q18 4Q18 1Q19 2Q19 3Q19 1 1 Diluted EPS Adjusted EPS ROA Adjusted ROA Return on Avg Tangible Common Equ
Slide 20: Net Interest Margin
Net Interest Margin Net Interest Margin (FTE) 3Q19 NIM (FTE) Progression 2Q19 4.04% 4.21% 4.12% 4.10% 4.04% Asset yield and mix -0.09% 0.29% 3.96% 0.29% 0.23% 0.23% 0.21% Loan fees 0.03% 0.17% 0.11% 0.13% 0.12% 0.15% Funding costs and mix 0.02% 3.70% 3.75% 3.76% 3.69% 3.60% Purchase accounting -0.02
Slide 21: Average Balance Sheet
Average Balance Sheet Average Loans Average Deposits 5.73% 5.69% 5.73% 5.53% 5.58% 0.78% 0.82% 0.80% 0.68% 0.59% $8,849 $8,766 $8,773 $8,853 $9,014 $9,888 $10,050 $10,068 $10,096 $10,018 3Q18 4Q18 1Q19 2Q19 3Q19 3Q18 4Q18 1Q19 2Q19 3Q19 Gross Loans Loan Yield (Gross)1 Total Deposits Cost of Deposits
Slide 22: Loan Portfolio
Loan Portfolio Loan LOB Mix (EOP) Net Loan Change-LOB (Linked Quarter) Total $9.1 Billion ICRE $173.6 $1,054 12% Commercial -$65.3 $3,083 $1,112 Small Business Banking -$19.2 34% 12% Consumer -$10.9 Mortgage $47.1 $873 10% Oak Street $4.3 Franchise -$50.3 $1,202 Other $3.6 13% $1,740 19% Total growt
Slide 23: Loan Portfolio: C&I and CRE
Loan Portfolio C&I Loans by Industry 1 CRE Loans by Collateral 2 C&I Loans: $3.6B CRE Loans: $3.4B Nursing/Assisted Manufacturing Hotel/Motel Living 13% 12% 6% Office Accommodation 15% Strip Center & Food Services Real Estate 6% 14% 12% Residential, 1-4 Family Health Care 4% Finance & 6% Insurance R
Slide 24: Deposits
Deposits Deposit Product Mix (Avg) 3Q19 Average Deposit Progression Total $10.0 billion Interest-bearing demand -$13.1 $1,340 13% $2,360 Noninterest-bearing $44.6 23% Savings -$6.4 $1,524 15% Money Markets -$75.4 $671 7% Retail Time Deposits $30.4 $885 9% $1,474 Brokered CDs -$16.8 15% $1,764 18% Pu
Slide 25: Investment Portfolio
Investment Portfolio Total EOP investments of approximately $3.1 billion Reduced portfolio balance by approximately $310 million during the third quarter of 2019 Investment portfolio / total assets = approximately 22% Portfolio duration = estimated 2.8 years Portfolio Composition Portfolio Quality N
Slide 26: Noninterest Income
Noninterest Income Noninterest Income 3Q19 Highlights Total $33.1 million $4.9 million of derivative fees in line with record second quarter $4,859 15% Mortgage banking income increased $1.4 $9,874 30% million, or 40%, compared to the linked quarter $4,806 14% Continued deposit service charge moment
Slide 27: Noninterest Expense
Noninterest Expense Noninterest Expense 3Q19 Highlights Total $86.2 million Includes $5.2 million of severance and merger related costs $12,840 15% $0.7 million related to branch consolidations $4,771 5% $5,774 FDIC assessment credit recognized in 7% 3Q19; $2.2 million change compared to 2Q19 $9,629
Slide 28: Asset Quality
Asset Quality Classified Assets / Total Assets Nonperforming Assets / Total Assets 1.00% 1.01% 1.02% 0.94% 0.63% 0.60% 0.62% 0.92% 0.56% 0.47% $147.8 $142.0 $138.9 $88.2 $90.2 $131.7 $132.5 $83.9 $80.8 $64.6 3Q18 4Q18 1Q19 2Q19 3Q19 3Q18 4Q18 1Q19 2Q19 3Q19 Classified Assets Classified Assets / Tota
Slide 29: Capital
Capital Tier 1 Common Equity Ratio Tier 1 Capital Ratio 11.87% 12.03% 12.00% 11.52% 11.52% 12.28% 12.43% 12.40% 11.93% 11.91% 9.00% 10.50% 3Q18 4Q18 1Q19 2Q19 3Q19 3Q18 4Q18 1Q19 2Q19 3Q19 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 • Financing for acquisition, development of $10.3 $19.2 new stores, and remodeling of existing 2% 4% stores • Top 15 concepts comprise 87% of portfolio outstandings . Disciplined portfolio management • Ann
Slide 31: 4Q19 Outlook
4Q19 Outlook1 Annualized loan growth expected to be in the low single digits on a percentage Balance Sheet basis 4Q19 NIM (FTE) 3.65% - 3.70%, assuming no further rate cuts and excluding Net Interest Margin purchase accounting NIM (FTE) expected to decline 6 - 8 bps for each 25 bps decline in rates
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 $2.6 billion Loans $1.1 billion Deposits $3.1 billion Deposits $0.6 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 Sep. 30, June 30, Mar. 31, Dec. 31, Sep. 30, 2019 2019 2019 2018 2018 Net interest income $ 121,535 $ 122,302 $ 121,515 $ 125,959 $ 123,485 Tax equivalent adjustment 1,759
Slide 37: Appendix: Non-GAAP to GAAP Reconciliation
Appendix: Non-GAAP to GAAP Reconciliation Additional non-GAAP ratios Three months ended YTD Sep. 30, June 30, Mar. 31, Dec. 31, Sep. 30, Sep. 30, Sep. 30, (Dollars in thousands, except per share data) 2019 2019 2019 2018 2018 2019 2018 Net income (a) $ 50,856 $ 52,703 $ 45,839 $ 55,014 $ 50,657 $ 14
Slide 38: Appendix: Non-GAAP to GAAP Reconciliation
Appendix: Non-GAAP to GAAP Reconciliation Additional non-GAAP measures 3Q19 2Q19 1Q19 4Q18 3Q18 (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) $ 121,535 $ 121,535 $ 122,302
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