Slide 1: Investor Presentation Third Quarter 2011
Another step on the path to success 1 Investor Presentation Third Quarter 2011 EXHIBIT 99.1
Slide 2: Forward-looking statements
Another step on the path to success 2 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 filing
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: Franchise Summary Comparison
Another step on the path to success Franchise Summary Comparison Consistent and solid profitability – LTM ROAA of 1.01% compared to peer median of 0.83% – LTM ROAE of 8.93% compared to peer median of 7.44% – LTM net interest margin of 4.63% compared to peer median of 3.79% Capital levels extreme
Slide 5: Third Quarter 2011 Financial Highlights
Another step on the path to success 5 Third Quarter 2011 Financial Highlights Quarterly net income of $15.6 million, or $0.27 per diluted common share Excluding pre-tax expenses not expected to recur of $3.4 million, net income totaled $17.7 million, or $0.31 per diluted common share Continued
Slide 6: Pre-Tax, Pre-Provision Income Trend
Another step on the path to success 6 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 Recent growth in adjusted
Slide 7: Components of Net Interest Margin
Another step on the path to success 7 Components of Net Interest Margin Yield on covered loans was 11.38% during the third quarter, continuing to enhance net interest margin Available liquidity was used during the quarter to purchase limited amount of agency MBS and fund redemption of wholesale
Slide 8: Capitalization
Another step on the path to success 8 Capitalization Primary component of capital is common equity Capital ratios declined during the third quarter 2011 as a result of intangible assets recognized in connection with the Liberty transaction Capitalization levels still remain among industry lead
Slide 9: Variable Dividend / 100% Payout Ratio
Another step on the path to success 9 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 $0.12 per share – Variable dividend based on the remainder of quarterl
Slide 10: Low Risk Balance Sheet Stress Case
Another step on the path to success 10 Low Risk Balance Sheet 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 = $88 millio
Slide 11: Credit Quality Review
Another step on the path to success 11 Credit Quality Review Total classified assets declined $40.0 million, or 18.8%, compared to September 30, 2010 Economic conditions in the Company’s markets are still challenging; real estate loan collateral and OREO valuations will continue to impact restru
Slide 12: Selective Acquisitions
Another step on the path to success 12 Selective Acquisitions Supplements organic growth strategy through expansion in strategic markets Transactions met all internal criteria for acquisitions Loss sharing arrangements provide significant protection on acquired loans Developed scalable cover
Slide 13: Liberty Savings Bank Branch Acquisition
Another step on the path to success 13 Liberty Savings Bank Branch Acquisition Branch Map and Deposit Market Share Significantly enhances presence in key market of Dayton Deposit composition and cost of funds similar to existing First Financial deposit base Strong growth potential in all busin
Slide 14: Flagstar Bank Branch Acquisition
Another step on the path to success 14 Flagstar Bank Branch Acquisition Branch Map and Deposit Market Share Indiana Pro Forma Deposit Market Share Indianapolis, IN MSA FDIC Deposit Data as of June 30, 2011 - Holding Company Level Number Total Market 2011 of Deposits Share Rank Name City, State Branc
Slide 15: Franchise Highlights
Another step on the path to success 15 Franchise Highlights 1. Strong operating fundamentals – 84 consecutive quarters of profitability 2. Strong capital levels 3. Dividend yield of 6.6% 4. Low risk balance sheet 5. Credit metrics have remained strong throughout the economic downturn 6. Solid market
Slide 16: Appendix
Another step on the path to success 16 Appendix
Slide 17: Pre-Tax, Pre-Provision Income
Another step on the path to success 17 Pre-Tax, Pre-Provision Income For the three months ended September 30, June 30, March 31, December 31, September 30, 2011 2011 2011 2010 2010 Pre-tax, pre-provision income 1 31,814$ 32,845$ 29,768$ 34,844$ 33,631$ Accelerated discount on acquired loans related
Slide 18: Revenue by Source
Another step on the path to success 18 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 76% of total revenue is derived from strategic businesses. Not includi
Slide 19: Noninterest Income and Expense
Another step on the path to success 19 Noninterest Income and Expense Components of Noninterest Expense For the Three Months Ended September 30, 2011 (Dollars in millions) Components of Noninterest Income For the Three Months Ended September 30, 2011 (Dollars in millions) $1.4 3% -$0.4 - 1% $43.6 82
Slide 20: Deposit and Loan Composition
Another step on the path to success 20 Deposit and Loan Composition Total Deposits = $5.3 billion As of September 30, 2011 (Dollars in millions) Gross Loans = $4.1 billion As of September 30, 2011 (Dollars in millions) Market exits are complete; acquired-non-strategic deposits consist primarily of
Slide 21: Loan Composition
Another step on the path to success 21 Loan Composition Covered Loans - $1.2 billion Uncovered Loans - $2.9 billion Total Loan Portfolio – September 30, 2011 $4.1 billion In-house lending limit of $15 million – significantly below legal limit 28.2% of total loans covered under FDIC loss share ag
Slide 22: Uncovered Loans – RE Collateral
Another step on the path to success 22 Uncovered Loans – RE Collateral Total Uncovered Loan Portfolio 1 – September 30, 2011 $2.9 Billion 1 Excludes loans covered by FDIC loss sharing agreements Construction and acquisition and land development loans represent small portion of overall portfolio
Slide 23: Funding Structure and Cost of Funds
Another step on the path to success 23 1.23% 1.11% 1.04% * Not included in cost of funds calculation Average Interest Bearing Liability Balances End of Period Deposit Composition 0.35% 2.12% Co s t of F u n d s Total Cost of Funds Funding Structure and Cost of Funds 0.00% 0.93% 0.32% 2.03% 0.00% 0.2
Slide 24: Deposit Activity
Another step on the path to success 24 Deposit Activity Quarterly growth in strategic transaction and savings accounts includes $188.4 million of deposits assumed as part of Liberty transaction Average strategic transaction and savings accounts increased over $67.9 million, or 8.0% annualized, c
Slide 25: Investment Portfolio
Another step on the path to success 25 Investment Portfolio Investment portfolio represents 18.8% of total assets Volatile market conditions limited new purchases to $38.6 million of agency mortgage backed securities during the third quarter 2011 Elevated cash balances, including cash received
Slide 26: Investment Portfolio Composition
Another step on the path to success 26 Sector Allocation Credit Quality Investment Grade = A rated securities Other Investment Grade = B rated securities Not Rated includes an immaterial amount of securities with a non-investment grade rating * Other consists primarily of regulatory stock Investment
Slide 27: Covered Loan Activity
Another step on the path to success 27 Covered Loan Activity Covered Loan Activity - Third Quarter 2011 Reduction in Balance Due to: June 30, Contractual Net Loans With September 30, (Dollars in thousands) 2011 Sales Prepayments Activity 1 Charge-Offs 2 Coverage Rem. 2011 Commercial 251,753$ 3,721$
Slide 28: Third Quarter 2011 Loan Valuation
Another step on the path to success 28 Third Quarter 2011 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. A
Slide 29: Covered Loan Performance
Another step on the path to success 29 Covered Loan Performance While covered loans continue to decline, better than expected performance has resulted in an increasing yield on the portfolio Despite net impairment being recognized in a majority of the loan pools life-to-date, impairment recaptur
Slide 30: Components of Credit Losses
Another step on the path to success Components of Credit Losses Covered Assets 30 $5,693 $4,873 $2,638 1Q11 2Q11 3Q11 Actual Covered Asset Credit Losses For the three months ended September 30, Dollars in thousands 2011 Description Net incremental impairment for period ($2,932) Reduction in expected
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 $1.15 per share as of the third quarter 2011 The absolute worst case scenario – a 100% loss on all acquired loans – would negativel
Slide 32: Summary of Acquisition-Related Items
Another step on the path to success 32 Summary of Acquisition-Related Items For the Three Months Ended September 30 June 30 September 30 (Dollars in thousands) 2011 2011 2010 Income effect: Accelerated discount on covered loans 1,2 5,207$ 4,756$ 9,448$ Acquired-non-strategic net interest income 8,64
Slide 33: Effect on Noninterest Items
Another step on the path to success 33 Effect on Noninterest Items Noninterest Income Noninterest Expense For the Three Months Ended September 30 June 30 September 30 (Dollars in thousands) 2011 2011 2010 Total noninterest income 28,115$ 41,118$ 44,895$ Signif icant components of noninterest income
Slide 34: Another step on the path to success 34 Another step on the path to success
Another step on the path to success 34 Another step on the path to success