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First Financial Bancorp Investor Presentation Second Quarter 2014 EXHIBIT 99.1
2 Certain statements contained in this release which are not statements of historical fact constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act. Examples of forward-looking statements include, but are not limited to, projections of revenues, income or loss, earnings or loss per share, the payment or non- payment of dividends, capital structure and other financial items, statements of plans and objectives of First Financial or its management or board of directors and statements of future economic performances and statements of assumptions underlying such statements. Words such as ‘‘believes,’’ ‘‘anticipates,’’ “likely,” “expected,” ‘‘intends,’’ and other similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements. Management’s analysis contains forward-looking statements that are provided to assist in the understanding of anticipated future financial performance. However, such performance involves risks and uncertainties that may cause actual results to differ materially. These factors include, but are not limited to: economic, market, liquidity, credit, interest rate, operational and technological risks associated with the Company’s business; the effect of and changes in policies and laws or regulatory agencies (notably the recently enacted Dodd-Frank Wall Street Reform and Consumer Protection Act); management’s ability to effectively execute its business plan; mergers and acquisitions, including costs or difficulties related to the integration of acquired companies, including the recently announced proposed acquisitions of The First Bexley Bank, Insight Bank and Guernsey Bancorp; the Company’s ability to comply with the terms of loss sharing agreements with the FDIC; the effect of changes in accounting policies and practices; and the costs and effects of litigation and of unexpected or adverse outcomes in such litigation. Please refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2013, as well as its other filings with the SEC, for a more detailed discussion of these risks, uncertainties and other factors that could cause actual results to differ from those discussed in the forward-looking statements. Such forward-looking statements are meaningful only on the date when such statements are made, and the Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such a statement is made to reflect the occurrence of unanticipated events. Forward Looking Statement Disclosure
3 Focused Business Strategy Client-intimate strategy focused on long-term, profitable relationships with clients Strong sales culture across all business lines Lines of business Commercial Consumer Wealth Management Mortgage Target clients – individuals and small / mid-size businesses located in-market Ohio, Indiana and Kentucky 110 locations with focus on metro and near-metro markets(1) Primary focus and value creation is through organic growth in key regional markets Supplement organic strategy through acquisitions in current footprint as well as contiguous markets with growth opportunities New Market Expansion Columbus, OH(1) – entered the market through three announced acquisitions with combined total assets of $701 million and total deposits of $542 million Fort Wayne, IN – added experienced and well established commercial and residential mortgage teams (1) First Bexley, Insight and Guernsey transactions closed in August 2014; balances based on June 30, 2014 data To Be Updated
4 Credit Product Diversity During the second quarter, the Company’s comprehensive set of credit products produced solid loan growth driven though multiple channels led by specialty finance and residential mortgage lending Category As of Percent As of Percent As of Percent (Dollars in thousands) December 31, 2008 of Portfolio March 31, 2014 1 of Portfolio June 30, 2014 1 of Portfolio Commercial and CRE $1,887,382 70.3% $2,337,001 59.4% $2,322,413 58.6% Franchise finance - 0.0% 493,918 12.5% 495,756 12.5% Business credit - 0.0% 100,937 2.6% 119,141 3.0% Equipment finance 50 0.0% 91,940 2.3% 92,946 2.3% Total commercial lending 1,887,432 70.3% 3,023,796 76.8% 3,030,256 76.5% Residential mortgage 383,599 14.3% 443,236 11.3% 452,279 11.4% Home equity 286,110 10.7% 451,733 11.5% 455,898 11.5% Other consumer 126,119 4.7% 67,869 1.7% 68,149 1.7% Total consumer lending 795,828 29.7% 962,838 24.5% 976,326 24.6% Loan mark / other - 0.0% (49,710) (1.3%) (43,836) (1.1%) Total loans $2,683,260 100.0% $3,936,924 100.0% $3,962,746 100.0% 1 Includes all uncovered loans and unpaid principal balance of covered loans likely to retain
5 Second Quarter 2014 Financial Highlights Second quarter net income of $16.0 million, or $0.28 per diluted common share; YTD net income of $31.1 million, or $0.54 per diluted common share YTD diluted earnings per share of $0.56 adjusted for the impact of non-operating items Continued solid performance Return on average assets of 1.01% adjusted for non-operating items Return on average tangible common equity of 10.94% adjusted for non-operating items Quarterly net interest margin declined 12 bps to 3.70% Covered loan balance decline negatively impacted margin by 7 bps Uncovered loan growth and higher fee income contributed a 2 bp improvement to margin Cost of interest-bearing deposits increased 2 bps to 38 bps Annualized total uncovered loan growth on a period-end and average basis of 5.4% and 11.6%, respectively Strong performance in specialty finance and residential mortgage lending Solid growth in traditional C&I / owner-occupied CRE and franchise lending Total nonperforming assets declined $3.1 million, or 5.0%, and represent 0.89% of total assets compared to 0.95% for the linked quarter Net charge-offs declined $0.9 million, or 47.8%, compared to the linked quarter and totaled 11 bps of average uncovered loans on an annualized basis
6 Adjusted Pre-Tax, Pre-Provision Income Trend Adjusted pre-tax, pre-provision (“PTPP”) income represents income before taxes plus provision for all loans less FDIC loss sharing income and accelerated discount adjusted for significant non- operating and non-recurring items Second quarter adjusted PTPP income increased $0.5 million compared to the linked quarter due to an increase in noninterest income, partially offset by a decline in net interest income $26,429 $26,371 $27,429 $23,632 $24,122 1.68% 1.69% 1.75% 1.50% 1.50% 2Q13 3Q13 4Q13 1Q14 2Q14 (Dollars in thousands) Adjusted PTPP Income Adjusted PTPP Income / Average Assets
7 Components of Net Interest Income Net interest margin decreased 12 bps during the second quarter to 3.70% Quarterly average balance of covered loans declined 10.8% and average balance of uncovered loans increased 2.9% Quarterly average investment balances were relatively unchanged while the portfolio yield decreased 5 bps to 2.47% Cost of interest bearing deposits remained low at 0.38% (1) Excludes impact of loans returning to accrual status during the fourth quarter 2013
8 Loan Composition Covered loans likely to retain – performing credits both in- and out-of-market Expected to retain past the expiration of applicable loss sharing agreements with the FDIC Covered loans likely to exit – primarily classified credits both in- and out-of-market Pursuing resolution strategies with intent to exit under loss sharing agreements with the FDIC Total Gross Loans – $4.0 billion As of June 30, 2014 (Dollars in millions) Total Gross Loans – $4.0 billion As of March 31, 2014 (Dollars in millions) $3,614 90% $323 8% $87 2% $3,663 91% $300 7% $66 2% Uncovered loans Covered loans likely to retain Covered loans likely to exit
9 Loan Composition Total uncovered loans increased $48.5 million, or 5.4% on an annualized basis, compared to the linked quarter Growth driven by performance in specialty finance, residential mortgage, franchise and C&I / owner-occupied CRE Uncovered loan growth has exceeded covered loan decline for six of the past seven quarters 9.1% of total loans covered under FDIC loss share agreements 7.4% represent loans likely to retain 1 Includes unpaid principal balance of covered loans likely to retain and excludes loan mark / other of ($43.8) million associated with these loans Total Uncovered Loans and Covered Loans Likely to Retain – $4.0 billion1 As of June 30, 2014 (Dollars in millions) $931 23% $830 21% $561 14% $496 12% $119 3% $93 2% $452 11% $456 12% $68 2% C&I and owner occupied CRE Investment CRE Business banking Franchise Business credit Equipment finance Residential mortgage Home equity Other consumer
10 Commercial Lending C&I / Owner Occupied CRE Investment Real Estate Target loan size is $1 million to $15 million, with flexibility to increase based on relationship criteria Increased focus on middle market business clients (generally up to $30 million of revenue) Specialty finance designed to expand product set and increase client base Business banking and SBA lending for smaller businesses Target loan size is $1 million to $15 million, with flexibility to increase based on relationship criteria Regional and local developers and investors Dedicated ICRE sales team of experts Interest rate risk management tools Total Commercial Loans Uncovered Loans and Covered Loans Likely to Retain – $3.0 billion1 As of June 30, 2014 (Dollars in millions) 1 Includes unpaid principal balance of covered loans likely to retain and excludes loan mark associated with these loans
11 Consumer Lending Consumer lending focused primarily on residential mortgage, home equity and credit cards Serving consumer households in Ohio, Indiana and Kentucky markets Mortgage loan originators located across footprint with concentrations in Cincinnati, Columbus, Dayton, Fort Wayne and Indianapolis Second quarter mortgage origination volumes increased 79% compared to the linked quarter, rebounding from the weather-related declines in the first quarter Total Consumer Loans Uncovered Loans and Covered Loans Likely to Retain – $1.0 billion1 As of June 30, 2014 (Dollars in millions) 1 Includes unpaid principal balance of covered loans likely to retain and excludes loan mark associated with these loans
12 Delivery Channels and Product Innovation Launched new online banking platform in 2012 Added mobile apps to accommodate client preferences with further enhancements such as Snap Deposit Client usage of mobile and online channels has increased significantly Deployed image-capture ATMs Sales centers focused on relationship vs. transactions Introducing enhanced online treasury management platform State-of-the-art paperless mortgage process with local underwriting and processing Launching first electronic banking center in late 2014 Deliver a consistent brand experience in a cost-effective manner
13 Capital Management Long-term capital return target to shareholders of 60% - 80% of earnings through combination of dividends and share repurchases Quarterly dividend of $0.15 per share Translates into yield of 3.6% compared to current peer median dividend yield of 2.4% Announced a share repurchase plan targeting one million shares annually beginning fourth quarter 2012 Repurchased 250,000 shares during fourth quarter 2013 and first quarter 2014 Repurchased approximately 1,250,000 total shares to date under the plan Suspended repurchases through third quarter 2014 due to pending merger agreements and increasingly active M&A environment Established revised long-term capital targets based on Basel III analysis and impact Tier 1 leverage ratio of 8.0% Common equity tier 1 capital ratio of 9.0% Tier 1 capital ratio of 10.5% Total capital ratio of 12.5% Peer Group comprised of the component banks within the KBW Regional Bank Index (49 total companies excluding First Financial); Dividend valuation data as of August 27, 2014.
14 Capitalization Primary component of capital is common equity Capitalization levels still remain high despite the strong return of capital to shareholders Long-term goal is to deploy capital above target levels though growth initiatives, including organic growth and acquisitions 10.38% 10.33% 10.40% 11.11% 10.38%7.96% 8.06% 8.28% 8.12% 8.39% 3Q10 4Q1 1Q11 2Q1 3Q11 First Financial Peer Group Median Peer Group comprised of the component banks within the KBW Regional Bank Index (49 total companies excluding First Financial); based on most recent financial information as of August 27, 2014. Source: Peer Group median data obtained from SNL Financial
15 Credit Quality (Excluding Covered Assets) Classified assets have declined $26.0 million, or 20.1%, since the second quarter 2013 Continued problem asset resolution activity during the quarter Total nonperforming assets declined $3.1 million, 5.0% Total nonperforming loans declined $3.7 million, or 7.6% Select Credit Metrics (Dollars in thousands) 2Q14 1Q14 4Q13 3Q13 2Q13 NPLs / total loans 1.23% 1.35% 1.50% 2.16% 2.22% NPA / total assets 0.89% 0.95% 1.13% 1.38% 1.38% Allowance for loan & lease losses / total loans 1.15% 1.19% 1.25% 1.33% 1.39% Annualized NCOs / average loans & leases 0.11% 0.23% 0.41% 0.34% 0.45% Total classified assets 103,799$ 103,471$ 110,509$ 120,423$ 129,832$ % increase / (decrease) 0.3% (6.4%) (8.2%) (7.2%) (0.5%)
16 Recent Transaction Summary In August 2014, First Financial completed the previously announced acquisitions of The First Bexley Bank, Insight Bank, and Guernsey Bancorp, all headquartered in the Columbus, OH market Entered the growth-oriented Columbus market through the acquisition of three highly successful and complementary institutions with client-focused business models similar to First Financial Strong business development teams now have access to greater resources, higher lending limits and wider commercial and consumer product sets to drive further growth and better serve their communities Attractive financial returns for shareholders before factoring in potential revenue synergies resulting from the enhanced product set and capabilities Integration risk is manageable and will not be a distraction to current and future strategic initiatives Pro forma capital levels are strong, leaving First Financial well positioned to capitalize on future organic growth and acquisition opportunities
17 Entrance to the Columbus, Ohio Market Third fastest growing metropolitan market in the Midwest Population of 1.9 million with projected growth of 4.3% through 2017 – highest in Ohio Diverse economy anchored by 15 Fortune 1000 companies Columbus MSA Market Highlights1 1 Source: the Columbus Chamber, SNL Financial LC First Financial First Bexley Insight Bank Guernsey Bank Pro Forma Deposit Market Share Columbus MSA FDIC Deposit Data as of June 30, 2013 - Holding Company Level Number Total Market 2013 of Deposits Share Rank Name City, State Branches ($000s) (%) 1 Huntington Bancshares Inc. Columbus, OH 95 14,436,412 30.8 2 JPMorgan Chase & Co. New York, NY 80 10,889,297 23.2 3 PNC Financia l Services Grp Inc. Pi ttsburgh, PA 67 6,010,235 12.8 4 Fi fth Third Bancorp Cincinnati , OH 59 4,171,643 8.9 5 Park National Corp. Newark, OH 34 1,836,099 3.9 6 KeyCorp Cleveland, OH 27 1,671,130 3.6 7 U.S. Bancorp Minneapol is , MN 42 1,317,578 2.8 8 Pro Forma First Financial Cincinnati, OH 5 517,318 1.1 8 WesBanco Inc. Wheel ing, WV 10 506,517 1.1 9 Heartland BancCorp Gahanna, OH 12 478,154 1.0 10 Firs tMerit Corp. Akron, OH 15 459,808 1.0 16 First Bexley Bank Bexley, OH 1 248,065 0.5 22 Insight Bank Worthington, OH 1 166,271 0.4 25 Guernsey Bancorp Inc. Westerville, OH 3 102,982 0.2 Other institutions 137 4,603,349 9.8 Market total 583 46,897,540$ 100.0 Source: SNL Financial LC As of June 30, 2014 The First The Bexley Insight Guernsey (D o llars in millio ns) Bank Bank Bank Total assets $330.4 $249.6 $120.8 Total loans 313.6 215.1 72.6 Total deposits 262.9 180.2 98.6 TCE ratio 7.5% 8.4% 7.1%
18 Prior Acquisition History Supplements organic growth strategy through expansion in strategic markets Transactions met all internal criteria for acquisitions Loss sharing agreements provided significant protection on covered loans Peoples (FDIC) July 31, 2009 19 banking centers $521mm deposits $331mm in loss share covered loans1 No first loss position Irwin (FDIC) September 18, 2009 27 banking centers $2.5B deposits $1.8B in loss share covered loans1 No first loss position Banking Centers December 2, 2011 22 banking centers, primarily Indianapolis MSA $342mm retail deposits Loan Portfolio June 30, 2009 $145 mm select performing commercial and consumer loans Banking Centers August 28, 2009 Three banking centers in Indiana $85mm deposits $41mm in select performing commercial and consumer loans Banking Centers September 23, 2011 16 banking centers, primarily Dayton MSA $342mm deposits $127mm in select in-market performing loans 1 Estimated fair market value of loans We will continue to evaluate opportunities but never lose sight of the core franchise Core philosophy and strategy remain unchanged
19 Franchise Highlights 1. Strong operating fundamentals – 95 consecutive quarters of profitability 2. Investments to create long-term growth are producing results 3. Strong loan growth momentum driven by comprehensive portfolio of credit products 4. Well positioned in current markets and executing on new market expansion strategies 5. Growth strategies focused on increasing core deposits and fee revenue 6. Strong capital levels with ability to support further organic growth and acquisition opportunities 7. Balanced long-term capital management strategy returning 60% - 80% of earnings through dividends and share repurchases 8. Delivered on efficiency plan with focus on continual process improvement
Appendix Investor Presentation Second Quarter 2014
21 Adjusted Pre-Tax, Pre-Provision Income For the three months ended June 30, March 31, December 31, September 30, June 30, (Dollars in thousands) 2014 2014 2013 2013 2013 Pre-tax, pre-provision income 1 22,422$ 21,660$ 1,947$ 23,707$ 23,794$ Less: accelerated discount on covered loans 621 1,015 1,572 1,711 1,935 Plus: loss share and covered asset expense 2 1,863 1,602 2,441 1,928 (634) Pre-tax, pre-provision income, net of accelerated discount and loss on covered OREO 23,664 22,247 2,816 23,924 21,225 Less: gain on sales of investment securities - 50 - - 188 Less: other income not expected to recur - - - - 442 Plus: pension settlement charges - - 462 1,396 4,316 Plus: expenses related to efficiency initiative (59) 350 1,450 1,051 1,518 Plus: FDIC indemnification asset valuation adjustment - - 22,417 - - Plus: acquisition-related expenses 517 620 284 - - Plus: other expenses not expected to recur - 465 - - - Adjusted pre-tax, pre-provision income 24,122$ 23,632$ 27,429$ 26,371$ 26,429$ 1 Represents income before taxes plus provision for all loans less FDIC loss sharing income 2 Reimbursements related to losses on covered OREO and other credit-related costs are included in FDIC loss sharing income, w hich is excluded from the pre-tax, pre-provision income above
22 Investment Portfolio Investment portfolio represents 28.2% of total assets Yield earned on portfolio decreased to 2.47% from 2.52% for the linked quarter As of June 30, 2014 Category Held-to- Available-for- Other Percent (Dollars in thousands) Maturity Sale Investments Total of Portfolio Debt obligations of the U.S. Government -$ 20,734$ -$ 20,734$ 1.1% Debt obligations of U.S. Government Agency 18,308 9,552 - 27,860 1.5% Residential Mortgage Backed Securities Pass-through securities: Agency fixed rate 80,232 101,413 - 181,645 9.9% Agency adjustable rate 152,463 39,759 - 192,222 10.4% Non-Agency fixed rate - 9,287 - 9,287 0.5% Collateralized mortgage obligations: Agency fixed rate 341,497 266,679 - 608,176 33.0% Agency variable rate - 109,879 - 109,879 6.0% Agency collateralized and insured municipal securities 78,812 111,328 - 190,140 10.3% Commercial mortgage backed securities 222,280 115,448 - 337,728 18.3% Mu i ipal bond securities 1,115 1,391 - 2,506 0.1% Corporate securities 4,795 56,019 - 60,814 3.3% Asset-backed securities - 47,996 - 47,996 2.6% Regulatory stock - - 42,576 42,576 2.3% Other - 8,230 5,064 13,294 0.7% 899,502$ 897,715$ 47,640$ 1,844,857$ 100.0%
23 Deposit Composition Total deposits increased $54.7 million, or 1.1%, during the quarter Average total deposits increased $151.3 million, or 3.2%, during the quarter Seasonal inflows of public fund deposits as well as higher commercial transaction deposits The total cost of deposit funding during the quarter remained low at 29 bps Non-time deposit balances comprise over 80% of the total base New products introduced to support growth and increase client share of wallet Commercial and consumer indexed money market accounts Relationship CD pricing Total Deposits – $4.9 billion As of June 30, 2014 23% 23% 34% 20% Noninterest-bearing deposits Interest-bearing deposits Savings and MMDA Time deposits
24 Funding Structure and Cost of Funds Average Balances – Total Interest Bearing Liability Composition Average Balances – Deposit Composition Total Cost of Funds (1) Not included in cost of funds calculation Total Cost of Deposits Co s t of F u n d s 0.35% 0.37% 0.37% 0.39% 0.24% 0.27% 0.28% 0.29% 0.00% 0.00% 0.00% 0.00% 0.12% 0.19% 0.12% 0.11% 0.09% 0.15% 0.20% 0.23% 0.90% 0.90% 0.94% 0.98%
25 Covered Loan Activity Covered loans declined $43.8 million, or 10.7%, during the quarter The FDIC indemnification asset declined $8.6 million, or 22.0%, during the quarter to $30.4 million, or 8.3% of the balance of covered loans outstanding Successful execution of resolution strategies related to covered loans classified as likely to exit contributed to majority of quarterly decline
26 Components of Covered Asset Credit Losses For the three months ended June 30, (Dollars in thousands) 2014 Description Net incremental impairment / (relief) for period $1,852 Reduction / (increase) in expected cash flows related to certain loan pools net of prior period impairment relief / recapture Net charge-offs (2,265) Represents actual net charge-offs of the recorded investment in covered loans during the period 1 Provision for loan and lease losses - covered (413) (Gain) / loss on sale - covered OREO 398 Other credit-related expenses 2 1,400 Total gross credit losses $1,385 FDIC loss sharing income $1,108 Represents receivable due from the FDIC on estimated credit (Noninterest income) losses; calculated as approximately 80% of gross credit losses related to covered assets $277 Difference between these two amounts represents actual credit costs for the period 1 Investment in covered loans originally recorded at less than unpaid principal balance to reflect anticipated credit losses at time of acquisition 2 Represents credit related expenses of $1.5 million net of $65 thousand of rental income on covered OREO properties $1,388 $(250) $(127) $277 3Q13 4Q13 1Q14 2Q14 Covered Asset Credit Losses
First Financial Bancorp Investor Presentation Second Quarter 2014