Attached files
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| EX-99.1 - EXHIBIT 99.1 - FIRST FINANCIAL BANCORP /OH/ | a8k3q16earningsreleaseex991.htm |
| 8-K - 8-K - FIRST FINANCIAL BANCORP /OH/ | a8kearningsrelease3q16.htm |
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Exhibit 99.2
2
This earnings presentation contains “forward-looking statements” within the meaning of the Private Securities Litigation
Reform Act of 1995. These statements are not based on historical or current facts, but rather on our current beliefs,
expectations, assumptions and projections about our business, the economy and other future conditions. Forward-looking
statements often include words such as ‘‘believes,’’ ‘‘anticipates,’’ “likely,” “expected,” ‘‘intends,’’ “could,” “should,” and other
similar references to future periods. Examples of forward-looking statements include, but are not limited to, statements we
make about (i) our future operating or financial performance, including revenues, income or loss and earnings or loss per
share, (ii) future common stock dividends, (iii) our capital structure, including future capital levels, (iv) our plans, objectives
and strategies, and (v) the assumptions that underlie our forward-looking statements.
As with any forecast or projection, forward-looking statements are subject to inherent uncertainties, risks and changes in
circumstances that may cause actual results to differ materially from those set forth in the forward-looking
statements. Important factors that could cause actual results to differ materially from those in our forward-looking
statements include the following, without limitation: (i) economic, market, liquidity, credit, interest rate, operational and
technological risks associated with the Company’s business; (ii) the effect of and changes in policies and laws or
regulatory agencies, including the Dodd-Frank Wall Street Reform and Consumer Protection Act and other legislation and
regulation relating to the banking industry; (iii) management’s ability to effectively execute its business plans; (iv) mergers
and acquisitions, including cost or difficulties related to the integration of acquired companies; (v) the Company’s ability to
comply with the terms of loss sharing agreements with the FDIC; (vi) the effect of changes in accounting policies and
practices; (vii) changes in consumer spending, borrowing and saving and changes in unemployment; (viii) changes in
customers’ performance and creditworthiness; and (ix) the costs and effects of litigation and of unexpected or adverse
outcomes in such litigation. Additional factors that may cause our actual results to differ materially from those described in
our forward-looking statements can be found in the Company’s Annual Report on Form 10-K for the year ended December
31, 2015, as well as its other filings with the SEC, which are available on the SEC website at www.sec.gov.
Forward-looking statements are meaningful only on the date when such statements are made. We undertake no
obligation to update any forward-looking statement to reflect events or circumstances that may arise after the date on
which a forward-looking statement is made.
Forward Looking Statement Disclosure
3
3Q 2016 Highlights – 104th Consecutive Quarter of Profitability
Total assets increased $58.4 million, to $8.4 billion, compared to the linked quarter.
EOP loans increased $88.3 million, or 6.2% annualized, compared to the linked quarter.
EOP deposits increased $219.1 million, or 14.2% annualized, compared to the linked quarter.
EOP investment securities decreased $35.6 million, or 1.9%, compared to the linked quarter.
Balance Sheet
Profitability
Asset Quality
Net Interest Income
&
Net Interest Margin
Non-Interest Income
&
Non-Interest Expense
Capital
Non-interest income = $16.9 million.
Non-interest expense = $51.1 million.
Efficiency ratio = 59.6%.
Effective tax rate of 30.7%, including seasonal adjustments
Net interest income = $68.8 million, a $1.7 million increase compared to the linked quarter.
Net interest margin was unchanged at 3.61%; decreased by 1bp to 3.66% on a fully tax equivalent basis.
6.1% annualized growth in average earning assets
Net income = $22.9 million or $0.37 per diluted share.
Return on average assets = 1.09%.
Return on average shareholders’ equity = 10.62%.
Return on average tangible common equity = 14.08%.
Provision expense = $1.7 million. Net charge offs = $0.8 million. NCOs / Avg. Loans = 0.05% annualized.
Non-performing Loans / Total Loans = 0.87%. Non-performing Assets / Total Assets = 0.69%.
ALLL / Non-accrual Loans = 314.8%. ALLL / Total Loans = 1.00%.
Total capital ratio = 12.82%.
Tier 1 capital ratio = 10.20%.
Tangible common equity ratio = 7.97%.
Tangible book value per share = $10.50.
4
Profitability
Net Income & EPS Return on Average Assets
Return on Tangible Common Equity
All dollars shown in millions
$22.9 $22.6
$19.8 $19.8
$18.7
$0.37 $0.36
$0.32 $0.32
$0.30
3Q162Q161Q164Q153Q15
Net Income EPS
$8,322 $8,204 $8,119
$7,950
$7,611
1.09% 1.11%
0.98% 0.99% 0.97%
3Q162Q161Q164Q153Q15
Average Assets ROAA
$645
$626
$610 $606 $601
14.08% 14.49%
13.06% 12.98%
12.33%
3Q162Q161Q164Q153Q15
Average Tangible Equity ROATCE
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Adjusted Net Income
Reflects impact to net income from items that do not occur on a regular basis
Earnings Diluted EPS Earnings Diluted EPS
GAAP net income 22,850$ 0.37$ 22,568$ 0.36$
Less: noninterest income adjustments 1,2 (398) (2,164)
Plus: noninterest expense adjustments 3.4 411 162
Subtotal 22,863 20,566
Tax adjustments (4) 843
Adjusted net income 22,859$ 0.37$ 21,409$ 0.35$
3Q 2016 2Q 2016
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3Q 2016 noninterest income includes $0.4 million in gains on sales of investment securities
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3Q 2016 adjustments include $0.8 million of severence expense, $0.2 million of gains related to branch consolidation activities and a $0.2 million legal recovery
(Dollars in thousands)
2
2Q 2016 noninterest income includes $2.4 million of previously unrealized income from the redemption of a limited partnship investment during the period and
$0.2 million in losses on sales of investment securities
4
2Q 2016 adjustments include $0.2 million of expenses related to branch consolidation activities
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Net Interest Income / Net Interest Margin
Gross loans include loans held for sale & FDIC indemnification asset
All dollars shown in millions
Average Deposits Net Interest Income
Average Securities Average Loans
$68.8
$67.1 $66.6 $66.1
$63.2
3.66% 3.67%
3.68% 3.69%
3.67%
3Q162Q161Q164Q153Q15
Net Interest Income Net Interest Margin (FTE)
$1,811
$1,870
$1,939 $1,934
$1,848
2.50%
2.54% 2.59%
2.44%
2.39%
3Q162Q161Q164Q153Q15
Average Investment Securities Investment Securities Yield
$5,758
$5,584
$5,435
$5,267
$5,053
4.54% 4.55% 4.59%
4.62%
4.52%
3Q162Q161Q164Q153Q15
Gross Loans Loan Yield
23% 23% 23% 22% 23%
23% 24% 23% 23% 21%
33% 32% 32% 32% 34%
21% 21% 23% 23% 23%
$6,201 $6,309 $6,136 $6,247 $5,960
0.36% 0.35% 0.36%
0.33% 0.32%
3Q162Q161Q164Q153Q15
NIB Demand IB Demand Savings
Time Cost of Deposits
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Non-Interest Income
Non-Interest Income 3Q16 Highlights
* Includes net gain on sale of investment securities & other noninterest income.
All dollars shown in millions
Total other non-interest income
decreased $3.2 million, or 16.1%, on
lower loss share related & other
income
Service charges on deposits
increased $0.6 million, or 13.5%
Gains from sales of mortgage loans
increased $0.2 million, or 11.9%
Loss share related income decreased
$1.4 million, or 111.8%
Other non-interest income decreased
$2.5 million, or 53.5%, due to $2.4
million of income from the redemption
of a limited partnership investment in
2Q
Included $0.4 million in gains on sale
of investment securities
30% 22% 28% 30% 24%
19%
16% 22% 20%
15%
18%
15% 19% 19% 14%
12%
9%
8% 8%
9%
7% 9%
7% 6%
8%
6%
3% 4%
14% 14%
22%
14% 13%
16%
$16.9
$20.2
$15.5 $15.8
$20.4
3Q162Q161Q164Q153Q15
Service Charges Wealth Mgmt
Bankcard Gains from sales of loans
Client derivatives Loss Share Income
Other *
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Non-Interest Expense
Noninterest Expense 3Q16 Highlights
Efficiency Ratio
All dollars shown in millions
Total non-interest expense increased
$1.7 million, or 3.4%
$2.6 million, or 8.7%, increase in salary
& benefits expense, which includes
$0.8 million of severance costs & YTD
performance based compensation
accruals
$1.1 million, or 18.1%, decline in other
non-interest expense includes $0.4
million of gains related to branch
consolidation activities
Net occupancy expenses include $0.2
million of lease termination costs
related to branch consolidations
63% 60% 58% 58% 52%
37%
40% 42% 42% 48%
$51.1 $49.4 $50.7 $51.3
$53.0
1,402 1,403 1,390 1,400 1,394
3Q162Q161Q164Q153Q15
Personnel Non-Personnel FTE
$51.1
$49.4
$50.7 $51.3
$53.0
59.6%
56.6%
61.8% 62.6%
63.5%
3Q162Q161Q164Q153Q15
NIE Efficiency Ratio
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Loan Portfolio
Loan Product Mix (EOP) Net Loan Change (Linked Quarter)
* Includes residential mortgage, home equity, installment, & credit card.
All dollars shown in millions
Highlights
32% 33% 34% 33% 33%
14% 14% 14% 15% 15%
29% 28%
27% 27% 27%
7% 7%
6%
6%
5%
18% 19%
19%
20%
20%
$5,790 $5,701
$5,505
$5,389
$5,216
3Q162Q161Q164Q153Q15
Commercial & Leasing Owner Occupied CRE Investor CRE
Construction Consumer Lending*
-$16.0
$1.2
-$4.0
$103.5
$9.4
-$5.8
Commercial & Leasing
Owner Occupied CRE
Owner Occupied Construction
Investor CRE
Investor Construction
Consumer Lending*
-$18.8
Total C&I
Portfolio continues to be well-balanced
3Q impacted by strong ICRE production as well
as elevated C&I prepayment activity
4Q production expected to be biased toward C&I
ICRE & Construction concentration levels of 227%
and 56% of total capital, well below 300%/100%
regulatory guidance.
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Asset Quality
Non-Performing Assets / Total Assets Classified Assets / Total Assets
Allowance / Total Loans Net Charge Offs & Provision Expense
All dollars shown in millions
$58.0
$59.6
$64.1
$70.1 $71.1
0.69% 0.72%
0.78%
0.86%
0.90%
3Q162Q161Q164Q153Q15
NPAs NPAs / Total Assets
$57.6 $56.7 $53.7 $53.4 $53.3
1.00% 0.99% 0.98% 0.99% 1.02%
3Q162Q161Q164Q153Q15
Allowance for Loan Losses ALLL / Total Loans
$0.8 $1.1 $1.3 $1.8 $2.2
$1.7
$4.0
$1.7
$1.9
$2.6
0.05% 0.08%
0.10%
0.14% 0.17%
3Q162Q161Q164Q153Q15
NCOs Provision Expense NCOs / Average Loans
$142.2 $143.3
$133.9 $132.4 $130.1
1.70% 1.72%
1.63% 1.63% 1.63%
3Q162Q161Q164Q153Q15
Classified Assets Classified Assets / Total Assets
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Capital
Tier 1 Common Equity
Tangible Book Value Total Capital
Tangible Common Equity
All capital numbers are considered preliminary
All dollars shown in millions
$650.2
$635.5
$615.1
$597.5 $601.3
$10.50 $10.26 $9.94 $9.69 $9.74
3Q162Q161Q164Q153Q15
Tangible Book Value Tangible Book Value per Share
$865.2 $849.3 $831.9 $822.4 $812.0
12.82% 12.70% 12.84% 13.04%
13.37%
12.50%
3Q162Q161Q164Q153Q15
Total Capital Total Capital Ratio Target
$688.4
$673.3
$658.0
$648.7
$638.6
10.20% 10.07% 10.16% 10.28%
10.51%
10.50%
3Q162Q161Q164Q153Q15
Tier 1 Common Equity Tier 1 Common Ratio Target
$650.2
$635.5
$615.1
$597.5 $601.3
7.97% 7.85% 7.71% 7.53%
7.84%
3Q162Q161Q164Q153Q15
Tangible Book Value Tangible Common Ratio
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Strategy & Outlook
Focus remains on organic growth & executing our core strategy:
1. Growing loans at risk-appropriate returns
Strong organic growth opportunities resulting from the mix of markets, products & businesses
built over the last five years
Full year 2016 loan growth trending toward high single digits
Stable margin outlook in the near term, similar to year to date results
2. Growing core deposits to fund loan growth & generate fee income
Ever-present focus on growing low cost, core deposits
Continue repositioning our balance sheet - redeploy cash flows from securities to fund
organic loan growth
3. Growing noninterest income to help build & diversify revenue
Strategies focused on product pricing, governance & client penetration
4. Maintaining our focus on efficiency & diligent expense management
Non-interest expense base expected to be approximately $50 million per quarter
Full year effective tax rate of approximately 32.5%
5. Remaining vigilant in our credit oversight
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Appendix: Non-GAAP to GAAP Reconciliation
Net interest income and net interest margin - fully tax equivalent
Sep. 30, June 30, Mar. 31, Dec. 31, Sep. 30, Sep. 30, Sep. 30,
2016 2016 2016 2015 2015 2016 2015
Net interest income $68,818 $67,132 $66,555 $66,083 $63,159 $202,505 $180,419
Tax equivalent
adjustment 1,028 1,058 1,052 1,046 1,000 3,138 2,971
Net interest income -
tax equivalent $69,846 $68,190 $67,607 $67,129 $64,159 $205,643 $183,390
Average earning assets $7,591,160 $7,475,711 $7,398,013 $7,219,995 $6,938,107 $7,488,670 $6,711,900
Net interest margin* 3.61 % 3.61 % 3.62 % 3.63 % 3.61 % 3.61 % 3.59 %
Net interest margin (fully
tax equivalent)* 3.66 % 3.67 % 3.68 % 3.69 % 3.67 % 3.67 % 3.65 %
Three months ended YTD
* Margins are calculated using net interest income annualized divided by average earning assets.
Net interest income-tax equivalent, appears in the tables entitled “Additional Data” at the bottom of the “Consolidated Quarterly Statements of
Income” pages. The tax equivalent adjustment to net interest income recognizes the income tax savings when comparing taxable and tax-
exempt assets and assumes a 35% tax rate. Management believes that it is a standard practice in the banking industry to present net interest
margin and net interest income on a fully tax equivalent basis. Therefore, management believes these measures provide useful information to
investors by allowing them to make peer comparisons. Management also uses these measures to make peer comparisons.
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Appendix: Non-GAAP to GAAP Reconciliation
Additional non-GAAP ratios
Sep. 30, June 30, Mar. 31, Dec. 31, Sep. 30, Sep. 30, Sep. 30,
(Dollars in thousands, except per share data) 2016 2016 2016 2015 2015 2016 2015
Net income (a) $22,850 $22,568 $19,814 $19,820 $18,673 $65,232 $55,243
Average total shareholders' equity 856,296 837,412 821,588 817,756 812,396 838,497 800,589
Less:
Goodw ill and other intangible (210,888) (211,199) (211,533) (211,865) (211,732) (210,888) (211,732)
Average tangible equity (b) 645,408 626,213 610,055 605,891 600,664 627,609 588,857
Total shareholders' equity 861,137 846,723 826,587 809,376 813,012 861,137 813,012
Less:
Goodw ill (210,888) (211,199) (211,533) (211,865) (211,732) (210,888) (211,732)
Ending tangible equity (c) 650,249 635,524 615,054 597,511 601,280 650,249 601,280
Total assets 8,368,481 8,310,102 8,193,554 8,147,411 7,880,533 8,368,481 7,880,533
Less:
Goodw ill (210,888) (211,199) (211,533) (211,865) (211,732) (210,888) (211,732)
Ending tangible assets (d) 8,157,593 8,098,903 7,982,021 7,935,546 7,668,801 8,157,593 7,668,801
Risk-w eighted assets (e) 6,750,749 6,685,158 6,478,716 6,308,139 6,073,899 6,750,749 6,073,899
Total average assets 8,322,156 8,203,837 8,118,945 7,950,278 7,611,389 8,215,370 7,353,698
Less:
Goodw ill (210,888) (211,199) (211,533) (211,865) (211,732) (210,888) (211,732)
Average tangible assets (f) $8,111,268 $7,992,638 $7,907,412 $7,738,413 $7,399,657 $8,004,482 $7,141,966
Ending shares outstanding (g) 61,952,873 61,959,529 61,855,027 61,641,680 61,713,633 61,952,873 61,713,633
Ratios
Return on average tangible shareholders' equity (a)/(b) 14.08 % 14.49 % 13.06 % 12.98 % 12.33 % 13.88 % 12.54 %
Ending tangible equity as a percent of:
Ending tangible assets (c)/(d) 7.97 % 7.85 % 7.71 % 7.53 % 7.84 % 7.97 % 7.84 %
Risk-w eighted assets (c)/(e) 9.63 % 9.51 % 9.49 % 9.47 % 9.90 % 9.63 % 9.90 %
Average tangible equity as a percent of average tangible
assets (b)/(f) 7.96 % 7.83 % 7.71 % 7.83 % 8.12 % 7.84 % 8.25 %
Tangible book value per share (c)/(g) 10.50$ 10.26$ 9.94$ 9.69$ 9.74$ 10.50$ $9.74
Three months ended YTD
The earnings press release also includes some non-GAAP ratios in the “Consolidated Financial Highlights” page. These ratios are: (1) Return on average tangible shareholders' equity; (2) Ending
tangible shareholders' equity as a percent of ending tangible assets; (3) Ending tangible shareholders' equity as a percent of risk-w eighted assets; (4) Average tangible shareholders' equity as a
percent of average tangible assets; and (5) Tangible book value per share. The Ending tangible shareholders' equity as a percent of ending tangible assets and Average tangible shareholders'
equity as a percent of average tangible assets are also show n in the “Regulatory Capital” section of the “Capital Adequacy” page in the earnings release. The Company considers these critical
metrics w ith w hich to analyze banks. The ratios have been included in the earnings press release to facilitate a better understanding of the Company's capital structure and f inancial condition.
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