Attached files
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| EX-99.1 - EXHIBIT 99.1 - FIRST FINANCIAL BANCORP /OH/ | a8k4q16earningsreleaseex991.htm |
| 8-K - 8-K - FIRST FINANCIAL BANCORP /OH/ | a8kearningsrelease4q16.htm |
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Earnings Presentation
Fourth Quarter 2016
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
Full Year 2016 Highlights
Total assets increased $290.6 million, to $8.4 billion
EOP loans increased $368.7 million, or 6.8%.
EOP deposits increased $346.2 million, or 5.6%.
EOP investment securities decreased $113.8 million, or 5.9%.
Balance Sheet
Profitability
Asset Quality
Net Interest Income
&
Net Interest Margin
Noninterest Income
&
Noninterest Expense
Capital
Noninterest income = $69.6 million.
Noninterest expense = $201.4 million.
Efficiency ratio = 58.8%.
Effective tax rate of 32.3%.
Net interest income = $272.7 million, a $26.2 million increase.
Net interest margin increased by 2 bps to 3.62%; 3.68% on a fully tax equivalent basis.
Average earning assets increased 10%.
Net income = $88.5 million, or $1.43 per diluted share, a 17.9% increase.
Return on average assets = 1.07%.
Return on average shareholders’ equity = 10.48%.
Return on average tangible common equity = 13.96%.
Provision expense = $10.1 million. Net charge offs = $5.6 million. NCOs / Avg. Loans = 0.10%.
Nonperforming Loans / Total Loans = 0.83%. Nonperforming Assets / Total Assets = 0.64%.
ALLL / Nonaccrual Loans = 326.9%. ALLL / Total Loans = 1.01%.
Total capital ratio = 13.10%.
Tier 1 capital ratio = 10.46%.
Tangible common equity ratio = 7.96%.
Tangible book value per share = $10.56, a 9.0% increase.
4
4Q 2016 Highlights – 105th Consecutive Quarter of Profitability
Total assets increased $69.5 million, to $8.4 billion, or 3.3% annualized, compared to the linked quarter.
EOP loans declined $32.0 million, or 2.2% annualized, compared to the linked quarter.
EOP deposits increased $187.1 million, or 11.7% annualized, compared to the linked quarter.
EOP investment securities increased $54.1 million, or 12.3% annualized, compared to the linked quarter.
Balance Sheet
Profitability
Asset Quality
Net Interest Income
&
Net Interest Margin
Noninterest Income
&
Noninterest Expense
Capital
Noninterest income = $16.9 million.
Noninterest expense = $50.2 million.
Efficiency ratio = 57.6%.
Effective tax rate of 31.9%, including seasonal adjustments
Net interest income = $70.2 million, a $1.3 million increase compared to the linked quarter.
Net interest margin increased 5 bps to 3.66%; 3.71% on a fully tax equivalent basis.
Average earning assets grew 2.0% on an annualized basis.
Net income = $23.3 million or $0.38 per diluted share.
Return on average assets = 1.11%.
Return on average shareholders’ equity = 10.73%.
Return on average tangible common equity = 14.19%.
Provision expense = $2.8 million. Net charge offs = $2.4 million. NCOs / Avg. Loans = 0.17% annualized.
Nonperforming Loans / Total Loans = 0.83%. Nonperforming Assets / Total Assets = 0.64%.
ALLL / Nonaccrual Loans = 326.91%. ALLL / Total Loans = 1.01%.
Total capital ratio = 13.10%.
Tier 1 capital ratio = 10.46%.
Tangible common equity ratio = 7.96%.
Tangible book value per share = $10.56.
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Profitability
Net Income & EPS Return on Average Assets
Return on Tangible Common Equity
All dollars shown in millions
$23.3
$22.9 $22.6
$19.8 $19.8
$0.38 $0.37 $0.36
$0.32 $0.32
4Q163Q162Q161Q164Q15
Net Income EPS
$8,360 $8,322 $8,204 $8,119
$7,950
1.11% 1.09% 1.11%
0.98% 0.99%
4Q163Q162Q161Q164Q15
Average Assets ROAA
$653 $645
$626
$610 $606
14.19% 14.08% 14.49%
13.06% 12.98%
4Q163Q162Q161Q164Q15
Average Tangible Equity ROATCE
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Adjusted Net Income
Reflects impact to net income from items that do not occur on a regular basis
Earnings Diluted EPS Earnings Diluted EPS
GAAP net income 23,294$ 0.38$ 22,850$ 0.37$
Less: noninterest income adjustments 1 - (398)
Plus: noninterest expense adjustments 2,3 86 411
Subtotal 23,380 22,863
Tax adjustments (31) (4)
Adjusted net income 23,349$ 0.38$ 22,859$ 0.37$
4Q 2016 3Q 2016
2
4Q 2016 noninterest expense includes $0.1 million in expenses related to the charter conversion
(Dollars in thousands)
1
3Q 2016 noninterest income includes $0.4 million in gains on sales of investment securities
3
3Q 2016 noninterest expense includes $0.8 million of severance expense, $0.2 million of gains related to branch consolidation activities and a $0.2 million legal recovery
7
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
$1,817 $1,811 $1,870
$1,939 $1,934
2.58%
2.50%
2.54% 2.59%
2.44%
4Q163Q162Q161Q164Q15
Average Investment Securities Investment Securities Yield
$5,794 $5,758
$5,584
$5,435
$5,267
4.57% 4.54% 4.55% 4.59%
4.62%
4Q163Q162Q161Q164Q15
Gross Loans Loan Yield
24% 23% 23% 23% 22%
23% 23% 24% 23% 23%
32% 33% 32% 32% 32%
21%
21% 21% 23% 23%
$6,557
$6,201 $6,309 $6,136 $6,247
0.37% 0.36% 0.35% 0.36%
0.33%
4Q163Q162Q161Q164Q15
Avg NIB Demand Avg IB Demand Avg Savings
Avg Time Cost of Deposits
$70.2 $68.8
$67.1 $66.6 $66.1
3.71% 3.66% 3.67% 3.68% 3.69%
4Q163Q162Q161Q164Q15
Net Interest Income Net Interest Margin (FTE)
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Noninterest Income
Noninterest Income 4Q16 Highlights
* Includes net gain on sale of investment securities & other noninterest income.
All dollars shown in millions
Total other noninterest income was
unchanged from the linked quarter at
$16.9 million
Deposit service charge income was
unchanged from the linked quarter;
6.0% increase compared to fourth
quarter 2015
Client derivative income decreased
$0.7 million, or 61.5%
Gains from sales of mortgage loans
decreased $0.4 million, or 17.2%
Loss share related income increased
$0.9 million due to elevated
prepayment activity
30% 30% 22% 28% 30%
19% 19%
16% 22% 20%
19% 18%
15% 19% 19%
10% 12%
9%
8% 8%
3%
7% 9%
7% 6%
5%
6%
3% 4%
15% 15%
22%
14% 13%
$16.9 $16.9
$20.2
$15.5 $15.8
4Q163Q162Q161Q164Q15
Service Charges Wealth Mgmt
Bankcard Gains from sales of loans
Client derivatives Loss Share Income
Other *
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Noninterest Expense
Noninterest Expense 4Q16 Highlights
Efficiency Ratio
All dollars shown in millions
Total noninterest expense declined $0.9 million,
or 1.8%, from the linked quarter
Salary & benefits expense declined $1.0
million, or 3.0%, from 3Q16, which included
$0.8 million of severance costs
OREO gains increased $0.8 million due to
favorable resolution of a single property
Professional services expense increased $0.3
million, or 18.6%, and includes $0.1 million of
charter conversion related costs
State intangible taxes declined $0.5 million, or
81.7% due to seasonal adjustments
Other noninterest expense increased $0.5
million, or 9.8%. 3Q16 included $0.4 million of
gains related to branch consolidation activities
$50.2
$51.1
$49.4
$50.7 $51.3
57.6%
59.6%
56.6%
61.8% 62.6%
4Q163Q162Q161Q164Q15
NIE Efficiency Ratio
62% 63% 60% 58% 58%
38% 37% 40% 42% 42%
$50.2 $51.1 $49.4 $50.7 $51.3
1,420 1,402 1,403 1,390 1,400
4Q163Q162Q161Q164Q15
Personnel Non-Personnel FTE
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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
33% 32% 33% 34% 33%
13% 14% 14% 14% 15%
29% 29% 28% 27% 27%
7% 7% 7%
6%
6%
18% 18% 19%
19%
20%
$5,757 $5,790 $5,701
$5,505
$5,389
4Q163Q162Q161Q164Q15
Commercial & Leasing Owner Occupied CRE Investor CRE
Construction Consumer Lending*
-$3.8
-$33.5
-$4.8
-$7.0
$23.8
-$6.8
Commercial & Leasing
Owner Occupied CRE
Owner Occupied Construction
Investor CRE
Investor Construction
Consumer Lending*
-$42.0
Total C&I
Portfolio remains well-balanced
4Q16 impacted by:
slower business activity
elevated prepayments
Continued focus on profitability and limiting
credit concentrations
Full year loan growth in line with target
Loan origination spreads improved throughout 2016
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Asset Quality
Nonperforming Assets / Total Assets Classified Assets / Total Assets
Allowance / Total Loans Net Charge Offs & Provision Expense
All dollars shown in millions
$54.3 $58.0
$59.6 $64.1
$70.1
0.64%
0.69% 0.72%
0.78%
0.86%
4Q163Q162Q161Q164Q15
NPAs NPAs / Total Assets
$58.0 $57.6 $56.7 $53.7 $53.4
1.01% 1.00% 0.99% 0.98% 0.99%
4Q163Q162Q161Q164Q15
Allowance for Loan Losses ALLL / Total Loans
$125.2
$142.2 $143.3
$133.9 $132.4
1.48%
1.70% 1.72%
1.63% 1.63%
4Q163Q162Q161Q164Q15
Classified Assets Classified Assets / Total Assets
$2.4 $0.8 $1.1 $1.3 $1.8
$2.8
$1.7
$4.0
$1.7
$1.9
0.17%
0.05% 0.08%
0.10%
0.14%
4Q163Q162Q161Q164Q15
NCOs Provision Expense NCOs / Average Loans
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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
$654.6 $650.2
$635.5
$615.1
$597.5
$10.56 $10.50 $10.26 $9.94 $9.69
4Q163Q162Q161Q164Q15
Tangible Book Value Tangible Book Value per Share
$881.2 $865.2 $849.3 $831.9 $822.4
13.10% 12.82% 12.70% 12.84% 13.04%
12.50%
4Q163Q162Q161Q164Q15
Total Capital Total Capital Ratio Target
$703.9
$688.4
$673.3 $658.0 $648.7
10.46% 10.20% 10.07% 10.16% 10.28%
10.50%
4Q163Q162Q161Q164Q15
Tier 1 Common Equity Tier 1 Common Ratio Target
$654.6 $650.2
$635.5
$615.1
$597.5
7.96% 7.97% 7.85% 7.71% 7.53%
4Q163Q162Q161Q164Q15
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 2017 loan growth expected to be in the mid to high single digits on a percentage
basis
Stable net interest margin outlook in the near term
2. Growing core deposits to fund loan growth & generate fee income
Ever-present focus on growing low cost, core deposits
Continued proactive balance sheet management to support organic 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
Noninterest expense base expected to grow 2 - 3%
Full year 2017 effective tax rate of approximately 32 - 33%
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
Dec. 31, Sep. 30, June 30, Mar. 31, Dec. 31, Dec. 31, Dec. 31,
2016 2016 2016 2016 2015 2016 2015
Net interest income $70,166 $68,818 $67,132 $66,555 $66,083 $272,671 $246,502
Tax equivalent
adjustment 1,077 1,028 1,058 1,052 1,046 4,215 4,017
Net interest income -
tax equivalent $71,243 $69,846 $68,190 $67,607 $67,129 $276,886 $250,519
Average earning assets $7,630,148 $7,591,160 $7,475,711 $7,398,013 $7,219,995 $7,524,233 $6,839,968
Net interest margin* 3.66 % 3.61 % 3.61 % 3.62 % 3.63 % 3.62 % 3.60 %
Net interest margin (fully
tax equivalent)* 3.71 % 3.66 % 3.67 % 3.68 % 3.69 % 3.68 % 3.66 %
Three months ended YTD
* Margins are calculated using net interest income annualized divided by average earning assets.
The earnings press release and accompanying presentation include certain non-GAAP ratios, such as net interest income-tax equivalent. 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
Dec. 31, Sep. 30, June 30, Mar. 31, Dec. 31, Dec. 31, Dec. 31,
(Dollars in thousands, except per share data) 2016 2016 2016 2016 2015 2016 2015
Net income (a) $23,294 $22,850 $22,568 $19,814 $19,820 $88,526 $75,063
Average total shareholders' equity 863,509 856,296 837,412 821,588 817,756 844,784 804,916
Less:
Goodw ill and other intangible (210,625) (210,888) (211,199) (211,533) (211,865) (210,625) (211,865)
Average tangible equity (b) 652,884 645,408 626,213 610,055 605,891 634,159 593,051
Total shareholders' equity 865,224 861,137 846,723 826,587 809,376 865,224 809,376
Less:
Goodw ill (210,625) (210,888) (211,199) (211,533) (211,865) (210,625) (211,865)
Ending tangible equity (c) 654,599 650,249 635,524 615,054 597,511 654,599 597,511
Total assets 8,437,967 8,368,481 8,310,102 8,193,554 8,147,411 8,437,967 8,147,411
Less:
Goodw ill (210,625) (210,888) (211,199) (211,533) (211,865) (210,625) (211,865)
Ending tangible assets (d) 8,227,342 8,157,593 8,098,903 7,982,021 7,935,546 8,227,342 7,935,546
Risk-w eighted assets (e) 6,728,737 6,750,749 6,685,158 6,478,716 6,308,139 6,728,737 6,308,139
Total average assets 8,359,912 8,322,156 8,203,837 8,118,945 7,950,278 8,251,703 7,504,069
Less:
Goodw ill (210,625) (210,888) (211,199) (211,533) (211,865) (210,625) (211,865)
Average tangible assets (f) $8,149,287 $8,111,268 $7,992,638 $7,907,412 $7,738,413 $8,041,078 $7,292,204
Ending shares outstanding (g) 61,979,552 61,952,873 61,959,529 61,855,027 61,641,680 61,979,552 61,641,680
Ratios
Return on average tangible shareholders' equity (a)/(b) 14.19 % 14.08 % 14.49 % 13.06 % 12.98 % 13.96 % 12.66 %
Ending tangible equity as a percent of:
Ending tangible assets (c)/(d) 7.96 % 7.97 % 7.85 % 7.71 % 7.53 % 7.96 % 7.53 %
Risk-w eighted assets (c)/(e) 9.73 % 9.63 % 9.51 % 9.49 % 9.47 % 9.73 % 9.47 %
Average tangible equity as a percent of average tangible
assets (b)/(f) 8.01 % 7.96 % 7.83 % 7.71 % 7.83 % 7.89 % 8.13 %
Tangible book value per share (c)/(g) 10.56$ 10.50$ 10.26$ 9.94$ 9.69$ 10.56$ $9.69
Three months ended YTD
The earnings press release and accompanying presentation include certain non-GAAP ratios. These ratios include: (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 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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