First Financial Bancorp 8-K, filed Nov 7, 2022
First Financial Bancorp (FFBC)
8-K
2022-11-07
For: 2022-11-07
View Original
Added on
April 07, 2026
About this 8-K
First Financial Bancorp filed this 8-K on November 7, 2022.
Items reported
- Item 7.01: Regulation FD disclosure
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 7, 2022
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (Commission File Number) | (I.R.S. employer identification number) | |||||||||||||||
| (Address of principal executive offices) | (Zip Code) | ||||||||||||||||
Registrant's telephone number, including area code: (877 ) 322-9530
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| Title of each class | Trading symbol | Name of exchange on which registered | ||||||||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 7.01 Regulation FD Disclosure.
The executive officers of First Financial Bancorp. intend to use the materials filed herewith, in whole or in part, in one or more meetings with investors and analysts. A copy of the investor presentation is attached hereto as Exhibit 99.1.
First Financial Bancorp. does not intend for this Item 7.01 or Exhibit 99.1 to be treated as “filed” for purposes of the Securities Exchange Act of 1934, as amended, or incorporated by reference into its filings under the Securities Act of 1933, as amended.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits:
The following exhibits shall not be deemed to be "filed" for purposes of the Exchange Act:
Exhibit No. Description
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
FIRST FINANCIAL BANCORP.
| By: /s/ James M. Anderson | ||||||||
| James M. Anderson | ||||||||
| Executive Vice President and Chief Financial Officer | ||||||||
| Date: | November 7, 2022 | |||||||
investor presentation • Third Quarter 2022 Exhibit 99.1
forward looking statements disclosure 2 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,” “expected,” “estimated,” ‘‘intends’’ and other similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements. 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. Forward-looking statements are not historical facts but instead express only management’s beliefs regarding future results or events, many of which, by their nature, are inherently uncertain and outside of management’s control. It is possible that actual results and outcomes may differ, possibly materially, from the anticipated results or outcomes indicated in these 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: • economic, market, liquidity, credit, interest rate, operational and technological risks associated with the Company’s business; • future credit quality and performance, including our expectations regarding future loan losses and our allowance for credit losses; • 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; (iv) management’s ability to effectively execute its business plans; • mergers and acquisitions, including costs or difficulties related to the integration of acquired companies; • the possibility that any of the anticipated benefits of the Company’s acquisitions will not be realized or will not be realized within the expected time period; • the effect of changes in accounting policies and practices; • changes in consumer spending, borrowing and saving and changes in unemployment; • changes in customers’ performance and creditworthiness; • the costs and effects of litigation and of unexpected or adverse outcomes in such litigation; • current and future economic and market conditions, including the effects of changes in housing prices, fluctuations in unemployment rates, U.S. fiscal debt, budget and tax matters, geopolitical matters, and any slowdown in global economic growth; • the adverse impact on the U.S. economy, including the markets in which we operate, of the novel coronavirus, which causes the Coronavirus disease 2019 (“COVID-19”), global pandemic, and the impact on the performance of our loan and lease portfolio, the market value of our investment securities, the availability of sources of funding and the demand for our products; • our capital and liquidity requirements (including under regulatory capital standards, such as the Basel III capital standards) and our ability to generate capital internally or raise capital on favorable terms;
forward looking statements disclosure 3 • financial services reform and other current, pending or future legislation or regulation that could have a negative effect on our revenue and businesses, including the Dodd-Frank Act and other legislation and regulation relating to bank products and services; • the effect of the current interest rate environment or changes in interest rates or in the level or composition of our assets or liabilities on our net interest income, net interest margin and our mortgage originations, mortgage servicing rights and mortgage loans held for sale; • the effect of a fall in stock market prices on our brokerage, asset and wealth management businesses; • a failure in or breach of our operational or security systems or infrastructure, or those of our third-party vendors or other service providers, including as a result of cyber attacks; • the effect of changes in the level of checking or savings account deposits on our funding costs and net interest margin; and • our ability to develop and execute effective business plans and strategies. Additional factors that may cause our actual results to differ materially from those described in our forward-looking statements can be found in our Form 10-K for the year ended December 31, 2021, as well as our other filings with the SEC, which are available on the SEC website at www.sec.gov. All forward-looking statements included in this filing are made as of the date hereof and are based on information available at the time of the filing. Except as required by law, the Company does not assume any obligation to update any forward-looking statement.
About First Financial Bancorp Financial Performance Appendix 4 presentation contents
overview 5 Commercial C&I, O-CRE, ABL, Equipment Finance, Treasury, Bannockburn Global Forex Retail Banking Consumer, Small Business Mortgage Banking NASDAQ: FFBC Headquarters: Cincinnati, Ohio Founded: 1863 Banking Centers: 134 Employees: 2,072 Market Cap (09/30/22): $2.0B Dividend Yield (09/30/22): 4.4% CET1 Ratio: 10.8% Wealth Management / Affluent Banking Investment Commercial Real Estate Commercial Finance Oak Street Funding / Franchise Summit Funding Group Lines of Business 1.82% Adj. PTPP ROAA(1) $16.6B in assets $9.8B/$12.3B loans / deposits $4.4B wealth management 1 Non-GAAP financial measure which management believes facilitates a better understanding of the Company’s financial condition. See Appendix for Non-GAAP reconciliation.
key investment highlights Proven & sustainable business model spanning 150+ years • Well managed through past credit cycles • Conservative operating philosophy • Consistent profitability – 128 consecutive quarters Premier Midwest franchise with top quartile performance High quality balance sheet & robust capital position (10.82% CET1) Prudent risk management & credit culture with strong asset quality Increased scale to continue investments in technology Track record of well-executed acquisitions with a well-defined M&A strategy Experienced and proven management team 6
complementary market centric strategies Loans $2.8B / Deposits $3.0B Loans $1.6B / Deposits $5.1B Loans $4.0B / Deposits $4.0B 7 Note: Headquarters loan and deposit balances include special assets, loan marks, and other out of market and corporately held balances. Loan balances exclude PPP balances. Loans $1.4B / Deposits $0.2B
The number of Trust & Investments and RPS relationships are updated as of 6/30/22. All other data as of 09/30/22. 8 diversified lines of business
9 revenue growth strategies Distribution Technology Talent Product & Pricing • Regional pricing strategy • Treasury Management product investments • Investments in Product Management DefinedModels • Community • Metro • Headquarters • National • Digital Enterprise Data Management • Investment in data warehouse • Enabling data as a strategic asset • Connection into CRM platform StaffingModel • Defined new company FTE targets • Larger salesforce intargeted Lines of Business Culture • Diversity and inclusion is a strategic priority • Refreshed Corporate Strategic Intent • Attraction/recruitment engagement and retention programs Capacity Plans • Increased physical distribution network • Closed 63 locations in last 5 years1 • Aligned sales teams to distribution models Expanded Capabilities • Acquired Bannockburn enabling us to provide foreign exchange services • Rollout of “in-house” derivatives desk capabilities • Investment in Wealth Mgmt.: • Business succession • Fixed income strategies • Alternative investments • Improved digital platform • Acquired Summit providing significant improvement to lease product offering Talent Expansion • Up-Market Commercial talent acquisition • Added Chief Transformation Officer; building out team • Added Enterprise ProductExecutive • Added Client Experience Executive Enterprise CRM • Company-wide implementation of SFDC • Marketing automation and sales enablement programdevelopment • Sales Management • Operational Integration Client Experience • Improved Cash Management Platform • Improved Online Banking Product • Blend – MortgageOrigination • nCino – Commercial loan origination and online account opening Digital Transformation • Roadmap Creation • Increased Resource Allocation • Enhanced Client Experience LOB | Go-to-Market 1 Post MainSource merger
10 digital + technology investments enabling simple, consistent & seamless customer experience across channels & making it easy for associates to provide best-in-class customer service. “
11 bank transformation All dollars shown in millions 1 – Tech Spend consists of data processing, communications, software / equipment depreciation & departmental expenses (primarily salaries & benefits) for the Technology, Digital & Info Security teams. 2 – Total Expense excludes Leasing Business Expense Tech Spend1 / Total Expense2 $61.0 $59.0 $55.5 $48.6 $40.8 $31.5 15.6% 15.1%14.9%14.8% 14.1% 13.6% YTD 2022 (Annualized)20212020201920182017 Tech Spend % of Total Expense
• engagement • digital engagement across core customers increased 4.2% vs. Q3 2021 • consumer online banking logins increased 10.7% vs. Q3 2021 • self service • consumer remote deposit volume increased 0.6% vs. Q3 2021 • consumer online banking transaction volume increased 9.9% vs. Q3 2021 • customer satisfaction • Q3 2022 consumer mobile app rating: 4.56 1 12 digital + technology highlights 1 – Composite rating 2 – Represents core customers active in online / mobile banking over the last 30 days of the quarter. Digital Engagement2 51.5% 52.4% 54.3% 56.3% 56.7% 57.3% 58.4% 58.5% 59.1% Q320 Q420 Q121 Q221 Q321 Q421 Q122 Q222 Q322 % of Core Customers Digitally Engaged
About First Financial Bancorp Financial Performance Appendix 13 presentation contents
3Q 2022 results 128th Consecutive Quarter of Profitability 14 • EOP assets increased $380.1 million compared to the linked quarter to $16.6 billion • EOP loans increased $377.0 million compared to the linked quarter to $9.8 billion • Average deposits decreased $166.7 million compared to the linked quarter to $12.4 billion • EOP investment securities decreased $307.8 million compared to the linked quarter Balance Sheet Profitability Asset Quality Income Statement Capital • Noninterest income - $42.5 million; $43.4 million as adjusted1 • Noninterest expense - $125.1 million; $106.1 million as adjusted1 • Efficiency ratio – 69.32%. Adjusted1 efficiency ratio – 58.52% • Effective tax rate of (18.3%). Adjusted1 effective tax rate of 13.6% • Net interest income - $137.9 million • Net interest margin of 3.93% on a GAAP basis; 3.98% on a fully tax equivalent basis1 • Net income - $55.7 million or $0.59 per diluted share. Adjusted1 net income - $57.8 million or $0.61 per diluted share • Return on average assets - 1.35%. Adjusted1 return on average assets - 1.40% • Return on average shareholders’ equity – 10.58%. Adjusted1 return on average shareholders’ equity – 10.97% • Return on average tangible common equity - 22.29%1. Adjusted1 return on average tangible common equity – 23.12% • Provision expense - $8.3 million • Net charge-offs - $1.7 million. NCOs / Avg. Loans - 0.07% annualized • Classified Assets / Total Assets - 0.69% • NPA / Total Assets – 0.28% • ACL / Total loans – 1.27% • Total capital ratio – 13.73% • Tier 1 common equity ratio – 10.82% • Tangible common equity ratio – 5.79%. Adjusted 1 Tangible common equity ratio– 8.07% • Tangible book value per share – $9.48 • Repurchased no shares during the quarter 1 Non-GAAP financial measure which management believes facilitates a better understanding of the Company’s financial condition. See Appendix for Non-GAAP reconciliation.
3Q 2022 highlights • Quarterly earnings driven by net interest margin • Adjusted1 earnings per share - $0.61 • Adjusted1 return on assets - 1.40% • Adjusted1 pre-tax, pre-provision return on assets - 1.82% • Adjusted1 return on average tangible common equity – 23.12% • End of period loan balances increased with strong origination volumes across the portfolio • EOP loan balances increased $377.0 million compared to the linked quarter; 15.9% on an annualized basis • Broad based portfolio growth included a $140.0 million increase in C&I, a $69.3 million increase in consumer loans, a $61.5 million increase in residential mortgage loans, a $44.3 million increase in ICRE and a $42.1 million increase in finance leases • Total average deposit balances decreased $166.7 million, or 5% annualized • Reduction driven by decline in public funds, retail CD’s, money market accounts and noninterest bearing deposit accounts • Average noninterest bearing deposits were 33.8% of total deposits • Majority of outflows are consumer deposits rather than business accounts • Accelerating 3.98% net interest margin (FTE) • 53 bp increase from second quarter driven by increase in interest rates • 89 bp increase in loan yields offset 11 bp increase in cost of deposits • Adjusted1 noninterest income of $43.4 million • Foreign exchange income of $11.8 million exceeded expectations, a decrease of $1.7 million, or 12.8%, from record linked quarter • Wealth management fees of $5.5 million remained strong; a decrease of $0.8 million, or 13.1% from linked quarter • Mortgage banking revenue of $3.7 million, a decrease of $1.5 million, or 28.8%, compared to linked quarter • Other noninterest income of $3.2 million, a decrease of $1.4 million, or 30.8%, compared to the linked quarter due to elevated income from limited partnership investments in second quarter • Leasing business revenue remained relatively unchanged at $7.1 million compared to linked quarter • Adjusted1 for $0.9 million loss on investment securities 1 Non-GAAP financial measure which management believes facilitates a better understanding of the Company’s financial condition. See Appendix for Non-GAAP reconciliations. 2The fair value measurements of assets acquired and liabilities assumed in the Summit acquisition are subject to refinement for up to one year after the closing date of the acquisition as additional information relative to closing date fair values becomes available. 15
3Q 2022 highlights • Adjusted1 noninterest expense of $106.1 million • Adjusted1 for $17.2 million in tax credit investments and $1.7 million of other costs not expected to recur such as acquisition, severance and branch consolidation costs • $11.3 million of Summit operating expenses during the quarter, including intangible amortization • Increase compared to linked quarter driven by elevated incentive compensation tied to the Company’s performance • Efficiency ratio of 69.3%; 58.5% as adjusted1 • Allowance for credit loss (ACL) and provision expense increased compared to linked quarter • Total ACL of $141.1 million; provision expense of $8.3 million o Loans and leases - ACL of $124.1 million; 1.27% of total loans o Unfunded Commitments - ACL of $17.0 million • NPA to total assets of 0.28% • NCOs declined to 7 bps of average loans and leases • Nonaccrual loans of $36.3 million; $2.6 million, or 6.7%, decline compared to linked quarter • Regulatory capital ratios in excess of internal targets • Total capital ratio of 13.73% • Tier 1 common equity of 10.82%; 9 basis point decrease from linked quarter • Tangible book value decreased by $0.79 to $9.48 due to decline in AOCI • Tangible common equity of 5.79%; 8.07%1 excluding ($354.6) million of AOCI • No shares repurchased in third quarter 16 1 Non-GAAP financial measure which management believes facilitates a better understanding of the Company’s financial condition. See Appendix for Non-GAAP reconciliations. 2The fair value measurements of assets acquired and liabilities assumed in the Summit acquisition are subject to refinement for up to one year after the closing date of the acquisition as additional information relative to closing date fair values becomes available. .
adjusted net income1 17 The table below lists certain adjustments that the Company believes are significant to understanding its quarterly performance. 1 Non-GAAP financial measure which management believes facilitates a better understanding of the Company’s financial condition. See Appendix for Non-GAAP reconciliations. All dollars shown in thousands, except per share amounts As Reported Adjusted 1 As Reported Adjusted 1 Net interest income 137,892$ 137,892$ 117,010$ 117,010$ Provision for credit losses-loans and leases 7,898$ 7,898$ (4,267)$ (4,267)$ Provision for credit losses-unfunded commitments 386$ 386$ 3,481$ 3,481$ Noninterest income 42,534$ 42,534$ 49,778$ 49,778$ less: gains (losses) on investment securities - (880) A - (1,054) A Total noninterest income 42,534$ 43,414$ 49,778$ 50,832$ Noninterest expense 125,068$ 125,068$ 103,034$ 103,034$ less: tax credit investment - 17,212 A - 104 A less: Summit acquistion costs - 76 A - 100 A less: other - 1,671 A - 666 A Total noninterest expense 125,068$ 106,109$ 103,034$ 102,164$ Income before income taxes 47,074$ 66,913$ 64,540$ 66,464$ Income tax expense (8,631)$ (8,631)$ 13,020$ 13,020$ plus: after-tax impact of tax credit investment @ 21% - 13,598 - 82 plus: tax effect of adjustments (A) @ 21% statutory rate - 4,166 - 404 Total income tax expense (8,631)$ 9,133$ 13,020$ 13,506$ Net income 55,705$ 57,780$ 51,520$ 52,958$ Net earnings per share - diluted 0.59$ 0.61$ 0.55$ 0.56$ Pre-tax, pre-provision return on average assets 1.34% 1.82% 1.58% 1.63% 3Q 2022 2Q 2022
profitability 18 Return on Average Assets Return on Avg Tangible Common Equity Diluted EPS 1 Non-GAAP financial measure which management believes facilitates a better understanding of the Company’s financial condition. See Appendix for Non-GAAP reconciliation. Efficiency Ratio $0.59$0.55 $0.44 $0.50 $0.63 $0.61 $0.56 $0.46 $0.58 $0.63 3Q222Q221Q224Q213Q21 Diluted EPS Adjusted EPS 1 1.35%1.28% 1.03%1.16% 1.49% 1.40% 1.31% 1.09% 1.34% 1.49% 3Q222Q221Q224Q213Q21 ROA Adjusted ROA 1 22.29% 20.68% 14.93%15.11% 19.03% 23.12% 21.26% 15.75% 17.43% 19.00% 3Q222Q221Q224Q213Q21 ROATCE Adjusted ROATCE 1 63.5% 70.1% 69.6% 61.8% 69.3% 60.1% 60.2% 67.7% 60.9% 58.5% 3Q21 4Q21 1Q22 2Q22 3Q22 Efficiency Ratio Adjusted Efficiency Ratio 1
net interest income & margin 19 Net Interest Margin (FTE) 3Q22 NIM (FTE) Progression Net Interest Income All dollars shown in millions 3.78% 3.24% 2.93% 2.82%2.87% 0.12% 0.11% 0.11% 0.18%0.11% 0.07% 0.08% 0.07%0.07%0.09% 0.16%0.25% 3.98% 3.45% 3.16% 3.23% 3.32% 3Q222Q221Q224Q213Q21 Basic Margin (FTE) Loan Fees Loan Accretion PPP Fees $4.2 $3.9 $3.7$6.5$3.9 $2.3 $2.6 $2.2$2.3 $3.0 $5.6$9.3 $137.9 $117.0 $106.3 $110.8 $113.4 3Q222Q221Q224Q213Q21 Loan Fees Loan Accretion PPP Interest/Fees 2Q22 3.45% Asset yields/mix 0.76% Deposit/funding costs/mix -0.22% Day count/accretion -0.01% 3Q22 3.98%
20 1NII – Year 1 impact, represents percentage change for immediate parallel changes in rates 2Reflects percentage of loans classified as variable rate and repricing in ≤ 1yr, hybrid variable rate repricing in > 1yr, or fixed rate, including loans held for sale 3Schedule reflects remaining maturity or repricing frequency for all fixed rate loans or hybrid variable rate loans repricing in > 1yr, including loans held for sale asset sensitive balance sheet positioning Net Interest Income Sensitivity 1 Loans - Variable Exposure2 Fixed/Hybrid Years to Maturity/Repricing3 -8.1% 5.3% 9.6% -100 bps +100 bps +200 bps 12% 7% 9% 72% ≤1 yr 1-2 yrs 2-3 yrs > 3 yrs Variable ≤ 1yr 65% Hybrid > 1yr 8% Fixed 27%
liquid balance sheet presents opportunity 21 1Historical data adjusted for the merger with MainSource Financial Group, Inc. using the sum of the individual components. Historical Deposit and Loan Betas1 Total Deposit Beta Loan Beta Excess Liquidity Provides Significant Tailwind 25% 26% 28% 29% 30% 29% 28% 26% 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 Cash + Securities / Assets 81% 79% 76% 74% 72% 72% 77% 79% 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 Loans / Deposits Ratio 53.1% 79.0% 60.0% 3Q15-2Q19 Fed Cycle (+225bps) 3Q19-4Q21 Fed Cycle (-225bps) 1Q22-3Q22 Fed Cycle (+300bps) 24% 31% 4% 3Q15-2Q19 Fed Cycle (+225bps) 3Q19-4Q21 Fed Cycle (-225bps) 1Q22-3Q22 Fed Cycle (+300bps)
22 Liquidity Sources Available Borrowing Capacity Liquidity Sources • In addition to deposits, First Financial has approximately $6.8 billion of readily available funding sources to meet customer needs through the following sources: • Interest-bearing deposits with other banks • Fed funds • FHLB funding • Brokered CDs • Highly liquid securities • Fed discount window • Investment securities portfolio: • $856 million of expected cash flow from securities portfolio in next 12 months • $300 million of securities available to be sold at breakeven • Portfolio duration of 4.4 years at 9/30 liquidity and borrowing capacity Investment Liquidity (dollars shown in thousands) $4.3 $4.6 $4.5 $4.6 $4.8 $5.1 $4.5 $4.3 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 (dollars shown in billions) Interest-bearing deposits with other banks 338,778$ Fed funds 1,684,465 Unpledged investment securities 2,266,353 FHLB borrowing availability 469,304 Brokered CDs 1,321,086 Funds available through Fed Discount Window 746,171 Total as of September 30, 2022 6,826,157$
diverse and growing fee revenues 23 Noninterest Income 3Q22 Highlights All dollars shown in thousands • Total fee income 23.6% of net revenue • Foreign exchange income of $11.8 million; decreased $1.7 million, or 12.8%, from record linked quarter • Trust and wealth management fees of $5.5 million decreased $0.8 million, or 13.1%, from the linked quarter due to market value changes • Deposit service charge income of $6.3 million; decreased $1.4 million, or 17.9%, from the linked quarter due to overdraft program changes • Mortgage banking income of $3.7 million; decreased $1.5 million, or 28.8%, from the linked quarter • Leasing business income of $7.1 million was flat compared to the linked quarter • Client derivative income of $1.4 million; $0.1 million, or 5.7%, increase from the linked quarter • Other noninterest income of $3.2 million; decreased $1.4 million, or 30.8% due to elevated income from limited partnership investments in second quarter Service Charges $6,279 15% Wealth Mgmt $5,487 13% Bankcard income $3,484 8% Client derivative fees $1,447 3% Foreign exchange income $11,752 28% Leasing business income $7,127 17% Mortgage origination income $3,729 9% Other $3,229 7% Total $42.5 million
well managed expenses 24 Noninterest Expense 3Q22 Highlights All dollars shown in thousands • Core expenses increased due to elevated incentive compensation tied to the Company’s performance and higher leasing business expenses • Adjustments include: • $17.2 million of tax credit investment writedowns • $1.7 million of other costs not expected to recur such as acquisition, branch consolidation and severance costs Salaries and benefits $66,808 53% Occupancy and equipment $8,891 7% Data processing $8,497 7% Professional services $2,346 2% Intangible amortization $2,783 2% Leasing business expense $5,746 5% Other $29,997 24% Total $125.1 million
average balance sheet 25 Average Loans Average Securities Average Deposits All dollars shown in millions 1 Includes loans fees and loan accretion $12,371$12,538$12,784$12,885$12,667 0.20% 0.09%0.08%0.10%0.10% 3Q222Q221Q224Q213Q21 Total Deposits Cost of Deposits $4,003$4,118$4,308$4,344$4,189 3.11% 2.78% 2.50% 2.29%2.31% 3Q222Q221Q224Q213Q21 Average Investment Securities Investment Securities Yield $9,597$9,368$9,267$9,283$9,503 5.05% 4.16%3.82%3.96%4.03% 3Q222Q221Q224Q213Q21 Gross Loans Loan Yield (Gross) 1
attractive deposit portfolio 26 Deposit Product Mix (Avg) 3Q22 Average Deposit Progression All dollars shown in millions Total growth/(decline): ($166.7) million $1.4 -$48.6 $15.0 -$48.8 -$58.1 $47.6 -$75.2 Interest-bearing demand Noninterest-bearing Savings Money Markets Retail CDs Brokered CDs Public Funds Interest-bearing demand $1,881 15% Noninterest- bearing $4,176 34% Savings $1,390 11% Money Markets $2,177 18% Retail CDs $849 7% Brokered CDs $127 1% Public Funds $1,771 14% Total $12.4 billion
loan portfolio 27 Loan LOB Mix (EOP) Net Loan Change-LOB (Linked Quarter) All dollars shown in millions Total growth/(decline): $377.0 million $44.3 $140.0 $23.6 $0.8 $42.1 $69.3 $61.5 -$4.6 ICRE Commercial & Small Business Banking Oak Street Franchise Summit Consumer Mortgage PPP ICRE $3,503 36% Commercial & Small Business Banking $3,123 32% Oak Street $610 6% Franchise $295 3% Summit $177 2% Consumer $967 10% Mortgage $1,118 11% PPP $4 0% Total $9.8 Billion
current expected credit losses - loans and leases 28 ACL / Total Loans 3Q22 Highlights All dollars shown in thousands • $141.1 million combined ACL; $8.3 million combined provision expense • $124.1 million ACL – loans and leases, or 1.27% of loan balances; slight increase driven by strong loan growth and slower prepayment rates • Utilized Moody’s September baseline forecast in quantitative model • $17.0 million ACL – unfunded commitments ACL by Loan Type All dollars shown in millions $124.1$117.9$124.1$132.0 $148.9 1.27% 1.25% 1.34% 1.42% 1.59% 3Q222Q221Q224Q213Q21 Allowance for Credit Losses ACL / Total Loans 3Q21 4Q21 1Q22 2Q22 3Q22 Loans Commercial and industrial 43,534$ 44,052$ 37,783$ 39,179$ 41,032$ Lease financing 1,083 1,633 2,093 2,212 2,450 Real estate -construction 15,390 11,874 11,410 11,965 14,046 Real estate - commercial 68,594 53,420 51,512 39,856 38,071 Real estate - residential 6,480 6,225 6,152 7,383 9,422 Home equity 9,538 9,643 9,676 10,980 11,620 Installment 1,177 1,097 1,075 1,189 4,855 Credit card 3,107 4,048 4,429 5,121 2,600 ACL-loan and lease losses 148,903$ 131,992$ 124,130$ 117,885$ 124,096$ ACL-unfunded commitments 11,607$ 13,406$ 13,179$ 16,661$ 17,046$
asset quality 29 Nonperforming Assets / Total AssetsClassified Assets / Total Assets Net Charge Offs & Provision Expense1 . 1 Provision includes both loans & leases and unfunded commitments All dollars shown in millions $2.5 $7.4 $2.3 $2.0 $1.7 -$10.1 -$7.7 -$5.8 -$0.8 $8.3 0.07% 0.08%0.10% 0.32% 0.10% 3Q21 4Q21 1Q22 2Q22 3Q22 NCOs Provision Expense NCOs / Average Loans $115.0$119.8 $106.8$104.8 $165.5 0.69%0.74%0.67%0.64% 1.04% 3Q222Q221Q224Q213Q21 Classified Assets Classified Assets / Total Assets $47.4$50.2$53.6 $60.1 $77.8 0.28%0.31%0.33%0.37% 0.49% 3Q222Q221Q224Q213Q21 NPAs NPAs / Total Assets
capital 30 Tier 1 Common Equity Ratio Total Capital Ratio Tangible Common Equity Ratio 9/30 Risk Weighted Assets = $12,467,422 All capital numbers are considered preliminary. 1 Non-GAAP financial measure which management believes facilitates a better understanding of the Company’s financial condition. See Appendix for Non-GAAP reconciliation. Adjusted TCE excludes impact from AOCI Tier 1 Capital Ratio 8.21% 7.58% 6.95% 6.40% 5.79% 8.11% 7.58% 7.90% 8.01% 8.07% 3Q21 4Q21 1Q22 2Q22 3Q22 TCE ratio Adjusted TCE ratio 1 10.82%10.91%10.87%10.85% 11.55% 7.00% 3Q222Q221Q224Q213Q21 Tier 1 Common Equity Ratio Basel III minimum 11.17%11.28%11.24%11.22% 11.92% 8.50% 3Q222Q221Q224Q213Q21 Tier 1 Capital Ratio Basel III minimum 13.73%13.94%13.97%14.11% 14.97% 10.50% 3Q222Q221Q224Q213Q21 Total Capital Ratio Basel III minimum
capital strategy 31 Strategy & Deployment Tangible Book Value Per Share • 4.4% annualized dividend yield • 39.1% of 3Q22 earnings returned to shareholders through common dividend • Most recent internal stress testing indicates capital ratios above regulatory minimums in all modeled scenarios • Common dividend expected to remain unchanged in near-term • No shares repurchased in 3Q22; no plans to repurchase shares in near- term• Decline in TBV per share driven by decline in AOCI $9.48 $10.27 $10.97 $12.26 $13.09 3Q222Q221Q224Q213Q21 Tangible Book Value per Share
outlook commentary1 • Loan balances expected to grow high single digits in near term • Total deposit balances to remain flat or decline slightly over near term 32 • Expected to be $105-107 million • Growth in leasing business expense of ~$1 million per quarter as portfolio grows • Incentive expense will fluctuate with fee income Noninterest Expense Net Interest Margin Balance Sheet Credit • Continued stability in credit quality trends • ACL coverage to remain stable to slightly higher • Uncertainty regarding inflation and impact of rate hikes on macroeconomic environment Noninterest Income • Total fee income expected to be $44-46 million 1 See Forward Looking Statement Disclosure on page 2-3 of this presentation for a discussion of factors that could affect management’s expectations and results in future periods. • Expected to be 4.30% - 4.45% with anticipated interest rate increases • Asset sensitive position advantageous with rising rates Capital • Expect to maintain dividend at current levels Summit • Unchanged outlook; minimal impact on 2022 EPS • $400 million of annual originations, growing at double digits
About First Financial Bancorp Financial Performance Appendix 33 presentation contents
appendix: our markets 34 • Greater Cincinnati/Dayton • Loans $4.4 billion • Deposits $5.2 billion • Deposit Market Share #5 (2.7%) • Banking Centers 52 • Fortune 500 Companies 8 • Indianapolis • Loans $0.9 billion • Deposits $0.9 billion • Deposit Market Share #14 (1.2%) • Banking Centers 10 • Fortune 500 Companies 2 • Columbus, OH • Loans $1.2 billion • Deposits $0.4 billion • Deposit Market Share #18 (0.4%) • Banking Centers 5 • Fortune 500 Companies 5 • National • Loans $1.4 billion • Deposits $0.2 billion • Louisville • Loans $0.3 billion • Deposits $0.7 billion • Deposit Market Share #12 (1.3%) • Banking Centers 6 • Fortune 500 Companies 3 • Community Markets • Loans $1.6 billion • Deposits $5.1 billion • Banking Centers 61 All numbers as of 09/30/2022 except deposit market share which is as of 6/30/2022. Greater Cincinnati/Dayton and deposit balances include special assets, loan marks, and other out of market and corporately held balances. Loan balances exclude PPP balances.
The Company’s Investor Presentation contains certain financial information determined by methods other than in accordance with accounting principles generally accepted in the United States (GAAP). Such non-GAAP financial information should be considered supplemental to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. However, we believe that non-GAAP reporting provides meaningful information and therefore we use it to supplement our GAAP information. We have chosen to provide this supplemental information to investors, analysts and other interested parties to enable them to perform additional analyses of operating results, to illustrate the results of operations giving effect to the non-GAAP adjustments and to provide an additional measure of performance. We believe this information is helpful in understanding the results of operations separate and apart from items that may, or could, have a disproportional positive or negative impact in any given period. For a reconciliation of the differences between the non-GAAP financial measures and the most comparable GAAP measures, please refer to the following reconciliation tables. to GAAP Reconciliation 35 appendix: non-GAAP measures
appendix: non-GAAP to GAAP reconciliation 36 All dollars shown in thousands Net interest income and net interest margin - fully tax equivalent Sep. 30, June 30, Mar. 31, Dec. 31, Sep. 30, 2022 2022 2022 2021 2021 Net interest income 137,892$ 117,010$ 106,345$ 110,806$ 113,410$ Tax equivalent adjustment 1,712 1,625 1,467 1,386 1,434 Net interest income - tax equivalent 139,604$ 118,635$ 107,812$ 112,192$ 114,844$ Average earning assets 13,917,815$ 13,780,243$ 13,848,596$ 13,793,644$ 13,724,403$ Net interest margin1 3.93 % 3.41 % 3.11 % 3.19 % 3.28 % Net interest margin (fully tax equivalent)1 3.98 % 3.45 % 3.16 % 3.23 % 3.32 % Three months ended 1 Margins are calculated using net interest income annualized divided by average earning assets. The tax equivalent adjustment to net interest income recognizes the income tax savings when comparing taxable and tax-exempt assets and assumes a 21% 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.
appendix: non-GAAP to GAAP reconciliation 37 All dollars shown in thousands Additional non-GAAP ratios Sep. 30, June 30, Mar. 31, Dec. 31, Sep. 30, (Dollars in thousands, except per share data) 2022 2022 2022 2021 2021 Net income (a) 55,705$ 51,520$ 41,301$ 46,945$ 60,012$ Average total shareholders' equity 2,089,179 2,099,670 2,225,495 2,241,820 2,261,293 Less: Goodw ill (999,690) (999,958) (1,000,238) (938,453) (937,771) Other intangibles (97,781) (100,354) (103,033) (71,006) (72,529) Average tangible equity (b) 991,708 999,358 1,122,224 1,232,361 1,250,993 Total shareholders' equity 1,994,132 2,068,670 2,137,445 2,258,942 2,236,170 Less: Goodw ill (998,422) (999,959) (999,959) (1,000,749) (937,771) Other intangibles (96,528) (99,019) (101,673) (104,367) (71,663) Ending tangible equity (c) 899,182 969,692 1,035,813 1,153,826 1,226,736 Less: AOCI (354,570) (243,328) (142,477) (433) 14,230 Ending tangible equity less AOCI (d) 1,253,752 1,213,020 1,178,290 1,154,259 1,212,506 Total assets 16,623,793 16,243,714 16,009,150 16,329,141 15,956,593 Less: Goodw ill (998,422) (999,959) (999,959) (1,000,749) (937,771) Other intangibles (96,528) (99,019) (101,673) (104,367) (71,663) Ending tangible assets (e) 15,528,843 15,144,736 14,907,518 15,224,025 14,947,159 Risk-w eighted assets (f) 12,467,422 11,982,860 11,705,447 11,642,201 11,399,375 Total average assets 16,385,989 16,185,978 16,184,919 16,036,417 15,995,808 Less: Goodw ill (999,690) (999,958) (1,000,238) (938,453) (937,771) Other intangibles (97,781) (100,354) (103,033) (71,006) (72,529) Average tangible assets (g) 15,288,518$ 15,085,666$ 15,081,648$ 15,026,958$ 14,985,508$ Ending shares outstanding (h) 94,833,964 94,448,792 94,451,496 94,149,240 93,742,797 Ratios Return on average tangible shareholders' equity (a)/(b) 22.29% 20.68% 14.93% 15.11% 19.03% Ending tangible equity as a percent of: Ending tangible assets (c)/(e) 5.79% 6.40% 6.95% 7.58% 8.21% Risk-w eighted assets (c)/(f) 7.21% 8.09% 8.85% 9.91% 10.76% Ending tangible equity excluding AOCI as a percent of: Ending tangible assets (d)/(e) 8.07% 8.01% 7.90% 7.58% 8.11% Average tangible equity as a percent of average tangible assets (b)/(g) 6.49% 6.62% 7.44% 8.20% 8.35% Tangible book value per share (c)/(h) 9.48$ 10.27$ 10.97$ 12.26$ 13.09$ Three months ended,
appendix: non-GAAP to GAAP reconciliation 38 Additional non-GAAP measures 1Q22 4Q21 3Q21 As Reported Adjusted As Reported Adjusted As Reported Adjusted As Reported Adjusted As Reported Adjusted Net interest income (f) 137,892$ 137,892$ 117,010$ 117,010$ 106,345$ 106,345$ 110,806$ 110,806$ 113,410$ 113,410$ Provision for credit losses-loans and leases (j) 7,898 7,898 (4,267) (4,267) (5,589) (5,589) (9,525) (9,525) (8,193) (8,193) Provision for credit losses-unfunded commitments (j) 386 386 3,481 3,481 (226) (226) 1,799 1,799 (1,951) (1,951) Noninterest income 42,534 42,534 49,778 49,778 41,294 41,294 45,660 45,660 42,537 42,537 less: gains (losses) on sale of investment securities (880) (1,054) (196) 306 (205) less: other - - - - 500 Total noninterest income (g) 42,534 43,414 49,778 50,832 41,294 41,490 45,660 45,354 42,537 42,242 Noninterest expense 125,068 125,068 103,034 103,034 102,805 102,805 109,605 109,605 99,058 99,058 less: severance and merger-related expenses - - - - - less: tax credit investments 17,212 104 104 6,120 5,309 less: legal settlement - - - 3,456 - less: Summit acquisition costs 76 100 323 4,095 - less: COVID-19 and other 1,671 666 2,354 1,870 181 Total noninterest expense (e) 125,068 106,109 103,034 102,164 102,805 100,024 109,605 94,064 99,058 93,568 Income before income taxes (i) 47,074 66,913 64,540 66,464 50,649 53,626 54,587 69,822 67,033 72,228 Income tax expense (8,631) (8,631) 13,020 13,020 9,348 9,348 7,642 7,642 7,021 7,021 plus: tax effect of adjustments 13,598 82 83 4,835 4,194 plus: after-tax impact of tax credit investments @ 21% 4,166 404 625 3,199 1,091 Total income tax expense (h) (8,631) 9,133 13,020 13,506 9,348 10,056 7,642 15,676 7,021 12,306 Net income (a) 55,705$ 57,780$ 51,520$ 52,958$ 41,301$ 43,570$ 46,945$ 54,146$ 60,012$ 59,922$ Average diluted shares (b) 94,794 94,794 94,450 94,450 94,264 94,264 93,762 93,762 95,144 95,144 Average assets (c) 16,385,989 16,385,989 16,185,978 16,185,978 16,184,919 16,184,919 16,036,417 16,036,417 15,995,808 15,995,808 Average shareholders' equity 2,089,179 2,089,179 2,099,670 2,099,670 2,225,495 2,225,495 2,241,820 2,241,820 2,261,293 2,261,293 Less: Goodwill and other intangibles (1,097,471) (1,097,471) (1,100,312) (1,100,312) (1,103,271) (1,103,271) (1,009,459) (1,009,459) (1,010,300) (1,010,300) Average tangible equity (d) 991,708 991,708 999,358 999,358 1,122,224 1,122,224 1,232,361 1,232,361 1,250,993 1,250,993 Ratios Net earnings per share - diluted (a)/(b) 0.59$ 0.61$ 0.55$ 0.56$ 0.44$ 0.46$ 0.50$ 0.58$ 0.63$ 0.63$ Return on average assets - (a)/(c) 1.35% 1.40% 1.28% 1.31% 1.03% 1.09% 1.16% 1.34% 1.49% 1.49% Pre-tax, pre-provision return on average assets - ((a)+(j)+(h))/(c) 1.34% 1.82% 1.58% 1.63% 1.12% 1.20% 1.16% 1.54% 1.41% 1.54% Return on average tangible shareholders' equity - (a)/(d) 22.29% 23.12% 20.68% 21.26% 14.93% 15.75% 15.11% 17.43% 19.03% 19.00% Efficiency ratio - (e)/((f)+(g)) 69.3% 58.5% 61.8% 60.9% 69.6% 67.7% 70.1% 60.2% 63.5% 60.1% Effective tax rate - (h)/(i) -18.3% 13.6% 20.2% 20.3% 18.5% 18.8% 14.0% 22.5% 10.5% 17.0% (Dollars in thousands, except per share data) 3Q22 2Q22
39 First Financial Bancorp First Financial Center 255 East Fifth Street Cincinnati, OH 45202