First Financial Bancorp (FFBC) Barclays 2012 Global Financial Services Conference Call September 12, 2012 8:15 am ET Executives Kenneth Lovik – Vice President-Investor Relations & Corporate Development J. Franklin Hall – Executive Vice President, Chief Financial Officer and Chief Operating Officer Analysts Matthew Keating – Barclays Capital, Inc. Presentation Matthew Keating – Barclays Capital, Inc.
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We have placed a recent emphasis on two more traditional product areas including residential mortgage production, and small business banking. Noted on the bottom right of this slide is a recently published ranking of the top SBA lenders in Southwest Ohio. First Financial ranks second for a number of loans originated and ranks first for dollar amount of loans originated for the top nine lenders in the year.For those of you who may not be familiar with the details of our story, this slide presents a summary of our execution of key strategic initiatives since 2005. In 2005, we began a comprehensive plan to reposition the franchise, which included operational changes such as consolidating charters, implementing a single brand, and updating our technology platform to drive greater efficiency across the company. We also repositioned the balance sheet as we sold out non-performing assets, consolidated or sold under performing branch locations, and exited non-strategic business lines. During this time, we actually shrunk the balance sheet from 3.9 billion of assets at the beginning of 2005 to 3.3 billion at the end of 2006. As a result of the restructuring, our balance sheet and asset quality were strong adding into the economic crisis. We were well positioned to capitalize on FDIC-assisted acquisition opportunities early in the cycle, with less competition provided favorable financial terms that further enhanced the strategic deals we closed. The two FDIC-assisted transactions we executed in 2009 essentially double the size of our company. Subsequent to the integration of the acquired banks, we spent much of 2010 focused internally on operations as we rationalized at non-strategic operations and implemented further efficiency initiatives. In 2011, we were able to deploy a portion of our strong capital base through two branch acquisitions where we accelerated our growth plans in Dayton, Ohio and Indianapolis, Indiana. Two metropolitan markets identified for future expansion. We also implemented our variable dividend, which has been acknowledged as one of the more innovative capital management strategies in the banking industry.
Listed on this slide, what I believe there’s some often overlooked points of peer and market differentiation. Peer is defined as the KBW Regional Bank Index minus First Financial. First, our profitability on a non-risk-adjusted basis over the last 12 months is above peer median with a return on average assets 15 basis points higher and a return on average equity, 174 basis points higher than peer.Our capital levels are also well above peer median. Our tangible common equity ratio is 9.91% relative to our peer at 8.73% and our total capital ratio, which is bolstered by the low risk weighting of our earning assets due to the covered status that what was acquired through FDIC-assisted transactions is 18.42% compared to peer median of 15.33%. It is because of this robust capital position that we have continued a total dividend payout ratio of 100% resulting in the current annualized yield in excess of 7%, both of which are substantially above the peer median payout ratio of 37% and dividend yield of 2.7%. And our quarterly adjusted return on risk-weighted assets of 1.92% is 62 basis points above peer median as our risk-weighted assets to total assets is so much lower than peer. Said in another way, we are delivering above peer median performance on a lower risk balance sheet. Read the rest of this transcript for free on seekingalpha.com