FFBC - Earnings call transcript Q3 2017 | First Financial Bancorp.

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Operator

Good day, everyone. And welcome to the First Financial Bancorp Third Quarter 2017 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please do note that today's event is being recorded. to conference like Crawley. to now would turn over the Scott I go Please ahead.

Scott Crawley

Relations Good thank Financial everyone us you, Chief today’s morning, Thank William. Claude be and financial Participating conference Davis, to are and under Officer; we the and call issued Officer will quarter on Chief available our call Officer. you discuss www.bankatfirst.com Tony section. presentation website on Gavigan, Investor third John Financial First Both Bancorp's Executive Banking the results. yesterday on accompanying Stollings, today's Chief the release slide joining for press

reference slides today’s We to will presentation accompanying in during make the contained the call.

provide after Additionally, release discussion of Company’s today risk please and facts in earnings not as be contained XX, well to will disclosure call. factors. The any over as we Claude of this the or information filings call the refer full I'll will forward-looking we XXXX, our reflect statement a is XXXX forward-looking the the to statements third as quarter updating circumstances SEC September accurate Davis to turn for

Claude Davis

and thanks afternoon results call quarter. today. the those announced our Thanks Scott financial joining we for third to the Yesterday

of quarter Presentation quarter the Slide had a we solid on shown profitability. As performance X XXX-consecutive our representing Investor of

and Our and loan quarter from third results credit improvement reflect efforts. deposit quality our stable growth, strong positive performance early returns

of the earnings performance XX% average $XXX as commercial a real call efforts physical or our resulted driven Slide basis a a through efforts the production million and focused our efficiency return common growth X% coupled during consumer by quarter, X, a as cleanup of as grew continued on improvement annualized period finance, costs average sheet XX.X% quarter, Loan well on commercial sheet to the previously GAAP X.XX% estate execution bank deposit commercial and X% million lines from premier on distribution, loans ratio, assets efficiency, linked As balances acquired and on off-balance loan strategy the equity. compared management. improving with return $XX detailed operating was securitizations. in linked quarter were business balance on These solid tangible and

to we growth demand clients and finish we elevated the expect payoff our weigh prospects, and performance solid to financial from continue continue While mid-single-digits. and growth the long year credit see on to in with

The X. increased remained On and approximately strategies commercial quarter attrition deposit nearly balances strong $XXX also from or minimal Slide the and the personal position X% front, improve deposit taken us support ratios to We the the solid quarter well and from million growth. the average a to from growth Capital in future benefit deposits with linked on from discussed performance. company quarter both going forward. during and management base margin improvement to and actions fourth benefits both is reduced expense anticipate well-positioned in by the

detailed on addition companies In excited approval to working integration Financial progress planning continue and Slide and we to shareholder two great Group. the performance, regulatory as made through our processes be MainSource on our merger pending about Together quarter with solid initial third X. our

areas our a saves million through work updated of as have Earlier The $XX will of that most net solidifying week, to need We integration. plan, impact footprint to our are this million. commitment updated we serve to and community our cost we assistance. financial increased in be $X.X continue expected from announced billion investment $XX five-year the

first merger during at integration to the close believe with quarter We on this remain are pleased we the XXXX. of the point and track progress

continue bank we strategy. that that, and to development focused important to high It turn we Midwest integration the execution Finally, meets the successfully that performing financial close community the our economic premier that communities John. to lending, I'll to call as XXXX, coordinate over With a serve. needs the equally now our we out bank build our of diligently of efforts primary look focus remains is business

John Gavigan

including Claude or of per the everyone. of you, performance overview and $XX.X income Thank good morning, for net $X.XX Slide provide diluted X share and million quarter. quarterly our X an

encouraged As Claude track believe our mentioned, third a on we close quarter are XXXX. for by are we and results strong to

Turning performance. your earnings, we our GAAP of we Slide attention to X, understanding reconciliation are to provide adjusted to quarterly earnings believe items our significant a highlighting

share, related third the exercise related sales the income well transactions million as to assisted through acquired investment and fees were was which Severance associated a costs performance quarter, earlier, period referenced For consisted call. driven with per clean-up incurred of income of costs Claude service during our efforts of the quarter. loans expense merger-related by merger-related cleanup $XX.X provision securities or the to adjusted FDIC and XXXX cost on as severance, professional securitizations net $X.XX excludes improvement call the the while largely the during consumer

be the cost lowering interest these net asset deposit will from funding balances The the linked our one we million, approximately $XX.X to basis believe lower points are implement million and paid in margin, XX results, potential fee the late and $XX.X basis fees margin was deposits primarily period. Consistent a approximately full XX, of efforts second and related point our net average Slide on fees clean-up client a money impact to the converting sales expect pleased of average primarily were these to fully we rates, previously fully income growing quarter to million the included products to core $X.X the third modest quarter, quarter, costs. the interest asset during with quarter, four the noninterest derivative decline $X rates or on initial low-cost equivalent which changes in offsetting in intended charges stronger we loan relationships. quarter driven our slight points were our approximately as with September, basic also strategies refocusing a majority decline Deposit financial deposit by quarter, by and volatility. manage by on realize income so stable six to income which XX during Slide improvement to linked earnings XX Noninterest billion was quarter details increasing income mix. indexed while $X.X the million basis the third market in implemented fourth and of these yields quarter we call, comments higher the to a weighted loan compared from million the tax relatively by X.XX% higher securitization to basis call. earning offset of increased X% $X.X income for excluding to higher service interest increasing driven earning the during bankcard impact Turning during

increased noninterest $XXX,XXX $X.X increase previously was primarily driven from of XX, $X.X or million million Slide well linked basis. to mentioned related efforts severance to merger-related the of to $XX.X million X.X% quarter on the a by efficiency Turning costs. linked quarter expense costs The as GAAP as

expense Excluding slightly quarterly run our $XX.X totaled better the quarter, than million these targeted rate. for items, noninterest $XX million

the driven periods. loan XX remains driven credit and provided to loans, allowance declines charge-offs in resolution to Turning loans performance including expense Net the franchise by $X credit of net through increased metrics our period, loan Provision by the during historically solid, was the charge-offs nonperforming stable. and outlook classified call. decrease substantially at clean-up a growth, prior securitization acquired million consumer average a low levels million with primarily modest remains increased basis Overall balances. driven or in $X.X by single in to for and Slide our of remain credit the points XX, that credit

Finally, net I'd recognized credit our interest a million the the and $XX I'll may quarterly call like concludes six a base fourth Claude. outlook late back margin of quarter, updated turn to that This and tax mid-single-digit X, quarter. historic operating for my point detail to increase basis in for to remarks impact loan during growth, the the expense now the basic including XXXX on investments potential highlight Slide be expectations in full-year fourth four regarding

Claude Davis

we'll up Thank John call questions now. the William, and for open

Operator

ahead. [Operator And be question-and-answer Arfstrom begin our the questioner now go We'll first RBC sir. with session. Please Yes Jon Capital Markets. instructions] will

Jon Arfstrom

Thanks. Good morning, guys.

Claude Davis

Jon. Hey

John Gavigan

Jon. morning, Good

Jon Arfstrom

Maybe Claude. a bigger picture question for you

also little real give opportunities really us estate terms good and that of big commercial growth you driving maybe you seeing bit what picture lending good Could and talked of and pretty growth. commercial, some about commercial payoffs actually You paydowns, in but a what's had you're growth?

Claude Davis

us or estate side, that losing real other mentioned. some projects year, good over lot commercial bet half pick-up now it's type liquidity cap a quarter, into saw going third we of You seeing some clients the a headed good more utilization, payoffs really the the the but and was the and what offsets the or just line on client you as selling a really It's of last rates. see, side, solid business relationships. related been which is third more, in quarter, year was we've we've faster is Yeah on what been seeing market no origination to fourth In not on activity because to we third the Jon. slight front. secondary we're selling the actually to seen heading throughout event. And really quarter, either their improved into our projects quarter It

in activity headwind, think to So origination that's nice really your has fourth really point, quarter. our the in continued I but the pipelines seen been we've that and

Jon Arfstrom

indexed and overall then one maybe gone pressures. rate lot you how us for potential seeing change deposits, and you're the then of deposit kind what a give assessment from has going on maybe product to John attrition And on costs changes maybe is of deposit managed there deposit the Good. on early in cost Okay. and touch costs there an the and just

Tony Stollings

one. is This Tony. I'll that Jon. Hey take

Jon Arfstrom

Tony. Hi

Tony Stollings

of We obviously and of portfolio. dynamics needed better to get deposit the control the cost our

feel CD product a a provides had. is process good or certainly we So, wrapped Outflows to the client indexed been range competitive managed bundle we the a was in priced, and us when or around account few very reaction have -- of that products and competitively account that we from managed enough very competitively for that and for really was it acceptable started suite also model move priced clients. standpoint of a we've within DDA a very products good actually any several well the managed programs into account. the within comfortable still to launched And June and

our we're pretty to clients and retain ability about optimistic accounts. So,

Jon Arfstrom

then deposit across just up And other like rates pricing the some products. other of looks pressures, were generally it Okay.

Tony Stollings

little been, have a see of activity short the some as outside CD pressure yet. programs, on end like not starting much we're extend programs and They some attempts teaser to to more through but clients

Claude Davis

this Jon, and is Yeah Claude.

couple Back if I of and it who's up feel loan-to-deposit some to the competition move which pressure add at thing depend The look the loan next at high those will industry to question, how move see is see and what quarters. has see we'll rates trying a here else to react we've think we a we rates more cases general to seen to that. over and what up begin we've to been we where banks, to just that would other loan-to-deposit first that does been few in as their is to those higher of starting growth, everybody start are your than just on we ratio like

Jon Arfstrom

Okay. Good.

really Thank good. Numbers look you. Okay.

Claude Davis

Thanks Jon.

Operator

And will Please Inc. the with today Zwick Stephens ahead. Erik questioner next be go

Erik Zwick

morning, guys. Good

Claude Davis

Erik. Hey

Erik Zwick

your quarter net of are points thoughts from in current improvement direction four this six rate the absent about and NIM recent basis the environment? margin to fourth the the the on deposit efforts, maybe strategy Thanking what interest

John Gavigan

I'd We with we've the to because changes. was the we're made on of guidance made side little our Tony with sheet, changes balance of the on separate would we I bit it's for that those heading into the just the sensitive of Well a XQ significance on say costs. number say deposit there Erik, to we to the me monitor to margin plays speaking consistent changes solidly relatively asset think, tough competitive funding I side deposit we'll the balance of our depend and need of that feel how pieces don't and react manage point and sensitivity pressures sheet We'll sides both on move on the deposits. will moving out to and the through on in loans Claude's the accordingly. margin how ultimately forward earlier going competition

Erik Zwick

those origination And thinking in average about maybe versus book? are let's existing on the on Okay. rate where say new loans, your coming yields

John Gavigan

than around a -- quarter-to-quarter, in I'd moves slightly They're coming but better with it little generally on say line yields. bit a payoff

Erik Zwick

coming on in acquisition, the savings are $XX -- Okay. savings And the cost million. Where then million $X to target million from MainSource raised the additional from? are $XX what you those areas

Claude Davis

combination we've work that of still We're Erik, some the Claude. that first into some the non-staffing. this stage assessment at bucket all side. And predominately performance it other efforts our but also in areas of about of made the integration through technology as it's well talked It's staffing includes of we has deeper is as us been getting process, on both the the that in XQ. First the Financial of improvement of

So staffing that predominately costs. in additional is personnel-related or five

Erik Zwick

you the to fully Got the XQ it. And sure million be make I'm expect of just timing, $XX entire realized clear to end 'XX. on the by

Claude Davis

Erik, it -- our back and be gave consistent will with announcement guidance we timing the our in merger July. on

of saves the within months realized first cost the post be We close. to expect XX% XX

Erik Zwick

realized third X, it's cost Okay. It during know Slide was saves bottom I of the quarter.

Okay.

XX%. So,

now. taking for Okay. Thanks step guys That's it. questions. my for I'll aside

Claude Davis

Thanks Erik.

Operator

Davidson. ahead. Please the be And questioner next D.A. Reevey with go will Kevin

Kevin Reevey

Good morning, gentlemen.

Claude Davis

Kevin. Hi

Kevin Reevey

how strong fourth line going had we the into the strong service given item, quarter performance it line experienced looks on in you the really about think John, guys that charge the performance that like third should So, you quarter? item

Claude Davis

and a was I that Kevin, we charges those service we as think jump I we wasn’t months probably in to about that of to you're up was then on implementing we're But decode run time the what ago to expected XX and expect strategies think significant the guided what XX is benefit here going and Yeah seeing improvement we talked continue. it's marginal rate. see would be it the that that to what fee seeing strategies over deposit income we the really that

Kevin Reevey

client the that should lumpy, going know that into how think the be I on fourth And can about fees, little derivative a quarter? then we

John Gavigan

those to Kevin commercial are growth. the to think driver of commercial fees tied That's production. there I is it's really the loan tied where bulk

it real majority with commercial more the of and the really So, it in moves commercial production. comes line from specifically loan estate growth

Claude Davis

an the so increase Kevin, fees saw derivative about clear, we're in Yeah and just quarter we actually third in $XXX,XXX.

solid point, And around looks So, originations. earlier fourth it us and originations quarter jumps based going for commercial the originations on especially was commercial John's on commercial estate quarter pretty to estate quarter. quarter-to-quarter pretty actually a based solid number in question, our that still and fourth into real real

Kevin Reevey

which like question on -- like I is is line line sounds pick think Great. some last on And side, then in my it commercial looks up you the the utilization, it utilization had the experienced that actual few in actually companies I was one number third so versus you're what of you a quarter? for the the the quarter the it have cover, have that it. Do second

John Gavigan

in as It are was number is recall. I of don't front guys a I right me. point that Two what or two me. points have telling

see So, actually It's about glad in a utilization running number. just still up little was X% we bit. a low the I improvement. to it saw XX%-line tick

I in it direction. So, material say move, it least wouldn't but move was at a the was a right

Kevin Reevey

guys. I No. Thanks Great would for color agree. the quarter.

John Gavigan

Thanks.

Operator

with [Operator the Lyons. will Andy questioner Stapp be go instructions] And next ahead. Please Hilliard

Andy Stapp

Good morning.

Claude Davis

Good morning, Andy.

Andy Stapp

modeling purposes good benefits the consolidations occurred level base in for branch and and the costs, just when ex did core quarter? related of severance The salaries question

Claude Davis

on on benefits think rate. here your front the decent a and will insurance one is pretty things this. overall bit quarter-to-quarter that. speak little decent costs But a I like Tony indication I and can to the move run period the salaries during excluding point one-time excluding I around depending health think It cost generally to is the and Andy, Yeah, then think a times

Tony Stollings

and Tony. this Andy is Yeah

open. to On close early the They're locations are scheduled not those December. until branch still side, excuse me,

improvement run that quarter. big Then see in then not post rate our think fourth saves yet I branch So we'll of in the a impact numbers. expense fourth post quarter the on the

'XX. So, going into

Andy Stapp

you're That's branch talking QX is event about? separate what the about the QX that then right that the And a Okay. consolidation related consolidations. to --

Claude Davis

That's No. same. that

-- to We eight be end have the the online closed locations before of year.

Andy Stapp

MainSource? Okay. Got beyond anticipate do to you XXXX consolidations you. in additional And those related

Claude Davis

what eight Well, to we've The XX to announced, part expect that XX is to as number the are eight No. of XX said occur XX. Andy merger. we've part a announced the that we the of we've is

Andy Stapp

Okay. you. I got

Okay.

Claude Davis

that trying First same once closed Financial workload So, do the otherwise close the would've the and the closed deal. premerger just we is those and is think have both to MainSource avoid to to resource constraint to what we're I that do trying we

Andy Stapp

confused said little the you prepared what but remarks correctly, date. in the then were consistent I about MainSource And heard says before, XQ 'XX Okay. the close it deck If you 'XX. slide XQ

Claude Davis

Andy just XQ 'XX these expect be, systems. yeah is we to when to convert

Andy Stapp

Oh.

Okay. Got you.

Claude Davis

in XQ. We're late hoping in those XQ close to and

Andy Stapp

Okay. Great. Thanks.

Operator

with KBW. go will And be ahead. today McGratty Chris the questioner Please next

Chris McGratty

Good Hey. everybody. morning,

Claude Davis

Chris. Hey morning. Good

Chris McGratty

Hey. John, we their balance next the bit portfolio. we've own of Should how sheet with transaction, MainSource's and your deal the am I thinking the meaningful interested growth it the investment are that what's sheet given close fund preparation of you investment in also be together we the quarter. and you're cash is and maybe flows guess, in banks I of some maybe kind -- the coming assuming terms or a into heading what the add restructure way, your portfolio of use to thanks. in should the seem for simple the question growth where on size a balance do over? loan are just two legacy Is rates about book

John Gavigan

Sure Chris.

comments start we're you're in securities portfolio think to the consistent how a to think size end tail of We I viewing of September. there, bit with I did the shrink portfolio the little securities your the today.

manage framework it during period deposit with some end much that of related to anticipation we in on to deposit of and the and the see continue that. of implemented the in quarter average And potentially here outflows tied a don't was to so some basis You balances, we'll the that of I'd but kind in that XQ combined with MainSource the at counterparts about we're having Probably fourth to impact we talk strategies conversations right and and securities significant any strategy in on change say implemented monitoring now. the there. regard terms to too in portfolio, deposits soon from really that quarter in our strategies then

Claude Davis

that any to just and we're looking sheet say point, -- opportunities to Chris balance there that's are okay, -- the there at to look whole And really combining two. optimize beyond the going is here

Chris McGratty

follow-up, your yet or thanks. we've Any that, credit a on given adjustments about for with interest increases? earnings thinking rate Okay. conversations asking that helpful you're few rates Maybe That's clients how or a seen thanks? anything

Tony Stollings

global I a that Tony. is or a few on say is scale. this one-offs, nothing nothing broader No, Chris, would but systemic

Chris McGratty

lot. Okay. got. That's a Thanks I all

Claude Davis

Okay. Thanks Chris.

Operator

questioner will with Nathan today ahead. next Please the Race And Jaffray. be Piper go

Nathan Race

Good guys. Hey morning.

Claude Davis

Hey Nathan.

John Gavigan

Nathan. morning, Good

Nathan Race

commentary Just the I changed. going appreciate your uptick franchise the area some that sounds competitors the some dynamics to back those like commercial has your earlier I commentary that line growth, am it just around about utilization. I from loan space in heard you've in curious, of in of guess

that So, will I curious to commercial the contribute am as how areas much well. result just will lending growth going you're especially to

Claude Davis

In last basically the They finance there second the come on was the space, the the being say we've couple seen specialty the five lend in the down verticals, I good XX insurance margins that talked insurance it or had over the -- business it's in what more a mix saw past is the being is because or and to three franchise pretty four always flat of of RIA -- little franchise franchises and space portfolios do we've years. XXX the verticals -- basis commercial third. about and dominated points two, would being one, they a in CPA a the several they we so by mix. of in a bit the and

had in pipeline but and have perform So nice nice XQ in we've been it's into there flattish, business seen they a originations more growth to that the has good well XQ. insurance heading and and XQ portfolio they in continued some

Nathan Race

in securities was quarter of And off-balance if I the Got as quarter? related back John it. well. just some to jump Okay. sure securities am the portfolio, -- that going the to items which have discussion not drove this on the in sheet of what yields

John Gavigan

rate reinvestment -- risk I move through bit combination yield positions in and would a of well the opportunity a Nathan, moving and we the total credit portfolio benefit pick and as was at portfolio where in it June from circulating just as profile looking continued up of portfolio the duration the from say of a see enhance positions return perspective. to the little

Claude Davis

that of X.X would portfolio to that investment is good of been I years, intact couple the that years. we've duration And say the X.X, kept be the the for part in continues our which of has last

Nathan Race

cost this not Got just lastly, And identified XX. the were in is the clarify, it. contemplated Okay. quarter, expected and that to that

John Gavigan

in is XX. It the

Nathan Race

you. Thank it. Got Okay.

Operator

the session. I'd This for question-and-answer like conference Claude the will remarks. Davis to over conclude closing back turn any to

Claude Davis

joining everyone today. for Great. Thanks First Financial the and interest your and Thank William in thanks again call you.

Operator

has attending you presentation. today's And now conference for the concluded. Thank all

You disconnect. now may

First Financial Bancorp. (FFBC) 20 Oct 172017 Q3 Earnings call transcript