First Financial Bancorp (FFBC) 2013 Q4 法說會逐字稿

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  • Operator

  • Good morning and welcome to the First Financial Bancorp fourth quarter 2013 financial results conference call and webcast. All participants will be in listen-only mode.

  • (Operator Instructions)

  • Please note this event is being recorded. I would now like to turn the conference over to Mr. Ken Lovik, Senior Vice President, Investor Relations and Corporate Development. Please go ahead, sir.

  • - SVP IR & Corporate Development

  • Thank you, Denise. Good morning, everyone and thank you for joining us on today's conference call to discuss First Financial Bancorp's fourth-quarter and full-year 2013 financial results. Discussing our operating and financial results today will be Claude Davis, President and Chief Executive Officer; and Tony Stollings, Executive Vice President and Chief Financial Officer.

  • Before we get started I would like to mention that both the press release we issued yesterday announcing our financial results for the quarter and the accompanying supplemental presentation are available on our website at www.bankatfirst.com under the Investor Relations section. Please refer to the forward-looking statement disclosure contained in the fourth quarter 2013 earnings release as well as our SEC filings for a full discussion of the Company's risk factors.

  • The information we will provide today is accurate as of December 31, 2013, and we will not be updating any forward-looking statements to reflect facts or circumstances after this call. I will now turn the call over to Claude Davis.

  • - President & CEO

  • Thanks, Ken, and thanks to everyone joining the call today. For the quarter we reported net income of $3.8 million, or $0.07 per share. Our results for the quarter were impacted by several nonoperating items, the most significant of which was the $22.4 million pretax, non-cash valuation adjustment we recognized related to the FDIC indemnification asset that we announced on January 22.

  • In total these nonoperating items reduced reported earnings per share by $0.24. Additionally on adjusted basis, return on assets was 1.14% and return on tangible common equity was 11.88%, representing our strongest quarter performance for the year.

  • This is obviously an exciting quarter for us as we announced the acquisitions of two high-performing institutions in the Columbus, Ohio market. The First Bexley Bank and Insight Bank are both successful franchises with extremely talented personnel and together provide us an excellent platform to capitalize on the growth potential of the Columbus market. Our integration team is hard at work in Columbus and we look forward to closing these transactions during the second quarter.

  • Also, earlier this month we announced our entrance into the Fort Wayne, Indiana market with the hiring of strong commercial and residential lending teams that are well-established in the market. Their solid relationships and market knowledge combined with our comprehensive credit product set and larger balance sheet provides another channel for quality asset generation and a platform for building out a greater presence in one of Indiana's larger metro markets.

  • The benefits of our efficiency plan were evident as operating expenses, excluding OREO costs, declined another $1.4 million during the quarter. Based on our operating results throughout the year, we are proud to state that we surpassed the original goal of 85% realization of announced cost savings and achieved 100% of our annual target of $17 million during the year. All initiatives related to the original plan have been fully implemented and on an annualized run rate basis we expect to exceed the original cost-savings target going forward.

  • Furthermore, as we announced last quarter, we identified additional cost savings initiatives. These initiatives are expected to produce an additional $5 million of efficiencies during 2014 across multiple expense categories.

  • We continue to produce quality loan growth as period-end loan balances in our uncovered portfolio increased $74.7 million, or 8.6% on an annualized basis, our seventh consecutive quarter of growth. Commercial production remained strong as new originations and renewals were up over 22% compared to the third quarter, with strong performance in C&I, owner-occupied CRE lending as well as in our franchise and specialty finance groups. Additionally, growth in the uncovered portfolio exceeded the decline and covered loan balances by over $14 million marking the fourth time in the last five quarters that we achieved this milestone.

  • For the year, we were pleased with our overall growth in uncovered loans which increased $326.6 million, or 10.3%. During 2013 C&I owner-occupied balances increased over $170 million, or about 27%, while specialty finance balances increased $81.3 million, or 73%, and franchise lending balances increased $80.3 million, or 26%. Additionally residential mortgage balances increased $34.7 million or 10.9% during the year.

  • Given that spreads between season credits and new originations are still fairly wide, we continued to experience an elevated level of payoffs. However, our local economies are showing improving fundamentals and business confidence continues to rise. We feel very good about our solid performance to close out the year and the momentum it provides heading into 2014 as evidenced by our strong pipeline of commitments and prospects for the first quarter.

  • Another highlight for the quarter was asset quality. While net charge-offs increased modestly during the quarter, we made significant progress regarding the nonperforming loan resolutions we mentioned on last quarter's call. Total nonperforming loans declined $21.5 million, or 29%, during the quarter and now equal 1.5% of total uncovered loans compared to 2.16% as of September 30. The allowance as a percent of nonaccrual loans, which equal nonperforming loans less accruing TDRs, increased to 116.6% from 78.6% for the linked quarter.

  • In conjunction with the earnings release we announced our quarterly dividend of $0.15 per share to be paid April 1 which translates into a 3.6% yield based on yesterday's closing price and remains on the upper end compared to peer institutions. During the quarter we repurchased about 210,000 shares of common stock and have repurchased another 40,000 shares thus far in 2014.

  • During 2013 we repurchased approximately 750,000 shares at an average price of $15.70. When combined with the regular invariable dividends paid during the year, we returned over 150% of full-year earnings to shareholders during 2013.

  • Capital levels remain strong as we ended the quarter with a tangible common equity ratio of 9.2%, a Tier 1 ratio of 14.61% and a total capital ratio of 15.88%. Adjusting capital for the pending transactions, we conservatively estimate that we still have over $80 million of excess capital to support organic growth and further acquisitions. In connection with the pending regulatory applications related to the acquisitions, we will not be repurchasing additional shares during the first quarter. Capital return decisions are determined quarterly by the Board of Directors in the context of our overall capital management strategies and other considerations such as expected growth.

  • In summary, we feel very good about how we wrapped up the year. We were able to execute on strategic opportunities and entered into markets we had identified as presenting strong prospects for future growth. We are also working hard to maintain a consistent level of operating revenue supported by strong organic loan growth while at the same time battling the headwinds of the declining covered loan book.

  • I am proud of the efforts of our Associates made throughout the year as we delivered on the announced cost savings earlier than expected. We have made significant progress in restructuring our expense base and are positioning the Company to deliver solid earnings growth in future periods as asset generation efforts increasingly outweigh the impact of the declining covered loan portfolio and we capitalize on new market expansion activities.

  • Finally, we remain interested in pursuing further acquisition opportunities that meet our strategic operational and financial criteria. With strong capital levels and manageable integration risk related to the pending deals, we have the capacity and the appetite to handle additional strategic opportunities should they arise. With that I'll turn it over to Tony for further discussion on our financial performance.

  • - EVP & CFO

  • Thank you, Claude. Our fourth-quarter adjusted pretax, pre-provision earnings of $27.4 million, which excludes certain items related to covered loan activity as well as other significant items, increased $1.1 million, or 4%, from the third quarter. As shown on slides 3 and 4 of the supplement, this was 1.75% of average assets on an annualized basis.

  • Total interest income increased $300,000, or 0.5% compared to the linked quarter, as higher interest income earned on investment securities more than offset lower interest income on total loans and higher amortization of the indemnification asset related to covered loans during the period. A decline in interest income on loans was primarily the result of an $83 million, or 15%, decline in the average balance of covered loans. Partially offset by a 37 basis point increase in the yield earned on the covered portfolio compared to the linked quarter. Additionally, while the average balance of the FDIC indemnification asset declined approximately $4 million, the negative yield on the asset increased 182 basis points during the quarter, negatively impacting net interest income and net interest margin compared to the third quarter.

  • The impact from covered loan activity was partially offset by another solid quarter of loan production as we saw $45 million, or 1.3%, linked quarter increase in average uncovered loan balances as well as modestly higher loan fees. Further the yield earned on the uncovered loan portfolio increased two basis points during the quarter, excluding the impact of interest income related to loans that returned to accrual status.

  • We continue to feel the impact of the prolonged low interest rate environment as the yield earned on new loan originations during the fourth quarter was approximately 68 basis points lower than the average yield on loans that paid off during the period. But this was still a slight improvement over what we saw in third quarter. Interest income from investment securities increased $1.1 million during the quarter as a result of a $65 million increase in average balances compared to the linked quarter and an 18 basis point increase in the portfolio yield, primarily driven by stabilization in the premium amortization during the period.

  • Total interest expense increased approximately $300,000 compared to the linked quarter as the cost of funds related to interest-bearing deposits increased 4 basis points during the period, primarily related to our deposit growth initiatives. As we discussed last quarter, these initiatives are focused on growing core deposit relationships and managing our funding base, including extending the duration of a company's liabilities where it makes sense. These deposit growth initiatives began to gain traction during the quarter as evidenced by the $67 million, or 1.8%, increase in average interest-bearing deposits and the $57 million, or 5.3%, increase in average non-interest-bearing deposits.

  • Further, core deposits as a percentage of total deposits continues to increase, now at 81%, and the weighted average life of prime deposits increased from 1.5 years to 1.9 years during the quarter. Net interest margin declined 1 basis point to 3.9% from 3.91% for the linked quarter. Excluding approximately $600,000 of interest income related to loans that return to accrual status during the period, that interest margin declined approximately 5 basis points to 3.86% for the fourth quarter.

  • Consistent with recent periods, the decline in the net interest margin is primarily a result of the balance and yield changes on covered loans and the indemnification assets discussed earlier. As we think about the net interest margin going into 2014, the margin will continue to be influenced by the quarterly re-estimation of expected cash flows on the covered loans and the indemnification asset, as well as resolution and prepayment activity in that portfolio.

  • Further, the covered portfolio continues to decline as a percentage of total earning assets at a much faster rate than any other asset on the balance sheet and at a higher yield than any available reinvestment opportunity. As a result of these variables, it is difficult to predict what the full year 2014 will look like, but we believe the adjusted mid-single digit decline observed here in the fourth quarter is a reasonable expectation for the first quarter of 2014. That's about as far out as we are comfortable discussing, but we will continue to provide clarity on the dynamics of the margin as we progress through the year.

  • Moving now to non-interest income. Excluding reimbursements due from the FDIC, other covered loan activity and other items as noted in table one of the release, fourth quarter non-interest income of $14.9 million was slightly lower than the linked quarter. The decrease was primarily driven by modest declines in service charges on deposit accounts, net gains on sales of residential mortgages, partially offset by higher trust and wealth management fees. Non-interest expenses for the fourth quarter, excluding certain FDIC and covered asset expenses associated with the implementation of our efficiency plans and other items as noted on table two of the release, were $43.2 million as compared to $44.4 million in the third quarter.

  • The decrease in non-interest expenses compared to the linked quarter was due primarily to lower salaries and employee benefits, occupancy costs, marketing and communication expenses during the quarter. As Claude discussed earlier, we continue to be pleased with our performance with respect to expense management. Here we are making solid progress in developing an efficient, scalable operating platform.

  • The Company recognized a $1.2 million income tax benefit for the fourth quarter, compared with income tax expense of $7.6 million in the third quarter. The income tax benefit in the fourth quarter was a result of favorable tax adjustments related to the completion of the 2012 state tax returns during the period as well as lower net income for the quarter primarily related to the valuation adjustments on the indemnification asset. We estimate the effective tax rate in future periods to be approximately 34%.

  • Turning briefly to covered assets, let me first call your attention to our press release dated January 22 where we announced a $22.4 million pretax, non-cash valuation adjustment to the company's FDIC indemnification asset. This valuation adjustment was driven by a number factors, as outlined in the press release, but was primarily a result of lower actual and expected claims, higher reimbursements to the FDIC related to positive asset resolutions in recent periods and the significantly shorter remaining life of the indemnification asset in comparison to the weighted average life of the relates covered loans.

  • Consistent with this, the Company recognized lower net credit costs on covered assets for the fourth quarter, as highlighted on page 8 of the supplement, and a 58% decline in covered classified loan balances during 2013. Finally, with respect to interest rate sensitivity, we expect to maintain a relatively neutral sensitivity position as of December 31 and continue to evaluate strategies to proactively manage our balance sheet with a bias toward asset sensitivity. I will now turn the call back over to Claude.

  • - President & CEO

  • Thanks, Tony. Denise, we're happy to open the call up for questions.

  • Operator

  • Very good.

  • (Operator Instructions)

  • Scott Siefers, Sandler O'Neill.

  • - Analyst

  • Good morning, guys.

  • - President & CEO

  • Hi, Scott.

  • - EVP & CFO

  • Morning, Scott.

  • - Analyst

  • I think the first question was on the cost side. Claude, you guys have obviously done a very nice job reducing the core cost base over the last year or more. And, of course, you've got the recent efficiency initiatives that should still contribute for this full-year. I'm just curious at a very top-level if you're in the $42 million, $43 million core run rate as of the fourth quarter. Is that a number you think you could still take down a bit or do cost savings from here on out just become a wash against any natural increases you would have? How are you thinking about that dynamic?

  • - EVP & CFO

  • Scott, this is Tony. Yes, as we look at the third and fourth quarter here in 2013, we kind of look at that together. It's probably somewhere in the middle. There's -- a little lower than maybe $44 million a quarter. And as we enter the year obviously we hope to -- we intend to continue to have that decline over 2014. So a little higher as we enter the year than when we exit, but on average probably a little under $44 million.

  • - President & CEO

  • Scott, related to the go forward, I don't have a specific answer for can we get additional cost saves or will any additional efficiencies offset just natural increases. I would tell you what we've tried to do over the last two years as we've been working on this is to really instill the process improvement discipline throughout the Company.

  • So we continue to look for opportunities for efficiencies and we're certainly not ready to announce any additional initiatives at this point, but we feel good that we've got a base and a capacity that can handle the additional growth initiatives and only have the incremental cost of the sales organizations and not need to add a lot of what I would call back office or support-related costs, and then we'll continue to look for additional improvements. But at this point I wouldn't suggest we'll see additional saves until we get better clarity on that.

  • - Analyst

  • Okay. That sounds good. I appreciate that. And then Tony, you gave some color on the FDIC indemnification asset valuation adjustment. I'm wondering if you could just maybe explain how -- I guess the lower volatility is easy enough to see in future quarters or the anticipation of it. Can you maybe go through -- you have fees, expenses and the provision all -- and I guess the margin as well, all have been hit by the merger-related issues in the last few years. Exactly how will it work through that having taken the evaluation adjustment in the fourth quarter reduces the volatility and then more importantly enhances the earning stream as we look forward?

  • - EVP & CFO

  • Scott, I'm a little confused by your question. Are you referring to the information in the release around the $0.05?

  • - Analyst

  • No, not necessarily. So you took the FDIC indemnification valuation adjustment. So one thing that does is lowers the volatility in the earning stream. And then when you guys announced it you suggested there'd be a few cents of EPS pickup as well. How exactly does the EPS pickup manifest itself?

  • - EVP & CFO

  • First of all, when you think about the indemnification asset it really comes off the balance sheet in two ways, and it does have to come off. Claims that are received for amortization, and once we determined that credit was better, resolution was better, our outlook was better and it was not likely that we were going to be able to remove the asset from the balance sheet from a claim standpoint. Then we turn to the amortization.

  • Without getting into all the details and the analysis, the amortization rate that it would have taken over that relatively short period of time, talking about commercial here, would have been so ridiculous that none of it would have made sense in relationship to what we were earning on the covered loan. So it was at that point that we went through the analysis and determined that the asset was impaired. So on a go forward basis you can see what that means just from a mathematical standpoint. It's a much lower balance with a more stabilized negative yield on the asset and that in and of itself, all things being equal, is a positive to 2014.

  • - President & CEO

  • Scott, and just to be clear. If we started out at $78 million, we took the valuation adjustment. The $78 million had a negative yield of 13%, just a savings of a $45 million asset having a negative yield of 13%. That difference is a big part of that $0.05. The other part would be improved credit costs that we would expect on a go forward, in that covered portfolio.

  • - Analyst

  • Yes. Okay. I appreciate it.

  • - President & CEO

  • Does that make sense?

  • - Analyst

  • Yes, it does. I guess I was thinking exactly where is the offset, right? Because there are always puts and takes. So if you have less of an FDIC issue, where was the other one? And it just I guess feels like credit cost is the main offset there.

  • - President & CEO

  • Yes. It's between there and the margin.

  • - Analyst

  • Yes. Okay. That' s perfect. I appreciate it.

  • - President & CEO

  • You bet.

  • Operator

  • Emlen Harmon, Jefferies.

  • - Analyst

  • Good morning guys.

  • - President & CEO

  • Good morning.

  • - Analyst

  • Tony, I heard your commentary about the reporting margin obviously being volatile, but what your expectations are for declines in mid-single digits. If we think about kind of the core margin, aside from the accretion, seems like you had -- approaching the point of stability there. Do you feel like that core margin can be stable from here, even increasing a little bit? Kind of how are you thinking about that?

  • - EVP & CFO

  • Well, I mean the core portfolio, or the core bank outside of the covered assets and all of that activity, is performing pretty well and we've seen it really fairly stable over the last couple of quarters. So I wouldn't expect it -- the decline in the margin or compression in the margin is going to be largely driven by that. We do think that it's actually being a slight contributor at the moment. So our volatility, our compression is really around the covered loans and everything else seems to be performing pretty well.

  • - Analyst

  • Got you. And what's your appetite for additional securities, purchases ahead of these two deals you guys will have closing?

  • - EVP & CFO

  • Those deals are -- I don't know how to frame this in the whole balance sheet management standpoint, but I think that regardless of the deals we're probably about where we're going to be on the investment portfolio. Those deals don't take a significant amount of cash, so that's not an issue at all. We don't need to liquidate or re-balance or anything based on that. So investment portfolio, absent some significant shift one way or another in loan or deposit flows, is probably about where it's going to be.

  • - Analyst

  • Got you. Thanks. And then just one more on the loan book. Had a nice pickup in the core growth this quarter. Last quarter on the call you had talked about having some stuff in the pipeline that kind of fell into the fourth quarter from the third quarter. Could you give us a sense of just, I guess, maybe one, how big a component of the growth that was in the quarter, but then also just how you're feeling about the pipeline at the end of the fourth quarter. I did hear your commentary about you feel good about the business environment but just would be curious about the pipeline specifically.

  • - President & CEO

  • Sure, Emlen. This is Claude. I don't have the specific number of what the few big deals that carried over to the fourth quarter. I tend to look at it more on the year and the 10% or so growth. We felt good about and we feel good about the mix of categories, that it was pretty well spread across our C&I categories of for C&I, specialty, franchise and then a bid in the residential. Our CRE book was pretty flat for the year.

  • I would say going into 2014 we had a good December closing month, so the pipeline was down a bit. But we feel good about the pipeline, where it's at, certainly compared to past fourth quarters and we feel like we've got some good momentum going into 2014. So I would guess I would say I was optimistic about 2014, or more so than I was about going into 2013.

  • - Analyst

  • Okay, great. Thanks for taking the questions.

  • - President & CEO

  • You bet.

  • Operator

  • (Operator Instructions)

  • David Long, Raymond James.

  • - Analyst

  • Good morning, guys.

  • - President & CEO

  • Hi, David.

  • - EVP & CFO

  • Good morning David.

  • - Analyst

  • With the [hot airs] in Fort Wayne, obviously there's some movement there in that marketplace with the acquisition. But what is it that you guys really brought to the table there to that key and really got them to come into First Financial?

  • - President & CEO

  • David, this is Claude. I would talk about not just the Fort Wayne's team, because we're always recruiting throughout the footprint. And what we try to present is our operating model and that we've got a pretty diverse product set that we can bring to people. That includes the specialty lines, it includes much larger loan limits than as an example they may have had in their previous bank as well as we bring a pretty high degree of local autonomy and control. So pretty responsive in our decision-making.

  • It's those things that really matter on the commercial side to those commercial bankers and their ability to do business. But that's true not just in Fort Wayne, I think, but beyond Fort Wayne. I think on the residential mortgage side we've spent a lot of time and money really investing in that infrastructure since we reentered the business in 2011. That combination of good infrastructure, good systems as well as we really try to keep a lot of the processing underwriting local that we feel like is a real advantage to those originators and something that they find attractive. It's a combination of all those that we think allow us to recruit pretty effectively.

  • - Analyst

  • Okay. And then, as they ramp up this year, how big of a loan portfolio can you have in Fort Wayne by the end of 2014?

  • - President & CEO

  • You know, obviously we do business cases and business models on every market as we go into it. As it relates to the commercial side, we have five people there originating credit and we'll just have to see. We don't typically disclose the business cases we put together, but five really experienced, talented individuals that I think will do a great job for us.

  • On the residential side we primarily follow and originate and sell model. We do portfolio some, so that'll be more of a function of how's the -- what's the mortgage market like and how are they able to ramp up quickly? We're very optimistic about it, David, but I guess I'd be uncomfortable suggesting what we think we can do. But we'll provide updates as we progress throughout the year just so you have some visibility into it.

  • - Analyst

  • Okay, great. And then lastly, a couple acquisitions announced in the quarter in Columbus. What is your appetite to announce additional deals at this point? Do you need to get those closed and integrated or do you feel comfortable going out and if you find something that's strategically and/or financially attractive, can you go ahead and act on that at this point?

  • - President & CEO

  • Yes. We feel we certainly want to give both First Bexley and Insight our full attention and make sure that those are integrated well and effectively and we think we have all the right teams in place to do that. But fortunately each only have one location, total assets of the two are approximately $500 million, so we feel that from a -- certainly a financial and capital capacity, we have plenty of capacity to continue even prior to those deals being completed.

  • As well as we have the operational capacity certainly based on our past history of where it was in 2009 doing the two FDIC deals within 45 days of one another, or the two branch deals in 2011 where we converted 40 plus branches within 60 days of one another. We feel pretty good about our ability, if we have another opportunity to progress on that and not necessarily need to wait until First Bexley and Insight are integrated.

  • - Analyst

  • Thank you, Claude, I appreciate it.

  • - President & CEO

  • You bet.

  • Operator

  • (Operator Instructions)

  • Chris McGratty, KBW.

  • - Analyst

  • Good morning, guys, it's John Barber filling in for Chris.

  • - EVP & CFO

  • Morning.

  • - Analyst

  • You've had pretty solid organic loan growth for a number of quarters now, you also have the two deals pending for 2014. Could you talk about your target loan mix?

  • - President & CEO

  • Yes, what we really try to do, and we included a piece in the supplement -- I think it's on page 7 of the supplement, where we've started to disclose our loan mix. And when we look at it from a risk management perspective, we're obviously looking at pretty broad ranges. And what I would tell you is we like the mix we have and we'd like to see all categories continue to grow to add nice rates.

  • If we see some shift in mix on the margin that wouldn't concern us at all. Our franchise portfolio in the past has been much larger than it currently is. As an example, I think the specialty portfolios are still in the early stages of growth and maturity, so we could see them being much larger percentages of the portfolio. And C&I is such a broad bucket that I don't see a natural ceiling, if you will, on that.

  • So all those are categories that we'd like to see continue to grow and ICRE has actually continued to decline as a percentage of the overall portfolio and that's not necessarily by design. I mean we were comfortable with it where was previously. All that's a way of saying that we're not worried about any of our concentration percentages at this point. We try to watch them all. We try to be sensitive to what the economic factors are. But I think this is a pretty good reflection of how we'd like to see the portfolio grow.

  • - Analyst

  • Thanks, Claude. Then the other question I had was just related to the efficiency ratio. Where do you think you can get that by the end of 2015 and what are going to be the major drivers? Thanks.

  • - President & CEO

  • We haven't published targets other than our long-term targets that in a normal environment we'd like to see that ratio be in the 55% to 60% range. That continues to be our long-term target. In the near term I think it's going to be a function of margin change and what happens to the rate environment. We're still at a very historically low level of rates as we all know.

  • And the continued improvement that we want to make in terms of our expense base and efficiency initiatives. So we continue to work on it. We continue to have that as our long-term target and we've not given up on that.

  • - EVP & CFO

  • I'd also add that it's not just an expense equation there. What we do fight some of the headwinds around the margin, we haven't forgotten about the non-interest income side of that equation and continue to push forward initiatives around that area as well. it's not just an expense side.

  • - Analyst

  • Great, thanks.

  • Operator

  • Taylor Brodarick, Guggenheim Securities.

  • - Analyst

  • Great, thank you. First question would be as you look at future efficiency initiatives, is there sort of a minimum floor for deposits per branch that you've told to your branch leaders or internally have discussed? Is it $20 million or $30 million?

  • - President & CEO

  • Well, we don't necessarily have a quote-unquote, minimum. We certainly like to see it at those levels or higher, but it also depends a lot on mix. So if you have a branch that has a lot of non-interest-bearing deposits that have good fee income associated with it then certainly that's terrific.

  • The part I would tell you, though, is changing in the consumer banking business is I just view it's less about deposits per branch and more about looking at each of your markets, the network and you're overall channels. So it's mobile, it's online, call center, it's banking center and then what we're trying to move to is what's the overall profitability of the consumer banking in that market based on all those related costs and opportunities and then we'll right-size the branches, either by increasing branch numbers or decreasing them by market, depending on that profitability.

  • - Analyst

  • Great, okay. One more question on the Columbus deals. Is there anything material -- materially different between the two banks that they each bring or is it more of a function of we like the market and it's a way to just get more scale by buying two as opposed to one?

  • - President & CEO

  • First, we do like the market a lot. Columbus is a great metropolitan area, growing, diverse and we think we can bring a lot of attractive products and capabilities to the market. In terms of the comparison of the two, I won't get too much into that, probably wouldn't be appropriate, but just to say that each has a unique niche in those markets, each are very dedicated to high levels of client service, which we value and appreciate and think it's consistent with our model.

  • Both have, even though they're still relatively small, are both very profitable. So that's really what attracted us to the market. They also have great people and great boards that really know that market extremely well.

  • - Analyst

  • Great, thank you. And last question, apologies if I missed it, not going to repurchase any more shares this quarter? And do you have an outstanding authorization?

  • - President & CEO

  • We are not going to be purchasing any additional shares this quarter and we do have an outstanding authorization.

  • - EVP & CFO

  • It's the same one from late in 2012. I believe it's 5 million shares.

  • - Analyst

  • Okay, great. Thank you, that's it for me. Appreciate it.

  • - President & CEO

  • Thanks.

  • Operator

  • And ladies and gentlemen, that will conclude our question-and-answer session. I would like to turn conference back over to Mr. Claude Davis for his closing remarks.

  • - President & CEO

  • Great, thanks Denise. And I would just say thank you all again for participating and your interest in First Financial. Thank you.

  • Operator

  • Ladies and gentlemen, the conference has now concluded. We thank you for attending today's presentation. You may now disconnect your lines.