First Financial Bancorp outlines mid-single-digit loan growth and $77M–$79M fee income target for Q4 2025 as acquisitions near completion

Earnings Call Insights: First Financial Bancorp. (FFBC) Q3 2025

MANAGEMENT VIEW

* Archie Brown, President and CEO, stated the third quarter of 2025 was "another outstanding quarter" for First Financial, highlighting adjusted net income of $72.6 million and adjusted earnings per share of $0.76. He emphasized "record revenue in the third quarter, driven by a robust net interest margin and record noninterest income." Brown noted a focus on workforce efficiency, with a 9% reduction in full-time equivalents over two years, and anticipated further efficiencies as integration of pending acquisitions progresses.
* Brown reported, "Loan balances declined modestly during the quarter, falling short of our expectations," attributing this to lower production in specialty businesses and more construction originations. He projected a return to "mid-single-digit loan growth to close out the year."
* Asset quality remained stable, with "nonperforming assets flat as a percent of assets and annualized net charge-offs were 18 basis points, which was a slight improvement from the linked quarter."
* Tangible book value per share increased 5% to $16.19, and tangible common equity rose to 8.87% at the end of September.
* Jamie Anderson, Executive VP, CFO & COO, stated, "The third quarter was another exceptional quarter with outstanding earnings, robust net interest margin and record fee income." Anderson highlighted a net interest margin of 4.02% and noted average deposit balances increased $157 million, primarily due to higher broker deposits and money markets.
* Anderson added, "Total fee income increased to $73.6 million during the quarter, which was the highest quarter in the history of the company."

OUTLOOK

* Brown projected, "We expect origination volumes to increase, which should accelerate our growth. Specific to the fourth quarter, excluding Westfield, we expect loan growth to be in the mid-single digits on an annualized basis."
* Brown expects net interest margin to be "in a range between 3.92% and 3.97% over the next quarter, assuming a 25 basis point rate cut in both October and December," and anticipates "a modest bump in margin from the addition of Westfield in early November."
* Fee income for the fourth quarter is estimated at "$77 million and $79 million, which includes $18 million to $20 million for foreign exchange and $21 million to $23 million for the leasing business revenue."
* Noninterest expense guidance is set at "$142 million and $144 million," including approximately $8 million from Westfield for November and December.
* On pending acquisitions, Brown said, "We have received formal regulatory approval for the Westfield transaction and anticipate closing in early November." The BankFinancial acquisition is expected to close in the first quarter of 2026.

FINANCIAL RESULTS

* Record noninterest income represented 31% of total net revenue for the quarter, with fee income at $73.6 million.
* Tangible book value per share increased to $16.19, up 5% from the linked quarter and 14% from a year ago.
* Tangible common equity rose 47 basis points from June 30 to 8.87% at quarter-end.
* Net interest margin decreased 3 basis points from the prior quarter to 4.02%.
* Loan balances decreased by $72 million, primarily from declines in Oak Street, ICRE, and C&I portfolios, partially offset by growth in Summit and consumer segments.
* Average deposit balances increased by $157 million, driven by brokered CDs and money market accounts.
* Provision expense for credit losses was $9.1 million, with an ACL coverage ratio of 1.38% of total loans.

Q&A

* Brendan Nosal, Hovde Group, LLC: Asked about NDFI loan exposure and commercial verticals. Bill Harrod explained the $434 million NDFI portfolio is "diversified, conservatively managed and anchored in high investment grade tier with currently no adversely rated credit."
* Nosal inquired about net interest margin sensitivity to rate cuts. Anderson responded, "We get about 5 basis points of margin pressure for each of those 25 basis point cuts... But then when you factor in Westfield... we get a little bit of improvement in the margin from them."
* Unknown Analyst (KBW): Sought insights on loan origination yields and portfolio yield expectations. Brown noted, "We were probably before the cut around 7%... it's going to come in closer to the mid-6s."
* Daniel Tamayo, Raymond James: Questioned fourth quarter fee guidance and run rates. Anderson cited a "forecast... a little higher even than what we had in the strong third quarter" for Bannockburn, with additional growth in Summit and wealth management.
* Tamayo asked about credit costs. Brown said, "25 to 30 basis points, kind of mid-20s seems to be the run rate for us in the current environment."
* Tamayo also queried capital plans post-acquisitions. Anderson indicated buybacks may be considered "if we're trading anywhere in that 150% of tangible book value or below."
* Terence McEvoy, Stephens: Asked about deposit competition and cost impacts. Brown stated, "We would expect a reduction in our deposit cost going forward in Q4... the market is competitive, but... we felt we could take a little bit more aggressive actions."
* McEvoy followed up on FX trading run rates. Brown cautioned not to annualize Q4, suggesting a $65 million to $70 million run rate for 2026.
* Jon Arfstrom, RBC: Inquired on workforce efficiency post-acquisitions. Brown said, "We're probably 90% of the way through the company... we would still achieve the expense that we've -- reductions that we modeled in those deals."

SENTIMENT ANALYSIS

* Analyst tone was neutral to slightly positive, focusing on credit quality, deposit costs, fee income guidance, and acquisition integration. Questions sought clarity on guidance and sustainability of current trends.
* Management tone remained confident and measured throughout both prepared remarks and Q&A, using phrases such as "we expect" and "we are very happy," with some caution about variability in commission-based business lines and the impact of rate cuts.
* Compared to the previous quarter, management's confidence in integration and efficiency initiatives was more pronounced, while analysts probed more into sustainability and future projections.

QUARTER-OVER-QUARTER COMPARISON

* Q3 guidance shifted to mid-single-digit loan growth from low-to-mid guidance in Q2, with a more detailed breakdown of fee income projections.
* Noninterest expense guidance increased, reflecting the impact of pending acquisitions, compared to prior quarter's focus on expense management.
* Tangible book value per share and common equity continued to rise, with a larger quarter-over-quarter increase noted in Q3.
* Analysts in Q3 focused more on the effects of acquisitions and the sustainability of fee income compared to Q2's emphasis on funding costs and asset yields.
* Management's confidence in execution of efficiency initiatives and acquisition integration was more clearly articulated in Q3, with explicit references to modeled cost savings and integration timelines.

RISKS AND CONCERNS

* Management acknowledged a "modest" decline in loan balances, driven by lower production in specialty businesses and construction originations.
* Asset quality risks were addressed, with management highlighting stable nonperforming asset ratios and charge-offs.
* Deposit cost competition was noted as ongoing, though management expressed confidence in managing costs despite a competitive market.
* Integration risks for the pending Westfield and BankFinancial acquisitions were recognized, though management projected confidence in achieving modeled cost savings and efficiencies.

FINAL TAKEAWAY

First Financial Bancorp. management expressed strong confidence in its financial performance, highlighting record fee income and robust net interest margin for Q3 2025. The company expects mid-single-digit loan growth and fee income between $77 million and $79 million in Q4, with ongoing integration of the Westfield and BankFinancial acquisitions anticipated to drive further efficiency and growth. Asset quality remains stable, and capital levels are robust, setting a positive trajectory as the company heads into 2026.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/ffbc/earnings/transcripts]

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* First Financial Bancorp. (FFBC) Q3 2025 Earnings Call Transcript [https://seekingalpha.com/article/4833105-first-financial-bancorp-ffbc-q3-2025-earnings-call-transcript]
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