First Financial Bancorp's Q2 2025: Navigating Contradictions in Deposit Costs and Loan Growth Expectations

Deposit cost trends, loan growth expectations, the impact of economic conditions on borrower performance, commercial and industrial loan growth expectations, and expectations for loan growth are the key contradictions discussed in First Financial Bancorp.'s latest 2025Q2 earnings call.



Strong Financial Performance:
- First Financial Bancorp reported record revenue of $226.3 million for Q2, representing a 5% increase over the same quarter last year.
- The growth was driven by a robust net interest margin, loan growth, and strong adjusted noninterest income.

Net Interest Margin and Loan Growth:
- The net interest margin remained strong at 4.05%, with a 17 basis point increase from the previous quarter.
- Loan growth was 2% on an annualized basis, with broad-based growth in most portfolios except for commercial real estate, which declined due to higher payoffs.

Asset Quality and Risk Management:
- Asset quality was stable, with net charge-offs declining 15 basis points to 21 basis points of total loans.
- The company's strong risk management strategies and conservative reserve modeling contributed to maintaining stable asset quality.

Dividend Increase and Capital Strength:
- The Board of Directors approved a 4.2% increase in the common dividend to $0.25 per share.
- This increase reflects the company's strong capital position, with tangible common equity increasing by 16% over the previous year to 8.4%.

Deposit Management and Cost Reductions:
- Average deposit balances increased by $114 million due to a seasonal influx in public funds and higher noninterest-bearing deposits.
- The company successfully managed deposit costs, with deposit costs declining by 13 basis points compared to the linked quarter.