First Financial Bancorp. (FFBC) Q3 Earnings call transcript Oct 25, 2024

In a recent earnings call, First Financial Bancorp (FFB) provided insights into its third-quarter 2024 financial performance, highlighting resilience and strategic growth amidst economic challenges. The call, led by CEO Archie Brown, CFO Jamie Anderson, and CCO Bill Harrod, underscored the bank's commitment to industry-leading performance, strategic growth, and sound risk management.

Financial Highlights and Strategic Priorities

FFB reported strong financial results for the third quarter, with adjusted earnings per share at $0.67, reflecting a return on assets of 1.42% and return on tangible common equity of 19.77%. Despite a slight decline in net interest margin to 4.08%, asset yields from the Agile investment portfolio restructuring and moderating funding costs have contributed to a more durable margin than initially anticipated. Average deposit balances grew by 4.9% on an annualized basis, with a focus on maintaining deposit balances and strategically managing the deposit mix.

The bank's noninterest income, led by strong performances in foreign exchange, wealth management, and the leasing business, totaled $45.7 million or $58.8 million on an adjusted basis. However, the third quarter was marked by several large nonrecurring items that impacted noninterest income, including losses on securities. The bank remains diligent in managing expenses, with a workforce efficiency initiative resulting in the elimination of 120 positions and additional savings expected into 2025.

Asset quality remained stable, with a slight increase in nonperforming assets as a percentage of total assets to 36 basis points. The bank is optimistic about asset quality and is confident in its ability to manage the portfolio through expected interest rate reductions and economic uncertainty. Capital also showed significant improvement, with a tangible book value increase of 10% from the linked quarter and over 30% from the same quarter last year.

Strategic Priorities and Future Outlook

Looking ahead, FFB expects mid-single-digit loan growth on an annualized basis for the fourth quarter, driven by seasonal strength in its Summit business unit. The bank remains focused on disciplined lending and continues to finalize plans for 2025, anticipating mid- to upper single-digit annualized loan growth. Loan yields have remained strong, with origination yields in the high 7s and payoff yields slightly below that. The bank expects a decline in net interest margin as the Federal Reserve eases, anticipating a range of 3.85% to 3.95% for the fourth quarter.

Capital remains a priority, with FFB continuing to focus on organic growth and executing its strategy. The bank is interested in bank M&A opportunities, provided they fit well for its shareholders. The bank's capital position remains strong, with a CET1 ratio of 12%, and it continues to build tangible book value.

Key Takeaways and Market Implications

FFB's earnings call underscores the bank's strategic focus on maintaining industry-leading performance, managing risks, and driving growth. Despite economic uncertainty, the bank's strong financial results and strategic initiatives position it well for future growth. The bank's optimistic outlook for the fourth quarter and beyond, coupled with its disciplined approach to capital deployment and M&A, is a positive sign for investors and stakeholders. As the bank continues to navigate the evolving economic landscape, its commitment to sound risk management and strategic growth will be crucial in driving long-term success.