First Financial Bancorp (NASDAQ:FFBC) released first-quarter financial results and hosted an earnings call on Friday. Read the complete transcript below.
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Summary
First Financial Bancorp reported adjusted earnings per share of $0.77, a 22% increase from the previous year, driven by a robust net interest margin and strong fee income.
The company’s strategic moves included completing the acquisition of Bank Financial and the conversion of Westfield Bank, leading to slight increases in loan balances.
Future outlook remains positive with expectations for mid-single digit loan growth, stable net interest margin, and strong fee income in the upcoming quarters.
Operationally, the company maintained a strong capital position with tangible book value per share increasing by 2.6% over the linked quarter.
Management highlighted successful cost management, achieving acquisition-related cost savings and maintaining strong asset quality despite economic uncertainties.
Full Transcript
Kate (Conference Operator)
Thank you for standing by. My name is Kate and I will be your conference operator today. At this time I would like to welcome everyone to the first financial banker first quarter 2026 earnings conference call and webcast. All lights have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press STAR followed by the number one on your telephone keypad. If you would like to withdraw your question, press Star one again. Thank you. I would now like to turn the call over to Scott Crowley, Corporate Controller. Please go ahead.
Scott Crowley (Corporate Controller)
Thanks, Kate. Good morning everyone. Thank you for joining us on today’s conference call to discuss First Financial Bancorp’s first quarter financial results. Participating on today’s call will be Archie Brown, President and Chief Executive Officer, Jamie Anderson, Chief Financial Officer and Bill Harrod, Chief Credit Officer. Both the press release we issued yesterday and the accompanying slide presentation are available on our website at www.bankatfirst.com under the Investor Relations section will make reference to the slides contained in the accompanying presentation during today’s call. Additionally, please refer to the forward looking statement disclosure contained in the first quarter 2026 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 March 31, 2026 and we will not be updating any forward looking statements to reflect facts or circumstances after this call. I’ll now turn the call over to Archie Brown. Thanks, Scott. Good morning everyone and thank you for joining us on today’s call. Yesterday afternoon we announced our first quarter results and I’m very pleased with our overall performance. The first quarter was a busy one as we closed the Bank Financial Acquisition, completed the conversion of Westfield bank and wrapped up the sale of the Bank Financial Multifamily Loan Portfolio. Adjusted earnings per share were $0.77 with an adjusted return on assets of 1.45% and an adjusted return on tangible common equity of 19.2%. Adjusted earnings per share increased 22% compared to the first quarter of last year, driven by robust net interest margin and strong fee income. Our net interest margin was resilient despite the Fed Funds rate cut in December as the expected decline in loan yields was offset by a similar decline in deposit costs. Assuming no short term rate reductions by the Fed, we expect the margin to remain stable in the near term. Loan balances increased slightly for the quarter due to the Bank Financial acquisition. Excluding the Bank Financial Portfolio loans declined for the quarter as seasonally strong loan production was offset by extended payoff pressure in the ICRE portfolio. Compared to the first quarter of 2025, originations increased approximately 45% and excluding Westfield and bank financial originations were up by over 25%. Our expectation for loan growth for 2026 has not materially changed. Loan pipelines are very healthy and we expect strong production in the second quarter. We also expect payoff activity in ICRE to approach more normal levels leading to solid loan growth in the second quarter. Adjusted fee income was strong for the quarter. Historically, fee income significantly dips early in the year. However, we successfully combated this Trend in the first quarter. Adjusted non interest income was 75.6 million, which was 24% higher than in the first quarter of 2025 and only a slight decline from the linked quarter. These results were driven by record wealth management income, strong client derivative income and record leasing business income. Additionally, expenses were well controlled during the quarter with total non interest expenses coming in well below our expectations and acquisition related cost savings exceeding our initial estimates. Net charge offs were 35 basis points of total loans and were impacted by one large commercial relationship. Other asset quality indicators were stable with non performing assets slightly declining from the linked quarter to 44 basis points. While there is certainly more uncertainty in the economy due to the impact of the war in Iran, our current expectations are for asset quality to gradually improve throughout the year, similar to our performance in 2025. Capital ratios are strong and continue to climb. In the first quarter, all regulatory ratios were well in excess of regulatory minimums and the tangible common equity increased 7.9%. Tangible book value per share was $16.15 which was a 2.6% increase over the linked quarter and a 9% increase compared to the first quarter. 2025 tangible value was at approximately the same level as the third quarter of 2025. Just prior to the Westfield bank acquisition this month, the Board of Directors authorized a $5 million share repurchase plan replacing the plan we had in place through 2025 and we’re evaluating opportunities to employ buybacks as part of our overall capital planning. I’d like to take a minute and discuss our recent acquisitions. During the quarter we successfully completed the conversion of Westfield bank and then for the quarter Westfield deposit and loan balances were stable. We maintained high associate retention and we have achieved the financial results that we expected from the transaction to date. We’re happy with the quality of the bank we acquired and with the talented team that has joined us. We also completed the purchase of Bank Financial on January 1st and plan to convert systems in early June. Remain excited about the opportunities in the Chicago market and continue to see growth potential from this transaction. Now I’ll turn the call over to Jamie to discuss these results in greater detail. And after Jamie, I’ll wrap up with some additional forward looking commentary and closing remarks.
Jamie Anderson (Chief Financial Officer)
Thank you Archie and good morning everyone. Slides 4, 5 and 6 provide a summary of our most recent financial performance. The first quarter results were excellent and included strong earnings record revenues driven by a robust net interest margin and higher than expected fee income. Our net interest margin remains very strong at 3.99%, increasing 1 basis point during the quarter. Cost of funds declined 13 basis points while asset yields declined 12 basis points points. End of period loan balances increased $71 million, which included $228 million acquired in the Bank Financial transaction. This was partially offset by a $152 million decrease in ICRE balances, reflecting the payoff pressure that Archie mentioned earlier. Total average deposit balances increased $1.7 billion, including $1.2 billion acquired in the Bank Financial transaction and the full quarter impact from Westfield. We maintained 20% of our total deposit balances and non interest bearing accounts and remain focused on growing lower cost deposit balances. Turning to the income statement, first quarter fee income overcame seasonal headwinds with strong performance across all income types. Additionally, we had an $8.9 million gain on bargain purchase related to the Bank Financial acquisition. Non interest expenses increased from the linked quarter due primarily to the impact of our most recent acquisitions. Our ACL coverage decreased slightly during the quarter to 1.36% of total loans and we recorded $8.5 million of provision expense during the period, which was driven primarily by net charge offs on asset quality. Net charge offs were 35 basis points on an annualized basis, an increase of 8 basis points from the fourth quarter, while NPAs as a percentage of assets were 44 basis points, declining 4 basis points from the fourth quarter. Classified assets as a percentage of total assets also declined slightly during the period. From a capital standpoint, our ratios are in excess of both internal and regulatory targets. Tangible book value increased $0.41 to $16.15 while our tangible common equity ratio increased to 7.88%. Slide 8 reconciles our GAAP earnings to adjusted earnings, highlighting items that we believe are important to understanding our quarterly performance. Adjusted net income was $80.5 million or $0.77 per share for the quarter. Non interest income was adjusted for $1.3 million of losses on the sales of investment securities, the $8.9 million gain on bargain purchase related to the bank financial acquisition and a $1.4 million loss on the surrender of a bank owned life insurance policy. Non interest expense adjustments exclude the impact of acquisition costs, tax credit, investment write downs and other expenses not expected to recur. As depicted on Slide 9, these adjusted earnings equate to a return on average assets of 1.45%, a return on average tangible common equity of 19% and a pre tax pre provision ROA of 1.99%. Turning to slides 10 and 11, net interest margin increased 1 basis point from the linked quarter to 3.99%. Total deposit costs declined 13 basis points from the linked quarter, offsetting the impact of lower asset yields. Slide 13 illustrates our current loan mix and balance changes. Compared to the linked quarter, loan balances increased $71 million during the period. As you can see on the right, we acquired $228 million of loans in the bank financial transaction. This was offset by a $152 million decrease in ICRE balances absent the acquisition. We loan balances decreased 4.7% on an annualized basis driven by elevated payoffs in ICRE. Slide 15 depicts our NDFI exposure. As you can see, our total NDFI balances are approximately 3% of our total loan book and all NDFI loans were pass rated at the end of the first quarter. The majority of our NDFI lending is concentrated in loans to REITs which we believe further mitigates our risk. Slide 16 shows our deposit mix as well as a progression of average deposits from the linked quarter. In total, average deposit balances increased $1.7 billion, including a $1.2 billion impact from the bank financial transaction as well as a full quarter impact from Westfield. Slide 18 highlights our non interest income. Total adjusted fee income was $76 million with leasing and Wealth Management both posting record results. Foreign exchange delivered strong results and client derivative fees increased during the period as well. Non interest expense for the quarter is outlined on slide 19. Core expenses increased $12.9 million as expected during the period. This was driven primarily by recent acquisitions. Turning now to slides 20 and 21, our ACL model resulted in a total allowance which includes both funded and unfunded reserves of $207 million, which includes $3.1 million of initial allowance on the bank financial portfolio. This resulted in an acl that was 1.36% of total loans which was a 3 basis point decline from the fourth quarter. We recorded $8.5 million of provision expense during the period. Provision expense was primarily driven by net charge offs which were 35 basis points. Additionally, our NPAs to total assets decreased slightly to 44 basis points, while classified asset balances as a percentage of total assets decreased to 1.02%. Finally, as shown on slides 22 and 23, capital ratios remain in excess of regulatory minimums and internal targets. During the first quarter, tangible book value increased to $16.15 while the TCE ratio increased to 7.88% at the end of the period. Our total shareholder return remains strong with 35% of our first quarter earnings returned to our shareholders during the during the period through the common dividend, the Board also approved a 5 million share repurchase program. …
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