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FF

FIRST FINANCIAL BANCORP /OH/ (FFBC)·Q2 2025 Earnings Summary

Executive Summary

  • Record quarterly revenue of $226.3M and adjusted EPS of $0.74; GAAP diluted EPS of $0.73; net interest margin (FTE) rose 17 bps q/q to 4.05% .
  • EPS beat Wall Street consensus by ~$0.06 (0.74 vs 0.68*) and revenue exceeded consensus by ~$6.4M ($226.3M vs $219.9M*) — driven by lower funding costs and broad-based fee strength in leasing, FX, mortgage .
  • Asset quality improved q/q: annualized NCOs fell to 0.21% (from 0.36% in Q1), though NPAs ticked up to 0.41% of assets; ACL coverage was 1.34% of loans .
  • Capital strengthened: TCE ratio rose to 8.40% and TBV/share to $15.40; the board increased the dividend to $0.25 (up 4.2%), ~35% payout of net income — a potential stock-supportive catalyst .
  • Q3 guidance calls for NIM of 4.00–4.05%, fee income of $67–69M, opex of $128–130M, and NCOs of 20–25 bps; loan growth expected low-to-mid single digits annualized, deposits stable ex-seasonal public fund outflows .

What Went Well and What Went Wrong

What Went Well

  • Record revenue and industry-leading NIM: “record revenue of $226.3 million” and NIM (FTE) 4.05% with a 17 bps q/q increase; deposit costs fell 13 bps while asset yields rose 5 bps .
  • Broad-based fee momentum: adjusted noninterest income $67.8M (+11% q/q), with double-digit growth in mortgage, bankcard, leasing, and FX; leasing revenue $20.8M (+11.2% q/q) .
  • Expense discipline and capital return: adjusted opex +0.8% q/q; TCE ratio 8.40% and dividend raised to $0.25 (4.2% increase) .
    Quote: “We achieved record revenue… drove adjusted earnings per share of $0.74… industry-leading profitability… Loan growth was 2% annualized… Payoffs have started to subside” — Archie Brown .

What Went Wrong

  • NPAs uptick despite lower NCOs: nonperforming assets increased 9 bps to 0.41% of assets even as NCOs fell to 0.21% annualized .
  • CRE payoffs pressured loan growth: ICRE balances declined on elevated prepayments; CRE expected flat to slightly down in Q3, muting consolidated loan growth .
  • Seasonal deposit risk and asset sensitivity: ~$100M expected seasonal public funds outflow in Q3; each 25 bp rate cut typically reduces NIM by 5–6 bps (partially mitigated by deposit repricing lag) .

Financial Results

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$224.3 $200.4 $226.3
Diluted EPS ($USD)$0.68 $0.54 $0.73
Net Interest Margin (FTE, %)3.94% 3.88% 4.05%

Segment/fee breakdown (selected components):

Noninterest Income Component ($USD Millions)Q1 2025Q2 2025
Leasing business income$18.7 $20.8
Foreign exchange income$12.5 $13.8
Mortgage banking (Net gains from sales of loans)$4.3 $6.7
Bankcard income$3.3 $3.7
Service charges on deposit accounts$7.5 $7.8
Wealth management fees$8.1 $7.8
Total noninterest income$51.1 $68.1

Key KPIs:

KPIQ4 2024Q1 2025Q2 2025
Total Loans (EOP, $USD Millions)$11,761.8 $11,724.1 $11,786.2
Avg Total Deposits ($USD Millions)$14,339.7 $14,240.7 $14,354.8
Net Charge-offs / Avg Loans (annualized)0.40% 0.36% 0.21%
ACL / Total Loans (%)1.33% 1.33% 1.34%
TCE Ratio (%)7.73% 8.16% 8.40%
Tangible Book Value/Share ($)$14.15 $14.80 $15.40
Dividend/Share ($)$0.24 $0.24 $0.25

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Loan growth (annualized)Q3 2025Q2 2025: low single digits Low–mid single digits Raised
NIM (FTE)Q3 2025Q2 2025: 3.95–4.05% 4.00–4.05% Low-end raised, top-end maintained
Total fee incomeQ3 2025Q2 2025: $64–66M $67–69M Raised
FX incomeQ3 2025Q2 2025: $13–15M $14–16M Raised
Leasing incomeQ3 2025Q2 2025: $18–20M $19–21M Raised
Noninterest expenseQ3 2025Q2 2025: $126–128M $128–130M Slightly higher
Net charge-offsQ3 2025Q2 2025: decline from Q1 (36 bps) 20–25 bps Clarified range
ACL coverage trendQ3 2025Stable to slight increase Stable to slight increase Maintained
DepositsQ3 2025Modest growth Stable ex-seasonal outflows Clarified
DividendQ3 2025Maintain level Increased to $0.25 Raised

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4’24 and Q1’25)Current Period (Q2’25)Trend
NIM and rate cutsNIM down on asset yields; guided Q1 NIM 3.85–3.90%; deposit costs falling NIM (FTE) 4.05%; each 25 bp cut reduces NIM 5–6 bps; deposit cost lag mitigates Improving near term; cautious on cuts
Loan growth and CRE payoffsQ4 strong growth; Q1 payoffs/workouts pressured growth Q2 loan growth 2% annualized; CRE payoffs subsiding; Q3 CRE flat/down Headwinds easing
Asset quality and NCOsQ4 NCOs 40 bps; expect lower going forward NCOs down to 21 bps; NPAs up to 0.41%; guide 20–25 bps NCOs Mixed: lower losses, higher NPAs
Efficiency programWorkforce reductions; completion in 2025 “80% through the bank”; tech/process redesign continues Ongoing, delivering
Tariffs/macro sensitivityMonitoring client exposure; uncertainty noted C&I nonaccruals up on tariffs; resolution expected by year-end Elevated monitoring
Deposits & seasonal public fundsQ4 seasonal inflows; Q1 decline; NIB ~21% ~$100M expected seasonal outflow in Q3; adjusted uninsured deposits $3.8B (27%) Stable core; manage seasonality
M&A/WestfieldDe novo expansions; considering M&A Announced acquisition of Westfield Bancorp; expected to close in 2025 Strategic expansion

Management Commentary

  • “Record revenue of $226.3 million… adjusted EPS of $0.74… robust net interest margin… Payoffs have started to subside, and we expect higher loan growth in the second half of this year.” — Archie Brown .
  • “NIM remains very strong at 4.05%… deposit costs down 13 bps; asset yields up 5 bps… adjusted fee income $68M with leasing, mortgage and interchange strong… TCE ratio increased to 8.4%.” — Jamie Anderson .
  • “We anticipate fee income $67–69M, noninterest expense $128–130M, and charge-offs 20–25 bps in Q3; NIM 4.00–4.05%… loan pipelines strong.” — Archie Brown .
  • “Board approved a $0.01 increase in the common dividend to $0.25; payout ~35% of net income.” — Archie Brown .

Q&A Highlights

  • Funding costs and NIM peak: Deposit costs likely near bottom; 25 bp cuts reduce NIM ~5–6 bps; margin outlook 4.00–4.05% includes 2–3 bp deposit cost decline in Q3 .
  • Seasonal public funds outflows: ~$100M typical outflow in Q3 tied to Indiana property taxes; inflow in Q2 reverses later .
  • Efficiency initiative: 80% through bank; mix of tech and process redesign; further benefits expected into early 2026 .
  • Loan growth composition: CRE payoffs remain headwind; C&I/consumer consistent; specialty lines growing 10–12% with ~20% of book .
  • Asset quality specifics: Two commercial borrowers drove NPA increase; one impacted by tariffs; resolutions expected by year-end with reserves recognized .
  • Westfield impact: Slightly liability-sensitive; on margin brings asset sensitivity closer to neutral; ~10% of earning assets .

Estimates Context

EPS and revenue vs S&P Global consensus:

MetricQ4 2024Q1 2025Q2 2025
EPS Consensus (Primary, $)0.65*0.628*0.68*
EPS Reported (Diluted, $)0.71 0.63 0.74
Revenue Consensus ($)216,325,000*215,025,000*219,900,000*
Revenue Reported ($)224,300,000 200,400,000 226,300,000
  • Q2 2025: EPS beat by ~$0.06 and revenue beat by ~$6.4M; drivers included lower funding costs and double-digit fee growth across mortgage, bankcard, leasing, and FX .
  • Q1 2025: EPS modestly above consensus; revenue below consensus amid seasonal fee softness and investment portfolio restructuring .
  • Q4 2024: EPS above consensus; revenue above consensus on strong fee income (FX, leasing, wealth) .

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • NIM momentum with disciplined funding costs delivered a clear EPS/revenue beat; near-term NIM likely flattish within 4.00–4.05% even with methodical rate cuts, given deposit repricing lag .
  • Fee engines are firing: leasing ($20.8M), FX ($13.8M), and mortgage ($6.7M) collectively support diversified revenue — a buffer against rate-driven NII volatility .
  • Credit remains manageable: NCOs down to 0.21% annualized and guidance of 20–25 bps suggests normalized loss levels; monitor NPAs (0.41%) and tariff-related exposures highlighted in Q&A .
  • Capital/returns upgraded: TCE 8.40%, TBV/share $15.40, dividend raised to $0.25 (~35% payout) — supportive for valuation and total return framing .
  • Loan growth outlook improving as CRE payoffs subside; expect low–mid single-digit growth with specialties outpacing core C&I/consumer .
  • Manage Q3 seasonality: ~$100M public funds outflow and slightly higher opex range ($128–130M) are known headwinds; fee guidance raised offsets some drag .
  • Strategic expansion: Westfield acquisition adds Northeast Ohio scale and modestly reduces asset sensitivity over time; closing targeted in 2025 .