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FF

FIRST FINANCIAL BANCORP /OH/ (FFBC)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered strong bottom-line and fee performance: diluted EPS $0.68 (adjusted $0.71), ROA 1.41% (adjusted 1.47%), and record quarterly noninterest income of $69.9M, while NIM (FTE) compressed to 3.94% as loan yields fell faster than deposit costs .
  • Balance sheet momentum: loans grew $208.7M QoQ (7.2% annualized) and average deposits rose $543.1M QoQ (15.7% annualized); ACL-to-loans ended at 1.33% and NPAs remained stable at 0.36% of assets .
  • Expense cadence: core expenses rose on higher incentive compensation tied to fee strength; reported expenses included $14.3M tax credit write-downs and $4.7M efficiency costs; adjusted efficiency ratio was 58.4% .
  • Outlook: management guides Q1 2025 NIM (FTE) to 3.85–3.90%, fee income to $63–65M (FX $11–13M; leasing $19–21M), noninterest expense to $128–130M, credit costs modestly lower, and dividend maintained at $0.24 .
  • Potential stock narrative catalysts: durability of above-peer NIM amid rate cuts, sustained fee growth (FX, leasing, wealth), resolution of FX-classified asset receivable, and continued de novo market expansion .

What Went Well and What Went Wrong

What Went Well

  • Record fee revenues with broad-based strength: foreign exchange $16.8M (+39% QoQ), leasing $19.4M (+15.5% QoQ), and record wealth management $8.0M (+15.2% QoQ) .
  • Robust deposit growth and mix: average deposits +$543.1M QoQ (+15.7% annualized), declines in brokered CDs and savings offset by broad-based growth; noninterest-bearing at 21% of total .
  • CEO confidence in operating momentum: “Adjusted earnings per share were $0.71… loan growth exceeding 7%… deposits surging ~16%… fee income increasing double-digit percentages” .

What Went Wrong

  • Margin compression: NIM (FTE) fell 14 bps QoQ to 3.94% as loan yields declined 37 bps vs deposits cost decline of 13 bps .
  • Reported noninterest expense elevated by non-recurring items: $14.3M tax credit write-downs and $4.7M efficiency costs; adjusted expenses still rose 5% QoQ on incentive comp .
  • Classified assets up 7 bps to 1.21% of assets due to a terminated FX trade creating a $45M receivable (believed fully collateralized) .

Financial Results

MetricQ4 2023Q3 2024Q4 2024Notes
Diluted EPS ($)0.60 0.55 0.68 Adjusted EPS $0.71
Net Interest Margin (FTE, %)4.26% 4.08% 3.94% Margin durability remained above peers per mgmt
Net Interest Income ($USD Millions)153.765 155.560 154.399 Stable despite yield pressure
Noninterest Income ($USD Millions)46.993 45.701 69.854 Record quarter
Total Net Revenue (NII + Noninterest, $USD Billions)0.201 0.201 0.224 Computed from NII + noninterest
ROA (%)1.31% 1.17% 1.41% Adjusted ROA 1.47%

Segment/Category breakdown – Noninterest income

Category ($USD Millions)Q4 2023Q3 2024Q4 2024
Service charges6.846 7.547 7.632
Wealth management6.091 6.910 7.962
Bankcard3.349 3.698 3.659
Client derivatives0.711 1.160 1.528
Foreign exchange8.730 12.048 16.794
Leasing income12.856 16.811 19.413
Gains from loan sales2.957 5.021 4.634
Securities gains (losses)(0.649) (17.468) 0.144
Other6.102 9.974 8.088
Total46.993 45.701 69.854

Key performance indicators (KPIs)

KPIQ4 2023Q3 2024Q4 2024
Total loans (EOP, $USD Billions)10.933 11.553 11.762
Avg deposits ($USD Billions)13.203 13.797 14.340
ACL / total loans (%)1.29% 1.37% 1.33%
NPAs / total assets (%)0.38% 0.36% 0.36%
NCOs / avg loans (annualized, %)0.46% 0.25% 0.40%
Tangible book value/share ($)12.38 14.26 14.15
CET1 ratio (%)11.73% 12.04% 12.16%
TCE ratio (%)7.17% 7.98% 7.73%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
NIM (FTE)Q1 2025Not provided3.85%–3.90% New
Total fee incomeQ1 2025Not provided$63–65M (FX $11–13M; Leasing $19–21M) New
Noninterest expenseQ1 2025Not provided$128–130M New
Credit costsQ1 2025Not providedModestly lower; NCOs expected lower QoQ New
ACL coverageQ1 2025Not providedStable to slightly increasing New
DividendOngoing$0.24 Maintain $0.24 Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024, Q3 2024)Current Period (Q4 2024)Trend
NIM durabilityQ2: 4.10% FTE, unchanged QoQ; asset yields up, deposit costs rising • Q3: 4.08% FTE, only -2 bps QoQ 3.94% FTE; loan yields -37 bps vs deposit costs -13 bps Down modestly, still strong
Fee income growthQ2: record $61.5M; FX +60.9%, leasing strong; wealth record • Q3: adjusted $58.8M Record $69.9M; FX $16.8M; leasing $19.4M; wealth $8.0M Positive acceleration
DepositsQ2: avg +$351M; seasonal public funds • Q3: avg +$166M Avg +$543M; broader growth, NIB 21% of total Strengthening
Credit/NPAs & ACLQ2: NPAs ~0.35%; ACL 1.36% • Q3: NPAs 0.36%; ACL 1.37% NPAs 0.36%; ACL 1.33%; classified assets +7 bps on FX termination receivable Stable overall; isolated FX item
Office CREOngoing monitoring; diversified book • Q3 steady Nonaccrual ~$26M; one relationship downgraded; $9M paid off post-year-end Mixed but managing down
EfficiencyWorkforce initiative ongoing; positions eliminated (Q2: 90) • Q3: 120 145 eliminated; adjusted efficiency ratio 58.4% Execution progressing
De novo expansionBuilding Chicago/Cleveland teams Added Grand Rapids team; continued momentum Expanding footprint

Management Commentary

  • CEO: “Adjusted earnings per share were $0.71… decline in asset yields outpaced the decline in deposit costs, leading to a reduction in our net interest margin to 3.94%. Balance sheet trends were very strong… loan growth exceeding 7% annualized and total deposits surging ~16% annualized” .
  • CFO: “Asset yields declined 31 bps… loan yields declined 37 bps… funding costs declined 17 bps… Adjusted net income was $67.7M or $0.71 per share… pretax pre-provision ROA exceeding 2%” .
  • Credit: “Increase in classified assets… driven by termination of a foreign exchange trade, resulting in a $45M obligation… fully collateralized… expect repayment in 2025” .
  • Year-in-review: “Adjusted noninterest income increased by 13.3% to a record $241.8M… record revenue of $853.8M… loans +7.6% to $11.8B… deposits +7.2% to $14.3B” .

Q&A Highlights

  • Loan growth trajectory: Expect seasonal moderation in Q1 with healthy pipelines; payoffs elevated in CRE drove recent dynamics .
  • Margin path: Q1 NIM (FTE) guided to 3.85–3.90%; a mid-year Fed cut in forecasts would initially compress NIM before deposit costs reprice lower and stabilize in the mid-3.80s band .
  • Expansion markets: De novo teams in Chicago, Cleveland, and Grand Rapids; focus on relationship-driven steady growth, opportunistic adds .
  • Expense modeling: Q1 noninterest expense includes payroll tax reset; FX/leasing-linked incentive comp embedded in $128–130M guide .
  • Classified asset/FX: $45M receivable is fully collateralized (cash, real estate, equity pledges, personal guarantees); repayment expected in 2025 .
  • Credit normalization: Long-term NCOs expected in 25–30 bps range; starting 2025 potentially lower than 2024’s 30 bps .
  • M&A stance: Active dialogues with banks $1–5B in or adjacent to footprint; window appears more open, regulatory approvals potentially faster .
  • Fee growth outlook: Steady growth across categories; FX in $15–16M average quarterly range with variability; leasing can lift with operating lease volume .

Estimates Context

  • We attempted to retrieve S&P Global consensus for Q4 2024 EPS and revenue but the service returned an error due to daily request limit being exceeded; consensus comparison is therefore unavailable at this time [GetEstimates error].
  • Implication: Without a formal consensus, focus shifts to company-specific drivers (NIM trajectory, fee mix, credit normalization) for near-term estimate revisions based on guidance and reported trends .

Key Takeaways for Investors

  • Fee engine is a differentiator: record noninterest income ($69.9M) with strength in FX ($16.8M), leasing ($19.4M), and wealth ($8.0M) supports earnings durability even as NIM compresses .
  • NIM remains elevated vs typical community peers, though converging: 3.94% (FTE) with managed funding costs and strong asset yields; expect 3.85–3.90% near term absent further cuts .
  • Credit is stable; classified asset uptick isolated: NPAs 0.36% of assets, ACL 1.33% of loans; FX receivable fully collateralized with payback expected in 2025 .
  • Balance sheet growth continues: loans +$208.7M QoQ, average deposits +$543.1M QoQ, mix favorable with 21% NIB .
  • Efficiency actions gaining traction: 145 positions eliminated to date; adjusted efficiency ratio 58.4%; ongoing expense discipline with Q1 guide $128–130M .
  • Watch the office CRE and Agile seasonality: office nonaccruals ~$26M with a $9M paydown after year-end; Agile premium finance balances exhibit seasonal patterns, with heavier originations in Q2 .
  • Near-term trading setup: potential estimate recalibration around guided NIM band and fee ranges; positive catalysts include fee momentum and FX receivable resolution; risks include further rate cuts pressuring NIM and incentive-driven expense sensitivity .

All data from Q4 2024 8-K press release and slides, and Q4 2024 earnings call: . Q2/Q3 references for trend context: .