First Financial Bancorp. Q2 FY2025 earnings call

• Robust net interest margin drove industry-leading profitability. - Loan growth was 2% annualized, with broad-based growth in most portfolios except commercial real estate. - Adjusted noninterest income increased 11% from the linked quarter, with broad-based fee growth. - Adjusted noninterest expenses increased 1% from the first quarter, with expense management efforts continuing. - Asset quality was stable, with net charge-offs at 21 basis points and classified asset balances relatively flat. - Capital levels were strong, with tangible common equity at 8.4% and tangible book value per share at $15.40. - Board approved a $0.01 increase in the common dividend.

First Financial Bancorp achieved record revenue of $226.3 million in the second quarter, a 5% increase from the same quarter in 2024. Adjusted earnings per share were $0.74, with a return on assets of 1.54% and return on tangible common equity of 20%. The net interest margin was 4.05%, a 17 basis point increase from the first quarter. Loan growth was 2% annualized, with broad-based growth in most portfolios except commercial real estate, which declined due to higher payoffs. Adjusted noninterest income was $67.8 million, an 11% increase from the linked quarter. Net charge-offs declined to 21 basis points of total loans, and ACL coverage was 1.34% of total loans. Tangible book value per share increased to $15.40, a 4% increase from the linked quarter.

• Expect loan growth in the low to mid-single digits annualized in the third quarter. - Net interest margin expected to be in the range of 4% to 4.05% over the next quarter assuming a 25 basis point rate cut in September. - Credit cost expected to approximate prior-quarter levels, with charge-offs in the 20 to 25 basis point range. - Fee income anticipated to be between $67 million and $69 million. - Noninterest expense expected to be between $128 million and $130 million. - Acquisition of Westfield Bank expected to close this year with regulatory approval.

• No detailed specific risks discussed in depth, but reference to forward-looking statement disclosure in SEC filings for full risk factors.

Q: Daniel Tamayo asked about funding costs and margin continuation.

A: Jamie Anderson responded that deposit costs are close to bottoming, with slight further decline expected, and margin impacts from rate cuts are manageable.

Q: Terry McEvoy asked about efficiency initiative and loan growth ex-payoffs.

A: Archie Brown said the efficiency initiative is ongoing, with 80% of work completed, and loan growth excluding CRE is expected to be in the 6%-7% range long-term.

Q: David Konrad asked about asset quality.

A: Bill Harrod explained that NPA increase was due to downgrades of commercial borrowers, with expected resolution by year-end.

Q: Karl Shepard asked about loan growth and margin timing.

A: Jamie Anderson explained the timing impact of rate cuts on asset yields and deposit costs, with a lag on deposit side.