First Financial Bancorp. Q4 FY2025 earnings call

• Q4 Performance: Record earnings with adjusted EPS of $0.80, adjusted return on assets of 1.52%, and adjusted return on tangible common equity of 20.3%. Net interest margin was resilient despite slight decline from Q3, and noninterest income was strong.
• Full-Year 2025: Net income was $281 million or $2.92 per share on an adjusted basis. Record revenue of almost $922 million, an 8% increase from 2024. Asset quality was stable, provision expense declined 21%, and ACL coverage was 1.39%.
• Westfield Acquisition: Impacted capital, but strong earnings drove tangible book value per share up 11% from $14.15 to $15.74.
• Deposit and Loan Trends: Organic loan growth was driven by Summit and C&I, and deposits had organic growth in most types while maintaining noninterest-bearing accounts.

Net Interest Margin: Declined slightly from the third quarter but remained resilient due to lower funding costs offsetting short-term rate reductions. Full-year net interest margin was 3.98% compared to 4.05% in 2024. Loans: Loan growth was 4% on an annualized basis, with a total increase of $1.7 billion including the Westfield acquisition; organic loan growth was $131 million. Deposits: Total average deposits increased by approximately 7% annually on an annualized basis, excluding Westfield acquisition, with organic growth $264 million and noninterest-bearing accounts making up 21% of total balances. Noninterest Income: Fourth-quarter adjusted fee income was $77 million, up 5% from the linked quarter, led by wealth management, foreign exchange, leasing, and mortgage. Full-year adjusted noninterest income was $280 million, up 16%. Asset Quality: Nonperforming assets were 0.48% of assets, classified assets were 1.11% of assets, and net charge-offs were 27 basis points, within expectations.

• First Quarter: Excluding Bank Financial impact, expected low single-digit organic loan growth. Full-year loan growth projected at 6%-8%.
• Net Interest Margin: Expected to be in the range of 3.94%-3.99% next quarter assuming a 25 basis point rate cut in March.
• Fee Income: Q1 fee income expected to be between $71 million and $73 million, including $14 million-$16 million for foreign exchange and $19 million-$21 million for leasing business revenue.
• Expenses: Q1 noninterest expense expected to be between $156 million and $158 million, with cost savings from acquisitions to materialize later in 2026.

• Forward-looking statements disclosed in earnings release and SEC filings.
• Integration risks from acquisitions (Westfield, Bank Financial) related to cost savings and integration challenges.
• Interest rate risks impacting the net interest margin.

Q: Daniel Tamayo on fee income guidance, FX and leasing trends A: Archie and Jamie discuss seasonality in FX, growth prospects for FX (expected low double-digit growth), and leasing portfolio seasoning leading to flatter growth Q: Brendan Nosal on loan growth, margin outlook A: Archie and Jamie talk about loan growth projections, purchase accounting impact from acquisitions, and margin dependence on short-term rates Q: Terry McEvoy on expense trajectory A: Jamie discusses cost savings from acquisitions and revenue offsetting expenses, with cost savings to materialize after deal conversions Q: David Konrad on efficiency ratio, trust A: Jamie explains efficiency ratio nuances and Westfield's impact on wealth management, while Archie discusses wealth team additions post-Westfield acquisition Q: Brian Foran on loan growth and securities A: Jamie talks about securities portfolio management and loan growth catalysts, including seasonality and team additions in markets