First Financial Bancorp.(FFBC) - 2025 Q2 - Quarterly Results

Financial Results Announcement Second Quarter 2025 Financial Highlights First Financial Bancorp achieved record Q2 2025 revenue, with significant sequential growth in net income, EPS, and key profitability metrics Q2 2025 Key Performance Metrics | Metric | Q2 2025 | Q1 2025 | | :--- | :--- | :--- | | Net Income | $70.0 million | $51.3 million | | Diluted EPS | $0.73 | $0.54 | | Adjusted Diluted EPS | $0.74 | - | | Return on Average Assets (ROA) | 1.52% | 1.13% | | Return on Average Tangible Common Equity (ROATCE) | 19.61% | 15.16% | - Achieved record quarterly revenue of $226.3 million[4] - Net interest margin (FTE basis) expanded by 17 basis points from the first quarter to 4.05%, driven by a 12 bp decline in funding costs and a 5 bp increase in asset yields[4][5] - Noninterest income showed strong growth, with mortgage and bankcard income increasing by double-digit percentages from the linked quarter, while leasing business income grew 11.2% and foreign exchange income grew 9.7% sequentially[5] - Loan balances grew by 2% on an annualized basis, while average deposit balances increased by 3% annualized during the quarter[5] CEO Commentary CEO Archie Brown highlighted record revenue, strong profitability, stable asset quality, and expected higher loan growth in H2 2025, with the Westfield Bank acquisition on track - Record revenue of $226.3 million represents a 5% increase over the same quarter one year ago[7] - Loan growth was 2% annualized, with an expectation for higher growth in the second half of the year as commercial real estate loan payoffs subside[7] - Asset quality was stable, with net charge-offs declining to 21 basis points, and the outlook for asset quality remains positive, with net charge-offs expected to be in the 20-25 basis point range for the remainder of the year[7] - The company is actively engaged in the integration process for the acquisition of Westfield Bank and expects the transaction to close in 2025[7] Dividend and Capital The Board approved a 4.2% increase in the quarterly common dividend to $0.25 per share, strengthening capital with a rising TCE ratio and 19% YoY increase in Tangible Book Value per share - The Board of Directors approved a quarterly dividend increase of $0.01, or 4.2%, to $0.25 per common share, payable on September 15, 2025[6][7] - The dividend payout ratio is approximately 35% of net income[7] Capital Position Highlights | Metric | Q2 2025 | Change from Q1 2025 | | :--- | :--- | :--- | | Tangible Common Equity (TCE) Ratio | 8.40% | - | | Tangible Book Value Per Share | $15.40 | +4% | | Total Capital Ratio | 14.98% | +8 bps | | Tier 1 Common Equity Ratio | 12.57% | +28 bps | Company Overview and Forward-Looking Statements First Financial Bancorp, a Cincinnati-based bank holding company with $18.6 billion in assets as of June 30, 2025, provides an overview and disclaimers on non-GAAP measures and forward-looking statements - As of June 30, 2025, the Company had $18.6 billion in assets, $11.8 billion in loans, $14.4 billion in deposits, and $2.6 billion in shareholders' equity[16] - The company operates 128 full-service banking centers in Ohio, Indiana, Kentucky, and Illinois[16] - The report contains forward-looking statements that are subject to inherent risks and uncertainties, including economic, market, credit, and regulatory risks[12][13] Selected Financial Information Consolidated Financial Highlights Consolidated financial highlights for Q2 2025 show strong performance with $70.0 million net income and $0.73 diluted EPS, significantly improving from Q1 2025, and robust capital ratios Quarterly Performance Comparison | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Net Income (in thousands) | $69,996 | $51,293 | $60,805 | | Diluted EPS | $0.73 | $0.54 | $0.64 | | Return on Average Assets | 1.52% | 1.13% | 1.38% | | Return on Average Tangible Equity (Non-GAAP) | 19.61% | 15.16% | 20.57% | | Net Interest Margin (FTE) | 4.05% | 3.88% | 4.10% | | Tangible Book Value Per Share (Non-GAAP) | $15.40 | $14.80 | $12.94 | Consolidated Statements of Income Q2 2025 net income reached $70.0 million, a 36.5% sequential increase, driven by a 6.0% rise in net interest income and a 33.2% surge in noninterest income, with noninterest expenses well-controlled Income Statement Summary (in thousands) | Line Item | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Net Interest Income | $158,269 | $149,296 | $153,311 | | Provision for Credit Losses | $9,802 | $8,700 | $16,443 | | Noninterest Income | $68,063 | $51,083 | $61,501 | | Noninterest Expenses | $128,671 | $128,076 | $123,574 | | Net Income | $69,996 | $51,293 | $60,805 | - Total interest income increased 2.3% sequentially, while total interest expense decreased 3.8%, leading to a 6.0% increase in net interest income[26] - The 33.2% sequential increase in noninterest income was primarily due to a 54.7% rise in net gains from sales of loans and a significant positive swing in net gain/loss on investment securities compared to Q1 2025[26] Consolidated Statements of Condition As of June 30, 2025, total assets reached $18.6 billion (1.0% increase), with loans growing 0.5% to $11.8 billion, deposits increasing 1.2% to $14.4 billion, and shareholders' equity rising 2.3% to $2.6 billion Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | Mar. 31, 2025 | June 30, 2024 | | :--- | :--- | :--- | :--- | | Total Assets | $18,634,255 | $18,455,067 | $18,166,180 | | Net Loans | $11,627,674 | $11,568,648 | $11,365,018 | | Total Deposits | $14,369,993 | $14,196,956 | $13,661,922 | | Total Shareholders' Equity | $2,558,155 | $2,501,235 | $2,326,439 | - Loan growth from the linked quarter was driven by Commercial & Industrial and Home Equity loans, offsetting a decline in Construction real estate loans[31] - The increase in total deposits was supported by growth in interest-bearing demand, savings, and time deposits[31] Net Interest Margin Analysis Q2 2025 net interest margin (FTE) expanded by 17 basis points to 4.05%, a significant improvement from Q1 2025, primarily driven by a decrease in funding costs to 2.90% Net Interest Margin and Component Yields | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Yield on Earning Assets | 6.24% | 6.19% | 6.68% | | Cost of Interest-Bearing Liabilities | 2.90% | 3.04% | 3.42% | | Net Interest Spread | 3.34% | 3.15% | 3.26% | | Net Interest Margin | 4.01% | 3.84% | 4.06% | - The cost of total interest-bearing deposits decreased by 16 basis points sequentially to 2.70%[35] - The linked quarter income variance analysis shows that changes in interest rates contributed a positive $5.5 million to net interest income, while volume changes contributed a positive $3.4 million[37] Credit Quality Credit quality remained stable in Q2 2025, with annualized net charge-offs decreasing significantly to 0.21%, nonperforming assets slightly increasing to 0.41%, and allowance for credit losses consistent at 1.34% Key Credit Quality Ratios | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Net Charge-offs to Avg. Loans (Annualized) | 0.21% | 0.36% | 0.15% | | Nonperforming Assets to Total Assets | 0.41% | 0.32% | 0.35% | | Allowance for Credit Losses to Total Loans | 1.34% | 1.33% | 1.36% | - Total net charge-offs for the quarter were $6.0 million, a decrease from $10.5 million in Q1 2025[39] - Total nonaccrual loans increased to $76.9 million from $59.6 million in the linked quarter, while classified assets remained relatively flat at $214.3 million[39] Capital Adequacy The company maintained a strong capital position as of June 30, 2025, with all regulatory capital ratios improving and remaining well above minimum requirements, including a preliminary Common Equity Tier 1 ratio of 12.57% Regulatory Capital Ratios (Preliminary) | Ratio | June 30, 2025 | Mar. 31, 2025 | June 30, 2024 | | :--- | :--- | :--- | :--- | | Common Equity Tier 1 Ratio | 12.57% | 12.29% | 11.78% | | Tier 1 Ratio | 12.89% | 12.61% | 12.11% | | Total Capital Ratio | 14.98% | 14.90% | 14.47% | | Leverage Ratio | 10.28% | 10.01% | 9.73% | - The company did not repurchase any shares under its publicly announced repurchase program during the three or six months ended June 30, 2025[41]