First Financial Bancorp.(US:FFBC)2024-10-25 16:46Financial Data and Key Metrics Changes - Adjusted earnings per share was $0.67, resulting in a return on assets of 1.42% and return on tangible common equity of 19.77% [4] - Net interest margin was 4.08%, with only a 2 basis point decline from the previous quarter [4][8] - Average deposit balances grew 4.9% on an annualized basis [5] - Tangible book value per share increased 10% from the linked quarter to $14.26 [7][11] Business Line Data and Key Metrics Changes - Loan growth slowed during the third quarter due to softer pipelines and higher payoffs in commercial banking and investment commercial real estate portfolios [5][9] - Noninterest income for the third quarter was $45.7 million, or $58.8 million on an adjusted basis, with strong earnings from foreign exchange, wealth management, and leasing [5][15] - Noninterest expenses were relatively flat compared to the prior quarter, with a slight increase due to higher leasing expenses [6][9] Market Data and Key Metrics Changes - The deposit mix continues to shift slightly towards higher-cost deposits, with 23% of total balances in noninterest-bearing accounts [9][14] - Average deposit balances increased by $166 million during the quarter, driven primarily by increases in retail CDs and money market accounts [14] Company Strategy and Development Direction - The company remains focused on organic growth and executing its strategy, with interest in potential bank M&A opportunities in the future [32] - The company expects to maintain a strong net interest margin but anticipates a decline to between 3.85% to 3.95% in the next quarter due to expected rate cuts [18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about asset quality and confidence in managing the portfolio through expected interest rate reductions and economic uncertainty [7] - The company expects mid-single-digit loan growth in the fourth quarter and anticipates continued strong deposit growth [18] Other Important Information - The company eliminated 120 positions as part of a workforce efficiency initiative, with additional savings expected into 2025 [6] - Nonperforming assets as a percentage of assets increased by 1 basis point to 36 basis points [7][10] Q&A Session Summary Question: Loan growth expectations for 2025 - Management expects mid- to upper single-digit annualized loan growth in 2025, balanced across most portfolios [20][21] Question: Loan yields and pressure in the fourth quarter - Current origination yields are in the high 7% range, with expectations of continued decline as the Fed cuts rates [22][23] Question: Securities restructuring and reinvestment - The company sold $140 million of securities during the quarter, with reinvestment expected to yield about 330 basis points [26][27] Question: Credit trends in the Summit business unit - Credit trends in the Summit business unit are performing as expected, with no significant issues reported [28][30] Question: Capital deployment priorities and M&A - The company is focused on organic growth and remains disciplined regarding potential M&A opportunities [32][33]