First Financial Bancorp. Q2 Earnings Call Highlights

Key Points

• First Financial Bancorp. posted record adjusted Q2 earnings of $83.9 million, or $0.80 per share, helped by 7% annualized loan growth and a strong net interest margin of 3.98%. Adjusted return on tangible common equity reached 19.7%.
• Credit quality and capital remained solid, with net charge-offs improving to 0.20% of total loans annualized and non-performing assets declining. Tangible book value rose to $16.64 and the board increased the quarterly dividend to $0.26 per share.
• The company announced a strategic acquisition of Finward Bancorp to expand in Chicago and Northwest Indiana, a deal valued at about $208 million and expected to be roughly 5% accretive to earnings. Management expects the transaction to close around year-end and help further build its regional deposit base.

First Financial Bancorp. NASDAQ: FFBC reported record adjusted second-quarter earnings and outlined plans to expand further in the Chicago and Northwest Indiana markets through its planned acquisition of Finward Bancorp, executives said on the company’s earnings call.

President and Chief Executive Officer Archie Brown said the quarter was “another active quarter” as the company continued post-integration work related to the Westfield acquisition and completed the systems conversion for BankFinancial. He said operating results were strong, with adjusted net income of $83.9 million, or $0.80 per share.

Brown said adjusted earnings per share increased 8% from the second quarter of 2025, driven by higher earning assets from organic loan growth and recent acquisitions. Adjusted return on assets was 1.5%, while adjusted return on tangible common equity was 19.7%.

Loan Growth and Margin Remained Stable

Chief Financial Officer Jamie Anderson said the quarter was highlighted by “strong earnings, 7% loan growth, a solid net interest margin, and positive credit trends.” Net interest margin was 3.98%, down one basis point from the linked quarter. Anderson said deposit costs declined six basis points, while asset yields fell seven basis points due to lower accretion income.

Loan balances rose $240 million, or 7% annualized, with growth across much of the portfolio. Management highlighted commercial and industrial lending, Summit and Agile as key contributors. Brown said loan originations increased 23% from the first quarter and that advanced-stage pipelines remained strong heading into the second half of the year.

Average deposits increased $41 million, which Anderson attributed mainly to a seasonal influx in public funds and growth in interest-bearing demand accounts. He said 21% of total deposit balances remained in non-interest-bearing accounts and that the company remains focused on growing lower-cost deposits.

Fee Income Fell From First Quarter, Expenses Declined

Brown said adjusted fee income was below management’s expectations after a strong first quarter, with lower foreign exchange swap income and investment banking fees weighing on non-interest income. However, he said the company expects a rebound in the third quarter.

Anderson said adjusted fee income totaled $72 million, led by leasing and foreign exchange. Other non-interest income increased $3.6 million due to higher income from bank-owned life insurance and limited partnership investments.

Adjusted non-interest expenses declined from the linked quarter, which management attributed to lower commission expense, payroll taxes and acquisition-related synergies. Anderson said core expenses decreased $5.7 million, driven by lower compensation costs tied to lower fee income.

Brown said virtually all expected Westfield cost reductions had been realized by June 30, while BankFinancial-related savings are expected to phase in during the third quarter, with full savings anticipated by quarter-end.

Credit Trends Improved and Capital Levels Rose

Asset quality trends were positive in the quarter. Net charge-offs declined 15 basis points to 0.20% of total loans on an annualized basis. Anderson said net charge-offs were down 42% from the first quarter, while non-performing assets and classified assets also declined.

The allowance for credit losses increased two basis points to 1.38% of total loans. The company recorded $8.2 million of provision expense, driven primarily by loan growth and net charge-offs.

Capital levels remained above internal and regulatory targets. Tangible book value increased to $16.64, and the tangible common equity ratio rose to 8.2%. Anderson said tangible book value now exceeds pre-Westfield and BankFinancial levels.

The company did not repurchase shares during the quarter as it focused on acquisitions and integration work. Anderson said 34% of second-quarter earnings were returned to shareholders through the common dividend, and the board voted to raise the common dividend to $0.26 per share.

Third-Quarter Outlook Calls for Steady Margin

For the third quarter, Brown said management expects mid-single-digit annualized loan growth and low single-digit core deposit growth. The company expects net interest margin to remain in a range of 3.96% to 4.01%, assuming no changes in interest rates and purchase accounting accretion in line with the second quarter.

Management expects credit costs to approximate second-quarter levels and allowance coverage to remain relatively stable as a percentage of loans. Brown said net charge-offs are expected to approximate 25 to 30 basis points in the back half of the year.

The company projected total fee income of $74 million to $77 million in the third quarter, including $15 million to $17 million from foreign exchange and $22 million to $24 million from leasing business revenue. Non-interest expenses are expected to range from $149 million to $152 million.

Finward Deal Expands Chicago and Northwest Indiana Presence

First Financial also discussed its agreement to acquire Finward Bancorp, the holding company for Peoples Bank. Finward is headquartered in Munster, Indiana, and has 24 banking locations. Brown said the transaction is expected to expand First Financial’s ability to serve consumers and businesses in the Chicagoland and Northwest Indiana markets.

Finward has approximately $2 billion in assets, $1.7 billion in deposits, $1.5 billion in loans and $412 million in wealth assets under management. Under the agreement, each outstanding Finward common share will be converted into the right to receive 1.35 shares of First Financial common stock. Brown said the transaction was valued at approximately $208 million based on First Financial’s July 20 closing price.

Brown said the deal is expected to be approximately 5% accretive to First Financial’s earnings per share, with tangible book value per share at closing estimated to be only slightly diluted and an anticipated earn-back period of just over half a year.

Including the BankFinancial acquisition, Brown said First Financial will have added $2.9 billion in lower-cost deposits to its Northwest Indiana operations and will have $4.1 billion in deposits in Chicago and Northwest Indiana. The combined branch network in the region is expected to exceed 40 offices.

During the question-and-answer session, Brown said the company does not expect to be on the sidelines for M&A permanently, but said management does not see anything in the near to intermediate term beyond closing and integrating Finward. He said the acquisition is strategic and incremental relative to First Financial’s size.

Anderson said First Financial expects to close the Finward transaction around year-end, with conversion anticipated sometime in the second quarter of next year. He said cost savings would likely phase in after conversion, with the first full quarter of all expected savings likely in the fourth quarter of next year.

Brown said First Financial is also committing $500,000 to its foundation for the benefit of organizations in communities served by Finward, in addition to the $1 million donation made when the company entered the Chicago market through BankFinancial.

About First Financial Bancorp. (NASDAQ:FFBC)

First Financial Bancorp NASDAQ: FFBC is a bank holding company headquartered in Cincinnati, Ohio, and the parent of First Financial Bank. The company provides a comprehensive suite of commercial and consumer banking services through a network of more than 100 full-service banking centers and mortgage offices across Ohio, Indiana and Kentucky. Its core mission centers on delivering personalized relationship banking to businesses, individuals and public sector clients.

First Financial Bank's product portfolio includes deposit solutions such as checking, savings and money market accounts, alongside a range of lending offerings that cover commercial and industrial loans, real estate and construction financing, home mortgages and home equity lines of credit.

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