• Adjusted Earnings Per Share: $0.67
• Return on Assets: 1.42%
• Return on Tangible Common Equity: 19.77%
• Net Interest Margin: 4.08%
• Average Deposit Balance Growth: 4.9% annualized
• Noninterest Income: $45.7 million, $58.8 million adjusted
• Noninterest Expenses: Relatively flat compared to prior quarter
• Allowance for Credit Losses (ACL): 1.37% of total loans
• Net Charge Offs: 25 basis points annualized
• Nonperforming Assets: 36 basis points of total assets
• Tangible Book Value Per Share: $14.26, increased 10% from linked quarter
• Tangible Common Equity Ratio: 7.98%, increased 75 basis points from June 30th
• Adjusted Net Income: $63.6 million
• Provision Expense: $10.6 million
• Total Fee Income: $46 million, $59 million adjusted

• Warning! GuruFocus has detected 7 Warning Sign with CL.

Release Date: October 25, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• First Financial Bancorp (NASDAQ:FFBC) reported a strong adjusted earnings per share of $0.67, with a return on assets of 1.42% and a return on tangible common equity of 19.77%.
• The net interest margin remained robust at 4.08%, with only a slight decline of 2 basis points from the previous quarter.
• Average deposit balances grew by 4.9% on an annualized basis, indicating strong deposit growth.
• Asset quality remained stable, with net charge-offs at 25 basis points on an annualized basis, aligning with expectations.
• Tangible book value per share increased by 10% from the previous quarter and over 30% from the same quarter last year, reaching $14.26.

Negative Points

• Loan growth slowed during the third quarter due to softer pipelines and higher payoffs in commercial banking and commercial real estate portfolios.
• Noninterest income was impacted by several large non-recurring items, including $17.5 million of losses on securities.
• The cost of deposits increased by 5 basis points compared to the previous quarter, although the pace of growth declined.
• Noninterest expenses increased slightly due to higher leasing expenses and a supplemental contribution to the foundation.
• The allowance for credit losses (ACL) coverage increased slightly, indicating a cautious approach to potential credit risks.

Q & A Highlights

Q: Can you provide insights into the expected loan growth for the fourth quarter and beyond, considering recent business additions? A: Archie Brown, President & CEO, stated that they anticipate mid to upper single-digit annualized loan growth for 2025, with a balanced approach across portfolios. They are rationalizing lower-return relationships, which may temper growth but still expect mid to high single-digit growth.

Q: How are current loan yields performing, and what is the outlook for the fourth quarter and next year? A: Archie Brown noted that origination yields were in the high 7% range, with a slight decline expected due to rate cuts. James M. Anderson, CFO, added that loans originated in Q3 had yields in the 7.5% to 7.8% range, with payoff yields slightly lower.

Q: Could you discuss the $8 million losses from securities restructuring and its impact on future margins? A: James M. Anderson explained that $140 million in securities were sold, with reinvestment yielding an additional 330 basis points. The restructuring is expected to contribute approximately $4.5 million in annual earnings, with a full benefit realized in Q4.

Q: How are credit trends in the Summit platform, given some industry stress? A: Archie Brown mentioned that Summit's portfolio is performing well, with some expected stress in transportation. James M. Anderson added that Summit's exposure to small-ticket items is limited, with total exposure under $100 million.

Q: What are your capital deployment priorities, and are there any M&A considerations? A: Archie Brown emphasized a focus on organic growth but is open to M&A opportunities that align with shareholder interests. James M. Anderson noted that they are in capital-building mode, with no immediate plans for stock buybacks, focusing instead on growing tangible book value.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.