First Financial Bancorp. Q4 Earnings Call Highlights

First Financial Bancorp. (NASDAQ:FFBC) reported fourth-quarter and full-year 2025 results that management described as record-setting, highlighted by strong profitability metrics, resilient net interest margin performance despite lower short-term rates, and higher fee income. The company also detailed progress on its Westfield Bank acquisition and provided guidance for early 2026 that incorporates integration activity from both Westfield and BankFinancial.

Fourth-quarter profitability and margin trends

President and CEO Archie Brown said the company delivered “record earnings performance” in the fourth quarter, with adjusted earnings per share of $0.80. Management reported an adjusted return on assets of 1.52% and an adjusted return on tangible common equity of 20.3%.

Net interest margin (NIM) was 3.98%, down slightly from the prior quarter. CFO Jamie Anderson said funding costs declined 15 basis points from the linked quarter, while asset yields fell 19 basis points, with lower deposit costs offsetting part of the yield pressure. The company guided to first-quarter 2026 NIM in a range of 3.94% to 3.99%, assuming a 25 basis point rate cut in March.

Loans, deposits, and Westfield acquisition impacts

First Financial’s balance sheet growth in the quarter included a significant contribution from the Westfield acquisition. Anderson said total loan balances increased $1.7 billion during the period, including $1.6 billion acquired in the Westfield transaction. Excluding acquisition impact, organic loan growth was $131 million, or 4% annualized, driven by C&I and Summit.

Deposits also rose sharply, with total deposit balances up $2 billion, including $1.8 billion from Westfield. Organic growth was $264 million, and management highlighted that 21% of total balances were non-interest-bearing accounts as it emphasized growth in lower-cost deposits.

During the quarter, the company also issued $300 million of subordinated debt with a 10-year maturity and an interest rate of 6.38%.

Record fee income and expense pressures tied to integration

Management pointed to robust non-interest income as a key driver of the quarter. Brown said total adjusted fee income was $77 million, up 5% from the prior quarter, with double-digit percentage increases in wealth management and foreign exchange income. Anderson said adjusted fee income totaled $77.3 million, the highest quarter in company history, and noted strong results at Bannockburn and Summit, along with higher mortgage and deposit service charge income.

Non-interest expenses rose from the linked quarter, which management attributed largely to acquisition-related impacts. Brown said adjusted non-interest expenses increased 6% from the prior quarter, while Anderson noted core expenses rose $8.6 million, primarily due to Westfield.

Looking ahead, management guided first-quarter non-interest expense to a range of $156 million to $158 million, including estimated impacts from Westfield (about $11 million) and BankFinancial (about $10 million). Anderson said cost savings are expected to materialize later in 2026 once both banks are fully integrated, with major conversions planned for March (Westfield) and June (BankFinancial). In response to questions about the expense trajectory, management suggested expenses could trend to the low $150 million range in the back half of the year, though it also flagged that higher variable compensation could accompany a pickup in foreign exchange revenue later in 2026.

Credit quality, allowance, and capital

Asset quality was described as relatively stable. Brown said fourth-quarter provision expense was $10.1 million, in line with expectations. Non-performing assets increased slightly to 0.48% of assets, while classified assets declined slightly to 1.11% of assets. Net charge-offs were 27 basis points, which management said was within its expected range.

Anderson said the company’s allowance model resulted in total allowance (funded and unfunded reserves) of $207 million, including $26 million of initial allowance on the Westfield portfolio. Allowance coverage stood at 1.39% of total loans at quarter-end.

Capital levels remained above internal and regulatory targets, according to management. Tangible book value ended the quarter at $15.74, with a tangible common equity ratio of 7.79%. Management also said 40% of earnings were returned to shareholders through the common dividend during the period.

2025 full-year results and 2026 outlook details

For full-year 2025, Brown reported adjusted net income of $281 million, or $2.92 per share. Adjusted ROA was 1.49% and adjusted return on tangible common equity was 19.3%. The company said full-year net interest margin declined year-over-year from 4.05% to 3.98%, while adjusted non-interest income increased 16% to a record $280 million. Brown said record revenue totaled almost $922 million, up 8% from 2024.

In the outlook discussion, Brown said the company expects payoff pressure to ease in the first quarter (excluding the impact from BankFinancial) and forecasts low single-digit organic loan growth on an annualized basis in the first quarter. For the full year, management expects loan growth of 6% to 8%, which executives confirmed on the call is intended to be organic and excludes acquired balances.

Fee income is expected to be $71 million to $73 million in the first quarter, including $14 million to $16 million from foreign exchange and $19 million to $21 million from leasing revenue. Management said foreign exchange revenue tends to be seasonal, typically stronger in the back half of the year, and indicated overall fee income could trend into the $75 million to $80 million range later in 2026.

Management also discussed growth initiatives in Grand Rapids, Michigan, saying the team there has built close to $100 million in loan commitments and $20 million to $30 million in deposits, with plans to add a full banking office, mortgage capabilities, and expanded private banking. In Chicago, executives outlined plans to grow organically following the BankFinancial transaction by adding commercial bankers, wealth and private banking resources, and mortgage bankers, while also retooling retail centers to originate lending, including home equity lines.

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.