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    FFBC
    Earnings call· Jun 2026(Q2 FY26)

    FIRST FINANCIAL BANCORP /OH/ FFBC

    Jul 22, 2026 Source

    Executive summary

    First Financial Bancorp Q2 FY26 — Record Earnings and Strategic Expansion

    First Financial Bancorp delivered record adjusted earnings in Q2 FY26, driven by strong loan growth and stable net interest margin, while successfully integrating prior acquisitions. The company announced the strategic acquisition of Finward Bancorp, expanding its presence in the Chicago and Northwest Indiana markets, with expectations for significant EPS accretion and minimal tangible book value dilution. Management remains focused on capital return and continued organic growth, supported by positive credit trends.

    Highlights

    5

    • Adjusted net income was a record $83.9 million, or $0.80 per share, an 8% increase over Q2 FY25.

    • Loan growth was 7% on an annualized basis, driven by C&I, Agile, and Summit portfolios.

    • Net interest margin remained strong at 3.98%, with lower funding costs offsetting a decline in loan accretion income.

    • Tangible common equity increased to 8.2% and tangible book value increased 3% to $16.64.

    • Net charge-offs declined 15 basis points to 20 basis points of loans on an annualized basis.

    Concerns

    2

    • Adjusted fee income was below expectations due to lower foreign exchange swap income and investment banking fees.

    • Loan accretion income declined 5 basis points due to low prepayment rates on acquired mortgage loans.

    Guidance & targets

    14
    CategoryTargetConfidence
    Net interest margin
    3.96% to 4.1%
    high materiality
    High
    Loan growth
    mid-single-digit annualized basis
    medium materiality
    Medium
    Core deposit balance growth
    low single-digit
    medium materiality
    Medium
    Credit costs
    approximate second quarter levels
    medium materiality
    Medium
    ACL coverage
    remain relatively stable as a percentage of loans
    medium materiality
    Medium
    Net charge-offs
    25 to 30 basis points
    medium materiality
    Medium
    Total fee income
    $74 million and $77 million
    medium materiality
    Medium
    Foreign exchange revenue
    $15 million to $17 million
    medium materiality
    Medium
    Leasing business revenue
    $22 million to $24 million
    medium materiality
    Medium
    Noninterest expenses
    $149 million and $152 million
    medium materiality
    Medium
    Finward acquisition EPS accretion
    approximately 5%
    high materiality
    High
    Finward acquisition tangible book value earn back
    just over half a year
    high materiality
    High
    Total EPS accretion from BankFinancial and Finward
    approximately 8%
    high materiality
    High
    Total tangible book value impact from BankFinancial and Finward
    no impact
    high materiality
    High

    Operational metrics

    22
    Adjusted net income
    $83.9 million
    Q2 FY26

    Record for the period.

    Adjusted EPS
    $0.808% increase over Q2 FY25
    Q2 FY26
    Adjusted return on assets
    1.5%
    Q2 FY26
    Pre-provision ROA
    over 2%
    Q2 FY26
    Tangible common equity ratio
    8.2%
    Q2 FY26
    Tangible book value per share
    $16.643% increase from linked quarter
    Q2 FY26

    Exceeds pre-Westfield and BankFinancial levels. Transcription note: Transcript initially stated '$16.4' but later clarified as '$16.64'.

    Loan originations growth
    23%over Q1 FY26
    Q2 FY26
    Deposit costs decline
    6 basis pointsfrom linked quarter
    Q2 FY26

    Offset decline in asset yields.

    Asset yields decrease
    7 basis points
    Q2 FY26

    Due to lower accretion income.

    Noninterest-bearing deposits share
    21%
    Q2 FY26

    Of total balances.

    Noninterest income adjustment (acquisition-related)
    $2.2 million
    Q2 FY26

    For acquisition-related items.

    Other noninterest income increase
    $3.6 million
    Q2 FY26
    Core expenses decrease
    $5.7 million
    Q2 FY26
    NDFI exposure
    3%
    Q2 FY26
    Loans sold (BankFinancial acquisition)
    $400 million
    Q1 FY26

    Part of the BankFinancial integration, contributing to excess funding.

    Cost savings realization (BankFinancial)
    full savings by Q4 next year
    FY27

    On pace to achieve modeled cost savings.

    Cost savings realization (Westfield)
    full savings in Q3 run rate
    Q3 FY26

    Virtually all expected cost reductions have been realized.

    Dividend increase per share
    $0.01
    Q3 FY26

    Board voted to increase common dividend to $0.26 per share.

    Total capital returned to shareholders
    34%
    Q2 FY26

    Of second quarter earnings, through the common dividend.

    Donation to foundation (Finward acquisition)
    $500,000
    post-closing

    Demonstrates commitment to the market.

    Donation to foundation (BankFinancial acquisition)
    $1 million
    Q1 FY26

    Donated when entering the Chicago market.

    Asset sensitivity (25 bps rate hike)
    7-8 basis points
    initial

    Still asset-sensitive post BankFinancial and Westfield.

    Industry KPIs

    10
    MetricValueDetails
    Loans$240 millionUSD
    Deposits$41 millionUSD
    Rotce ROE19.7%%
    Capital returns$0.26USD
    Fee income lines$72 millionUSD
    Allowance reserves$208 millionUSD
    Net interest margin3.98%%
    Net charge offs npls20 basis pointsbps
    Total operating expenses—
    Provision for credit losses$8.2 millionUSD

    Deals & partnerships

    1
    Finward Bancorp (Peoples Bank)Strategic expansion into Chicago and Northwest Indiana markets.$208 million

    Each share of Finward common stock converts into 1.35 shares of First Financial common stock. 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. The acquisition will add to the company's presence in the Chicago and Northwest Indiana markets, making it the second largest market for First Financial.

    Risks & headwinds

    2
    Lumpiness in foreign exchange and investment banking feesQuarter-to-quarter

    Foreign exchange swap income and investment banking fees were lower than expectations in Q2 FY26.

    Mitigation: Anticipate a rebound in Q3 FY26; foreign exchange revenue is up 12% year-over-year for H1 FY26.

    Decline in loan accretion incomeQ2 FY26

    5 basis point decline in loan accretion income.

    Mitigation: Due to low prepayment rates on acquired mortgage loans; expected to be in line with Q2 for Q3 guidance.

    What to watch in Q3 FY26

    5

    Net interest margin trajectory

    Q3 FY26
    Current3.98%
    Target3.96% to 4.1%

    Why it matters

    NIM is a primary driver of bank profitability, and its stability is key to earnings outlook.

    Our net interest margin remains among the highest in the peer group, and we expect it will hold steady in the 3.96% to [ 4.1% ] range over the next quarter.

    Q&A highlights

    6

    Given three recent deals, is the company on the M&A sidelines, and what are the updated thoughts on the total payout ratio?

    The company is not on the M&A sidelines but will focus on integrating Finward for the next 4 quarters. The long-term capital plan is one-third for dividends, one-third for organic growth/small M&A, and one-third for buybacks. They plan to re-enter the buyback market.

    “So I think that's the plan kind of long term going forward.”

    asked by Brendan Nosal · answered by James Anderson

    2 min read5 chapters

    Detailed Narrative

    01

    Q2 Performance and Integration Progress

    The second quarter saw strong operating results, with record adjusted net income and robust loan growth. The company continued post-integration efforts for the Westfield acquisition, with virtually all expected cost reductions realized. The BankFinancial systems conversion was successfully completed in June, and cost savings are on track to be fully realized by Q4 next year.

    02

    Finward Bancorp Acquisition

    First Financial announced the acquisition of Finward Bancorp for approximately $208 million, expanding its footprint in the Chicago and Northwest Indiana markets. This strategic move adds approximately $2 billion in assets, $1.7 billion in deposits, and $1.5 billion in loans, along with $412 million in wealth assets under management. The transaction is expected to be 5% accretive to EPS with a tangible book value earn back of just over half a year.

    03

    Strategic Market Expansion

    Including BankFinancial, the company will have added $2.9 billion in lower-cost deposits and a total of $4.1 billion in deposits in Chicago and Northwest Indiana. This expansion will create a branch network of over 40 offices and establish the Chicago Northwest Indiana market as the second largest for First Financial, enhancing commercial banking, mortgage banking, wealth management, and specialty bank solutions.

    04

    Capital Allocation Strategy

    Management outlined a long-term capital allocation plan: approximately one-third of earnings for common dividends, one-third retained for organic growth and small M&A, and one-third for share buybacks. The Board approved an increase in the common dividend to $0.26 per share, and the company plans to re-enter the buyback market after holding off in Q2 due to the Finward deal.

    05

    Loan Portfolio and Credit Quality

    Loan growth was broad-based across C&I, Summit, and Agile portfolios. Asset quality trends were positive, with declining net charge-offs, nonperforming assets, and classified assets. The allowance for credit losses coverage increased, and the company's NDFI exposure remains low at approximately 3% of the total loan book, primarily concentrated in REITs.

    AI-generated summary of the company’s earnings call. Not investment advice.