Key Highlights

  • FFBC reported adjusted EPS of $0.84 and GAAP diluted EPS of $0.77 for the third quarter.
  • Record total revenue was $273.9 million, with net interest income up 22.3% year over year to $196.3 million.
  • Net interest margin widened to 4.05% from 3.96% in the second quarter.
  • Classified assets rose to 1.26% of total assets from 1.01% in the prior quarter.
  • The quarterly dividend was raised to $0.26 per share from $0.25.

FFBC Earnings: Did Record Revenue Outweigh Higher Expenses in the Third Quarter?

First Financial Bancorp (NASDAQ:FFBC) reported results on Tuesday, October 27, with GAAP diluted EPS of $0.77, compared with $0.73 in the second quarter and $0.75 a year earlier. Adjusted EPS was $0.84, up 11% from a year ago on the company's adjusted basis, against a screen estimate of $0.83. Net income was $81.2 million, and adjusted net income was $87.8 million.

Total revenue was a record $273.9 million for a third quarter. Return on average assets was 1.44% on a GAAP basis and 1.56% adjusted, while adjusted return on tangible common equity was 20.2%.

Nine-month diluted EPS was $2.21, against $2.02 a year earlier.

FFBC Margin and Fees: What Lifted Net Interest Income 22.3%?

Net interest income was $196.3 million, up 22.3% from a year ago and 3.1% from the second quarter. The net interest margin was 4.05%, up 9 basis points sequentially, as asset yields rose 13 basis points and funding costs rose 4 basis points. The loan yield improved to 6.57% from 6.45%.

Adjusted fee income reached a record $77.6 million, or 28% of revenue. Wealth management fees rose 24.3% to $9.1 million, foreign exchange income rose 4.9% to $17.5 million and leasing business income rose 9.4% to $23.0 million.

GAAP noninterest expense was $165.7 million, up 2.6% from the second quarter. The company cited incentive pay tied to record revenue, and the GAAP efficiency ratio was 60.5%, or 57.3% adjusted. Management expects expenses to moderate in the fourth quarter.

FFBC Credit Quality: Why Did Classified Assets Rise to 1.26% of Assets?

Total loans were $13.9 billion, up 18.7% from a year earlier and 4.9% annualized from the second quarter. Management expects low-to-mid single-digit loan growth for the rest of 2026.

The provision for loans was $9.0 million, down from $12.9 million in the second quarter. Net charge-offs were $7.2 million, or 0.21% annualized, and nonaccrual loans were 0.72% of loans. The allowance was $191.7 million, or 1.38% of loans, covering 191% of nonaccruals.

Classified assets rose to $281.4 million, or 1.26% of assets, from 1.01%, mainly on the downgrade of one investor commercial real estate relationship. Management expects the workout to resolve over the next few quarters.

FFBC Capital and Finward: What Should Be Watched Into Year End?

Total deposits were $17.7 billion, up 22.6% from a year earlier. Common equity tier 1 capital was 12.54% and total capital was 15.83%, both preliminary. Tangible book value per share fell 5.9% to $15.65 as accumulated other comprehensive loss widened to $387 million from $224 million, reflecting higher rates late in the quarter. No shares were repurchased in the first nine months.

The dividend was raised to $0.26 per share, payable December 15 to holders of record on December 1. Federal approval for the acquisition of Finward Bancorp (NASDAQ:FNWD) has been received, and the registration statement became effective on September 28. Closing is targeted for January 1, 2027, pending state approval and a Finward shareholder vote.

A conference call was scheduled for Wednesday, October 28. Investors will look for fourth-quarter expense trends and the closing of Finward.