First Financial Bancorp (FFBC, Financial) recently announced its first-quarter results, revealing a slight decline in net interest margin to 3.84%, down from 3.91% in the previous quarter and 4.05% in the same period last year. Despite this, the company saw a positive shift in its tangible book value per share, which increased to $14.80 from $14.15 a year ago.
The company's Tier 1 common equity improved by 13 basis points, reaching 12.29%, reflecting a robust capital position. Adjusted earnings per share stood at 63 cents, with an adjusted return on assets of 1.33% and an adjusted return on tangible common equity of 17.8%, showcasing solid financial performance.
CEO Archie Brown highlighted the stable performance in loan balances, noting that Q1 experienced lower loan production due to seasonal factors. Additionally, the quarter saw some challenges in loan growth due to the resolution of several commercial and industrial credits and accelerated payoffs in the ICRE portfolio. However, the company remains optimistic about future prospects, expecting modest growth in the second quarter fueled by healthy loan pipelines in the Consumer, C&I, and ICRE business lines, despite ongoing elevated prepayments in ICRE.
Currently, the short-term interest rate environment suggests potential expansion for the company's net interest margin in upcoming quarters, despite the recent decline attributed to loan yields decreasing faster than deposit costs.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 4 analysts, the average target price for First Financial Bancorp (FFBC, Financial) is $31.25 with a high estimate of $33.00 and a low estimate of $30.00. The average target implies an upside of 30.21% from the current price of $24.00. More detailed estimate data can be found on the First Financial Bancorp (FFBC) Forecast page.
Based on the consensus recommendation from 5 brokerage firms, First Financial Bancorp's (FFBC, Financial) average brokerage recommendation is currently 2.6, indicating "Hold" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for First Financial Bancorp (FFBC, Financial) in one year is $27.56, suggesting a upside of 14.83% from the current price of $24. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the First Financial Bancorp (FFBC) Summary page.
FFBC Key Business Developments
Release Date: January 24, 2025
- Adjusted Earnings Per Share: $0.71
- Return on Assets: 1.7%
- Return on Tangible Common Equity: 19.9%
- Net Interest Margin: 3.94%
- Loan Growth: Exceeded 7% on an annualized basis
- Total Deposits Growth: Approximately 16% on an annualized basis
- Noninterest Income: Increased by more than 13% to $241.8 million
- Total Revenue: Approximately $154 million, a 2% increase over 2023
- Total Loans: Increased by 7.6% to $11.8 billion
- Total Deposits: Increased by 7.2% to $14.3 billion
- Tangible Common Equity: Increased by 56 basis points to 7.73%
- Tangible Book Value Per Share: Increased from $12.38 to $14.15, a 14% increase
- Nonperforming Assets: Flat at 0.36%
- Classified Assets: Increased by 7 basis points to 1.21%
- Net Charge Offs: 40 basis points on an annualized basis
- ACL Coverage: Decreased 4 basis points to 1.33% of total loans
- Provision Expense: $9.4 million
- Capital Ratios: Tangible book value at $14.15; Tangible common equity ratio at 7.7%
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Adjusted earnings per share were strong at $0.71, with a return on assets of 1.7% and return on tangible common equity of 19.9%.
- Loan growth exceeded expectations, with a 7% annualized increase, and total deposits surged by approximately 16% on an annualized basis.
- Noninterest income was robust, with significant increases in leasing, foreign exchange, and wealth management income.
- The company achieved record revenue of approximately $154 million, a 2% increase over 2023.
- Asset quality remained stable, with nonperforming assets flat at 0.36% and net charge-offs slightly elevated but expected to improve.
Negative Points
- Net interest margin declined from 4.4% to 3.94% due to decreases in short-term rates.
- Expenses increased by 5% from the linked quarter, driven by higher incentive compensation.
- Classified assets increased by 7 basis points to 1.21%, primarily due to a terminated foreign exchange trade.
- Provision expense was $9.4 million, driven by loan growth and net charge-offs.
- The company anticipates some seasonal deposit outflows in the first quarter of 2025, potentially impacting deposit balances.
