First Financial Bancorp reports Q3 adjusted EPS 67c, consensus 67c

Reports net interest margin on FTE basis of 4.33%; 15 bps decrease from linked quarter. Archie Brown, President and CEO, commented on the quarter, “Overall, I am pleased with our third quarter performance. Strong net interest income and robust fee income led to a 13% increase in net income from the third quarter of 2022. Adjusted return on assets was 1.49% and adjusted return on average tangible common equity was 23.8%. As expected, higher deposit costs led to a slight reduction in earnings on a linked quarter basis. Even so, our net interest margin was 4.33% for the quarter, which was at the high end of our expectations.” Brown continued, “Loan growth was in line with expectations for the period, led by growth in the Leasing and Mortgage portfolios. We expect moderate loan growth over the remainder of the year. Deposit balances were stable during the quarter. While the change in mix from non-interest bearing to CDs and Money Market accounts continued, we experienced slight growth in total balances and our loan to deposit ratio remained flat at 82%. Our fee income continued to exceed expectations this quarter, with strong performance from wealth management, equipment leasing, Bannockburn, and mortgage banking.” Brown commented on asset quality, “Credit trends were mixed during the period, and we experienced elevated net charge-offs. During the third quarter we elected to sell approximately $32 million in commercial real estate loans and incurred a $6.1 million loss on the sale. We also recorded a $6.9 million loss on a large C&I loan that was negatively impacted during Covid and has been unable to rebound in the period since. Additionally, nonaccrual loan balances increased during the period due to the downgrade of one office loan whose major tenant vacated the space during the quarter. Classified Assets remain low and we expect provision expense to to be fairly stable in the fourth quarter.” Brown concluded, “We remain pleased with our high net interest margin, favorable fee income trends and robust earnings. During the quarter, our regulatory capital levels strengthened, and our strong earnings helped to maintain the tangible common equity ratio despite the negative impact to AOCI from the increase in market rates. We are encouraged by our performance in 2023 and we believe we are well positioned to navigate the current economic environment and continue to deliver strong results.”