First Financial Bank Q1 2026 Earnings Call - Robust NIM and Acquisition Integration Drive 22% EPS Growth

Kate, Conference Operator: Thank you for standing by. My name is Kate, and I will be your conference operator today. At this time, I would like to welcome everyone to the First Financial Bank first quarter 2026 earnings conference call and webcast. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to Scott Crawley, Corporate Controller. Please go ahead.

Scott Crawley, Corporate Controller, First Financial Bank: Thanks, Kate. Morning, everyone. Thank you for joining us on today’s conference call to discuss First Financial Bank’s first quarter financial results. Participating on today’s call will be Archie M. Brown, President and Chief Executive Officer, James Anderson, Chief Financial Officer, and Bill Harrod, Chief Credit Officer. Both the press release we issued yesterday and the accompanying slide presentation are available on our website at www.bankatfirst.com under the investor relations section. We’ll make reference to the slides contained in the accompanying presentation during today’s call. Additionally, please refer to the forward-looking statement disclosure contained in the first quarter 2026 earnings release, as well as our SEC filings for a full discussion of the company’s risk factors. The information we’ll provide today is accurate as of March 31st 2026, and we will not be updating any forward-looking statements to reflect facts or circumstances after this call.

I’ll now turn the call over to Archie Brown.

Archie M. Brown, President and Chief Executive Officer, First Financial Bank: Thanks, Scott. Good morning, everyone, and thank you for joining us on today’s call. Yesterday afternoon, we announced our first quarter results, and I’m very pleased with our overall performance. The first quarter was a busy one as we closed the Bank Financial acquisition, completed the conversion of Westfield Bank, and wrapped up the sale of the Bank Financial multifamily loan portfolio. Adjusted earnings per share were $0.77, with an adjusted return on assets of 1.45% and an adjusted return on tangible common equity of 19.2%. Adjusted earnings per share increased 22% compared to the first quarter of last year, driven by a robust net interest margin and strong fee income. Our net interest margin was resilient despite the Fed funds rate cut in December, as the expected decline in loan yields was offset by a similar decline in deposit costs.

Assuming no short-term rate reductions by the Fed, we expect the margin to remain stable in the near term. Loan balances increased slightly for the quarter due to the Bank Financial acquisition. Excluding the Bank Financial portfolio, loans declined for the quarter as seasonally strong loan production was offset by extended payoff pressure in the ICRE portfolio. Compared to the first quarter of 2025, originations increased approximately 45%, and excluding Westfield Bank and Bank Financial, originations were up by over 25%. Our expectation for loan growth for 2026 has not materially changed. Loan pipelines are very healthy, and we expect strong production in the second quarter. We also expect payoff activity in ICRE to approach more normal levels, leading to solid loan growth in the second quarter. Adjusted fee income was strong for the quarter. Historically, fee income significantly dips early in the year.

However, we successfully combated this trend in the first quarter. Adjusted non-interest income was $75.6 million, which was 24% higher than in the first quarter of 2025 and only a slight decline from the linked quarter. These results were driven by record wealth management income, strong client derivative income, and record leasing business income. Additionally, expenses were well controlled during the quarter, with total non-interest expenses coming in well below our expectations and acquisition-related cost savings exceeding our initial estimates. Net charge-offs were 35 basis points of total loans and were impacted by one large commercial relationship. Other asset quality indicators were stable, with non-performing assets slightly declining from the linked quarter to 44 basis points.

While there is certainly more uncertainty in the economy due to the impact of the war in Iran, our current expectations are for asset quality to gradually improve throughout the year, similar to our performance in 2025. Capital ratios are strong and continued to climb in the first quarter. All regulatory ratios were well in excess of regulatory minimums, and the tangible common equity increased to 7.9%. Tangible book value per share was $16.15, which was a 2.6% increase over the linked quarter and a 9% increase compared to the first quarter of 2025. Tangible book value was at approximately the same level as the third quarter of 2025, just prior to the Westfield Bank acquisition.

This month, the board of directors authorized a 5 million share repurchase plan, replacing the plan we had in place through 2025, and we are evaluating opportunities to employ buybacks as part of our overall capital planning. I’d like to take a minute and discuss our recent acquisitions. During the quarter, we successfully completed the conversion of Westfield Bank. For the quarter, Westfield deposit and loan balances were stable. We maintained high associate retention, and we have achieved the financial results that we expected from the transaction to date. We’re happy with the quality of the bank we acquired and with the talented team that has joined us. We also completed the purchase of Bank Financial on January 1st and plan to convert systems in early June. We remain excited about the opportunities in the Chicago market and continue to see growth potential from this transaction.

Now I’ll turn the call over to Jamie to discuss these results in greater detail, and after Jamie, I’ll wrap up with some additional forward-looking commentary and closing remarks.

Scott Crawley, Corporate Controller, First Financial Bank: Thank you, Archie, and good morning, everyone. Slides four, five, and six provide a summary of our most recent financial performance.

James Anderson, Chief Financial Officer, First Financial Bank: The first quarter results were excellent and included strong earnings, record revenues driven by a robust net interest margin, and higher than expected fee income. Our net interest margin remains very strong at 3.99%, increasing 1 basis point during the quarter. Cost of funds declined 13 basis points while asset yields declined 12 basis points. End-of-period loan balances increased $71 million, which included $228 million acquired in the Bank Financial transaction. This was partially offset by a $152 million decrease in ICRE balances, reflecting the payoff pressure that Archie mentioned earlier. Total average deposit balances increased $1.7 billion, including $1.2 billion acquired in the Bank Financial transaction and the full quarter impact from Westfield. We maintained 20% of our total deposit balances in non-interest-bearing accounts and remain focused on growing lower cost deposit balances. Turning to the income statement.

First quarter fee income overcame seasonal headwinds with strong performance across all income types. Additionally, we had an $8.9 million gain on bargain purchase related to the Bank Financial acquisition. Non-interest expenses increased from the linked quarter, due primarily to the impact of our most recent acquisitions. Our ACL coverage decreased slightly during the quarter to 1.36% of total loans, and we recorded $8.5 million of provision expense during the period, which was driven primarily by net charge-offs. On asset quality, net charge-offs were 35 basis points on an annualized basis, an increase of 8 basis points from the fourth quarter, while NPAs as a percentage of assets were 44 basis points, declining 4 basis points from the fourth quarter. Classified assets as a percentage of total assets also declined slightly during the period. From a capital standpoint, our ratios are in excess of both internal and regulatory targets.

Tangible book value increased $0.41 to $16.15, while our tangible common equity ratio increased to 7.88%. Slide 8 reconciles our GAAP earnings to adjusted earnings, highlighting items that we believe are important to understanding our quarterly performance. Adjusted net income was $80.5 million, or $0.77 per share for the quarter. Non-interest income was adjusted for $1.3 million of losses on the sales of investment securities, the $8.9 million gain on bargain purchase related to the Bank Financial acquisition, and a $1.4 million loss on the surrender of a bank-owned life insurance policy. Non-interest expense adjustments exclude the impact of acquisition costs, tax credit investment write-downs, and other expenses not expected to recur. As depicted on Slide 9, these adjusted earnings equate to a return on average assets of 1.45%, a return on average tangible common equity of 19%, and a pre-tax, pre-provision ROA of 1.99%.

Turning to slides 10 and 11. Net interest margin increased one basis point from the linked quarter to 3.99%. Total deposit costs declined 13 basis points from the linked quarter, offsetting the impact of lower asset yields. Slide 13 illustrates our current loan mix and balance changes compared to the linked quarter. Loan balances increased $71 million during the period. As you can see on the right, we acquired $228 million of loans in the Bank Financial transaction. This was offset by a $152 million decrease in ICRE balances. Absent the acquisition, loan balances decreased 4.7% on an annualized basis, driven by elevated payoffs in ICRE. Slide 15 depicts our MDI exposure. As you can see, our total MDI balances are approximately 3% of our total loan book, and all MDI loans were pass rated at the end of the first quarter.

The majority of our MDI lending is concentrated in loans to REITs, which we believe further mitigates our risk. Slide 16 shows our deposit mix, as well as the progression of average deposits from the linked quarter. In total, average deposit balances increased $1.7 billion, including a $1.2 billion impact from the Bank Financial transaction, as well as a full quarter impact from Westfield. Slide 18 highlights our non-interest income. Total adjusted fee income was $76 million, with leasing and wealth management both posting record results. Foreign exchange delivered strong results, and client derivative fees increased during the period as well. Non-interest expense for the quarter is outlined on slide 19. Core expenses increased $12.9 million as expected during the period. This was driven primarily by our recent acquisitions. Turning now to slides 20 and 21.

Our ACL model resulted in a total allowance, which includes both funded and unfunded reserves of $207 million, which includes $3.1 million of initial allowance on the Bank Financial portfolio. This resulted in an ACL that was 1.36% of total loans, which was a 3 basis points decline from the fourth quarter. We recorded $8.5 million of provision expense during the period. Provision expense was primarily driven by net charge-offs, which were 35 basis points. Additionally, our NPAs to total assets decreased slightly to 44 basis points, while classified asset balances as a percentage of total assets decreased to 1.02%. Finally, as shown on slides 22 and 23, capital ratios remain in excess of regulatory minimums and internal targets. During the first quarter, tangible book value increased to $16.15, while the TCE ratio increased to 7.88% at the end of the period.

Our total shareholder return remained strong, with 35% of our first quarter earnings returned to our shareholders during the period through the common dividend. The board also approved a 5 million share repurchase program. We maintain our commitment to providing an attractive return to our shareholders and will evaluate capital actions that support that commitment. I’ll now turn it back over to Archie for some comments on our outlook. Archie?

Archie M. Brown, President and Chief Executive Officer, First Financial Bank: Thank you, Jamie. Before we conclude our prepared remarks, I want to comment on our second quarter outlook, which can be found on slide 24. On the balance sheet, we expect mid-single digit loan growth on an annualized basis during the second quarter as loans filter through our strong pipelines and ICRE payoffs slow. On the deposit side, we expect core deposit balances to remain relatively flat compared to the first quarter. Our net interest margin remains among the highest in the peer group, and we expect it to hold steady in a 3.99%-4.04% range over the next quarter, assuming no rate cuts. Related to credit, we expect second quarter credit costs to approximate first quarter levels and ACL coverage to remain relatively stable as a percentage of loans.

As I mentioned earlier, similar to last year, we expect credit trends to gradually improve over the course of the year. Further down the income statement, we expect fee income to be between $75-$77 million, which includes $14-$16 million for foreign exchange and $20-$22 million for leasing business revenue. Non-interest expenses are expected to be between $151-$154 million. We successfully completed the Westfield conversion in March and are scheduled to convert Bank Financial over the summer. We’re on pace to achieve our modeled cost savings in the Westfield acquisition and should realize full savings beginning in the third quarter, and we expect full Bank Financial savings to be realized beginning in the fourth quarter.

Before I wrap up, I want to thank our associates for the incredible work they’ve done this year integrating Westfield into First Financial and the work they’re now doing as they prepare for the Bank Financial conversion. I also want to mention how proud I am that First Financial was selected for the Gallup Exceptional Workplace Award for Associate Engagement. This marks the second consecutive year that we have received this honor, which is awarded to 4% of the thousands of companies that Gallup works with worldwide. We have partnered with Gallup for more than six years, and we’ve made associate engagement a core tenet of our corporate strategy. I want to commend our associates and leaders who work throughout the year to drive engagement, knowing that by doing so, we’re also improving the client experience and shareholder value. To conclude, we’re really happy with our first quarter results.

We’ve made substantial progress across the company, and we’ve worked diligently to be a bank that consistently produces top-level results. We remain focused on the right things and are determined to build on the momentum generated by our first quarter performance. We’ve had a very strong start to 2026, and we believe that this is going to be another very successful year for First Financial. Kate will now open up the call for questions.

Kate, Conference Operator: At this time, I would like to remind everyone in order to ask a question, press star then the number one on your telephone keypad. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Daniel Tamayo with Raymond James. Your line is open.

Daniel Tamayo, Analyst, Raymond James: Thank you. Good morning, Archie and Jamie.

Archie M. Brown, President and Chief Executive Officer, First Financial Bank: Good morning, Daniel.

Daniel Tamayo, Analyst, Raymond James: I guess maybe first starting on the loan growth side. You talked about the impact from the payoffs in the first quarter. $152 million, I think is the number you gave. We talked to a lot of banks this earnings season about this headwind and kind of what’s going to change to remove that headwind going forward. Just curious on your thoughts on that. What drives your confidence those headwinds on the pay down side slow, and just a little bit more timing, if it’s second quarter or you think it’s back half of the year as it relates to the timing of the pay downs. Thanks.

Archie M. Brown, President and Chief Executive Officer, First Financial Bank: Yeah. Thanks, Danny. Maybe start with some color, then I’ll come back to kind of how we see our outlook on it. We talked about this primarily being ICRE. We don’t show REITs in the ICRE totals, but we also had some REIT pay downs or exits, if you will, and that shows up more in our commercial line. That was probably another $23 million, but it’s all related in the commercial real estate space, if you will. Look, it’s been a mix. We probably saw about 30% of our ICRE balances were exited because the properties were sold. There’s been, I think, a little more volume of sales occurring as some of the developers/owners are saying, "Look, I’m getting good pricing. It’s a good time to do it with the uncertainty." That’s a piece of it.

We’ve seen about maybe close to a quarter of it go to the secondary market, and then we’ve seen other banks come back in. For several years, we weren’t seeing the larger regionals in the space. They’re back in and they’re aggressive. They’re taking out loans. In some cases for us, hotels, we don’t have a big book, but that’s where some of it’s come from. Other cases, loans that they’re taking, and they’re taking for very aggressive pricing or in some cases, structures that we don’t think is appropriate. We’re seeing some of it move like that. If you said property sales, secondary market, larger banks coming back in, and then some REIT exits, that’s sort of been the mix of what we’ve seen happen.

We’ve talked to our commercial real estate team, just what we’re seeing and in their conversation with borrowers and just with the level of payoff requests coming in, they just are slowing. What our team sees is that over the course of the second quarter, that will continue to slow. In addition, our production ramps up more in the quarter. It’s a combination of the two. We don’t know exactly where this is going to fall, of course. There’s timing of payoffs, things that can occur, but they’re hopeful that they’re going to be somewhere that portfolio around flattish for the quarter. If they’re flattish, along with the other activity we have, I think that drives our growth overall.

Daniel Tamayo, Analyst, Raymond James: That’s great. Very helpful detail there, Archie. I guess the other side of that, and you touched on it at the end, is the production. I think you talked a little bit about it in the prepared remarks, but maybe talk about the pipeline and some of the drivers within that, particularly on the commercial side for the rest of the year.

Archie M. Brown, President and Chief Executive Officer, First Financial Bank: Sure. Yeah, the pipeline, I think we signaled is pretty strong. Now look, I guess everybody can define what a pipeline means. In the language we’re using here, we call these advanced stage pipeline or a late-stage pipeline. Generally, this is where we’ve been awarded the business. That doesn’t mean we’ll close them all. Sometimes they’ll fall out for different reasons. That’s how we’re looking at this. It’s up substantially from the early part of the year. We think that activity is continuing. The sentiment in the market, I know there’s a lot of macro activity going on, but demand is pretty strong. Borrowers are pretty active, and we think the pipeline will continue to build. That’s given us some confidence that we’ll see the growth we’ve talked about. It’s pretty much across the board.

When you look at all of the areas that we lend into, we’re seeing good pipeline activity.

Daniel Tamayo, Analyst, Raymond James: Okay, great. Lastly, again, on the same topic, but just curious where you guys stand. In Chicago right now, you closed the Bank Financial deal. It was really for the deposit side. I know you had some presence there prior to the deal. Maybe update us on where you stand from a lender perspective and where you’re looking to get to over time.

Archie M. Brown, President and Chief Executive Officer, First Financial Bank: Sure. Daniel, as you said, we closed early in the year, conversion early June. As you said, it’s been primarily a deposit play. Deposits are holding, I think, pretty well at this point. We’re sort of building out the team, if you will. We’ve added some commercial banking talent. We had a team. I think we’ve added one here in the last month or two. We plan to add more bankers to the commercial banking team. We’ve added wealth advisors to the team, private bankers to the team. We’re kind of filling out, if you will, what I call more the wholesale commercial team to complement the retail strategy. We think there’s good opportunity. If you go back and look at that bank, they really weren’t generating activity in those areas to speak of.

We think as we get the team filled out, almost anything we do there is going to be additive to the bank’s balance sheet.

Daniel Tamayo, Analyst, Raymond James: Got it. Thanks for all the color, Archie.

Archie M. Brown, President and Chief Executive Officer, First Financial Bank: Yeah. Good seeing you, Danny.

Kate, Conference Operator: Your next question comes from the line of Brandon Grote with Stephens. Your line is open.

Brandon Grote, Analyst, Stephens: Morning, guys.

Archie M. Brown, President and Chief Executive Officer, First Financial Bank: Good morning.

Brandon Grote, Analyst, Stephens: I guess maybe my first one, I think the cost of interest-bearing deposits was 233 for the full quarter. I’m just curious, embedded within your NIM guide, is that kind of a good starting base for the second quarter, or I guess, yeah. Is that still a good starting point for the second quarter?

Archie M. Brown, President and Chief Executive Officer, First Financial Bank: Yeah. When we’re talking deposits, Brendan, we really talk more kind of our overall cost of deposits. That number that you’re quoting there, I guess the exit cost going into the second quarter would be slightly lower than that. We’re showing our overall cost of deposits in the first quarter was 183, and we think we can get that down in the second quarter another 2 or 3 basis points. The cost of interest-bearing deposits would just kind of flow right off of that as well, obviously. Our starting kind of cost of deposits in the second quarter, again, 183 for the full quarter. In the first quarter, the starting point is around 180, 181.

Brandon Grote, Analyst, Stephens: Okay, perfect. Thank you for that.

I think you said the fourth quarter of this year, I think is going to be the first clean quarter with all the expenses taken out. Thank you for the guide for the second quarter. I’m assuming kind of stairsteps down from there. I guess, what does that all-in run rate with all the cost saves kind of look like in the fourth quarter then?

James Anderson, Chief Financial Officer, First Financial Bank: Yeah. We’ll get a stairstep down here. In the second quarter, call it, down into that range where we guided to. We think then it is relatively flat for the remainder of the year. We may get a little bit more coming down, but obviously we have some other stuff outside of the acquisitions where we’re making other investments and whatnot, where costs are moving up, just like normal in that 2 or 3% range. That’s going to offset the decline really from the Bank Financial deal. The Bank Financial deal obviously was a little bit smaller in their expense base. The fourth quarter, we should see that step down in the second quarter, which gets us to that guide that we put in the outlook. Then it’s relatively flat for the out quarters.

Brandon Grote, Analyst, Stephens: Got you. Okay. The cost savings effectively fund the investments, and that’s the stable rate.

James Anderson, Chief Financial Officer, First Financial Bank: Correct.

Okay. Got it. Thank you very much.

Yes.

Kate, Conference Operator: Your next question comes from the line of Karl Shepard with RBC Capital Markets. Your line is open.

Karl Shepard, Analyst, RBC Capital Markets: Hey, good morning, guys.

James Anderson, Chief Financial Officer, First Financial Bank: Hey, Karl.

Karl Shepard, Analyst, RBC Capital Markets: I guess I just want to start on the margin quick. We have the guidance for 2Q, but just thinking about your balance sheet, I’m guessing if we don’t see any cuts, that’s probably a pretty good spot to be for the rest of the year. Or should we be thinking about loan growth maybe at changing the mix a little bit and helping the margin?

James Anderson, Chief Financial Officer, First Financial Bank: This is Jamie, Carl. That guide, obviously, with rate cuts looks like getting pushed out, and either later in the year or into 2027 at this point, obviously helps us from a margin standpoint, being slightly asset sensitive. As we remix out of some of the securities balances that we’ve put on with the liquidity that we got especially from the Bank Financial deal, you could see, and it’s not a lot, obviously, because based on the earning asset base that we have, that rotation is relatively small out of the securities book into the, if we have loan growth in that 5%-7% range, you’re talking about $200 million a quarter, right?

If we rotate out of securities for a portion or all of that, it’s not that much to basically get a lot of lift in the margin. You might see a basis point or two.

Karl Shepard, Analyst, RBC Capital Markets: Okay. I saw on the deck a new branch in the Westfield markets. I’m assuming that was planned ahead of the merger, but just, we talked a little bit about Chicago expectations and investments there a few questions ago, but anything in Westfield markets to flag?

Archie M. Brown, President and Chief Executive Officer, First Financial Bank: Yeah, Karl, this is R.T. Specific to that branch, that was actually a branch underway. When we were negotiating and announcing the deal, they already had that branch under construction. We just completed, actually, we opened it up as a First Financial branch prior to the conversion, which was, I think, a good thing from training and letting people get to introduced to First Financial. With regard to other things we’re doing in the Northeast Ohio market, I think all together, I think there’s about 4 FTE added because of Wadsworth, that branch. I think we’ve added about another 9 producers, whether they be on the commercial, small business side, wealth, private banking. We’ve added about 9 producers to that market to kind of round out all the things that we do. That’s all baked into the expense numbers as well.

We think there’s upside adding the additional production capability.

Karl Shepard, Analyst, RBC Capital Markets: Okay. Thank you both.

Archie M. Brown, President and Chief Executive Officer, First Financial Bank: Yep.

Kate, Conference Operator: Your next question comes from the line of Brian Foran with Truist. Your line is open.

Brian Foran, Analyst, Truist: Hey, good morning. Your capital’s rebuilt pretty quickly here, which is a good problem to have. In some ways, maybe it’s just an open-ended question on what you’re thinking going forward. I think you mentioned maybe evaluating more buybacks. And then as part of that, if there’s anything notable to share around Basel III or around how you’re thinking about the binding minimum between CET1 and TCE and things like that. Yeah, really just kind of focused on the excess capital and what you’re thinking for the next 12 months or so.

James Anderson, Chief Financial Officer, First Financial Bank: Yeah, Brian, this is Jamie Anderson. Yeah. We are compounding capital at a high rate just based on our earnings level. If you look back pre-Westfield and Bank Financial, maybe to a lesser extent, Bank Financial. If you look back pre-acquisition, at the end of the third quarter, and I’m talking about our tangible book value per share, we’re basically back to where we were now, pre-acquisition level. Which we were very pleased with. We are piling in at this earnings level, a lot of capital. Really, when you think about it for us, our regulatory ratios are fine. We have a lot of cushion there. Typically, our constraint when we look at an acquisition, our constraint typically is in the TCE ratio. We’re close to 8 now, just below 8. Obviously, we have some AOCI impact in there.

Then rates moved against us a little bit in the first quarter, too, or that would’ve been even a little bit higher. Our typical constraint’s the TCE ratio. We’d like to have that above 8, and we’re getting there pretty quickly. When we talk about buyback and looking at that, obviously we’re going to be mindful of price and the earn back on a buyback and looking at that TCE ratio. When we look at the common dividend, we have a payout ratio in the low 30s, call it 30%-35% now based on our earnings level post-acquisition. We wanted to get a quarter or two of impact in from the acquisitions to see where we were from a capital ratio standpoint, where everything was going to fall out. We had the board approve the share buyback.

We haven’t done any buybacks in several years, mainly because of, well, several things. We had a couple of non-bank acquisitions during that. We haven’t done a buyback since 2021. We had a couple of the non-bank acquisitions in there, which ate up a pretty significant amount of capital for us because they were basically all cash deals. All goodwill ate into the TCE ratio. We think we’re at a level now, especially with our earnings, the amount of capital we’re bringing in, where we can look at buybacks and potentially, I think what we’re looking at is, looking at that total payout ratio, again, which now with just the common dividend is in the low 30s, of increasing that somewhere in that 50%-60% range. If you do that math, obviously the other piece of that’s the buyback.

You’re talking about another 20-30 points of where the buyback would play into that. I don’t know if we’re saying we’re guaranteeing we’re going to do that. You could probably see us execute some on the buyback. It would be dependent on some other factors, potentially macro factors. If we see a strategic M&A deal, we would prioritize that in front of the buyback. Yeah, I think absent that, I think you would see us start executing on the buyback.

Brian Foran, Analyst, Truist: That’s great. Thanks for all the detail. If I could ask one follow-up. The theory pay down discussion was really helpful. I think the last point you made was seeing some pricing and structure that you don’t necessarily want to match. I wonder if, just anecdotally, if I’m at the aggressive end of the market, could you share where you’re seeing yields or spreads get to, and are there any particular points in structure that you’re seeing people give on? Is it an LTV thing? Is it a personal guarantee thing? What are the kind of things you’re seeing in the market that you don’t want to match?

Archie M. Brown, President and Chief Executive Officer, First Financial Bank: Yeah. This is Archie. We had a deal. We thought we were within days of closing. It’s like a $25 million or $30 million transaction. We thought we were in days of closing, and one of the large regionals had been competing on it. I guess when they realized they had lost it, they came back and basically eliminated the covenants. It wasn’t even changed. It just eliminated the covenants. We’re seeing that. Certainly on a fixed charge coverage ratio, those numbers may be coming down. It’s those kind of things in particular. Pricing is aggressive also. I may have mentioned earlier, but certainly sub 200 basis points of spread, 170, 180, in some cases lower. For some commercial, really high-quality commercial deals, even lower on spread. It tends to be really aggressive pricing.

James Anderson, Chief Financial Officer, First Financial Bank: Loosening up some of the coverage ratios would be probably the primary areas we’re seeing it.

Brian Foran, Analyst, Truist: All right. Hopefully it’s not through a swoop in with no covenants. Thank you for that.

Archie M. Brown, President and Chief Executive Officer, First Financial Bank: Yeah. Well, I think the point here too is, I think everybody’s excited about activity and wanting loan growth, and we want it, too, but we don’t want to give up our skis. We’re going to get growth, but we want it to make sense, and we want to be happy about it two years from now. Agreed. Thank you.

Kate, Conference Operator: Before going to the next question, again, if you would like to ask a question, press star one on your telephone keypad. Your next question comes from the line of Brendan Nosal with Holiday Group. Your line is open.

Brendan Nosal, Analyst, Holiday Group: Hey, good morning, guys. Hope you’re doing well.

James Anderson, Chief Financial Officer, First Financial Bank: Hey, Brandon.

Brendan Nosal, Analyst, Holiday Group: Maybe just starting off here on just the overall balance sheet. Looks like there’s some pretty big discrepancies between where spot balances were for kind of loans, cash, and securities versus average balances for the quarter, and I get there’s a lot of noise. I guess, can you fill us in on when the Bank Financial loan sale occurred during the quarter? And then where do you see overall average earning assets landing in the second quarter?

James Anderson, Chief Financial Officer, First Financial Bank: Yeah. Great question, Brandon. This is Jamie. The loan sale closed at the very end of the quarter. It closed on March 30. When you look at our cash and securities, we had, call it, roughly $400 million sitting in cash, not in securities. It was sitting in cash at the end of the quarter. That $400 million-ish, we will not put that to work in the securities portfolio. We will kind of slowly let higher cost either borrowings or deposits or broker deposits run out, and we’ll fund that with the cash from that loan sale. When you’re talking about earning assets, the earning asset base for the first quarter kind of spot at the end of the quarter was around $19.7 million.

If you take that 400 out, as it was sitting in cash. I guess it’s sitting in interest-bearing deposits at banks. That will come out and then you’ll start to see, again, with the loan growth that we guided to. Again, if that’s in that 5%-7% range, you’re talking about a couple of hundred, like $200 million a quarter. Our plan is to fund about half of that with cash flows from the securities portfolio. Then the rest, we will grow the earning asset base. You’re talking about maybe a $100 million or so increase in earning assets each quarter. Does that make sense?

Brendan Nosal, Analyst, Holiday Group: Yeah. Just, I guess, there’s still a bit of a discrepancy on my end of just kind of where that number will land in the second quarter, just with the moving pieces. Can you just maybe help out a little more on kind of where AEAs land?

James Anderson, Chief Financial Officer, First Financial Bank: Yeah. You’re talking around $19.5 million.

Brendan Nosal, Analyst, Holiday Group: Okay. All right. Fantastic. Thank you. Maybe turning back to the margin, just kind of unpacking the core NIM ex-accretion versus the accretion piece. I think you had 10 basis points this quarter of fair value accretion. Just kind of curious when you kind of look at the path for that, what does that number look like?

James Anderson, Chief Financial Officer, First Financial Bank: Yeah. We think that’ll be relatively steady at that 10 basis points. Obviously, it could move around if we get either a slowdown, and it’s all based on the amount of payoff/prepayments that we get on that portfolio. Somewhere around that 10 basis points range in that 4 to, and the dollars would be around that $4 million-$5 million of accretion income.

Brendan Nosal, Analyst, Holiday Group: Okay. Perfect. Last one from me here. Just when you kind of look out at growth expectations for the balance of the year, can you kind of dissect that between the core commercial bank versus your various specialty businesses?

Archie M. Brown, President and Chief Executive Officer, First Financial Bank: Yeah, this is Archie. When you say the specialty, are you meaning core versus like specialty including Summit and Oak Street, things like that?

Brendan Nosal, Analyst, Holiday Group: Yeah. When I say specialty, Oak Street, Summit, Agile, those folks versus kind of the traditional commercial bank.

Archie M. Brown, President and Chief Executive Officer, First Financial Bank: Yeah. It’s just off the top of my head, but I’d say it’s slightly tilted towards the core commercial. Agile is going to grow, but they’re going to grow, it’s just the base is not that huge and if they grow, I can’t recall now, $20-$30 million. Summit will grow, but their amortizations have picked up, so their growth rates are just not as strong as they used to be. Specialty is contributing. I would say we’re talking commercial, core commercial consumer is going to be, if you said 50%-60%, maybe 65%.

Brendan Nosal, Analyst, Holiday Group: Yeah. Okay. Excellent. Thanks.

James Anderson, Chief Financial Officer, First Financial Bank: Yeah. This is Jamie. Yeah. I would say it’s about two-thirds, one-third. Then Agile, the second quarter is their big quarter for growth.

Brendan Nosal, Analyst, Holiday Group: Yep.

James Anderson, Chief Financial Officer, First Financial Bank: Yes.

Brendan Nosal, Analyst, Holiday Group: Yep. Okay. Fantastic.

Kate, Conference Operator: I’ll now turn the call back over to Archie Brown for closing remarks.

Archie M. Brown, President and Chief Executive Officer, First Financial Bank: Thank you, Kate. I want to thank everybody for joining us today and following along our progress during the first quarter. We look forward to talking again second quarter, and hopefully we’ll be sharing even more good news with you. Have a great day. Have a great weekend. Bye now.

Kate, Conference Operator: Ladies and gentlemen, that concludes today’s call. Thank you all for joining. You may now disconnect.