FFBC Q3 Deep Dive: Revenue Growth and Efficiency Gains Set Stage for Acquisitions

Regional banking company First Financial Bancorp (NASDAQ:FFBC) reported Q3 CY2025 results topping the market’s revenue expectations, with sales up 16.9% year on year to $235.3 million. Its non-GAAP profit of $0.76 per share was 1.3% above analysts’ consensus estimates.

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StockStory’s Take

First Financial Bancorp delivered a solid Q3, with management attributing performance to record noninterest income and a resilient net interest margin. CEO Archie Brown pointed to the bank’s ability to maintain asset yields while managing funding costs, as well as the contribution from diverse income streams like leasing and foreign exchange. The quarter also benefited from ongoing workforce efficiency initiatives, which have reduced full-time equivalents by 9% over the past two years. Loan balances declined modestly due to lower production in specialty businesses and the timing of construction originations, but deposit balances increased, driven by brokered certificates of deposit and money markets.

Looking ahead, management anticipates renewed loan growth and further deposit inflows, supported by the integration of upcoming acquisitions. Brown stated the company expects mid-single-digit loan growth for the rest of the year, with commercial lending and Summit funding highlighted as key drivers. Fee income is projected to remain strong, particularly in the foreign exchange and leasing businesses, while efficiency gains from the Westfield and BankFinancial acquisitions are expected to materialize primarily in 2026. The company is also preparing for potential interest rate cuts, which could impact net interest margin but may be partially offset by the addition of newly acquired business lines.

Key Insights from Management’s Remarks

Management credited Q3 results to robust noninterest income, ongoing expense control, and steady asset quality, while noting that loan growth lagged expectations due to specialty and construction lending dynamics.

• Record noninterest income: Fee income reached new highs, led by outperformance in leasing and foreign exchange services, along with increased syndication fees and investment banking activity.
• Expense discipline: Ongoing workforce efficiency initiatives yielded a 9% reduction in full-time equivalents over two years, helping to keep core expenses flat outside of performance-based incentives.
• Loan growth slowdown: Loan balances declined slightly, attributed to slower specialty lending and delayed construction funding, though management noted healthy pipelines entering the next quarter.
• Deposit mix shift: The bank grew average deposit balances by $157 million, primarily through brokered CDs and money markets, offsetting seasonal declines in public funds and maintaining a 21% noninterest-bearing deposit ratio.
• Stable asset quality: Nonperforming assets and net charge-offs remained flat or improved modestly, with management citing conservative portfolio management and no adverse ratings in key loan segments, including the NDFI (non-depository financial institution) portfolio.

Drivers of Future Performance

Management’s outlook centers on accelerating loan growth, integration of recent acquisitions, and navigating potential interest rate cuts while maintaining expense discipline.

• Acquisition integration and cost synergies: The upcoming Westfield and BankFinancial acquisitions are expected to expand market reach, provide new sources of low-cost deposits, and yield significant cost reductions as efficiency programs are applied to the acquired banks. Management projects the majority of these savings will be realized from mid-2026.
• Commercial lending and specialty businesses: Renewed loan growth is expected to be led by commercial lending and Summit’s peak production period, with some offset from anticipated payoff pressure in the Oak Street Group. Management is targeting mid-single-digit annualized loan growth to close out the year.
• Interest rate sensitivity: The bank is preparing for possible rate cuts, which could pressure net interest margin by approximately 5 basis points per 25-basis-point cut, but expects the impact to be mitigated by the addition of Westfield’s portfolio and ongoing management of deposit costs.

Catalysts in Upcoming Quarters

Our team will be monitoring (1) the pace and success of integrating Westfield and BankFinancial, including realization of projected cost savings; (2) sustained momentum in noninterest income, especially in foreign exchange and leasing; and (3) evidence of renewed loan growth, particularly in commercial lending. The impact of interest rate changes and management’s ability to control funding costs will also be important signposts for future performance.

First Financial Bancorp currently trades at $24.09, in line with $24.29 just before the earnings. Is there an opportunity in the stock?See for yourself in our full research report (it’s free for active Edge members).

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