First Financial Bank Q4 2025 First Financial Bancorp Earnings Call | AllMind AI Earnings | AllMind AI
Q4 2025 First Financial Bancorp Earnings Call
Speaker #1: Thank you for standing by. My name is Jill, and I will be your conference operator today. At this time, I would like to welcome everyone to the First Financial Bancorp fourth quarter 2020 Earnings Conference Call and webcast.
Speaker #1: 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.
Speaker #1: If you would like to ask a question during this time , simply press star , followed by the number one on your telephone keypad .
Speaker #1: If you would like to withdraw your question, simply press star one again. I would now like to turn the conference over to the Corporate Controller, Scott Crawley.
Jamie Anderson: Thanks, JL. Good morning, everyone, and thank you for joining us on today's conference call to discuss First Financial Bancorp's fourth quarter and full year financial results. Participating on today's call will be Archie Brown, President and Chief Executive Officer, Jamie 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 statements disclosure contained in the fourth quarter 2025 earnings release, as well as our SEC filings for a full discussion of the company's risk factors.
Scott Crawley: Thanks, JL. Good morning, everyone, and thank you for joining us on today's conference call to discuss First Financial Bancorp's fourth quarter and full year financial results. Participating on today's call will be Archie Brown, President and Chief Executive Officer, Jamie 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 statements disclosure contained in the fourth quarter 2025 earnings release, as well as our SEC filings for a full discussion of the company's risk factors.
Speaker #1: You may begin .
Speaker #2: Thanks, JL. Good morning, everyone, and thank you for joining us on today's conference call to discuss the fourth quarter and full year financial results for First Financial Bancorp.
Speaker #2: Participating on today’s call will be Archie Brown, Officer, Executive President Anderson, Financial Chief and Chief Officer, and Bill Chief Herrod, Credit Officer.
Speaker #2: press Both the release we yesterday and the Jamie accompanying issued presentation are slide website at available on our under the Investor Relations WW section .
Speaker #2: make We'll reference to the contained in the during today's accompanying call slides . Additionally , please the forward refer to disclosure statements fourth quarter contained in the 2020 earnings release , as well as our SEC filings .
Jamie Anderson: The information we provide today is accurate as of 31 December 2025, and we will not be updating any forward-looking statements to reflect facts or circumstances after this call. I'll now turn it over to Archie Brown.
The information we provide today is accurate as of 31 December 2025, and we will not be updating any forward-looking statements to reflect facts or circumstances after this call. I'll now turn it over to Archie Brown.
Speaker #2: company's discussion of the risk For a factors . The provide today is information we accurate as of December 31st , 2025 , and we updating any will not be looking reflect now turn it forward after this statements to circumstances call .
Archie Brown: Thanks, Scott. Good morning, everyone, and thank you for joining us on today's call. Yesterday afternoon, we announced our fourth quarter and full year financial results. I'm very pleased with our record earnings performance for the quarter. Adjusted earnings per share were $0.80, leading to an adjusted return on assets of 1.52% and an adjusted return on tangible common equity of 20.3%. The net interest margin, which declined slightly from the third quarter, has proven resilient as reduction in funding costs negated most of the impact of short-term rate reductions by the Federal Reserve. Balance sheet trends were solid for the quarter, with loan growth of 4% on an annualized basis, total average deposits increasing by approximately 7% on an annualized basis, excluding the impact from the Westfield acquisition.
Archie Brown: Thanks, Scott. Good morning, everyone, and thank you for joining us on today's call. Yesterday afternoon, we announced our fourth quarter and full year financial results. I'm very pleased with our record earnings performance for the quarter. Adjusted earnings per share were $0.80, leading to an adjusted return on assets of 1.52% and an adjusted return on tangible common equity of 20.3%. The net interest margin, which declined slightly from the third quarter, has proven resilient as reduction in funding costs negated most of the impact of short-term rate reductions by the Federal Reserve. Balance sheet trends were solid for the quarter, with loan growth of 4% on an annualized basis, total average deposits increasing by approximately 7% on an annualized basis, excluding the impact from the Westfield acquisition.
Speaker #2: . I'll over to Archie Brown Scott . facts or , everyone , joining us today's on call and thank you for Yesterday afternoon .
Speaker #2: our fourth quarter and full year financial results . I'm very pleased with our record earnings performance for the quarter Adjusted earnings per . share were $0.80 , leading to an adjusted return on assets of and an 1.52% return on adjusted tangible common equity of 20.3% .
Speaker #2: The net interest margin , which declined slightly from the third quarter , has proven resilient as a reduction in funding costs negated most of the impact of short term rate reductions Federal Reserve balance sheet .
Speaker #2: Trends were solid for the quarter , with long growth of 4% on an annualized basis average . Total increasing by deposits 7% on an approximately annualized basis , excluding the from the Westfield acquisition .
Archie Brown: I'm especially pleased with our robust non-interest income for the quarter. Total adjusted fee income was $77 million and increased 5% compared to the linked quarter. Wealth management and foreign exchange income both increased by double-digit percentages, while leasing and mortgage income also remained strong. While adjusted non-interest expenses increased by 6% from the linked quarter, most of the increase was driven by the Westfield acquisition. Asset quality was relatively stable for the quarter, and provision expense was in line with our expectations at $10.1 million. Non-performing assets increased slightly to 0.48% of assets, and classified assets declined slightly to 1.11% of assets. Three loans drove the increase in NPAs, while net charge-offs were 27 basis points, which was within our range of expectations.
I'm especially pleased with our robust non-interest income for the quarter. Total adjusted fee income was $77 million and increased 5% compared to the linked quarter. Wealth management and foreign exchange income both increased by double-digit percentages, while leasing and mortgage income also remained strong. While adjusted non-interest expenses increased by 6% from the linked quarter, most of the increase was driven by the Westfield acquisition. Asset quality was relatively stable for the quarter, and provision expense was in line with our expectations at $10.1 million. Non-performing assets increased slightly to 0.48% of assets, and classified assets declined slightly to 1.11% of assets. Three loans drove the increase in NPAs, while net charge-offs were 27 basis points, which was within our range of expectations.
Speaker #2: I'm especially pleased with our robust income for the noninterest quarter. Total adjusted fee income was $77 million and increased 5% compared to the linked quarter.
Speaker #2: Wealth management and foreign exchange income both increased by double digit percentages , while leasing and mortgage income also remained strong . While adjusted non-interest expenses increased by 6% from the linked quarter .
Speaker #2: Most of the increase was driven by the Westfield acquisition . Asset quality was relatively stable for the quarter , and provision in line with our expectations .
Speaker #2: Most of the increase was driven by the Westfield acquisition . Asset quality was relatively stable for the quarter , and provision in line with expense was At $10.1 million .
Speaker #2: Non-performing assets increased slightly to and 0.48% of assets classified declined assets slightly to 1.11% of assets . Three loans drove the increase in NPAs , while net charge offs were 27 basis points , which was within our range of expectations Turning to the full .
Archie Brown: Turning to the full year, 2025 was another great year for First Financial. On an adjusted basis, our net income was $281 million or $2.92 per share. Adjusted return on assets was 1.49%, and adjusted return on tangible common equity was 19.3%. We are pleased with the performance of the net interest margin for the full year. While the margin did decline year over year from 4.05% to 3.98%, we were able to offset most of the impact of short-term rate decreases through the diligent management of deposit costs. Adjusted non-interest income increased by 16% to a record $280 million, led by growth in wealth management, foreign exchange, and mortgage income.
Turning to the full year, 2025 was another great year for First Financial. On an adjusted basis, our net income was $281 million or $2.92 per share. Adjusted return on assets was 1.49%, and adjusted return on tangible common equity was 19.3%. We are pleased with the performance of the net interest margin for the full year. While the margin did decline year over year from 4.05% to 3.98%, we were able to offset most of the impact of short-term rate decreases through the diligent management of deposit costs. Adjusted non-interest income increased by 16% to a record $280 million, led by growth in wealth management, foreign exchange, and mortgage income.
Speaker #2: year , 2025 was another great year for First Financial . On an adjusted basis , our net income was $281 million , or $2.92 per share .
Speaker #2: return Adjusted on assets was adjusted 1.49% and return on tangible common equity was 19.3% . We were pleased performance of the with the net interest margin for the full the year .
Speaker #2: decline margin did year over While year from 4.05% to 3.98% . We were able to offset most of the impact of short term rate diligent decreases through the management of deposit Adjusted .
Speaker #2: non-interest costs income by increased to a 16% led by growth in wealth record $280 million , management and foreign exchange and mortgage income record Result was revenue for the company of almost $922 million , an 8% increase over 2020 .
Archie Brown: Result was record revenue for the company of almost $922 million, an 8% increase over 2024. Similar to Q4, asset quality was relatively stable for the year. Provision expense declined 21% from 2024. Net charge-offs as a percent of average loans declined 5 basis points to 25 basis points, and our ACL coverage increased by 6 basis points to 1.39%. Capital levels remained strong during 2025. While the acquisition of Westfield negatively impacted our capital, our strong earnings drove increases to tangible book value per share of 11% from $14.15 to $15.74.
Result was record revenue for the company of almost $922 million, an 8% increase over 2024. Similar to Q4, asset quality was relatively stable for the year. Provision expense declined 21% from 2024. Net charge-offs as a percent of average loans declined 5 basis points to 25 basis points, and our ACL coverage increased by 6 basis points to 1.39%. Capital levels remained strong during 2025. While the acquisition of Westfield negatively impacted our capital, our strong earnings drove increases to tangible book value per share of 11% from $14.15 to $15.74.
Speaker #2: For similar to the fourth quarter , asset quality was relatively stable for the year . Provision expense 21% declined from 2024 . Net charge offs , as a percent of average loans declined five basis points to 25 basis points , and our ACL coverage increased six basis points to 1.39% .
Speaker #2: Capital levels remained by strong during 2025 , while the acquisition of Westfield negatively impacted our capital . strong earnings drove increases to tangible book value per share of 11% , from $14.15 to $15.74 .
Archie Brown: I'll now turn the call over to Jamie to discuss these results in more detail, and after Jamie talks, I'll wrap up with some additional forward-looking commentary and closing remarks.
I'll now turn the call over to Jamie to discuss these results in more detail, and after Jamie talks, I'll wrap up with some additional forward-looking commentary and closing remarks.
Speaker #2: now turn the call over to Jamie to discuss these results . In more detail , and after Jamie talks , I'll wrap up with some additional forward looking commentary and closing remarks .
Jamie Anderson: Thank you, Archie, and good morning, everyone. Slides 4, 5, and 6 provide a summary of our most recent financial results. The Q4 was another outstanding quarter, highlighted by record earnings, a strong net interest margin, organic growth in both loans and deposits, and the acquisition of Westfield Bank. Our net interest margin remains very strong at 3.98%. Funding costs declined 15 basis points from the linked quarter, while asset yields decreased 19 basis points. Loan balances decreased $1.7 billion, including $1.6 billion acquired in the Westfield transaction. Organic growth was $131 million or 4% on an annualized basis and was driven by Summit and C&I. Total deposit balances increased $2 billion, including $1.8 billion acquired in the Westfield transaction.
Jamie Anderson: Thank you, Archie, and good morning, everyone. Slides 4, 5, and 6 provide a summary of our most recent financial results. The Q4 was another outstanding quarter, highlighted by record earnings, a strong net interest margin, organic growth in both loans and deposits, and the acquisition of Westfield Bank. Our net interest margin remains very strong at 3.98%. Funding costs declined 15 basis points from the linked quarter, while asset yields decreased 19 basis points. Loan balances decreased $1.7 billion, including $1.6 billion acquired in the Westfield transaction. Organic growth was $131 million or 4% on an annualized basis and was driven by Summit and C&I. Total deposit balances increased $2 billion, including $1.8 billion acquired in the Westfield transaction.
Speaker #2: Thank you , Archie , and good morning , everyone . Slides four , five and six provide a summary of our most recent financial results .
Speaker #2: The fourth quarter was another outstanding quarter , highlighted by record earnings , a strong net interest margin , organic growth in both loans and deposits , and the Westfield acquisition of Bank .
Speaker #2: our net net , Our strong remains very at 3.98% . Funding costs declined 15 basis points from the linked quarter , while asset yields decreased points 19 basis .
Speaker #2: Loan balances decreased $1.7 billion , including $1.6 billion acquired in the Westfield transaction . Organic growth was $131 million , or 4% , on an annualized basis , and was driven by summit and CNI .
Jamie Anderson: Organic growth was $264 million, with increases in the majority of our deposit types.... We maintain 21% of our total balances in non-interest-bearing accounts and remain focused on growing lower cost deposit balances. Additionally, we issued $300 million of subordinated debt during Q4. These notes have a 10-year maturity and carry a 6 3/8% interest rate. Turning to the income statement. Adjusted Q4 fee income was a record, led by leasing, foreign exchange, and wealth management. Non-interest expenses increased from the linked quarter, due primarily to the impact of the Westfield acquisition. Our ACL coverage remained relatively unchanged during the quarter at 1.39% of total loans, despite a large increase in the ACL balance. Most of that balance change was due to the Westfield acquisition.
Organic growth was $264 million, with increases in the majority of our deposit types.... We maintain 21% of our total balances in non-interest-bearing accounts and remain focused on growing lower cost deposit balances. Additionally, we issued $300 million of subordinated debt during Q4. These notes have a 10-year maturity and carry a 6 3/8% interest rate. Turning to the income statement. Adjusted Q4 fee income was a record, led by leasing, foreign exchange, and wealth management. Non-interest expenses increased from the linked quarter, due primarily to the impact of the Westfield acquisition. Our ACL coverage remained relatively unchanged during the quarter at 1.39% of total loans, despite a large increase in the ACL balance. Most of that balance change was due to the Westfield acquisition.
Speaker #2: Total deposit balances increased $2 billion , including $1.8 billion acquired in the Westfield transaction . Organic growth was $264 million , with increases in the majority of our deposit types .
Speaker #2: We maintained 21% of our total balances in non-interest bearing accounts and remain focused on growing lower cost deposit balances . Additionally , we issued $300 million of subordinated debt during the fourth quarter .
Speaker #2: These notes have a ten-year maturity and carry a 6 and 3/8 percent interest rate. To the Turning income statement, adjusted fourth quarter fee income was a record, led by leasing, foreign exchange, and wealth management.
Speaker #2: Non-interest expenses increased from the linked quarter due primarily to the impact of the acquisition of Westfield. Our ACL coverage remained relatively unchanged during the quarter.
Speaker #2: At loans, 1.39% of total, despite a large increase in the ACL balance. Most of that balance change was due to the Westfield acquisition.
Jamie Anderson: In addition, we recorded $10.1 million of provision expense during the period, which was driven primarily by net charge-offs and loan growth. Asset quality trends were relatively stable as net charge-offs increased 9 basis points from Q3, and classified assets as a percentage of total assets declined 7 basis points. Net charge-offs were 27 basis points on an annualized basis, while NPAs as a percentage of assets were 48 basis points. From a capital standpoint, our ratios are in excess of both internal and regulatory targets. Tangible book value was $15.74, while our tangible common equity ratio was 7.79%. Slide 7 reconciles our GAAP earnings to adjusted earnings, highlighting items that we believe are important to understanding our quarterly performance. Adjusted net income was $77.7 million, or $0.80 per share for the quarter.
In addition, we recorded $10.1 million of provision expense during the period, which was driven primarily by net charge-offs and loan growth. Asset quality trends were relatively stable as net charge-offs increased 9 basis points from Q3, and classified assets as a percentage of total assets declined 7 basis points. Net charge-offs were 27 basis points on an annualized basis, while NPAs as a percentage of assets were 48 basis points. From a capital standpoint, our ratios are in excess of both internal and regulatory targets. Tangible book value was $15.74, while our tangible common equity ratio was 7.79%. Slide 7 reconciles our GAAP earnings to adjusted earnings, highlighting items that we believe are important to understanding our quarterly performance. Adjusted net income was $77.7 million, or $0.80 per share for the quarter.
Speaker #2: In addition, we recorded $10.1 million of provision expense during the period, which was driven primarily by net charge-offs and loan growth.
Speaker #2: Asset quality trends were relatively stable, as net charge-offs increased nine basis points from the third quarter and classified assets as a percentage of total assets declined seven basis points.
Speaker #2: Net charge-offs were 27 basis points on an annualized basis, while NPAs as a percentage of assets were 48 basis points. From a capital standpoint, our ratios are in excess of both internal and regulatory targets.
Speaker #2: Tangible book value was $15.74, while our tangible common equity ratio was 7.79%. Slide seven reconciles our GAAP earnings to adjusted earnings, highlighting items that we believe are important to understanding our quarterly performance.
Jamie Anderson: Non-interest income was adjusted for $12.6 million of losses on the sales of investment securities, while non-interest expense adjustments were primarily related to acquisition activity. As depicted on Slide 8, these adjusted earnings equate to a return on average assets of 1.52%, a return on average tangible common equity of 20%, and a pre-tax, pre-provision ROA of 2.14%. Turning to Slides 9 and 10, net interest margin decreased 4 basis points from the linked quarter to 3.98%. Asset yields declined 19 basis points compared to the prior quarter. Total deposit costs declined 15 basis points, partially offsetting the impact of lower asset yields. Slide 12 illustrates our current loan mix and balance changes compared to the linked quarter. Loan balances increased $1.7 billion during the period.
Non-interest income was adjusted for $12.6 million of losses on the sales of investment securities, while non-interest expense adjustments were primarily related to acquisition activity. As depicted on Slide 8, these adjusted earnings equate to a return on average assets of 1.52%, a return on average tangible common equity of 20%, and a pre-tax, pre-provision ROA of 2.14%. Turning to Slides 9 and 10, net interest margin decreased 4 basis points from the linked quarter to 3.98%. Asset yields declined 19 basis points compared to the prior quarter. Total deposit costs declined 15 basis points, partially offsetting the impact of lower asset yields. Slide 12 illustrates our current loan mix and balance changes compared to the linked quarter. Loan balances increased $1.7 billion during the period.
Speaker #2: Adjusted net income was $77.7 million , or $0.80 per share , for the quarter . Non-interest income was adjusted for $12.6 million of losses on the sales of investment securities , while non-interest expense adjustments were primarily related to acquisition activity as depicted on slide eight .
Speaker #2: These adjusted earnings equate to a return on average assets of 1.52% , a return on average . Tangible common equity of 20% , and a pre-tax pre-provision ROA of 2.14% .
Speaker #2: Turning to slide nine and ten . Net interest margin decreased four basis points from the linked 2:45 .98 percent . Asset yields declined 19 basis points compared to the prior quarter .
Speaker #2: Total deposit costs declined 15 basis points, partially offsetting the impact of lower asset yields. Slide 12 illustrates our current loan mix and balance changes compared to the linked quarter.
Jamie Anderson: As you can see on the right, $1.6 billion was a result of the Westfield transaction. Absent the impact from the acquisition, organic loan growth was $131 million, or 4% on an annualized basis. Organic growth was driven by C&I and Summit. Slide 14 shows our deposit mix, as well as a progression of average deposits from the linked quarter. In total, average deposit balances increased $1.4 billion, including a $1.2 billion impact from the Westfield transaction. Organic growth during the quarter included increases in the majority of our product types, while some were seasonal in nature. Slide 16 highlights our non-interest income. Total adjusted fee income increased to $77.3 million, which was the highest quarter in the history of the company. Bannockburn and Summit both had strong results.
As you can see on the right, $1.6 billion was a result of the Westfield transaction. Absent the impact from the acquisition, organic loan growth was $131 million, or 4% on an annualized basis. Organic growth was driven by C&I and Summit. Slide 14 shows our deposit mix, as well as a progression of average deposits from the linked quarter. In total, average deposit balances increased $1.4 billion, including a $1.2 billion impact from the Westfield transaction. Organic growth during the quarter included increases in the majority of our product types, while some were seasonal in nature. Slide 16 highlights our non-interest income. Total adjusted fee income increased to $77.3 million, which was the highest quarter in the history of the company. Bannockburn and Summit both had strong results.
Speaker #2: Loan balances increased $1.7 billion during the period . As you can see on the right , result $1.6 billion was a of the Westfield transaction .
Speaker #2: Absent the impact from the acquisition , organic loan growth was $131 million , or 4% , on an annualized basis . Organic growth was driven by CNI and Summit .
Speaker #2: Slide 14 shows our deposit mix , as well as a progression of average linked quarter deposits from the . In total average deposit balances increased $1.4 billion , including a $1.2 billion impact from the Westfield transaction .
Speaker #2: Organic growth the quarter during included increases in the majority of our product types , while some were seasonal in nature . Slide 16 highlights our noninterest income .
Speaker #2: Total adjusted fee income increased to $77.3 million , which was the highest quarter in the history of the company . Bannockburn and summit both had results .
Jamie Anderson: Wealth had a record quarter, while mortgage and deposit service charge income also increased from Q3 levels. Non-interest expense for the quarter is outlined on Slide 17. Core expenses increased $8.6 million during the period. This was driven by the impact from the Westfield acquisition. Turning now to Slides 18 and 19. Our ACL model resulted in a total allowance, which includes both funded and unfunded reserves of $207 million. This includes $26 million of initial allowance on the Westfield portfolio. We recorded $10.1 million of total provision expense during the period. At December 31, the ACL was 1.39% of total loans, which was up slightly from the linked quarter. Provision expense was primarily driven by net charge-offs and loan growth.
Wealth had a record quarter, while mortgage and deposit service charge income also increased from Q3 levels. Non-interest expense for the quarter is outlined on Slide 17. Core expenses increased $8.6 million during the period. This was driven by the impact from the Westfield acquisition. Turning now to Slides 18 and 19. Our ACL model resulted in a total allowance, which includes both funded and unfunded reserves of $207 million. This includes $26 million of initial allowance on the Westfield portfolio. We recorded $10.1 million of total provision expense during the period. At December 31, the ACL was 1.39% of total loans, which was up slightly from the linked quarter. Provision expense was primarily driven by net charge-offs and loan growth.
Speaker #2: Wealth had a record quarter , while mortgage and deposit service charge income also increased from third quarter levels . Noninterest expense for the quarter is on outlined slide 17 .
Speaker #2: Core expenses increased $8.6 million during the period. This was driven by the impact from the Westfield acquisition. Turning now to 18 and 19.
Speaker #2: Our ACL model resulted in a total allowance, which includes both funded and unfunded reserves, of $207 million. This includes $26 million of initial allowance on the Westfield portfolio.
Speaker #2: We recorded $10.1 million of total provision expense during the period at December 31st , the ACL was 1.39% of total loans , which was up slightly from the linked quarter expense was primarily driven by net .
Jamie Anderson: Additionally, our NPAs to total assets increased slightly to 48 basis points, while classified asset balances as a percentage of total assets decreased to 1.11%. Finally, as shown on slides 20 and 21, capital ratios remain in excess of regulatory minimums and internal targets. During the Q4, tangible book value and the TCE ratio were negatively impacted by the by the Westfield acquisition. Tangible book value was $15.74, and the TCE ratio was 7.79% at the end of the period. Our total shareholder return remained strong, with 40% of our earnings returned to shareholders during the period through the common dividend. We maintain our commitment to providing an attractive return to our shareholders, and we'll evaluate capital actions that support that commitment.
Additionally, our NPAs to total assets increased slightly to 48 basis points, while classified asset balances as a percentage of total assets decreased to 1.11%. Finally, as shown on slides 20 and 21, capital ratios remain in excess of regulatory minimums and internal targets. During the Q4, tangible book value and the TCE ratio were negatively impacted by the by the Westfield acquisition. Tangible book value was $15.74, and the TCE ratio was 7.79% at the end of the period. Our total shareholder return remained strong, with 40% of our earnings returned to shareholders during the period through the common dividend. We maintain our commitment to providing an attractive return to our shareholders, and we'll evaluate capital actions that support that commitment.
Speaker #2: Charge-offs and loan growth. Provision. Additionally, our NPAs to total assets increased slightly to 48 basis points, while classified asset balances as a percentage of total assets decreased to 1.11%.
Speaker #2: Finally , as shown on slide 20 and 21 , capital ratios remain in excess of regulatory minimums and internal targets . During the fourth quarter , tangible book value in the TCE were ratio negatively impacted by the by the Westfield acquisition book .
Speaker #2: Tangible was $15.74 , and the TCE ratio was 7.79% . At the end of the period , our total shareholder return remains strong , with 40% of our earnings returned to during the shareholders period through the common dividend .
Jamie Anderson: I'll now turn it back over to Archie for some comments on our outlook. Archie?
I'll now turn it back over to Archie for some comments on our outlook. Archie?
Speaker #2: 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 Brown: Thank you, Jamie. Before we conclude our prepared remarks, I want to comment on our outlook for the first quarter, which can be found on Slide 22. Excluding the impact from BankFinancial, we expect payoff pressure to ease in the coming quarter, resulting in a low single-digit organic loan growth on an annualized basis during the first quarter. And for the full year, as originations ramp up, we expect loan growth to be in the 6 to 8% range. We expect core deposit balances to decline modestly in the near term due to seasonal outflows of public funds. Our net interest margin remains among the highest in the peer group, and we expect it to be in a range of between 3.94% and 3.99% over the next quarter, assuming a 25 basis point rate cut in March.
Archie Brown: Thank you, Jamie. Before we conclude our prepared remarks, I want to comment on our outlook for the first quarter, which can be found on Slide 22. Excluding the impact from BankFinancial, we expect payoff pressure to ease in the coming quarter, resulting in a low single-digit organic loan growth on an annualized basis during the first quarter. And for the full year, as originations ramp up, we expect loan growth to be in the 6 to 8% range. We expect core deposit balances to decline modestly in the near term due to seasonal outflows of public funds. Our net interest margin remains among the highest in the peer group, and we expect it to be in a range of between 3.94% and 3.99% over the next quarter, assuming a 25 basis point rate cut in March.
Speaker #2: Archie . Thank you . Jamie .
Speaker #3: Before we conclude our prepared remarks , I want to comment on our outlook for the first quarter , which can be found on slide 22 .
Speaker #3: Excluding the impact from Bank financial , we expect payoff pressure to ease in the coming quarter , resulting in a low single digit organic loan growth on an annualized basis during the first quarter .
Speaker #3: And for the full year as originations ramp up , we expect loan growth to be in the 6 to 8% range this quarter .
Speaker #3: decline Deposit modestly in the near term due to seasonal outflows of public funds . Our net interest margin remains among the highest in the peer group , and we expect it to be in a range of between 3.94% and 3.99% over the next quarter , assuming a 25 basis point rate cut in March , we expect first quarter credit costs to approximate levels and ACL coverage to remain stable as a percentage of loans .
Archie Brown: We expect Q1 credit costs to approximate Q4 levels and ACL coverage to remain stable as a percentage of loans. We expect fee income to be between $71 and 73 million, which includes $14 to 16 million for foreign exchange and $19 to 21 million for leasing business revenue. This range includes the impact from both Westfield Bank and BankFinancial. Non-interest expense is expected to be between $156 and 158 million and reflect our continued focus on expense management. This range includes the impact from both Westfield Bank and BankFinancial, which should approximate $11 million and $10 million, respectively. While we remain confident that we will realize our modeled cost savings, we expect those savings to materialize later in 2026, once both banks have been fully integrated.
We expect Q1 credit costs to approximate Q4 levels and ACL coverage to remain stable as a percentage of loans. We expect fee income to be between $71 and 73 million, which includes $14 to 16 million for foreign exchange and $19 to 21 million for leasing business revenue. This range includes the impact from both Westfield Bank and BankFinancial. Non-interest expense is expected to be between $156 and 158 million and reflect our continued focus on expense management. This range includes the impact from both Westfield Bank and BankFinancial, which should approximate $11 million and $10 million, respectively. While we remain confident that we will realize our modeled cost savings, we expect those savings to materialize later in 2026, once both banks have been fully integrated.
Speaker #3: Expect fee income to be between $71 million and $73 million, which includes $14 million to $16 million for foreign exchange and $19 million to $21 million for leasing business revenue.
Speaker #3: This range includes the impact from both Westfield and Bank financial . Non-interest expense is expected to be between 156 and 158 million , and reflect our continued focus on expense management .
Speaker #3: This range includes the impact from both Westfield and Bank financial , which should approximate 11,000,010 million , respectively . While we remain confident that we will realize our modeled cost savings , we expect those savings to materialize , to materialize later in 2026 .
Archie Brown: To conclude, we're very proud of our overall performance in 2025. In addition to outstanding financial results, we successfully launched our Western Michigan banking office in Grand Rapids and acquired two banking companies, which strengthened our core funding and provides us with a platform for growth in two of the largest metropolitan markets in the Midwest. We received our second consecutive outstanding CRE rating, demonstrating our commitment to creating opportunities for lower-income communities in our footprint. And we were one of only 70 companies worldwide to be recognized by Gallup as an exceptional workplace. Finally, I want to recognize and thank our associates for their hard work and commitment. It's due to their efforts that First Financial consistently delivers industry-leading performance. And with that, we'll now open up the call for questions.
To conclude, we're very proud of our overall performance in 2025. In addition to outstanding financial results, we successfully launched our Western Michigan banking office in Grand Rapids and acquired two banking companies, which strengthened our core funding and provides us with a platform for growth in two of the largest metropolitan markets in the Midwest. We received our second consecutive outstanding CRE rating, demonstrating our commitment to creating opportunities for lower-income communities in our footprint. And we were one of only 70 companies worldwide to be recognized by Gallup as an exceptional workplace. Finally, I want to recognize and thank our associates for their hard work and commitment. It's due to their efforts that First Financial consistently delivers industry-leading performance. And with that, we'll now open up the call for questions.
Speaker #3: both banks Once have been fully integrated . To conclude , we're very proud of our overall performance in 2025 . In addition to outstanding financial results , we successfully launched our Western Michigan Banking Office in Grand Rapids and acquired two banking companies , which strengthened our core funding and provides us with a platform for growth and two of the largest metropolitan markets in the Midwest .
Speaker #3: We received our second consecutive outstanding CRA rating, demonstrating our commitment to creating opportunities for lower-income communities in our footprint, and we were one of only 70 companies worldwide to be recognized by Gallup as an exceptional workplace.
Speaker #3: Finally, I want to recognize and thank our associates for their hard work and commitment. It's due to their efforts that First Financial consistently delivers industry-leading performance.
Operator: Thank you. The floor is now open for questions. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again. If you are called upon to ask a question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. Your first question comes from the line of Daniel Tamayo of Raymond James. Your line is open.
Operator: Thank you. The floor is now open for questions. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again. If you are called upon to ask a question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. Your first question comes from the line of Daniel Tamayo of Raymond James. Your line is open.
Speaker #3: And with that, we'll now open up the call for questions.
Speaker #1: Thank floor is now you . The open for have dialed questions . If you would like to question , please in and press star One on your telephone ask a keypad to raise your hand and join the queue .
Speaker #1: If you would like to withdraw your question , simply press star one again . called upon to If you are ask a question and you're listening via loudspeaker on your device , please pick up your handset and ensure that your phone is not on mute .
Speaker #1: When asking your question . Your first question comes from the line of Daniel Tamayo of Raymond James . Your line is open .
Daniel Tamayo: Thank you. Good morning, Archie. Good morning, Jamie.
Daniel Tamayo: Thank you. Good morning, Archie. Good morning, Jamie.
Archie Brown: Good day.
Archie Brown: Good day.
Daniel Tamayo: Maybe starting on the fee income guidance. I mean, fourth quarter was a good quarter. The guidance was a little bit below where I was looking for. You know, I you know, within that, FX is, looks like it's going to be down, and then leasing over the last couple of quarters has trended down. So just curious if you can kind of walk us through where you're seeing the path for the rest of the year and those two line items, and then, you know, more broadly, the fee income path for the rest of the year. Thanks.
Daniel Tamayo: Maybe starting on the fee income guidance. I mean, fourth quarter was a good quarter. The guidance was a little bit below where I was looking for. You know, I you know, within that, FX is, looks like it's going to be down, and then leasing over the last couple of quarters has trended down. So just curious if you can kind of walk us through where you're seeing the path for the rest of the year and those two line items, and then, you know, more broadly, the fee income path for the rest of the year. Thanks.
Speaker #4: Thank you . Good morning Archie . Good morning Jamie .
Speaker #3: Hey , Danny .
Speaker #4: Maybe starting on the on the fee income guidance . I mean , fourth quarter was was a good quarter . The guidance was a little bit below where where I was looking for , you you know , know , within that FX is looks like it's going to be down .
Speaker #4: And then leasing over the last couple quarters has trended down. So just curious if you can kind of walk us through where you're seeing the path for the rest of the year.
Archie Brown: Sure, Danny. As you said, the fourth quarter was a great quarter all around and, you know, FX certainly shined. I think they had their best quarter ever. There's a little bit of seasonality in Q1, and they have added quite a bit of talent where some non-solicits will burn off after the first quarter, which I think is going to create more opportunity for them as they go forward. But with that, I'll have Jamie maybe talk about fees. He could talk about FX or go beyond that and maybe more fees more broadly for the year.
Archie Brown: Sure, Danny. As you said, the fourth quarter was a great quarter all around and, you know, FX certainly shined. I think they had their best quarter ever. There's a little bit of seasonality in Q1, and they have added quite a bit of talent where some non-solicits will burn off after the first quarter, which I think is going to create more opportunity for them as they go forward. But with that, I'll have Jamie maybe talk about fees. He could talk about FX or go beyond that and maybe more fees more broadly for the year.
Speaker #4: And those two line items . more And then broadly , the the fee income path for the rest of the year . Thanks .
Speaker #3: Sure . Danny . As you said , the fourth quarter was a great quarter all around . And , you know , FX certainly shined .
Speaker #3: think they had their best quarter I ever . There's a little bit of seasonality in Q1 , and they have added quite a bit of talent where some non-solicited off will burn after the first quarter , which I going to create more think is opportunity for them as they go forward .
Speaker #3: But with that , I'll have Jamie maybe talk about fees . He could talk about or go beyond that and maybe more fees more broadly for the year .
Jamie Anderson: Yeah, Danny. So for the Q4, obviously, you saw, you know, we had a record quarter, you know, huge, huge revenue quarter for Bannockburn on the foreign exchange side. And we do see some seasonality to that business in terms of the revenue coming in. The Q4, the back half of the year, is typically large, and so we do see that coming down in the Q1, but then ramping up as the year moves on. And you know, some of these, a couple of these teams that we've brought on over the past year. Again, Archie mentioned the non-solicit starts to wear off on those, and we start to see some impact from those teams.
Jamie Anderson: Yeah, Danny. So for the Q4, obviously, you saw, you know, we had a record quarter, you know, huge, huge revenue quarter for Bannockburn on the foreign exchange side. And we do see some seasonality to that business in terms of the revenue coming in. The Q4, the back half of the year, is typically large, and so we do see that coming down in the Q1, but then ramping up as the year moves on. And you know, some of these, a couple of these teams that we've brought on over the past year. Again, Archie mentioned the non-solicit starts to wear off on those, and we start to see some impact from those teams.
Speaker #2: Yeah , Danny . So for the fourth quarter , saw , you know , we had obviously you a record quarter . You know , huge , huge revenue quarter for Bannockburn on the foreign exchange side .
Speaker #2: And we do see some some seasonality to that business in terms of the the revenue coming in the fourth quarter is the back half of the year , is typically large .
Speaker #2: And so we do see that coming down in the first quarter, but then ramping up as the year moves on.
Speaker #2: And , you know , some of these a couple of these teams that we've we've brought on over the over the past year again , Archie mentioned the Non-solicited starts to wear off on those and we start to see some impact from those , from those teams .
Jamie Anderson: And then it's just, I would say the, the, the big difference is just the overall seasonality from the Q4 to the Q1 across really all the lines. And so, you know, as you look out into, as you look out into the, the back half of 2026 or even the Q2, Q3, Q4, you start to get into that $75 to 80 million range of, of fee income, as the year moves on.
And then it's just, I would say the, the, the big difference is just the overall seasonality from the Q4 to the Q1 across really all the lines. And so, you know, as you look out into, as you look out into the, the back half of 2026 or even the Q2, Q3, Q4, you start to get into that $75 to 80 million range of, of fee income, as the year moves on.
Speaker #2: And then it's just I would say the the big difference is , is the overall seasonality from the fourth quarter to the first quarter across really all the lines .
Speaker #2: And so , you know , as you look out into as you look out into the the back half of 26 or even the second quarter , the second , third , fourth quarter , you start to get into that 75 to $80 million range of of fee income as the year moves on .
Daniel Tamayo: Okay. All right. That's helpful. So I mean, I guess the FX business, would-- you, you would expect growth year-over-year for that business as, as we look for kind of overall 2026 and then,
Daniel Tamayo: Okay. All right. That's helpful. So I mean, I guess the FX business, would-- you, you would expect growth year-over-year for that business as, as we look for kind of overall 2026 and then,
Speaker #4: Okay . All right . That's So I helpful . mean , I guess the FX business would you would expect growth year over year for , for that business as we look for of kind overall 26 .
Jamie Anderson: Yep.
Jamie Anderson: Yep.
Daniel Tamayo: leasing, you know, is that business slowing, the growth rates, or are they slowing, you think?
Daniel Tamayo: leasing, you know, is that business slowing, the growth rates, or are they slowing, you think?
Speaker #4: And then yeah leasing you know I is that business slowing . The growth rates or are slowing . You they think .
Archie Brown: Yeah, on FX, we do expect, as Jamie said, Danny, for it to keep growing. If you look at it, you know, we acquired it in 2019. I think their compound annual growth rate is probably close to 14 or 15%, you know, a year over that time, and they're still going to grow, probably low double digit over the next few years. So we think, foreign exchange will continue to grow in capital markets overall at nice clips. In the case of Summit, I mean, their origination numbers were up last year. They'll be up some more this year. It's sometimes more of a question of what the mix is, and they've probably been doing more finance leases and a little bit less operating leases as a percent of the mix.
Archie Brown: Yeah, on FX, we do expect, as Jamie said, Danny, for it to keep growing. If you look at it, you know, we acquired it in 2019. I think their compound annual growth rate is probably close to 14 or 15%, you know, a year over that time, and they're still going to grow, probably low double digit over the next few years. So we think, foreign exchange will continue to grow in capital markets overall at nice clips. In the case of Summit, I mean, their origination numbers were up last year. They'll be up some more this year. It's sometimes more of a question of what the mix is, and they've probably been doing more finance leases and a little bit less operating leases as a percent of the mix.
Speaker #3: Yeah on FX we do expect as Jamie said Danny , for it to keep growing . If you look at it you know we acquired it in 2019 .
Speaker #3: I think there compound annual growth rate is probably close to 14 or 15% . You know a year over that time . And they're still going to grow probably low double digit over the next few years .
Speaker #3: So we think foreign exchange will continue to grow in capital markets overall at a clips in the case of nice summit , I mean , their origination numbers were up last They'll year .
Speaker #3: be up some more this year . It's sometimes more of a question of what the mix is . And they probably been doing more finance leases and a little bit less operating percent of the leases a as mix .
Archie Brown: So that's probably why you're seeing that number maybe, a little bit on the flatter side.
So that's probably why you're seeing that number maybe, a little bit on the flatter side.
Jamie Anderson: Yeah. And Danny, it's Jamie. So, you know, I think we were seeing growth in that on the leasing side in past years in that 10 to 15% range. And I would say it's more high single digits. We're just. We're starting that portfolio is starting to become seasoned. We acquired it that company four or five years ago. The leases generally have terms in that range. And so you're starting to see things kind of churn at this point in that portfolio.
Jamie Anderson: Yeah. And Danny, it's Jamie. So, you know, I think we were seeing growth in that on the leasing side in past years in that 10 to 15% range. And I would say it's more high single digits. We're just. We're starting that portfolio is starting to become seasoned. We acquired it that company four or five years ago. The leases generally have terms in that range. And so you're starting to see things kind of churn at this point in that portfolio.
Speaker #3: So, why you're seeing that maybe number a little bit on the flatter side.
Speaker #2: Yeah . And Danny it's Jamie . So you know I think we were seeing growth in that leasing . On the side . And past years in that 10 to 15% range .
Speaker #2: And I would say it's more high single digits . We're just we're starting that portfolio is starting to become seasoned . We acquired it .
Speaker #2: That company 4 or 5 years ago . The leases generally have terms in that in that range . And so you're starting to see you're starting to see things kind of churn at this point in that portfolio
Daniel Tamayo: Okay. That's, that's helpful. I appreciate it. And then, maybe one, bigger picture here for you, Archie, just on the, on the plan for, for growth in, you know, Grand Rapids. You, you mentioned that in, in your commentary and in the, in the release. Just curious what, what you have in place there, and, and what you're planning to, to do in terms of investments there.
Daniel Tamayo: Okay. That's, that's helpful. I appreciate it. And then, maybe one, bigger picture here for you, Archie, just on the, on the plan for, for growth in, you know, Grand Rapids. You, you mentioned that in, in your commentary and in the, in the release. Just curious what, what you have in place there, and, and what you're planning to, to do in terms of investments there.
Speaker #4: . That's that's helpful I
Speaker #4: appreciate it . And . Okay then maybe one bigger picture here for you , just Archie , on the on the plan for , for growth in , you know , Grand Rapids , you mentioned that in your and in the , in the release .
Archie Brown: But, yeah, we've brought a team over. It was not all at once, but we brought a team over throughout most of the Q1 last year, and, you know, they've ramped up nicely. I mean, they're not quite at, but close to $100 million in commitments on the loan side. I think $20 to 30 million range in deposits. We've added some other banking team members on the wealth side, in particular, private banking. We're looking to add, I think, have a full banking office up there this year, add in some mortgage as well. So we're going to keep building it out.
Archie Brown: But, yeah, we've brought a team over. It was not all at once, but we brought a team over throughout most of the Q1 last year, and, you know, they've ramped up nicely. I mean, they're not quite at, but close to $100 million in commitments on the loan side. I think $20 to 30 million range in deposits. We've added some other banking team members on the wealth side, in particular, private banking. We're looking to add, I think, have a full banking office up there this year, add in some mortgage as well. So we're going to keep building it out.
Speaker #4: Just curious what you have in place there, and what you're planning to do in terms of investments there.
Speaker #3: Well , you know , we brought a team over . It was not all at once , but we brought a team over throughout most of the first quarter last And year .
Speaker #3: , you know , they've ramped up nicely . I mean , they're not quite at the close to $100 million in commitments on the loan side .
Speaker #3: I think . 20 to $30 million range in deposits . We've added other some other banking team members on the wealth side , in particular private banking .
Speaker #3: We're looking to add like a have a full banking office up there this year . Add in some mortgage as well . So we're going to keep building it out we .
Archie Brown: And we think we don't have anything yet, Danny, but we think there's more opportunities in Michigan, especially with some of the larger M&A that's going on with some of the banks. We think that's gonna potentially create some opportunity for us to do some add-on in that market over the years. So we think it's close to a home run in terms of investment that we could make.
And we think we don't have anything yet, Danny, but we think there's more opportunities in Michigan, especially with some of the larger M&A that's going on with some of the banks. We think that's gonna potentially create some opportunity for us to do some add-on in that market over the years. So we think it's close to a home run in terms of investment that we could make.
Speaker #3: And think we don't have anything yet , but we think there's more opportunities in Michigan , especially with some of the larger M&A that's going on with some of the banks .
Speaker #3: I think that's—we're going to create some potential opportunity for us to do some add-on in that market over the years.
Daniel Tamayo: Great. All right, well, I will step back. Thanks for the color, guys. Appreciate it.
Daniel Tamayo: Great. All right, well, I will step back. Thanks for the color, guys. Appreciate it.
Speaker #3: We think it's close to a home run in terms of an investment that we could make.
Archie Brown: Yep. Thanks, Danny.
Archie Brown: Yep. Thanks, Danny.
Operator: Your next question comes from the line of Brendan Nosal of Hovde Group. Your line is open.
Operator: Your next question comes from the line of Brendan Nosal of Hovde Group. Your line is open.
Speaker #4: Great . All right . Well I will step back . Thanks for the color guys . Appreciate it .
Speaker #3: Thanks , Yep . Danny .
Brendan Nosal: Hey, good morning, Archie. Good morning, Jamie. Hope you guys are doing well.
Brendan Nosal: Hey, good morning, Archie. Good morning, Jamie. Hope you guys are doing well.
Speaker #1: Your next question comes from the line of Brendan Nossel of Harvey Group . Your line is open .
Archie Brown: Hey, Brendan. Morning.
Archie Brown: Hey, Brendan. Morning.
Brendan Nosal: Good morning. Good morning. Maybe just to circle back to the loan growth outlook. I think you guys said 6% to 8% growth for the full year. Just want to confirm that that's on an organic basis and not including BankFinancial, which closed earlier this quarter.
Brendan Nosal: Good morning. Good morning. Maybe just to circle back to the loan growth outlook. I think you guys said 6% to 8% growth for the full year. Just want to confirm that that's on an organic basis and not including BankFinancial, which closed earlier this quarter.
Speaker #5: Hey good morning . Good morning Jamie . Hope you guys are doing well . Hey , Brendan .
Speaker #3: Good morning .
Speaker #5: Good morning . Good morning . Maybe just to circle back to the loan growth outlook . I think you guys said 6 to 8% growth for the full year .
Speaker #5: Just want to confirm that that's on an basis and organic not including Bank financial which closed earlier this quarter .
Archie Brown: Yeah, I think that's right, Brendan. Maybe a little more commentary on loans overall. We had an incredible origination quarter in Q4. It was our best quarter by a lot in 2025. I think it was 36% over the linked quarter in terms of our fundings. But what we also saw in Q4 was a record level of payoff activity. I think it was up 56% over Q3 last year, and by far our largest quarter of payoffs. And so, you know, Q1 tends to be a little bit of a lower point from an origination, just more seasonality, and then it ramps up. Pipelines look healthy, you know, as more, probably more than even last year, look healthy.
Archie Brown: Yeah, I think that's right, Brendan. Maybe a little more commentary on loans overall. We had an incredible origination quarter in Q4. It was our best quarter by a lot in 2025. I think it was 36% over the linked quarter in terms of our fundings. But what we also saw in Q4 was a record level of payoff activity. I think it was up 56% over Q3 last year, and by far our largest quarter of payoffs. And so, you know, Q1 tends to be a little bit of a lower point from an origination, just more seasonality, and then it ramps up. Pipelines look healthy, you know, as more, probably more than even last year, look healthy.
Speaker #3: Yeah I think that's that's right Brendan . Maybe maybe a little more commentary on loans . Overall . We had an incredible origination quarter in Q4 .
Speaker #3: It was our best by quarter a lot in 2025 . I think it was up 36% over the linked quarter . In terms of fundings our .
Speaker #3: But what we also saw in Q4 was record a level payoff of activity . I think it was up 56% over Q3 last year and by far our largest quarter of payoffs .
Speaker #3: And so , you know , Q1 tends to be a little bit of a lower point from an origination , just more seasonality .
Speaker #3: And then it ramps up . Pipelines look healthy , you know , as more probably more than even last year , look healthy .
Archie Brown: And we think originations will certainly come in strong as the year goes on. And we think payoffs, well, they, they won't hit a low point in Q1, but they're going to come down from where they were. So we think we'll eke out a little bit of growth in Q1, and then it'll ramp up, but we are projecting out 6 to 8% for the year, and that would be the Legacy Bank.
And we think originations will certainly come in strong as the year goes on. And we think payoffs, well, they, they won't hit a low point in Q1, but they're going to come down from where they were. So we think we'll eke out a little bit of growth in Q1, and then it'll ramp up, but we are projecting out 6 to 8% for the year, and that would be the Legacy Bank.
Speaker #3: And we think originations will will certainly come in strong as the year goes on . And we think payoffs well , they they won't hit a low point in Q1 , but they're going to from where come down they were .
Speaker #3: So we think we'll eke out a little bit of growth in Q1, it'll ramp and then up. But we are projecting out 6 to 8% for the year.
Jamie Anderson: Yeah. Yeah, so that would exclude any of the, any of the acquired balances.
Jamie Anderson: Yeah. Yeah, so that would exclude any of the, any of the acquired balances.
Brendan Nosal: Okay. Perfect. Perfect. Maybe turning to the margin outlook for the first quarter, that 3.94 to 3.99, can you break out the estimated purchase accounting accretion number, you know, with BankFinancial, you know, coming in, in a full quarter of Westfield? But TA is, I think, four basis points this quarter. What does that look like in the guide for Q1?
Brendan Nosal: Okay. Perfect. Perfect. Maybe turning to the margin outlook for the first quarter, that 3.94 to 3.99, can you break out the estimated purchase accounting accretion number, you know, with BankFinancial, you know, coming in, in a full quarter of Westfield? But TA is, I think, four basis points this quarter. What does that look like in the guide for Q1?
Speaker #3: And that would be the legacy bank .
Speaker #3: And that would be the legacy bank.
Speaker #2: Exclude 'Yeah.' So the 'Yeah.' Any of that would have acquired any of the balances, okay.
Speaker #5: Perfect . Perfect . Maybe turning to the margin outlook for the first quarter , that 394 to 399 . Can you break out the estimated purchase accounting accretion number .
Speaker #5: You bank know, with financial coming in in a full of Westfield, PA repping four basis points this quarter, what does that look like in the guide for one?
Jamie Anderson: Yeah, so the four basis points for Westfield should pretty much hold. We don't see a big impact in terms of purchase accounting from the BankFinancial deal, for one, a couple reasons. For one, they didn't have a lot of loans to begin with. And we are selling a big chunk of their multifamily portfolio, like we announced, with the deal. So they have about $700 million in loan balances that we acquired. We're selling about $450 million. And so really, they're gonna have $200 to $250 million of loan balances that carry over.
Jamie Anderson: Yeah, so the four basis points for Westfield should pretty much hold. We don't see a big impact in terms of purchase accounting from the BankFinancial deal, for one, a couple reasons. For one, they didn't have a lot of loans to begin with. And we are selling a big chunk of their multifamily portfolio, like we announced, with the deal. So they have about $700 million in loan balances that we acquired. We're selling about $450 million. And so really, they're gonna have $200 to $250 million of loan balances that carry over.
Speaker #2: Q yeah , so the so the the four basis points for for Westfield should pretty much much hold should pretty . We we see a don't impact in terms of in terms of purchase accounting from the from financial deal for one couple reasons .
Speaker #2: For one that they just don't have a lot of they didn't have a lot of loans to begin with . And we are and we are selling a big chunk of their multifamily that the portfolio , like we with the announced deal .
Speaker #2: So they have about 700 million in loan balances that we acquired . We're selling about 450 million . And so really I would .
Speaker #2: So they have about 700 million in loan balances that we acquired . We're selling about 450 million . And so really so So they're going to have 200 , 200 to 250 million of , of loan balances that carry over .
Jamie Anderson: So you can imagine the purchase accounting isn't going to be significant for that. So if you look at Westfield, it was 4 basis points in the Q4, so, and we had them for 2 months, so you can, you can kind of look at, like, a 5 or 6 basis point purchase accounting impact from the deals.
So you can imagine the purchase accounting isn't going to be significant for that. So if you look at Westfield, it was 4 basis points in the Q4, so, and we had them for 2 months, so you can, you can kind of look at, like, a 5 or 6 basis point purchase accounting impact from the deals.
Speaker #2: So you can imagine purchase accounting isn't going to be significant for that. So if you look at Westfield, it was four basis points in the fourth quarter.
Speaker #2: So when we had them for two months . So you can you can kind of look at like a 5 or 6 basis point purchase accounting impact from the deals .
Brendan Nosal: Okay. Okay, that's, that's really helpful. One more from me, just staying on this topic of margin. Like, outside of short-term rate cuts, just kind of walk us through the major driver of margin over the course of 2026. Like, if, if there's no more cuts, is there a natural drift in the margin one way or the other? Or is it really just dependent on what the short end does?
Brendan Nosal: Okay. Okay, that's, that's really helpful. One more from me, just staying on this topic of margin. Like, outside of short-term rate cuts, just kind of walk us through the major driver of margin over the course of 2026. Like, if, if there's no more cuts, is there a natural drift in the margin one way or the other? Or is it really just dependent on what the short end does?
Speaker #5: Okay , okay . That's that's really helpful . One more from me . Just staying on this topic of margin , like outside of short term rate cuts , just kind of walk us through the major driver of margin over the course of If there's no 2026 .
Jamie Anderson: I would say it's really dependent on what the short, on what the short end does, for us. Now, if we do not get any cuts, what we will see, I mean, our margin we're showing for 2026 is staying relatively level. We do get some impact now from the rate cuts. And, you know, we are forecasting in our forecast, we have rate cuts in two rate cuts, one in March, one in June, and our margin for the year goes down slightly, kind of in the low 3.90s, 3.90 to 3.95. So there is some impact if we have those rate cuts. If we don't, it essentially stays flat at just a higher level.
Speaker #5: more cuts , is there a drift in the natural margin one way or the other , or is it really just dependent on what the short does end ?
Jamie Anderson: I would say it's really dependent on what the short, on what the short end does, for us. Now, if we do not get any cuts, what we will see, I mean, our margin we're showing for 2026 is staying relatively level. We do get some impact now from the rate cuts. And, you know, we are forecasting in our forecast, we have rate cuts in two rate cuts, one in March, one in June, and our margin for the year goes down slightly, kind of in the low 3.90s, 3.90 to 3.95. So there is some impact if we have those rate cuts. If we don't, it essentially stays flat at just a higher level.
Speaker #2: I would say it's really dependent the short on what and what the short end does for us . Now , if we do not get any we will what cuts , see , I mean , our margin , we're showing for 26 is staying relatively level .
Speaker #2: We do get some some impact now from the rate cuts . And you know , we are we are forecasting and our forecast .
Speaker #2: We have rate cuts in two rate cuts . One in March , one in June . And our margin for the year goes down slightly , kind of in the low three 9390 to 395 .
Speaker #2: So there is some impact if we have those rate cuts. If we don't, it essentially stays flat at just a higher level.
Brendan Nosal: Fantastic. I really appreciate the color and the commentary.
Brendan Nosal: Fantastic. I really appreciate the color and the commentary.
Jamie Anderson: Welcome. Thanks for it.
Jamie Anderson: Welcome. Thanks for it.
Operator: Your next question comes from the line of Terry McEvoy of Stephens. Your line is open.
Operator: Your next question comes from the line of Terry McEvoy of Stephens. Your line is open.
Speaker #5: Fantastic. I really appreciate the color and commentary.
Speaker #2: Welcome .
Speaker #3: Thanks , Brendan .
[Analyst] (Stephens Inc.): Hi, good morning, guys.
Terry McEvoy: Hi, good morning, guys.
Speaker #1: Your next question comes from the line of Terry McEvoy of Stephens . is open Your line .
Speaker #1: Your next question comes from the line of Terry McEvoy of Stephens. Your line is open.
Jamie Anderson: Hey, Terry.
Jamie Anderson: Hey, Terry.
[Analyst] (Stephens Inc.): Hi. You know, it really feels, really feels like a Friday morning, not a Thursday morning. It kind of threw me off this quarter.
Terry McEvoy: Hi. You know, it really feels, really feels like a Friday morning, not a Thursday morning. It kind of threw me off this quarter.
Speaker #6: Good morning, guys.
Jamie Anderson: Yeah.
Jamie Anderson: Yeah.
[Analyst] (Stephens Inc.): I'm going to be honest.
Terry McEvoy: I'm going to be honest.
Speaker #3: Hey , Terry .
Jamie Anderson: You take off after today.
Jamie Anderson: You take off after today.
Speaker #2: Terry .
Speaker #6: You know , really feels Hey . really Friday morning , feels like a on a Thursday morning , you kind of threw this me off .
[Analyst] (Stephens Inc.): I'll run that by the boss.
Terry McEvoy: I'll run that by the boss.
Jamie Anderson: You can take tomorrow off, yeah.
Jamie Anderson: You can take tomorrow off, yeah.
[Analyst] (Stephens Inc.): Thanks. Just a question, the quarterly expenses, the $156 to 158, where does that trend through Q4 once you achieve the cost savings? I'm just trying to get a better sense for the quarterly trajectory.
Terry McEvoy: Thanks. Just a question, the quarterly expenses, the $156 to 158, where does that trend through Q4 once you achieve the cost savings? I'm just trying to get a better sense for the quarterly trajectory.
Speaker #6: Be honest. I'm going to—
Speaker #3: today After .
Speaker #6: I'll run that by the boss . Yeah . Thanks . Just a question . The the the quarterly expenses , the 156 to 158 .
Speaker #6: Where does that trend through the fourth quarter? Once you achieve the cost savings? Just trying to get a better sense for the quarterly trajectory.
Jamie Anderson: Yeah. So Terry, it's Jamie. So we have a couple of things going on there that, kind of go, I would say, in opposite directions. So we have... So for the two deals, for Westfield, we have the, you know, the major conversion, major event, happen in March. So we'll start to realize much more of the cost savings for that deal after that. We've already achieved some of that, but, but not, not the big, you know, not the big amount that you typically get. And then in June, we have the conversion for BankFinancial, and so that'll come a, a quarter later, and again, we'll start to see cost savings off of that. However, like we were mentioning, I think it was, I think it was Danny's question about fees.
Jamie Anderson: Yeah. So Terry, it's Jamie. So we have a couple of things going on there that, kind of go, I would say, in opposite directions. So we have... So for the two deals, for Westfield, we have the, you know, the major conversion, major event, happen in March. So we'll start to realize much more of the cost savings for that deal after that. We've already achieved some of that, but, but not, not the big, you know, not the big amount that you typically get. And then in June, we have the conversion for BankFinancial, and so that'll come a, a quarter later, and again, we'll start to see cost savings off of that. However, like we were mentioning, I think it was, I think it was Danny's question about fees.
Speaker #2: Yeah. So, Terry, it's Jamie. So we have a couple of things going on there that kind of go, I would say, in opposite directions.
Speaker #2: So we have so for the two deals for Westfield , we have the , the you know , the major conversion , major event happen in March .
Speaker #2: So we'll start to realize much more of the cost savings for that deal . After that , we've already achieved some of that .
Speaker #2: But but not not the big , you know , not the big amount that you typically get . And then in June , we have the conversion for Bank financial .
Speaker #2: And so that will come a quarter later . And again we'll start to see cost savings off of that . However , like we were mentioning , I think it was it was I think Danny's question about fees , what we then see in the back half of the year is a pickup in foreign exchange revenue , which we will then , which then ramps up , you know , commissions and whatnot .
Jamie Anderson: What we then see in the back half of the year is a pickup in foreign exchange revenue, which we will then-- which then ramps up, you know, commissions and whatnot related to that, the variable comp related to the of of not only Bannockburn, but of also a few of our other fee businesses. So, that, that partially offsets some of the cost savings that we will, that we will get, but obviously, then we have the revenue to on the other side. So, you know, when we are-- when we look out kind of in the back half of the year, we're kind of in the in the low 150 range, $150 million of on the expense side.
What we then see in the back half of the year is a pickup in foreign exchange revenue, which we will then-- which then ramps up, you know, commissions and whatnot related to that, the variable comp related to the of of not only Bannockburn, but of also a few of our other fee businesses. So, that, that partially offsets some of the cost savings that we will, that we will get, but obviously, then we have the revenue to on the other side. So, you know, when we are-- when we look out kind of in the back half of the year, we're kind of in the in the low 150 range, $150 million of on the expense side.
Speaker #2: Related to that , the variable comp related to the of not only Bannockburn but also a few other fee of our businesses . So that that partially offset some of the cost savings that we will that we will get .
Speaker #2: But obviously then we have the revenue to the other on side . So , you know , when we are when we look out kind of in the back half of the year , we're kind of in the in the low 150 range , 150 million on the of expense side .
Archie Brown: I think, Jamie, we're kind of looking at it like conversion plus 90 days.
Archie Brown: I think, Jamie, we're kind of looking at it like conversion plus 90 days.
Jamie Anderson: Yeah.
Jamie Anderson: Yeah.
Archie Brown: So you get, you say, convert Westfield in March, by June, pretty much all the expenses wrung out that we're going to get out of that integration. And then BankFinancial happens in June-
Archie Brown: So you get, you say, convert Westfield in March, by June, pretty much all the expenses wrung out that we're going to get out of that integration. And then BankFinancial happens in June-
Speaker #3: I And think , Jamie , we're kind of looking at it like conversion . Plus 90 days . So you get you say convert Westfield March in by the pretty much all expenses wrung out that we're going to get out of the out of that integration .
Jamie Anderson: Yeah.
Jamie Anderson: Yeah.
Archie Brown: -conversion, and then three months later, we've got some employees that are contracted to stay with us 90 days after. So once we get to 90 days after conversion, that's when all the expenses burn out.
Archie Brown: -conversion, and then three months later, we've got some employees that are contracted to stay with us 90 days after. So once we get to 90 days after conversion, that's when all the expenses burn out.
Speaker #3: And then, think financial—what happens in June is the conversion. And then three months later, we've got some employees that are contracted to stay with us 90 days after.
[Analyst] (Stephens Inc.): Perfect. Great, great color there. And then maybe as my follow-up, what are the plans in Chicago, the $1.2 billion that comes from BankFinancial? It's a massive market, and what's the strategy to grow? Is it de novo, hiring bankers, or is that an M&A market for you, potentially?
Terry McEvoy: Perfect. Great, great color there. And then maybe as my follow-up, what are the plans in Chicago, the $1.2 billion that comes from BankFinancial? It's a massive market, and what's the strategy to grow? Is it de novo, hiring bankers, or is that an M&A market for you, potentially?
Speaker #3: So once we get the 90 days after conversion, that's when all the expenses burn out.
Speaker #6: Great . Great Perfect . color there . And then maybe as my follow up , what what are the plans in Chicago ? The billion comes from two that Bank financial .
Speaker #6: It's a massive market . And what's the strategy to to grow ? Is it de novo hiring bankers or is that an M&A market for you potentially
Archie Brown: Yeah, Terry, it's Archie again. It's a little bit. Yeah, we'll, we'll focus on what we control, which is, you know, we're going to do organically. And we have a commercial banking team in the market that we had already put in prior, you know, a year and a half ago, or two years prior to the BankFinancial closing. We'll be adding to that team a little bit. We'll be adding wealth bankers in the market, wealth private banking in the market. They did not do mortgage banking. We'll be adding mortgage bankers in the market. And then we're going to retool what they're doing in their retail centers. They really weren't originating lending in the retail center.
Archie Brown: Yeah, Terry, it's Archie again. It's a little bit. Yeah, we'll, we'll focus on what we control, which is, you know, we're going to do organically. And we have a commercial banking team in the market that we had already put in prior, you know, a year and a half ago, or two years prior to the BankFinancial closing. We'll be adding to that team a little bit. We'll be adding wealth bankers in the market, wealth private banking in the market. They did not do mortgage banking. We'll be adding mortgage bankers in the market. And then we're going to retool what they're doing in their retail centers. They really weren't originating lending in the retail center.
Speaker #6: .
Speaker #3: , this Terry Yeah . Archie again , it's a little you know , we'll focus on what we control , which is you to do organically and know , we're going we have a commercial banking team market that we in the had already put in prior .
Speaker #3: know , You a year and a half two years prior to ago or the Bank financial closing , we'll be adding to that team a little bit .
Speaker #3: We'll be adding wealth bankers in the private banking in the wealth , market , market . They did not do banking . adding mortgage We'll be mortgage bankers in the market .
Speaker #3: And then we're going to retool what they're doing in their retail retail centers . They really weren't originating lending in the retail center .
Archie Brown: So we're training and retooling that so we can originate, you know, we're a pretty strong HELOC lender, so we're going to ramp that up. So a little bit of organic, and then adding a little bit of talent in some spots where we need it. There's a couple of folks that they had doing smaller, kind of smaller CRE that we've retained. They had a leasing team doing a few things on the leasing side that kind of filled in some holes that we had, and we're going to bring them over. We think there'll be some expansion of that business as a result. A little bit of both. As far as M&A in Chicago, we do think there's opportunity for add-on there.
So we're training and retooling that so we can originate, you know, we're a pretty strong HELOC lender, so we're going to ramp that up. So a little bit of organic, and then adding a little bit of talent in some spots where we need it. There's a couple of folks that they had doing smaller, kind of smaller CRE that we've retained. They had a leasing team doing a few things on the leasing side that kind of filled in some holes that we had, and we're going to bring them over. We think there'll be some expansion of that business as a result. A little bit of both. As far as M&A in Chicago, we do think there's opportunity for add-on there.
Speaker #3: So we're we're training and retooling that so we can originate , you know , we're a pretty strong HELOC lender . So we're going to we're going to ramp that up .
Speaker #3: So a little bit of organic . And then adding a little bit of talent and some spots where we need it . There's a folks couple of that they had smaller kind of smaller CRE that doing we've retained .
Speaker #3: had They team a doing a few things on the leasing leasing side . That kind of filled in some We holes . had and that we we're we're going to bringing them over .
Speaker #3: expansion of there'll be some that business A little We think as a result . bit of both . M&A As far as in Chicago , think there's we do opportunity on .
Archie Brown: And, you know, if the right thing happens, maybe so, but that's, that's not really our focus at the moment.
And, you know, if the right thing happens, maybe so, but that's, that's not really our focus at the moment.
Speaker #3: For add there. And you know, it's the right thing. Maybe so. But that happens. That's not really our focus at the moment.
[Analyst] (Stephens Inc.): Perfect. Thanks for taking my questions.
Terry McEvoy: Perfect. Thanks for taking my questions.
Archie Brown: Sure. Thank you.
Archie Brown: Sure. Thank you.
Operator: And again, if you would like to ask a question, press star and the number one on your telephone keypad. Your next question comes from the line of David Konrad of KBW. Your line is open.
Operator: And again, if you would like to ask a question, press star and the number one on your telephone keypad. Your next question comes from the line of David Konrad of KBW. Your line is open.
Speaker #6: Thanks for
Speaker #6: taking my questions . Perfect . .
Speaker #3: Sure . Thank you .
Speaker #1: If you would like to ask a question, please press * and then the number 1 on your telephone keypad. Your next question comes from the line of David Conrad of KBW.
David Konrad: Yeah. Hey, good morning, everyone.
David Konrad: Yeah. Hey, good morning, everyone.
Jamie Anderson: Hey, David.
Jamie Anderson: Hey, David.
David Konrad: Just a follow-up, follow-up question on the expenses. Excuse me. Just wondered how the efficiency ratio will trend through the year. It feels like it's going to be, like, very low fifties, based on your commentary.
David Konrad: Just a follow-up, follow-up question on the expenses. Excuse me. Just wondered how the efficiency ratio will trend through the year. It feels like it's going to be, like, very low fifties, based on your commentary.
Speaker #1: Your line is open .
Speaker #7: Yeah . Hey . Good everyone morning . Just to follow up , follow up question on the expenses . Excuse me . Just wondered efficiency ratio will trend through the year .
Jamie Anderson: Yeah. Yeah. David, this is Jamie. You sound sick. I'm sorry about that.
Jamie Anderson: Yeah. Yeah. David, this is Jamie. You sound sick. I'm sorry about that.
Speaker #7: It feels like it's going to be, like, very low 50s based on your commentary.
David Konrad: I'm trying to be brave.
David Konrad: I'm trying to be brave.
Jamie Anderson: Yeah. Yeah, you are. Got a good front. Yeah, so in the back half of the year, on the back half of the year, when the... Again, that'll be kind of when we start to realize what I would call full cost savings for the, for the two deals. When you look out, it's more - it's not quite low 50s, it's kind of in that, in that mid-50 range, 55, 56 range. A couple of things that like kind of nuance with our efficiency ratio. One of those is the impact from, from Summit, and the equipment leasing side. The way you account for, for operating leases, and it's a pretty good-sized chunk of our, of our fee income and also on the expense side.
Jamie Anderson: Yeah. Yeah, you are. Got a good front. Yeah, so in the back half of the year, on the back half of the year, when the... Again, that'll be kind of when we start to realize what I would call full cost savings for the, for the two deals. When you look out, it's more - it's not quite low 50s, it's kind of in that, in that mid-50 range, 55, 56 range. A couple of things that like kind of nuance with our efficiency ratio. One of those is the impact from, from Summit, and the equipment leasing side. The way you account for, for operating leases, and it's a pretty good-sized chunk of our, of our fee income and also on the expense side.
Speaker #2: Yeah , yeah . David , this is Jamie . You sound sick . I'm sorry about that . The .
Speaker #7: I'm trying to be .
Speaker #2: Brave . Yeah . You are . Got a good , got a good front . half of the Yeah . So in the back year , on the the year back half of the when again that'll be kind of when we start to realize what I would call full cost savings for the , for the two deals .
Speaker #2: When you look out it's more it's not quite low 50s . It's kind of in that in that mid 50 range 5556 range .
Speaker #2: A couple of things that kind of nuance with our efficiency ratio , one of those is the impact from , from summit and the equipment leasing side .
Speaker #2: The way you account for , for operating leases . And it's a pretty good sized chunk of our , of our income . And also on the expense side .
Jamie Anderson: So you get the rental payment in, the rental payment goes into fee income, and then you depreciate the asset on an operating lease. And that kind of isolated efficiency ratio for that business there is about in the mid- to high 60s. And so that skews our efficiency ratio a little bit, maybe by a couple hundred basis points. So absent that, it would be kind of in that, what you're talking about, that 52, 53 range.
So you get the rental payment in, the rental payment goes into fee income, and then you depreciate the asset on an operating lease. And that kind of isolated efficiency ratio for that business there is about in the mid- to high 60s. And so that skews our efficiency ratio a little bit, maybe by a couple hundred basis points. So absent that, it would be kind of in that, what you're talking about, that 52, 53 range.
Speaker #2: So you get the rental payment in the rental payment a is goes into fee income . And then you'd appreciate the asset on an operating lease .
Speaker #2: And that that kind of isolated efficiency ratio for that business . There is about in the high in the mid to high 60s .
Speaker #2: And so that that skews our efficiency ratio a little bit . Maybe by a couple hundred basis points . So absent that it would be kind of in that what you're talking about , that 5253 range .
[Company Representative] (First Financial Bancorp): Got it. Okay. And then, trust, really strong quarter there. How much did Westfield add, and what are you looking for for Q1?
David Konrad: Got it. Okay. And then, trust, really strong quarter there. How much did Westfield add, and what are you looking for for Q1?
Speaker #7: Got it . Okay . And then trust really strong quarter there . How much should Westfield add and what are you looking for for the first quarter .
Archie Brown: Yeah, David, Westfield didn't have a wealth or they have private banking, team that's more on the banking side. So we're actually adding, and we already hired one wealth advisor in the market. We're adding a second one, here soon, to try to grow, wealth, you know, kind of the wealth management assets in Northeast Ohio. But, they did, they didn't have any, when we acquired them. But they did have a great quarter, and it was a combination of just continue to, you know, bringing in new assets, and, and growing overall assets under management. And then we do have our M&A, small M&A advisory unit in that group, and, that group had a strong Q4, which added to their number.
Archie Brown: Yeah, David, Westfield didn't have a wealth or they have private banking, team that's more on the banking side. So we're actually adding, and we already hired one wealth advisor in the market. We're adding a second one, here soon, to try to grow, wealth, you know, kind of the wealth management assets in Northeast Ohio. But, they did, they didn't have any, when we acquired them. But they did have a great quarter, and it was a combination of just continue to, you know, bringing in new assets, and, and growing overall assets under management. And then we do have our M&A, small M&A advisory unit in that group, and, that group had a strong Q4, which added to their number.
Speaker #3: Yeah Westfield didn't have a They have private wealth . banking team that's more in the banking side . So we're actually adding . And we already hired one wealth advisor in the market .
Speaker #3: We're adding a second one here soon to try to grow our wealth, you know, kind of the wealth management assets in Northeast Ohio.
Speaker #3: But they did they didn't have any . We acquired them . But they did have a great quarter . And it was a combination of just continue to , you know , bringing in new assets and growing assets overall under management .
Speaker #3: then we do And have our M&A , small M&A advisory unit that group . in that group And had a strong Q4 , which added to their number .
[Company Representative] (First Financial Bancorp): Got it. Thank you.
David Konrad: Got it. Thank you.
Archie Brown: Yep.
Archie Brown: Yep.
Operator: Your next question comes from the line of Brian Foran of Truist. Your line is open.
Operator: Your next question comes from the line of Brian Foran of Truist. Your line is open.
Speaker #7: Got it . Thank you .
Speaker #8: Yep .
Brian Foran: Hey, good morning.
Brian Foran: Hey, good morning.
Archie Brown: Morning, Brian.
Archie Brown: Morning, Brian.
Jamie Anderson: Brian.
Jamie Anderson: Brian.
Speaker #1: Next question comes from the line of Brian Foran of Trust. Your line is open.
Brian Foran: Just going back to the loan growth commentary, two things I wanted to check. So one, would you expect total earning assets to kind of generally follow loan growth this year? Or is there anything we need to be mindful of as we're kind of penciling in cash and securities?
Brian Foran: Just going back to the loan growth commentary, two things I wanted to check. So one, would you expect total earning assets to kind of generally follow loan growth this year? Or is there anything we need to be mindful of as we're kind of penciling in cash and securities?
Speaker #4: Hey good morning .
Speaker #3: Morning , Brian .
Speaker #8: Brian .
Speaker #4: Just going back loan growth to the commentary . Two things I wanted to check . So one , would you expect total earning assets to kind of generally loan follow growth this year ?
Jamie Anderson: Yeah. So, yeah, Brian, so this is Jamie. So when you look at, we are getting a big influx of liquidity cash in on the BankFinancial deal. So what we will do is put that money to work, you know, kind of mindful of cash flow off of the securities portfolio. So the securities portfolio might get a little bit bloated for us in terms of size. We typically like to keep the securities portfolio somewhere around 20% of assets. So you'll see that, you'll see that peak maybe around $5 billion. So a little bit higher than what we would historically run on a percentage basis, because at that point, we'll be around $22 billion and change in assets.
Jamie Anderson: Yeah. So, yeah, Brian, so this is Jamie. So when you look at, we are getting a big influx of liquidity cash in on the BankFinancial deal. So what we will do is put that money to work, you know, kind of mindful of cash flow off of the securities portfolio. So the securities portfolio might get a little bit bloated for us in terms of size. We typically like to keep the securities portfolio somewhere around 20% of assets. So you'll see that, you'll see that peak maybe around $5 billion. So a little bit higher than what we would historically run on a percentage basis, because at that point, we'll be around $22 billion and change in assets.
Speaker #4: Or is there anything we need to be mindful of as we're kind of penciling in cash and securities ?
Speaker #2: Yeah . So yeah . Brian . So this is Jamie , the look at it we are getting a big so when you influx of liquidity cash in on the bank financial deal .
Speaker #2: So what we will do is put that money to work . You know kind of mindful of cash flow off of the portfolio .
Speaker #2: securities So the securities portfolio might get a little bit bloated for us in terms of in terms of size . We typically like to keep the securities portfolio somewhere around 20% of assets .
Speaker #2: So you'll see that you'll see that peak maybe around 5 billion . So a little bit higher than what we would historically run on a percentage basis .
Jamie Anderson: So what we will do then, as, as, you know, loan growth kind of ebbs and flows, we will bring the securities portfolio down. And if, and really, if you kind of want to look at it, kind of maybe a rule of thumb for that, it would be, you know, loan growth, you know, and about half of that would come off of the securities portfolio. So we will bring that down. Yeah.
So what we will do then, as, as, you know, loan growth kind of ebbs and flows, we will bring the securities portfolio down. And if, and really, if you kind of want to look at it, kind of maybe a rule of thumb for that, it would be, you know, loan growth, you know, and about half of that would come off of the securities portfolio. So we will bring that down. Yeah.
Speaker #2: Because at that point we'll be around 22 billion . And change in assets . So what we will do then , as , as you know , loan growth kind of ebbs and flows .
Speaker #2: We will bring the securities portfolio down and , and really if you kind of want to look at kind of maybe a rule of thumb for that , it would be , you know , loan growth , you know , in about half of that would come off of the securities portfolio .
Brian Foran: And then just on the timing of loan growth improving, I guess, was it more tied to getting through elevated pay downs in Q1, or is it more tied to getting through the conversions and we should see the strengthening more in the back half of the year? I just,
Brian Foran: And then just on the timing of loan growth improving, I guess, was it more tied to getting through elevated pay downs in Q1, or is it more tied to getting through the conversions and we should see the strengthening more in the back half of the year? I just,
Speaker #2: So we will bring that down . Yeah
Speaker #4: just on the . And then loan growth , improving , I guess , was it more tied to getting through elevated paydowns in one Q or is it more tied to getting through the conversions ?
Speaker #4: timing of
Jamie Anderson: Yeah.
Jamie Anderson: Yeah.
Brian Foran: Maybe you could just revisit the catalyst for the step up and the best guess of when we would start seeing it.
Brian Foran: Maybe you could just revisit the catalyst for the step up and the best guess of when we would start seeing it.
Speaker #4: see And the strengthening more in the back half of the year . I just maybe you could just revisit the catalyst for the step best guess up and the of when of we would start seeing it .
Archie Brown: Yeah, Brian, it's probably a couple of things. One, there is just a lower, typically a little bit lower origination quarter in Q1 for us than you would see as the year ramps up. A little bit of seasonality, I guess, is what I'm saying. You know, Summit, for example, our leasing group, tends to have a really strong back half, and the early part of the year tends to be a little bit lower than the back half, although, you know, we think they'll do a little bit more this year. But some seasonality is a piece of this. You know, we think the Westfield team, for example, Northeast Ohio, is already running strong.
Archie Brown: Yeah, Brian, it's probably a couple of things. One, there is just a lower, typically a little bit lower origination quarter in Q1 for us than you would see as the year ramps up. A little bit of seasonality, I guess, is what I'm saying. You know, Summit, for example, our leasing group, tends to have a really strong back half, and the early part of the year tends to be a little bit lower than the back half, although, you know, we think they'll do a little bit more this year. But some seasonality is a piece of this. You know, we think the Westfield team, for example, Northeast Ohio, is already running strong.
Speaker #3: Yeah , Brian , it's probably a couple of things . One , there is just a lower typically a little bit lower origination quarter in Q1 for us than you would the year see as ramps up .
Speaker #3: A little bit of seasonality , I I'm guess , is what . You know , some it , for example , or leasing group tends to have a really strong back half .
Speaker #3: And the early part of the year tends to be a little bit lower than the back half. Although, you know, we think they'll do a little bit more this year.
Archie Brown: So we'll be ramping up more resources and FTE in BankFinancial markets, and that will, in the back part of the year, also add more assets, you know, earning assets in our loans. So seasonality combined with, you know, bringing on some more people in the Chicago market over the year.
Speaker #3: But some seasonality is a piece of this we think . You know , the Westfield team , for example , Northeast Ohio is already running strong .
Archie Brown: So we'll be ramping up more resources and FTE in BankFinancial markets, and that will, in the back part of the year, also add more assets, you know, earning assets in our loans. So seasonality combined with, you know, bringing on some more people in the Chicago market over the year.
Speaker #3: So ramping we'll be more resources and FTE in the bank financial markets . And that will in the back part of the also add year , assets .
Speaker #3: You know , earning assets in or loans . So seasonality combined with combined with bringing on a few more people in the Chicago market over the year .
Brian Foran: Perfect. Thank you so much.
Brian Foran: Perfect. Thank you so much.
Archie Brown: Yep.
Archie Brown: Yep.
Operator: With no further questions, that concludes our Q&A session. I'll now turn the conference back over to Archie Brown for closing remarks.
Operator: With no further questions, that concludes our Q&A session. I'll now turn the conference back over to Archie Brown for closing remarks.
Speaker #4: Thank you so much .
Speaker #8: Yep .
Archie Brown: Thank you, JL. I want to thank everybody for joining us today. We are really pleased with the year and the quarter. Look forward to another great year in 2026, and look forward to talk to you again next quarter. Have a great day.
Archie Brown: Thank you, JL. I want to thank everybody for joining us today. We are really pleased with the year and the quarter. Look forward to another great year in 2026, and look forward to talk to you again next quarter. Have a great day.
Speaker #1: questions , that With no further concludes our Q&A session . I'll now turn the conference back over to Archie Brown for closing remarks .
Speaker #3: Thank you . Jill , I everybody want to thank joining us today . We really pleased with the year in the quarter . Look forward to another great year in 2026 .
Operator: This concludes today's conference call. You may now disconnect.
Operator: This concludes today's conference call. You may now disconnect.
Speaker #3: And I look forward to talking to you again next quarter. Have a great day.
