Thank you for standing by and welcome to the First Financial Bancorp fourth quarter 2024 earnings conference call and webcast. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press the star one. Thank you. I'd now like to turn the call over to Scott Crawley. You may begin.

Yeah, thank you, Rob. Good morning, everyone, and thank you for joining us for this fourth quarter and full-year financial president and chief executive officer today. Any accompanying slide presentations are available on our website at www.bac.com. We'll make reference to the slides contained in the accompanying presentation during today's call. Refer to the forward-looking statement. Any forward-looking statements?

Good morning, everyone, and thank you for joining us on today's call. Yesterday afternoon, we announced our financial results for the fourth quarter and full-year 2024. Before I turn the call over to 71 cents of 1.7% and a return on tangible common equity of ratio of 19.9%, as expected due to decreases in short-term rates by the Fed, the decline in asset yields outpaced the decline in deposit costs, leading to a reduction in our net interest margin to 3.94%. Balance sheet trends were very strong for the quarter, with loan growth exceeding 7% on an annualized basis and total deposits surging by approximately 16% on an annualized basis. Non-interest income was robust in the fourth quarter with leasing, foreign exchange, and wealth management income all increasing by double-digit percentages from the linked quarter. While expenses increased by 5% from the linked quarter, the increase was driven by higher incentive compensation tied to the strong fee income and overall company performance. Our workforce efficiency initiative continued during the quarter, and we've eliminated 145 positions to date. We expect to complete this work in 2025. Asset quality was relatively stable for the quarter. Non-performing assets were flat compared to the linked quarter at 0.36%, while classified assets increased by 7 basis points to 1.21%. The increase in classified assets was driven by the mutually agreed-upon termination of a foreign exchange trade, resulting in a 45 million dollar obligation from the customer which we believe is fully collateralized customer to pay this obligation in 2025 net charge-offs were slightly elevated due to the resolution of three loans that have been longer-term workouts we believe that overall credit trends are improving and as a result we anticipate lower credit costs going forward 2024 was an excellent year for our company on an adjusted basis we earned 249 million dollars or $2.61 per share, while return on assets was 1.4 percent and return on tangible common equity was 19.9 percent. While the net interest margin declined from 4.4 percent to 4.05 percent due to declining short-term rates, strong loan growth offset most of the impact, with net interest income declining by only 2.5 percent. Non-interest income increased by more than 13 percent to a record $241.8 million, led by growth in leasing and wealth management income. The result was record $4 million increase over 2023. I'm very pleased with our balance sheet growth for the year. Total loans increased by 7.6% to $11.8 billion to $14.3 billion. Per share increased from $12.38 to $14.15, which was a 14% end year. Net charge-offs as a percentage of average loans declined 3 basis points to 30 basis points and non-performing assets as basis points i'll now turn the caller to jamie to discuss these results in greater detail after jamie's discussion i will wrap up with some additional forward-looking commentary and closing remarks jamie thank you archie and good morning everyone slides four five and six provide a summary of our most recent financial results the fourth quarter was highlighted by strong earnings and the net interest margin that exceeded our deposit growth our net interest margin remains very strong at 394 despite a

decline of 14 basis points from the linked quarter deposit costs declined 13 basis points during the period while loan yields decreased 30 stations during the quarter coming in at seven percent on an annualized basis the growth was not constant mortgage and lease we maintained 21 percent of our strategically focused health management income points during the quarter cases points basis points on an annualized basis. This put our year at 30 basis points. While a tangible common adjusted net income with 60 non-interest expense adjustments exclude the impact, investment write-downs, and other expenses, these adjusted earnings equate to return on average assets of 1.4% tangible common equity of 20% and a pre-tax pre-provision ROA exceeding 2.94% as loan yields declines and the yield funding cost declined 17 basis point 13 basis point lines are various sources of liquidity and borrowing capacity we continue to believe we have the flexibility required to manage the balance sheet through the expected economic environment and balance changes compared to the linked quarter loan balances increased seven percent on an annualized basis with growth in almost every portfolio as you can see on the right growth was driven by cni leasing icre concentration by industry patient in any particular in detail on our off downgraded to non-accrual during the quarter and our total non-accrual by mainly 26 million talents of this relationship of nine million dollars paid off it's from the linked quarter in total average and public fund back and traded in money markets and retail CDs seven billion dollars tration and believe our borrowing capacity 19 station which is tied to fee income and the company's overall profane and 21 and unfunded million dollars of total provision expense during the period. This resulted in an ACL that was announced as increased to 1.21 percent of total. However, this increase was related to a single following the mutually agreed-upon termination of a foreign exchange transaction, applying 27 million. The bill of reserves, we anticipate our ACL coverage will remain relatively flat or increase slightly in future periods as our model responds to changes in the macroeconomic environment. We remain in excess of regulatory minimums, and our tangible book value decreased slightly dollars than 15 cents. Return remains strong, with 35% of our earnings returned to our shareholders during the period through the common dividend. We continue to evaluate capital. I'll turn it back over to RT for some comments.

Strong the last several quarters, but we expect some of the seasonal flows that came in reversed in the first quarter, causing public funds and business balances to be slightly down. It continues to be strong and industry-leading, and assuming no additional rate cuts, we expect it to be in the range between 3.85% and 3.9% over the next quarter, lower over the next quarter, with the net charge-offs lower than the current period. ACL coverage as a percentage of loans is expected to be stable to slightly increasing. On fee income, we expect to be between $63 and $65 million, which includes $11 to $13 million for foreign exchange and $19 to $21 million for leasing business revenue. Non-interest expense is expected to be between $128 and $130 million and stay stable, excluding the leasing business and fee-based incentive expense. Our capital ratios remain strong, and we expect to maintain our dividend at the current level. During the year, we were excited to add the Agile team, and I want to thank them for making an immediate contribution to our company at the beginning of 2025 strategies to its clients and the team here at First Finance 24. We'll now open up the call.

Thank you. we will now begin the question and answer session if you would like to ask a question please press star one in your telephone keypad to raise your hand and join the queue if you would like to withdraw your question simply press star one again your first question today comes from the line of daniel tamayo from raymond james your line is open thank you um good morning guys so yeah maybe um first you know you you guys uh gave guidance for the first quarter i appreciate that on on loan growth um but it's it's kind of down from what you did in 2024 so just curious if that's a there's

some seasonality in the in the first quarter number or something unusual there that you expect you would expect um growth to pick up as as the year goes on or just kind of your comments on on loan growth throughout the year if you have some thanks yeah danie this is uh archie uh by the end of the year, but we've got a little bit more in Q1. Okay, terrific. And I guess then shifting over to the margin, one for Jamie, similar type of question. You gave the range 385 to 390 in the first quarter.

Just curious how you're thinking about the rest of the year and how the Fed funds cuts would play into that yeah um so we have we gave that guidance for the first quarter and then um so in our forecast for 2025 a day during the year kind of banned so the margin down slightly just due to the um due to the contractual nature obviously the loan book where those will come down then uh our margin again stay tight within that range of uh in that mid-380s call it.

Okay. That's helpful. Appreciate it, Jamie. And then I guess just a quick last one here for you, Archie. You guys have been expanding into new markets, as you pointed out, with Grand Rapids, the latest here in 2025. Just curious kind of the depth of those investments that you're making in those markets.

How quickly you think they may turn into you know meaningful growth for the bank and if there's any other markets that you've got your eye on for uh for de novo yeah thanks danny i mean the the ones we've i guess opened up in the last year to year and a half i think we're performing well both on the loan and deposit side i wouldn't call them rapid growth they're steady growth which is appropriate we want to build relationships not just build assets so they're going um well we've got teams probably in those markets anywhere from, if you think Chicago is, I think, around five to seven people. Cleveland, maybe just a little bit less, four or five people to date. The team in Grand Rapids initially is four. They were part of a bank that had a lot of market share, so I think they're hitting the ground running. We tend to look at these more opportunistically, so we've got a range of markets that are kind of in or adjacent, and we kind of take the opportunity when something income. We think about it. This year is just, again, when an opportunity presents itself that makes sense to us, we'll take the opportunity to.

All right, great. Well, thank you for all the color.

Thanks, Danny.

Your next question comes from the line of Terry McAvoy from Stevens, Inc. Your line is open.

Hi. Good morning, everybody.

Hey, Terry. Terry?

Maybe just make sure I understand the expense guide. If the FX is in the midpoint of, say, 12 and leasing is $20 million in the first quarter, that's baked into the $128 to $130 million of total non-interest expense?

Yeah, that's correct. Yeah. And so just kind of working through a little bit of the dynamics there, we get about a million increase included in the 128 to one.

And then as a follow-up, the classified asset, it was a kind of an FX transaction. And I guess my question is, is there credit risk in that, or do you talk about the credit risk in that business? And do you have a specific reserve for that business? And just provide a little bit more insight. We appreciate it.

Good morning.

Appreciate it. Thanks for all the color there.

Your next question comes from the line of Christopher McGrady from KBW. Your Your line is open.

All right. Hey, Chris. Jamie or Archie, the 30 basis, I think you mentioned 30 basis points of charge-offs in your prepared market. Is that how you think about normalized losses for this bank?

How we think 30, we said to you 25, you know, the last two years, you know, the way we're starting, you know, Chris kind of in that range, I'd say.

Okay, thanks. And then any kind of comment that you could provide on inorganic growth? there's a lot of optimism in the banks for deregulation, and you do have a multiple and strong capital. Thoughts on incremental M&A in 25?

Yeah. Well, I think we all have a little more optimism for lots of reasons, too, that it seems like it's in that $1 to $5 billion space.

All right. Perfect. Thank you.

Your next question comes from a line of John Arfstrom from RBC Capital Markets. Your line is open.

Thanks. Good morning.

Hey, John.

Can you guys talk a little bit about your overall non-interest income growth expectations? I mean, you had a good, great year in 24 across categories. Just curious what you think might be possible for 25 on fee income.

Yeah, John, I'll start. Jimmy may have something to say here, too. I mean, generally, to exclude leasing business income for a moment, But I think it's more gradual, kind of steady growth. Swaps has probably been one of the areas that's been a little down. So with more activity, I think that has an opportunity to improve. But I think outside of leasing business income, those numbers feel pretty much like a steady course can move up a little bit.

Yeah, John, the only thing that I would add, I mean, just on the foreign exchange side and in that capital markets group, we just get, you know, $15 million to $15 million.

Good, thank you. And you guys always, you provide a nice slide on Agile. It's more than doubled. Can you just talk a little bit about that business and how long you think the runway is in terms of your balance sheet capacity for that?

Yeah, John, you know, when we bought that, I think we only brought over around a little over $100 million in receivables, $110 million in receivables at the time. So we knew the production numbers were going to drive a lot of growth, especially in the first year. But, again, even this year, I think we're 25% year-over-year production, probably being a little healthier than last year's production because first we have them for the whole year. Last year we had them for 10 months. So production is going to go up a little bit more. I can't remember exactly the numbers at this point. About 250.

250-ish for originations, and that's kind of where we think the balances are going to end. over the over the end of the year okay good um yeah john hey john hey john real quick on that the one thing um that on the uh on the agile side i mean that there is some seasonality to their business as well that's why you saw um a little bit that's not anything that we you know that we purposefully did or the seasonality of their business really in the middle of the year and as a business says um and then and then bill one for you just on the classified uh if you take

out the fx issue it's a pretty big step down in classifieds and i'm just curious how you're feeling about that and do you think we may have hit a peak or is there anything new that you're seeing or concerning yeah a great question john i appreciate it um you know the the q4 we we all right thanks guys i appreciate it again if you'd like to ask a question please

press star one on your telephone keypad and there are no further questions at this time i will now turn the call back over to Archie Brown for closing remarks.

Thank you, Rob. I want to thank everybody for joining us today and hearing about our quarter and our year. We're excited about 2025. We look forward to talking with you again in a few months. Have a good day.

This concludes today's conference call. Thank you for your participation. You may now discuss