First Financial Bancorp.

Thank you for standing by, and welcome to the First Financial Bancorp Fourth Quarter 2023 Earnings Conference Call and Webcast. I would now like to welcome Scott Crawley, Corporate Controller, to begin the call. Scott, over to you.

Thank you, Monty. 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 2023 financial results. Participating on today's call will be Archie Brown, President and Chief Executive Officer, Jamie Anderson, Chief Financial Officer, and Bill Herron, Chief Credit Officer. Both the press release we issued yesterday and the accompanying slide presentation are available on our website at www.bankatfirst.com under the Investor Relations section. We'll make reference to the slides contained in the accompanying presentation during today's call. Additionally, please refer to the forward-looking statement disclosure contained in the fourth quarter 2023 earnings release well as our sec filings for a full discussion of the company's risk factors the information we will provide today is accurate as of december 31st 2023 and we will not be updating any forward-looking statements to reflect facts or circumstances after this call i'll now turn the call over to archie brown thank you scott 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 2023 before i turn the call over to jamie i'd like to provide some highlights from the most recent quarter and recap this year's record performance. I'm very pleased with our fourth quarter performance. Adjusted earnings per share was $0.62, which resulted in a return on assets of 1.37% and a return on tangible common equity ratio of 22.2%. As expected, rising funding costs outpaced the increase in asset yields. However, our net interest margin remained very strong at 4.26%. Additionally, balance sheet trends were positive during the quarter with loans increasing $286 million or 11% on an annualized basis and average deposits increasing $416 million or 13% on an annualized basis. Non-interest income and expenses were both lower than we expected during the quarter. The decline in non-interest income included a $4.6 million loss on a trade at Bannockburn. However, excluding this loss, foreign exchange income was within our range of expectations. Leasing income also declined during the period due to lower end-of-term fees and lease originations shifting to a greater mix of finance leases. While this shift increased interest income and the net interest margin, it resulted in lower non-interest income during the period. Non-interest expenses declined for the quarter primarily due to lower incentive compensation, which is tied directly to non-interest income. Asset quality was stable for the quarter with underlying credit trends improving. Net chargeoffs were 46 basis points during the quarter and were driven by one relationship that included a borrower fraud. This loan had been on non-accrual for most of the year and was almost fully reserved coming into the fourth quarter. Additionally, non-forming assets declined by 12% to 38 basis points, and classified asset balances were relatively unchanged from the third quarter. 2023 was a record year for First Financials. Adjusted earnings per share increased 17% from the prior year to $2.77, while return on assets was 1.55%. Return on tangible common equity was 25.4%, and our efficiency ratio was 56%. Total revenue of $840.2 million was the highest in the company's history, increasing 18.5% over the prior year. Our balance sheet responded favorably to the interest rate environment, resulting in a 21% in net interest income. Additionally, record years from wealth management and summit drove a 12% increase in non-interest income. We're extremely pleased with the performance of our balance sheet during 2023, especially given the turmoil in the banking industry in the first half of the year. Loan production was solid, exceeding 6% in balance growth, while average deposit balances increased 2.4% compared to the prior year. We're also very happy with the 122 basis point expansion in the tangible common equity ratio and 24% increase in intangible book value per share for the year. Asset quality trends were a bit elevated during the year. Net charge-offs increased to 33 basis points for 2023 after we achieved a record low of six basis points in 2022. This increase was driven by two large relationships as well as the loss on the sale of a small portfolio of ICRE loans. Non-performing assets to total assets ended the year at 38 basis points. We believe we're well positioned to manage the coming year and were cautiously optimistic regarding asset quality in 2024. With that, I'll now turn the call over 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.

Thank you, Archie, and good morning, everyone. Slides four, five, and six provide a summary of our fourth quarter financial results. The fourth quarter was another good quarter, highlighted by strong earnings, net interest margin that exceeded expectations, stable asset quality metrics, and solid loan and deposit growth. Our balance sheet continues to respond favorably to the current interest rate environment. While our net interest margin declined slightly, the pace was less than we expected and remains very strong at 4.26%. We anticipate further net interest margin contraction in the coming period due to additional pressure on deposit pricing and changes in funding mix. Total loans grew 11% on an annualized basis, which exceeded our expectations. Loan growth was concentrated in the leasing, specialty finance, investor CRE, and residential mortgage books, with relatively stable balances in the other portfolios. Non-interest income declined in the fourth quarter. The largest decline was foreign exchange, which was negatively impacted by a $4.6 million loss on a trade. However, this loss was mostly offset by lower non-interest expenses. Additionally, leasing business income declined during the quarter. However, this was primarily a function of product mix as Summit originated a larger volume of finance leases during the period. Non-interest expenses declined from the linked quarter due to lower employee costs and marketing expenses. Overall, asset quality trends were stable with lower net charge-offs, black classified assets, and declining non-performing asset balances. Annualized net charge-offs were 46 basis points during the period and were driven by a single $9 million relationship that we'd previously reserved for. We recorded $10.2 million of provision expense during the period, which was driven by net charge-offs and loan growth. Our ACL coverage remains conservative at 1.29% of total loans. From a capital standpoint, our regulatory ratios remain in excess of both internal and regulatory targets. Accumulated other comprehensive incomes improved $100 million during the period. As a result, tangible book value increased 13.5%, while our tangible common equity ratio increased by 67 basis points during the period. Slide seven reconciles our gap earnings to adjusted earnings. highlighting items that we believe are important to understanding our quarterly performance. Adjusted net income was $59 million, or 62 cents per share, for the quarter. Adjusted earnings exclude the impact of the FDIC special assessment, as well as costs not expected to recur, such as acquisition, severance, and branch consolidation costs. As depicted on slide 8, These adjusted earnings equate to a return on average assets of 1.37%, a return on average tangible common equity of 22%, and an efficiency ratio of 58%. Turning to slide nine, net interest margin declined seven basis points from the linked quarter to 4.26%. As we expected, higher funding costs outpaced the increase in asset yields, primarily due to a 31 basis point increase in the cost of deposits. These costs were partially offset by a favorable shift in funding mix and a 14 basis point increase in asset yields due to higher rates and a more profitable mix of earning asset balances during the period. On slide 10, you can see the increase in asset yields included an 11 basis point increase in loan yields. Additionally, the yield on the investment portfolio increased 13 basis points. As I previously mentioned, our cost of deposits increased 31 basis points compared to the linked quarter, and we expect these costs to continue to increase in the first quarter, but at a slower pace than we saw in the fourth quarter. Slide 11 details the betas utilized in our net interest income modeling. Deposit costs increased with greater velocity in the fourth quarter, moving our current beta of 5 percentage points to 38%. Our modeling indicates that our through the cycle beta is approximately 40%. Slide 12 outlines our 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. Slide 13 illustrates our current loan mix and balance changes compared to the linked quarter. As I mentioned before, loan balances increased 11% on an annualized basis. with broad-based growth. Summit, specialty finance, ICRE, and mortgage all had strong quarters, while the other loan portfolios were relatively flat. Slide 14 provides detail on our loan concentration by industry. We believe our loan portfolio remains sufficiently diversified to provide protection from deterioration in any particular industry. Slide 15 provides detail on our office portfolio. About 4% of our total loan book is concentrated in office space, and the overall LTV of the portfolio is strong. No office relationships were downgraded during the quarter, and our total non-accrual balance for this portfolio declined to $23 million. Slide 12 shows our deposit mix as well as the progression of average deposits from the linked quarter. In total, average deposit balances increased $416 million during the quarter, driven primarily by a $284 million increase in money market accounts, a $123 million increase in public funds, and a $158 million increase in combined retail and brokered CDs. These increases offset a decline in non-interest bearing deposits and savings accounts. This was expected as the current interest rate environment has driven customers to higher cost deposit products. Slide 17 illustrates trends in our average personal, business, and public fund deposits, as well as the comparison of our borrowing capacity to our uninsured deposits. We saw increases in all three deposit types, with personal deposits increasing $97 million, business deposits increasing $124 million, and public fund balances increasing $123 million. On the bottom right of the slide, you can see our adjusted uninsured deposits were $3.2 billion at the end of the year. This equates to 24% of our total deposits. We are comfortable with this concentration and believe our borrowing capacity provides sufficient flexibility to respond to any event that would stress our larger deposit balances. Slide 18 highlights our non-interest income for the quarter. Fee income declined to $47 million during the fourth quarter. The biggest driver of the decline was lower foreign exchange income, which was negatively impacted by a $4.6 million loss on a trade. This loss was offset by a reduction in the related employee costs and non-interest expenses. Leasing business income declined during the period due to a heavier mix of finance lease originations during the period. Additionally, wealth management had another solid quarter and other non-interest income increased during the period driven by higher syndication fees. Non-interest expense for the quarter is outlined on slide 19. Core expenses declined $4.7 million during the period. This decrease was driven by lower employee costs, which are tied to fee income, as well as lower marketing expenses. Turning now to slides 20 and 21, our ACL model resulted in a total allowance which includes both funded and unfunded reserves of $160 million and $10.2 million of total provision expense during the period. This resulted in an ACL that was 1.29% of loans, which was a seven basis point decrease from the third quarter. Provision expense was driven by net charge-offs and loan growth. Net charge-offs were $12.6 million or 46 basis points on an annualized basis. and were primarily driven by a $9 million relationship that had been previously reserved for. In other credit trends, non-accrual loans decreased during the period due to the charge-off I previously mentioned, while classified asset balances were relatively flat quarter over quarter. Our ACL coverage was 1.29% at year-end. As I mentioned last quarter, we have modeled conservatively in prior quarters to build a reserve that reflected the losses we expect from our portfolio. We expect our ACL coverage to remain relatively flat in the coming periods. Finally, as shown on slides 22, 23, and 24, regulatory capital ratios remain in excess of regulatory minimums and internal targets. During the fourth quarter, tangible book value increased 13.5%, and the TCE ratio increased 67 basis points, or 10.3%. due to a $100 million improvement in accumulated other comprehensive income. Absent the income from AOCI, the TCE ratio would have been 9.05% at the end of the year, compared to 7.17% as reported. Slide 23 demonstrates that our capital ratios will remain in excess of regulatory targets, including the unrealized losses in the securities portfolio. Our total shareholder return remains robust with 39% of our earnings returned to our shareholders during the period through the common dividend. We believe our dividend provides an attractive return to our shareholders and do not anticipate any near-term changes. However, we will continue to evaluate various capital actions as the year progresses. I'll now turn it back over to Archie for some comments on our outlook going forward. Archie? Thank you, Jamie.