Why This First Financial Bancorp Analyst Is Bullish In A Tough Year For Regional Banks

Piper Sandler Companies took a bullish turn on First Financial Bancorp FFBC Monday. Here's what investors need to know.

The FFBC Analyst: Brandan Nosal upgraded shares of First Financial from Neutral to Overweight, and increased the price target from $23 to $24. Check out more FFBC ratings here.

The upgrade came amidst the bank’s solid performance in the recent rate cycle, its robust market position in Cincinnati and other major Midwest cities, as well as its consistently strong return profile in a variety of rate environments, Nosal said to investors.

First Financial, a $17 billion asset bank holding company headquartered in Cincinnati, Ohio, operates a 130-branch footprint that spans Ohio, Indiana, northern Kentucky and northeast Illinois.

The bank escaped relatively unscathed from the ongoing rate cycle due to its solid funding base and naturally asset-sensitive balance sheet, Nosal said, resulting in a Net Interest Margin (NIM) increase from 3.15% to 4.55% over the past 12 months.

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The analyst also said FFBC's outlook is realistic, predicting a NIM decrease to ~3.90-4.00% by the fourth quarter of this year, or the first quarter of next year. The conservative forecast potentially sets a floor on numbers versus other banks, making FFBC a likely strong performer in the "higher for longer" interest rate environment.

The bank’s history of delivering healthy and durable returns, with core Return on Average Assets (ROAA) > 1% each year over the past decade, signals a strong contribution from fee income sources and a cost-conscious expense base, Piper Sandler said.

The analyst acknowledged potential pushbacks, including the bank’s larger national businesses and not being the most discounted name in the coverage universe, along with somewhat larger office exposure compared to others.

FFBC Price Action: Shares of First Financial Bancorp are trading 4.38% higher to $21.46, according to data from Benzinga Pro.

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