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Date

Friday, April 24, 2026 at 8:30 a.m. ET

Call participants

  • President & Chief Executive Officer — Archie M. Brown
  • Chief Financial Officer — James Michael Anderson

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Takeaways

  • Adjusted Earnings Per Share -- $0.77, reflecting a 22% increase compared to the first quarter of 2025.
  • Adjusted Return on Assets -- 1.45% for the period, with adjusted return on tangible common equity at 19.2%.
  • Net Interest Margin -- 3.99%, up 1 basis point from the linked quarter, with management expecting stability near this level if rates remain steady.
  • Loan Balances -- Increased $71 million, driven by $228 million acquired from Bank Financial, partially offset by a $152 million decrease in investor commercial real estate (ICRE) portfolio balances.
  • Loan Origination -- Originations rose approximately 45% compared to the prior year and over 25% excluding Westfield and Bank Financial.
  • Adjusted Noninterest Income -- $75 million, a 24% increase from 2025 and near flat sequentially, supported by record leasing and wealth management income, and strong client derivatives.
  • Noninterest Expenses -- Increased $12.9 million over the linked quarter, primarily from recent acquisitions, but remained below expectations with acquisition-related cost savings surpassing initial targets.
  • Net Charge-Offs -- 35 basis points annualized, up 8 basis points from the fourth quarter, affected by a single large commercial relationship.
  • Nonperforming Assets -- Declined 4 basis points from the linked quarter, ending at 44 basis points of total assets.
  • Total Average Deposit Balances -- Rose by $1.7 billion, including $1.2 billion from Bank Financial and the full-quarter impact of Westfield, with 20% in non–interest-bearing accounts.
  • Allowance for Credit Losses (ACL) -- Coverage ratio at 1.36% of total loans, a 3-basis-point decrease from the previous quarter, reflecting a $207 million total allowance.
  • Tangible Book Value Per Share -- Increased 2.6% sequentially to $16.15 and up 9% from 2025 levels.
  • Capital Ratios -- Remained above regulatory and internal targets, with tangible common equity ratio at 7.88% at period end.
  • Shareholder Return -- 35% of first-quarter earnings returned via common dividend; board approved a new 5 million-share repurchase authorization.
  • Guidance -- Management projects mid-single-digit annualized loan growth in the second quarter, fee income between $75 million and $77 million, foreign exchange revenue of $14 million to $16 million, leasing revenue of $20 million to $22 million, and noninterest expenses of $151 million to $154 million.
  • Acquisition Progress -- Westfield Bank conversion completed with high retention and expected financial results; Bank Financial system conversion planned for early June, with full run-rate cost savings anticipated in the fourth quarter.
  • NDFI Exposure -- Nondirect financial institution (NDFI) loans constitute about 3% of the loan book and are all pass rated, primarily concentrated in REITs.

Summary

First Financial Bancorp. (FFBC +2.44%) delivered higher adjusted net income driven by increased net interest margin and strong fee income despite ongoing pressure in the ICRE loan portfolio. Management highlighted substantial deposit growth and stable credit performance as well as the successful completion of key acquisitions. Capital levels further strengthened, enabling the company to reauthorize share repurchases and pursue an active capital return strategy while maintaining regulatory cushions.

  • Speaker Anderson attributed “an $8.9 million gain on bargain purchase” to the Bank Financial acquisition, adjusting noninterest income for this item and other nonrecurring losses.
  • Speaker Brown discussed, “it is a combination of the two. We do not know exactly where this is going to fall—there is timing of payoffs, things that can occur—but they are hopeful that they are going to be somewhere around flattish for the quarter in that portfolio. And if they are flattish, along with the other activity we have, I think that drives our growth overall,” positioning the company for loan growth in the next quarter.
  • Speaker Anderson said, “earnings level post-acquisition” supports “potentially increasing the total payout ratio,” with buybacks considered alongside dividends and possible strategic M&A.
  • Deposits in the Chicago market, enhanced by Bank Financial, are described as “Deposits are holding, I think, pretty well at this point” with plans to expand commercial and wealth management teams in that region.
  • Core commercial/consumer lending is expected to drive about 50%-65% of loan growth, with specialty businesses such as Agile, Summit, and Oak Street contributing the balance, per direct management commentary.
  • Management does not expect material changes in core noninterest expense post-Q2, noting anticipated investments are offset by acquisition-related cost saves.

Industry glossary

  • ICRE: Investor Commercial Real Estate loans, representing credit extended to fund income-producing properties not owner-occupied.
  • NDFI: Non-Depository Financial Institution loans, typically lending to financial entities such as REITs rather than to non-financial borrowers.
  • ACL: Allowance for Credit Losses, the reserve established for potential future loan losses.
  • TCE: Tangible Common Equity, calculated as common equity minus intangible assets and goodwill, serving as a core capital adequacy metric.

Full Conference Call Transcript

Archie M. Brown: Thanks, Scott. Good morning, everyone, and thank you for joining us on today's call. Yesterday afternoon, we announced our first quarter results, and I am very pleased with our overall performance. The first quarter was a busy one, as we closed the Bank Financial acquisition, completed the conversion of Westfield Bank, and wrapped up the sale of the Bank Financial multifamily loan portfolio. Adjusted earnings per share were 77¢, an adjusted return on assets of 1.45%, and an adjusted return on tangible common equity of 19.2%. Adjusted earnings per share increased 22% compared to the first quarter of last year, driven by robust net interest margin and strong fee income.

Our net interest margin was resilient, despite the Fed funds rate cut in December, as the expected decline in loan yields was offset by a similar decline in deposit costs. Assuming no short-term rate reductions by the Fed, we expect the margin to remain stable in the near term. Loan balances increased slightly for the quarter due to the Bank Financial acquisition. Excluding the Bank Financial portfolio, loans declined for the quarter as seasonally strong loan production was offset by extended payoff pressure in the ICRE portfolio. Compared to 2025, origination increased approximately 45%, and excluding Westfield and Bank Financial, originations were up by over 25%. Our expectation for loan growth for 2026 has not materially changed.

Loan pipelines are very healthy, and we expect strong production in the second quarter. We also expect payoff activity in ICRE to approach more normal levels, leading to solid loan growth in the second quarter. Adjusted fee income was strong for the quarter. Historically, fee income significantly dips early in the year; however, we successfully combated this trend in the first quarter. Adjusted noninterest income was $75 million, which was 24% higher than in 2025 and only a slight decline from the linked quarter. These results were driven by record wealth management income, strong client derivative income, and record leasing business income.

Additionally, expenses were well controlled during the quarter, with total noninterest expenses coming in well below our expectations and acquisition-related cost savings exceeding our initial estimates. Net charge-offs were 35 basis points of total loans and were impacted by one large commercial relationship. Other asset quality indicators were stable, with nonperforming assets slightly declining from the linked quarter to 44 basis points. While there is certainly more uncertainty in the economy due to the impact of the war in Iran, our current expectations are for asset quality to gradually improve throughout the year, similar to our performance in 2025. Capital ratios are strong and continued to climb in the first quarter.

All regulatory ratios were well in excess of regulatory minimums, and tangible common equity increased 7.9%. Tangible book value per share was $16.15, which was a 2.6% increase over the linked quarter and a 9% increase compared to 2025. Tangible book value was at approximately the same level as 2025 just prior to the Westfield Bank acquisition. This month, the board of directors authorized a 5 million share repurchase plan, replacing the plan we had in place through 2025, and we are evaluating opportunities to employ buybacks as part of our overall capital planning. I would like to take a minute and discuss our recent acquisitions.

During the quarter, we successfully completed the conversion of Westfield Bank, and for the quarter, Westfield deposit and loan balances were stable. We maintained high associate retention, and we have achieved the financial results that we expected from the transaction to date. We are happy with the quality of the bank we acquired and with the talented team that has joined us. We also completed the purchase of Bank Financial on January 1 and plan to convert systems in early June. We remain excited about the opportunities in the Chicago market and continue to see growth potential from this transaction. I will now turn the call over to James Michael Anderson to discuss these results in greater detail.

After James, I will wrap up with some additional forward-looking commentary and closing remarks.

James Michael Anderson: Thank you, Archie, and good morning, everyone. Slides four, five, and six provide a summary of our most recent financial performance. The first quarter results were excellent and included strong earnings, record revenues driven by a robust net interest margin, and higher-than-expected fee income. Our net interest margin remains very strong at 3.99%, increasing 1 basis point during the quarter. Cost of funds declined 13 basis points, while asset yields declined 12 basis points. End-of-period loan balances increased $71 million, which included $228 million acquired in the Bank Financial transaction. This was partially offset by a $152 million decrease in ICRE balances, reflecting the payoff pressure that Archie mentioned earlier.

Total average deposit balances increased $1.7 billion, including $1.2 billion acquired in the Bank Financial transaction and the full-quarter impact from Westfield. We maintained 20% of our total deposit balances in noninterest-bearing accounts and remain focused on growing lower-cost deposit balances. Turning to the income statement, first quarter fee income overcame seasonal headwinds with strong performance across all income types. Additionally, we had an $8.9 million gain on bargain purchase related to the Bank Financial acquisition. Noninterest expenses increased from the linked quarter due primarily to the impact of our most recent acquisition.

Our ACL coverage decreased slightly during the quarter to 1.36% of total loans, and we recorded $8.5 million of provision expense during the period, which was driven primarily by net charge-offs. On asset quality, net charge-offs were 35 basis points on an annualized basis, an increase of 8 basis points from the fourth quarter, while NPAs as a percentage of assets were 44 basis points, declining 4 basis points from the fourth quarter. Classified assets as a percentage of total assets also declined slightly during the period. From a capital standpoint, our ratios are in excess of both internal and regulatory targets. Tangible book value increased 41¢ to $16.15, while our tangible common equity ratio increased to 7.88%.

Slide eight reconciles our GAAP earnings to adjusted earnings, highlighting items that we believe are important to understanding our quarterly performance. Adjusted net income was $80.5 million, or 77¢ per share, for the quarter. Noninterest income was adjusted for $1.3 million of losses on the sales of investment securities, the $8.9 million gain on bargain purchase related to the Bank Financial acquisition, and a $1.4 million loss on the surrender of a bank-owned life insurance policy. Noninterest expense adjustments exclude the impact of acquisition costs, tax credit investment write-downs, and other expenses not expected to recur.

As depicted on slide nine, these adjusted earnings equate to a return on average assets of 1.45%, a return on average tangible common equity of 19%, and a pretax pre-provision ROA of 1.99%. Turning to slides ten and eleven, net interest margin increased 1 basis point from the linked quarter to 3.99%. Total deposit costs declined 13 basis points from the linked quarter, offsetting the impact of lower asset yields. Slide 13 illustrates our current loan mix and balance changes compared to the linked quarter. Loan balances increased $71 million during the period. As you can see on the right, we acquired $228 million of loans in the Bank Financial transaction.

This was offset by a $152 million decrease in ICRE balances. After the acquisition, loan balances decreased 4.7% on an annualized basis, driven by elevated payoffs in ICRE. Slide 15 depicts our NDFI exposure. As you can see, our total NDFI balances are approximately 3% of our total loan book, and all NDFI loans were pass rated at the end of the first quarter. The majority of our NDFI lending is concentrated in loans to REITs, which we believe further mitigates our risk. Slide 16 shows our deposit mix as well as a progression of average deposits from the linked quarter.

In total, average deposit balances increased $1.7 billion, including a $1.2 billion impact from the Bank Financial transaction, as well as a full-quarter impact from Westfield. Slide 18 highlights our noninterest income. Total adjusted fee income was $76 million, with leasing and wealth management both posting record results. Foreign exchange delivered strong results, and client derivative fees increased during the period as well. Noninterest expense for the quarter is outlined on slide 19. Core expenses increased $12.9 million, as expected, during the period. This was driven primarily by our recent acquisitions.

Turning now to slides twenty and twenty-one, our ACL model resulted in a total allowance, which includes both funded and unfunded reserves, of $207 million, which includes $3.1 million of initial allowance on the Bank Financial portfolio. This resulted in an ACL that was 1.36% of total loans, which was a 3 basis point decline from the fourth quarter. We recorded $8.5 million of provision expense during the period. Provision expense was primarily driven by net charge-offs, which were 35 basis points. Additionally, our NPAs to total assets decreased slightly to 44 basis points, while classified asset balances as a percentage of total assets decreased to 1.02%.

Finally, as shown on slides twenty-two and twenty-three, capital ratios remain in excess of regulatory minimums and internal targets. During the first quarter, tangible book value increased to $16.15, while the TCE ratio increased to 7.88% at the end of the period. Our total shareholder return remains strong, with 35% of our first quarter earnings returned to our shareholders during the period through the common dividend. The board also approved a 5 million share repurchase program. We maintain our commitment to providing an attractive return to our shareholders, and we will evaluate capital actions that support that commitment. I will now turn it back over to Archie for some comments on our outlook. Archie?

Archie M. Brown: Thank you, James. Before we conclude our prepared remarks, I want to comment on our second quarter outlook, which can be found on slide 24. On the balance sheet, we expect mid-single-digit loan growth on an annualized basis during the second quarter, as loans filter through our strong pipelines and ICRE payoffs slow. On the deposit side, we expect core deposit balances to remain relatively flat compared to the first quarter. Our net interest margin remains among the highest in the peer group, and we expect it to hold steady in a 3.99% to 4.04% range over the next quarter, assuming no rate cuts.

Related to credit, expect second quarter credit costs to approximate first quarter levels and ACL coverage to remain relatively stable as a percentage of loans. As I mentioned earlier, similar to last year, we expect credit trends to gradually improve over the course of the year. Further down the income statement, we expect fee income to be between $75 million and $77 million, which includes $14 million to $16 million for foreign exchange and $20 million to $22 million for leasing business revenue. Noninterest expenses are expected to be between $151 million and $154 million. We successfully completed the Westfield conversion in March and are scheduled to convert Bank Financial over the summer.

We are on pace to achieve our modeled cost savings for the Westfield acquisition and should realize full savings beginning in the third quarter, and we expect full Bank Financial savings to be realized beginning in the fourth quarter. Before I wrap up, I want to thank our associates for the incredible work they have done integrating Westfield into First Financial, and the work they are now doing as they prepare for the Bank Financial conversion. I also want to mention how proud I am that First Financial Bancorp. was selected for the Gallup Exceptional Workplace Award for associate engagement.

This marks the second consecutive year that we have received this honor, which is awarded to 4% of the thousands of companies that Gallup works with worldwide. We have partnered with Gallup for more than six years, and we have made associate engagement a core tenet of our corporate strategy. I want to commend our associates and leaders who work throughout the year to drive engagement, knowing that by doing so, we are also improving the client experience and shareholder value. To conclude, we are really happy with our first quarter results. We have made substantial progress across the company, and we work diligently to be a bank that consistently produces top-level results.

We remain focused on the right things and are determined to build on the momentum generated by our first quarter performance. We have had a very strong start to 2026, and we believe that this is going to be another very successful year for First Financial Bancorp. Kate, we will now open up the call for questions.

Operator: We will now open the call for questions. At this time, I would like to remind everyone, in order to ask a question, press star then the number one on your telephone keypad. The first question comes from the line of Daniel Tamayo with Raymond James. Your line is open.

Daniel Tamayo: Good morning, Archie and James. So I guess maybe first starting on the loan growth side, you talked about the impact from the payoffs in the first quarter, $152 million, I think, is the number you gave. We have talked to a lot of banks this earnings season about this headwind and what is going to change to remove that headwind going forward. So just curious on your thoughts on that, what drives your confidence those headwinds on the paydown side slow, and a little bit more on timing—if it is second quarter or you think it is back half of the year as it relates to the timing of the paydowns? Thanks.

Archie M. Brown: Yeah, thanks, Danny. Maybe I will start with some color, then come back to how we see our outlook on it. We talked about this primarily being ICRE. We do not show REITs in the ICRE totals, but we also had some repay downs or exits, if you will, and that shows more in our commercial line. That was probably another $3 million, but it is all related in the commercial real estate space, if you will. It has been a mix. We probably saw about 30% of our ICRE balances exited because the properties were sold.

So there has been a little more volume of sales occurring as some of the developers/owners are saying, “Look, I am getting good pricing. It is a good time to do it with the uncertainty.” So that is a piece of it. We have seen maybe close to a quarter of it go to the secondary market. And then we have seen other banks come back in. For several years, we were not seeing the larger regionals in the space. They are back in, and they are aggressive, and they are taking out loans. In some cases for us, we do not have a big book—that is where some of it has come from.

Other cases, loans that they are taking, they are taking for very aggressive pricing or, in some cases, structure that we do not think is appropriate. So if you said property sales, secondary market, larger banks coming back in, and then some REIT exits, that has been the mix of what we have seen happen. We can talk to our commercial real estate team—what we are seeing in their conversations with borrowers and with the level of payoff requests coming in—they are slowing. And what our team sees is that over the course of the second quarter, that will continue to slow. In addition, our production ramps up more in the quarter. So it is a combination of the two.

We do not know exactly where this is going to fall—there is timing of payoffs, things that can occur—but they are hopeful that they are going to be somewhere around flattish for the quarter in that portfolio. And if they are flattish, along with the other activity we have, I think that drives our growth overall.

Daniel Tamayo: That is great. Very helpful detail there, Archie. I guess the other side of that, and you touched on it at the end, is the production. I think you talked a little bit about it in the prepared remarks, but maybe talk about the pipeline and some of the drivers within that, particularly on the commercial side, for the rest of the year?

Archie M. Brown: Yeah. The pipeline, I think we signaled, is pretty strong. Everyone can define what a pipeline means. In the language we are using here, we call these advanced-stage or late-stage pipeline. Generally, this is where we have been awarded the business. That does not mean we will close them all—sometimes they will fall off for different reasons—but that is how we are looking at this, and it is up substantially from the early part of the year. That activity is continuing. The sentiment in the market—there is a lot of macro activity going on—but demand is pretty strong. Borrowers are pretty active, and we think the pipeline will continue to build.

So that has given us some confidence that we will see the growth we have talked about. It is pretty much across the board when you look at all of the areas that we lend into—we are seeing good pipeline activity.

Daniel Tamayo: Okay, great. And then lastly, again on the same topic, but just curious where you guys stand in Chicago right now. You closed the Bank Financial deal. That was really for the deposit side. I know you had some presence there prior to the deal. So maybe update us on where you stand from a lender perspective and where you are looking to get to over time.

Archie M. Brown: Sure. As you said, we closed early in the year and convert in early June. As you said, it has been primarily a deposit play. Deposits are holding, I think, pretty well at this point, and we are building out the team. We have added some commercial banking talent. We had a team, and I think we have added one here in the last month or two. We plan to add more bankers to the commercial banking team. We have added wealth advisors to the team, private bankers to the team. We are filling out the wholesale commercial team to complement the retail strategy. We think there is good opportunity.

If you go back and look at that bank, they really were not generating activity in those areas to speak of. So as we get the team filled out, almost anything we do there is going to be additive to the bank’s balance sheet.

Daniel Tamayo: Got it. Thanks for all the color, Archie.

Archie M. Brown: Yep. Good to see you, Danny.

Operator: Your next question comes from the line of an analyst with Stephens. Your line is open.

Analyst: Morning, guys. Good afternoon. I guess in my first one, I think the cost of interest-bearing deposits was $233 million for the full quarter. I am just curious, embedded within your NIM guide, is that a good starting base for the second quarter? Or is that still a good starting point for second quarter?

James Michael Anderson: Yeah. When we are talking deposits, we really talk more about our overall cost of deposits. The number you are quoting there—that is the exit cost going into the second quarter—would be slightly lower than that. We are showing our overall cost of deposits in the first quarter was 1.83%, and we think we can get that down in the second quarter another 2 or 3 basis points. So the cost of interest-bearing deposits would flow off of that as well. Our starting cost of deposits in the second quarter—again, 1.83% for the full first quarter—the starting point is around 1.80% to 1.81%.

Analyst: Okay, perfect. Thank you for that. And then I think you said the fourth quarter of this year is going to be the first clean quarter with all the expenses taken out. Thank you for the guide for the second quarter. I am assuming it kind of stair-steps down from there. What does that all-in run rate with all the cost saves look like in the fourth quarter then?

James Michael Anderson: We will get a stair-step down in the second quarter into the range where we guided, and then we think it is relatively flat for the remainder of the year. We may get a little bit more coming down, but we have some other items outside of the acquisitions where we are making investments and whatnot—costs moving up in that 2% to 3% range—that will offset the decline from the Bank Financial deal. The Bank Financial deal was a little bit smaller in their expense base. So we should see that step down in the second quarter, get us to the outlook guide, and then it is relatively flat for the out quarters.

Analyst: Gotcha. Okay. So the cost savings effectively fund the investments, and that is the stable rate.

James Michael Anderson: Right.

Operator: Your next question comes from the line of Karl Robert Shepard with RBC Capital Markets.

Karl Robert Shepard: Hey. Good morning, guys.

Archie M. Brown: Hey, Karl.

Karl Robert Shepard: I just want to start on the margin quick. We have the guide for 2Q. But thinking about your balance sheet, I am guessing if we do not see any cuts, that is probably a pretty good spot to be for the rest of the year. Or should we be thinking about loan growth maybe changing the mix a little bit and helping the margin?

James Michael Anderson: Yeah, Karl. So that guide—obviously, with rate cuts looking like they are getting pushed out either later in the year or into ’27 at this point—helps us from a margin standpoint, being slightly asset sensitive. As we remix out of some of the securities balances that we put on with the liquidity from the Bank Financial deal, you could see a little lift. It is not a lot, because based on the earning asset base we have, that rotation is relatively small out of the securities book. If we have loan growth in that 5% to 7% range, you are talking about a couple hundred million dollars a quarter.

If we rotate out of securities for a portion or all of that, it is not that much to get a lot of lift in the margin, but you might see a basis point or two.

Karl Robert Shepard: And then I saw on the deck a new branch in the Westfield markets. I am assuming that was planned at the end of the merger, but just talk a little bit about Chicago expectations and investments there, and anything in Westfield markets to flag?

Archie M. Brown: Specific to that branch, that was actually a branch underway when we were negotiating and announcing the deal—they already had that branch under construction. We just completed and opened it as a First Financial branch prior to the conversion, which was a good thing from training and letting people get introduced to First Financial. With regard to other things we are doing in the Northeast Ohio market, I think altogether there are about four FTE added because of Wadsworth, that branch. I think we have added about another nine producers—commercial, small business, wealth, private banking. We have added about nine producers to that market to round out all the things that we do.

That is all baked into the expense numbers as well. We think there is upside adding the additional production capability.

Karl Robert Shepard: Thank you both.

Operator: Your next question comes from the line of Brian Foran with Truist. Your line is open.

Brian Foran: Hey. Good morning. Your capital has rebuilt pretty quickly here, which is a good problem to have. Maybe it is an open-ended question on what you are thinking going forward. I think you mentioned maybe evaluating more buybacks. And then as part of that, if there is anything notable to share around Basel III or around how you are thinking about the binding minimum between CET1 and TCE and things like that. Really just focused on the excess capital and what you are thinking for the next twelve months or so.

James Michael Anderson: Yeah, Brian. We are compounding capital at a high rate based on our earnings level. If you look back pre-Westfield and Bank Financial—to a lesser extent, Bank Financial—but pre-acquisition at the end of the third quarter, talking about our tangible book value per share, we are basically back to where we were now pre-acquisition levels, which we were very pleased with. We are piling in, at this earnings level, a lot of capital. Our regulatory ratios are fine; we have a lot of cushion there. Typically, our constraint when we look at an acquisition is the TCE ratio. We are close to 8% now, just below 8%.

Obviously, we have some AOCI impact in there, and rates moved against us a little bit in the first quarter or that would have been even a little bit higher. Our typical constraint is the TCE ratio—we would like to have that above 8%, and we are getting there pretty quickly. When we talk about buybacks, we are going to be mindful of price and the earn-back on a buyback and looking at that TCE ratio. We have a common dividend payout ratio in the low thirties—call it 30% to 35% now—based on our earnings level post-acquisition.

We wanted to get a quarter or two of impact in from the acquisitions to see where we were from a capital ratio standpoint, where everything was going to fall out. Then we had the board approve the share buyback. We have not done any buybacks in several years, mainly because we had a couple of non-bank acquisitions during that time. We have not done a buyback since 2021, and those non-bank acquisitions ate up a significant amount of capital for us because they were basically all-cash deals—so all goodwill—ate into the TCE ratio.

We think we are at a level now, especially with our earnings and the amount of capital we are bringing in, where we can look at buybacks and potentially increase the total payout ratio. With just the common dividend, it is in the low thirties; we could increase that somewhere in the 50% to 60% range. If you do that math, the other piece of that is the buyback—so you are talking about another 20 to 30 points where the buyback would play into that. We are not guaranteeing we are going to do that; you could see us execute some on the buyback.

It would be dependent on other factors—potentially macro factors—and if we see a strategic M&A deal, we would prioritize that in front of the buyback. Absent that, I think you would see us start executing on the buyback.

Brian Foran: That is great. Thank you for all the detail. If I could ask one follow-up, the CRE paydown discussion was really helpful. I think the last point you made was seeing some pricing and structure that you do not necessarily want to match. I wonder, anecdotally on the aggressive end of the market, could you share where you are seeing yields or spreads get to? And are there any particular points in structure that you are seeing people give on? Is it an LTV thing? Is it a personal guarantee thing? What are the kinds of things you are seeing in the market that you do not want to match?

Archie M. Brown: Let me give you an example. We had a deal that we thought we were within days of closing—like a $25 million or $30 million transaction. We thought we were days from closing, and one of the large regionals had been competing on it. When they realized they had lost it, they came back and basically eliminated the covenants—did not even change them, just eliminated the covenants. We are seeing that. On a fixed charge coverage ratio, those numbers may be coming down. Pricing is aggressive also. Certainly sub-200 basis points of spread—170, 180, in some cases lower—for some really high-quality commercial deals, even lower on spread.

It tends to be really aggressive pricing and loosening up some of the coverage ratios. Those would be the primary areas we are seeing it. The point here is everybody is excited about activity and wanting loan growth—we want it too—but we do not want to get over our skis. We are going to get growth, but it needs to make sense. We want to be happy about it two years from now.

Operator: Before going to the next question, again, if you would like to ask a question, press star then 1 on your telephone keypad. Your next question comes from the line of an analyst with Hovde Group. Your line is open.

Analyst: Hey. Maybe just starting off here on the overall balance sheet. Looks like there are some pretty big discrepancies between where spot balances were for loans, cash, and securities versus average balances for the quarter, and I get there is a lot of noise. Can you fill us in on when the Bank Financial loan sale occurred during the quarter? And then where do you see overall average earning assets landing in the second quarter?

James Michael Anderson: Great question. The loan sale closed at the very end of the quarter—it closed on March 30. If you look at our cash and securities, we had roughly $400 million sitting in cash at the end of the quarter. That ~$400 million—we will not put that to work in the securities portfolio. We will slowly let higher-cost either borrowings or brokered deposits run off, and we will fund that with the cash from that loan sale. When you are talking about earning assets, the earning asset base at the end of the quarter was around $19.7 billion—around $19.716 billion. If you take that $400 million out as it is sitting in cash—interest-bearing deposits at banks—that will come out.

Then you will start to see, with the loan growth that we guided to, if that is in the 5% to 7% range, you are talking about roughly $200 million a quarter. Our plan is to fund about half of that with cash flows from the securities portfolio, and then the rest we will grow the earning asset base. So you are talking about maybe a $100 million or so increase in earning assets each quarter.

Analyst: Yeah. And then there is still a bit of a discrepancy on my end of where that number will land in the second quarter, just with the moving pieces. Can you maybe help a little more on where AEAs land?

James Michael Anderson: You are talking around $19.5 billion.

Analyst: Okay. Fantastic. Thank you. Maybe turning back to the margin—just unpacking the core NIM ex accretion versus the accretion piece. I think you had 10 basis points this quarter of fair value accretion. When you look at the path for that, what does that number look like?

James Michael Anderson: We think that will be relatively steady at that 10 basis points. It could move around if we get either a slowdown or an increase in payoffs/prepayments on that portfolio, but somewhere around that 10 basis point range, and the dollars would be around $4 million to $5 million of accretion income.

Analyst: Perfect. Last one for me. When you look at growth expectations for the balance of the year, can you dissect that between the core commercial bank versus your various specialty businesses?

Archie M. Brown: When you say specialty, are you meaning core versus specialty including Summit and Oak Street, things like that?

Analyst: Yes—especially Oak Street, Summit, Agile—those books versus the traditional commercial bank.

Archie M. Brown: Off the top of my head, I would say it is slightly tilted toward the core commercial. Agile is going to grow, but the base is not that huge. [inaudible] Summit will grow, but their amortizations have picked up; their growth rates are just not as strong as they used to be. So specialty is contributing, but I would say we are talking commercial—core commercial/consumer is going to be, if you said, 50% to 60%, maybe 65%.

James Michael Anderson: Yeah, it is about two-thirds/one-third, and Agile has its big quarter for growth in the second quarter.

Analyst: Okay. Fantastic.

Operator: I will now turn the call back over to Archie Brown for closing remarks.

Archie M. Brown: Thank you, Kate. I want to thank everybody for joining us today and following along our progress during the first quarter. We look forward to talking again in the second quarter, and hopefully, we will have even more good news to share with you. Have a great day. Have a great weekend. Bye now.

Operator: Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.