First Financial Bancorp (NASDAQ:FFBC) released first-quarter financial results and hosted an earnings call on Friday. Read the complete transcript below.
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Summary
First Financial Bancorp reported adjusted earnings per share of $0.77, a 22% increase from the previous year, driven by a robust net interest margin and strong fee income.
The company's strategic moves included completing the acquisition of Bank Financial and the conversion of Westfield Bank, leading to slight increases in loan balances.
Future outlook remains positive with expectations for mid-single digit loan growth, stable net interest margin, and strong fee income in the upcoming quarters.
Operationally, the company maintained a strong capital position with tangible book value per share increasing by 2.6% over the linked quarter.
Management highlighted successful cost management, achieving acquisition-related cost savings and maintaining strong asset quality despite economic uncertainties.
Full Transcript
Kate (Conference Operator)
Thank you for standing by. My name is Kate and I will be your conference operator today. At this time I would like to welcome everyone to the first financial banker first quarter 2026 earnings conference call and webcast. All lights 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, press Star one again. Thank you. I would now like to turn the call over to Scott Crowley, Corporate Controller. Please go ahead.
Scott Crowley (Corporate Controller)
Thanks, Kate. Good morning everyone. Thank you for joining us on today's conference call to discuss First Financial Bancorp's first quarter 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 will 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 first quarter 2026 earnings release as 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 March 31, 2026 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. 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'm 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 $0.77 with 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 the first quarter of 2025, originations 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 non interest income was 75.6 million, which was 24% higher than in the first quarter of 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 non interest 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 non performing 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 continue to climb. In the first quarter, all regulatory ratios were well in excess of regulatory minimums and the 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 the first quarter. 2025 tangible value was at approximately the same level as the third quarter of 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're evaluating opportunities to employ buybacks as part of our overall capital planning. I'd like to take a minute and discuss our recent acquisitions. During the quarter we successfully completed the conversion of Westfield bank and then 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're 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 1st and plan to convert systems in early June. Remain excited about the opportunities in the Chicago market and continue to see growth potential from this transaction. Now I'll turn the call over to Jamie to discuss these results in greater detail. And after Jamie, I'll wrap up with some additional forward looking commentary and closing remarks.
Jamie Anderson (Chief Financial Officer)
Thank you Archie and good morning everyone. Slides 4, 5 and 6 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 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 and non interest 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. Non interest expenses increased from the linked quarter due primarily to the impact of our most recent acquisitions. 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 $0.41 to $16.15 while our tangible common equity ratio increased to 7.88%. Slide 8 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 $0.77 per share for the quarter. Non interest 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. Non interest expense adjustments exclude the impact of acquisition costs, tax credit, investment write downs and other expenses not expected to recur. As depicted on Slide 9, these adjusted earnings equate to a return on average assets of 1.45%, a return on average tangible common equity of 19% and a pre tax pre provision ROA of 1.99%. Turning to slides 10 and 11, 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 absent the acquisition. We 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 non interest 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. Non interest 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 recent acquisitions. Turning now to slides 20 and 21, 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 22 and 23, 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 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 will evaluate capital actions that support that commitment. I'll now turn it back over to Archie for some comments on our outlook. Archie thank you, Jamie.
Archie Brown (President and Chief Executive Officer)
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 399 to 4.04% range over the next quarter assuming no rate cuts related to credit. We 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 and 77 million dollars, which includes 14 to 16 million for foreign exchange and 20 to 22 million dollars for leasing business revenue. Non interest expenses are expected to be between 151 and $154 million. We successfully completed the Westfield conversion in March and are scheduled to convert Bank Financial over the summer. We're on pace to achieve our modeled cost savings in 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've done this year integrating Westfield into First Financial and the work they're now doing as they prepare for the bank Financial Conversion. I also want to mention how proud I am that First Financial 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've 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're also improving the client experience and shareholder value. To conclude, we're really happy with our first quarter results. We've 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've had a very strong start to 2026 and we believe that this is going to be another very successful year. First Financial. Kate will now open up the call for questions.
Kate (Conference Operator)
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. We will pause for just a moment to compile the Q and A roster. Your first question comes from the line of Daniel Tamayo with Raymond James. Your line is open.
Daniel Tamayo (Equity Analyst)
Thank you. Good morning, Archie and Jamie. 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. So we, we talked to a lot of banks this earnings season about, about this headwind and, and kind of what's going to change to, to, to remove that headwind going forward. So just curious on your thoughts on that kind of what, what drives your confidence, those headwinds on the pay down side. Slow and you know, just a little bit more timing if it's second quarter or you think it's back half of the year as it relates to the timing of the pay downs. Thanks.
Archie Brown (President and Chief Executive Officer)
Yeah, thanks. Thanks Danny. Yeah, maybe start with some color and then I'll come back to the kind of how we see our outlook on it. You know, we talked about this primarily being ICRE. We had, we don't show REITs in the ICRE totals, but we also had some REIT pay downs or exits, if you will. And that shows up more in our commercial line that was probably another 23 million, but it's all related in the commercial real estate space, if you will. Look it's been a mix. We probably saw about 30% of our ICRE balances were exited because of the properties were sold. So there's been a little more, I think a little more volume of sales occurring as some of the, some of the developers owners are just saying, look, this is, I'm getting good pricing, it's a good time to do it with the uncertainty. So that's a piece of it. We've seen about maybe close to a quarter of it go to the secondary market. And then we've seen other banks come back in. We've seen for several years we weren't seeing the larger regionals in the space. They're back in and they're aggressive and they're taking out loans. In some cases for us hotels, we don't have a big book, but that's where some of it's come from. Other cases, loans that they're taking and they're taking for very aggressive pricing or in some cases, you know, structure that we don't think is appropriate. So we're seeing some of it move like that. So if you said property sales, secondary market, larger banks coming back in and then some REIT exits, it's sort of been the, in the mix of what we've seen happen. We, you know, we can talk to our commercial real estate team, just what we're seeing and in their conversation with borrowers and just with the level of payoff requests coming in, they just are slowing. And what our team sees is that over the course of the second quarter that will slow, continue to slow. In addition, our production ramps up more in the quarter. So the combination of the two, we don't know exactly where this is going to fall. Of course there's timing of payoffs, things that can occur, but they're hopeful that they're going to be somewhere that portfolio around flattish for the quarter. And if they're flattish along with the other activity we have, I think that drives our growth overall.
Daniel Tamayo (Equity Analyst)
That's great. Very helpful detail there, rg. 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 I maybe talk about the pipeline and some of the drivers within that, particularly on the commercial side for the rest of the year.
Archie Brown (President and Chief Executive Officer)
Yeah, the pipeline I think we signaled is pretty strong. Now look, I guess everybody can define what a pipeline means in the language we're using here. We call these advanced stage pipeline or a late stage pipeline. Generally. This is where we've been awarded the business. That doesn't mean we'll close them all. Sometimes they'll fall out for different reasons, but that's how we're looking at this. And it's just, it's up substantially from the early part of the year and we think that activity is continuing the sentiment in the market. I know there's 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's given us some confidence that we'll see the growth we've talked about. And it's pretty much across the board. When you look at all of the that we lend into, we're seeing good pipeline activity.
Daniel Tamayo (Equity Analyst)
Okay, great. And then lastly again on the same topic, but just curious where you guys stand. I mean in Chicago right now you closed the bank financial deal. You know, it 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 like a lender perspective and where you're looking to get to over time.
Archie Brown (President and Chief Executive Officer)
Sure. So Danny, as we said, we closed early in the year, convert early June. As you said, it's been primarily a deposit play. Deposits are holding I think pretty well at this point and we're sort of building out the team, if you will. So we've added some commercial banking talent. We had a team, I think we've added one here in the last month or two. We plan to add more bankers to the commercial banking team. We've added wealth advisors to the team, private bankers to the team. So we're kind of filling out, if you will, what I call the more the wholesale commercial team to complement the retail strategy. And we think there's good opportunity. If you go back and look at that bank, they really weren't generating activity in those areas to speak of. So we think it's as we get the team filled out, almost anything we do there is going to be additive to. To the bank's balance sheet.
Daniel Tamayo (Equity Analyst)
Got it. Thanks for all the color, Archie.
Archie Brown (President and Chief Executive Officer)
Yeah, good seeing you, Danny.
Kate (Conference Operator)
Your next question comes from the line of Brandon Rood with Stevens. Your line is open.
Brandon Rood
Morning, guys. I guess maybe my first one, the cost of interest bearing deposits was 233 for the full quarter. I'm just curious, embedded within your NIM guide, is that kind of a good starting base for the second quarter or I guess, yeah. Is that still a good starting point for the. For the second quarter?
Jamie Anderson (Chief Financial Officer)
Yeah. Let me. We talk when we're talking deposits, Brandon, we really Talk more kind of the overall, like our overall cost of deposits. So that, but that number that you are, you're quoting there, I mean that the, I guess the exit cost going into the second quarter would be slight, would be slightly lower than that. And so we are, you know, we're showing our overall cost of deposits in the, in the first quarter was 183. And we think we can, you know, we think we can get that down in the second quarter another two or three basis points. So the cost of interest bearing deposits would just kind of flow right off of that as well, obviously. So the, so our starting kind of cost of deposits in the second quarter, again, 183 for the full quarter in the first quarter. The starting point is around 180. 181.
Brandon Rood
Okay, perfect. Thank you for that. And then you said the fourth quarter of this year, I think it was going to be the first clean quarter with all the expenses taken out. So thank you for the guide for the second quarter. I'm assuming it kind of stair steps down from there, I guess. What does that all in run rate with all the cost saves kind of look like in the fourth quarter then?
Jamie Anderson (Chief Financial Officer)
Yeah, so we will, we'll get a stair step down here in the, let's see here in the, in the second quarter, you know, down into that range where we, where we guided to. And we think then it is relatively flat for the remainder of the year. We may get a little bit more coming down. But you know, obviously we have some other, you know, other stuff outside of the investor, outside of the acquisitions where we're, you know, making other investments and whatnot, where costs are moving up, you know, just like normal in that, you know, 2 or 3% range. That's going to offset the decline really from the, from the bank financial deal. And the bank financial deal obviously was a little bit, was a little bit smaller in their expense base, but the fourth quarter. So we should see that step down in the second quarter which gets us to that guide that we put in the outlook. And then it's relatively flat for those, for the out quarters.
Brandon Rood
Gotcha. Okay. So the cost savings effectively fund the investments and that's the stable rate. Okay, got it. Thank you very much.
Kate (Conference Operator)
Your next question comes from the line of Carl shepherd with RBC Capital Markets. Your line is open.
Carl Shepherd
Hey, good morning, guys.
Jamie Anderson (Chief Financial Officer)
I guess I just want to start on the margin quick. We have the guide for 2Q, but just thinking about your balance sheet, I'm guessing if we don't see any cuts, that's probably a pretty good spot to be for the rest of the year. Or should we be thinking about loan growth maybe at changing the mix a little bit and helping the margin? Yeah, yeah. This is Jamie, Carl. Yeah. So that, that guide, obviously with rate cuts getting, looks like getting pushed out, you know, in the. Either later in the year or into 27 at this point, obviously helps us from a margin standpoint being slightly asset sensitive. But. Yes. So when we, as we remix out of some of the securities balances that we put on with the liquidity that we got from, especially from the bank financial deal, you could see, you know, and it's not, it's not a lot obviously, because, you know, based on the earning asset base of, you know, based on the earning asset base that we have, you know, that that rotation is relatively small out of the securities book into the. And you know, if we have loan growth in that, you know, 5 to 7% range, you're talking about a couple hundred million dollars a quarter. Right. So if we, if we rotate out of securities for a portion or all of that, it's just not, it's not that much to basically get a lot of, get a lot of lift in the margin. But you might see a basis point or two.
Carl Shepherd
Okay. And then I saw in the deck a new branch in the Westfield markets. I'm assuming that was planned ahead of the merger, but just we talked a
Archie Brown (President and Chief Executive Officer)
little bit about, you know, Chicago expectations and investments there a few questions ago, but anything in Westfield markets to flag. Yeah, Carl, this RT so specific to that branch, that was actually a branch underway when we, when we, you know, we're negotiating and announcing a deal. They already had that branch under construction. So we just completed, actually we opened it up as a first financial branch prior to the conversion, which was, I think a good thing from training and letting people get to use, get to introduce to First Financial with regard to other things we're doing in the Northeast Ohio market. I think altogether, I think there's about four FTE added because of Wadsworth, that branch. I think we've added about another nine producers, whether they be on the commercial, small business side, wealth, private banking. We've added about nine producers to that market to kind of round out, you know, all the things that we do. That's all baked into the, into the expense numbers as well. But we think there's upside, you know, adding the additional production capability. Okay, thank you both.
Kate (Conference Operator)
Your next question comes from the line of Brian Forin with Truist. Your line is open.
Brian Forin
Hey, good morning. You Know your capitals rebuilt pretty quickly here, which is a good problem to have. I mean in some ways maybe it's just an open ended question on what you're thinking going forward. I think you mentioned maybe evaluating more buybacks and then as part of that if there's anything notable to share around Basel III or around how you're thinking about the binding minimum between CET1 and TCE and things like that. But yeah, really just kind of focused on the extra capital and what you're thinking for the next 12 months or so.
Jamie Anderson (Chief Financial Officer)
Yeah, yeah. Brian, this is Jamie. So yeah, if you. We are compounding capital at a, at a high rate just based on, based on our, based on our earnings level and if you look back, you know, back pre Westfield and Bank Financial, I mean maybe to a lesser extent Bank Financial, but if you look back pre acquisition, you know, at the end of the third quarter and I'm talking about our tangible book value per share, you know, we're basically back to where we were now pre acquisition level. So which we were very pleased with. So you know, we are piling in, you know, at this earnings level a lot of capital. And really when you think about it for us, I mean our regulatory ratios are
Brian Forin
fine. We have a lot of cushion there. Typically our constraint when we look at like if we look at an acquisition, our constraint typically is in the TCE ratio. You know, we're close to eight now, you know, just below eight. Obviously we have some AOCI impact in there and then rates moved, moved against us a little bit in the first quarter to, or that would have been even a little bit higher. So our typical constraints to TCE ratio, we would like to be that, like to have that above eight and we're getting there pretty quickly. But when we talk about buyback and looking at that, obviously we're going to be mindful of price and the earn back on that, you know, on a buyback and you know, looking at that TCE ratio. But you know we are. So we have a, when we look at the common dividend we have a payout ratio in the, in the low 30s, call it 30 to 35% now based on our earnings level post acquisition. So we wanted to get a couple, you know, a quarter or two of impact in from the, from the acquisitions to see where we were from a capital ratio standpoint where everything was going to fall out and then so we had the board approve the share buyback. We haven't done any buybacks in several years mainly because of, well, several things. We've had, we had a couple of non bank acquisitions during that. So we haven't done a buyback since 21 and we had a couple of the non bank acquisitions in there which ate up a pretty significant amount of capital for us because they were all, basically all cash deals and you know, so all goodwill aid into the TCE ratio. So we think we're at a level now, especially with our earnings, the amount of capital we're bringing in where we can look at buybacks and potentially I think what we're looking at is looking at that total payout ratio again, which now with just the common dividend is in the low 30s of increasing that somewhere in that 50 to 60% range. And so, you know, if you do that, if you do that, Matt, the other, obviously the other piece of that, the buyback. So you're talking about another, you know, 20 to 30 points of, of where the buyback would play into that. And then, you know, but that, you know, we're, I don't know if we're saying we're, you know, guaranteeing we're going to do that. You could probably see us execute some on the buyback. It would be dependent on, you know, some other factors potentially, you know, macro factors. And then, you know, we would, you know, if we see a strategic M and A deal, you know, we would prioritize that in front of the buyback. But, but yeah, I think absent that, I think you would see us start executing on, on the buyback. That's great. Thank you for all the detail. If I could ask one, follow up the theory. Pay down discussion was really helpful. I think the last point you made was seeing some pricing and structure that you don't necessarily want to match. I wonder if just anecdotally at the aggressive end of the market, could you share where you're seeing yields or spreads get to and are there any particular points in structure that you're seeing people give on? Is it an LTV thing? Is it a personal guarantee thing? You know, what are the kind of things you're seeing in the market that you don't want to match?
Archie Brown (President and Chief Executive Officer)
Yeah, this is Archie. I mean, you know, we had a, we had a deal. We were, we thought we were within days of closing. It's like a 25 or $30 million transaction. We thought we were in days of closing and one of the large regionals had been competing on it and then I guess when they realized they had lost it, they came back and basically eliminated the covenants. So it wasn't even changed. It just Eliminated the covenant. So we're seeing that certainly on a fixed charge coverage ratio, those numbers may be coming down. It's those kind of things in particular. Pricing is aggressive also, I may have mentioned earlier, but certainly sub 200 basis points of spread 170, 180 in some cases lower for some commercial, really high quality commercial deals, even lower on spread. So it tends to be really aggressive pricing. Loosening up some of the coverage ratios would be the primary areas. We're seeing it. Hopefully it's not true. It's swooping in with no covenants. Thank you for that. Yeah. Well, I think the point here too is, I mean we're, I think everybody's excited about activity and wanting loan growth and we want it too, but we don't want to give our skis. So we're going to get growth, but we want it to make sense and we want to be happy about it two years from now.
Kate (Conference Operator)
Before going to the next question again, if you would like to ask a question, press Star one on your telephone keypad. Your next question comes from Lon if Brandon Nozzle with Holiday Group. Your line is open.
Brandon Nozzle
Hey, good morning guys. Hope you're doing well.
Jamie Anderson (Chief Financial Officer)
Hey Brandon, maybe just starting off here on some of the, just the overall balance sheet looks like there's some pretty big discrepancies between, you know, where spot balances were for kind of loans, cash and securities versus average balances for the quarter. And I get there's a lot of noise. So I guess 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? Yep. Yeah, great question. Brandon, this is Jamie. So the loan sale closed on at the end of the very end of the quarter. It closed on March 30th. So when you look at our cash and securities, we had call it roughly 400 million sitting in cash, not in securities. It was sitting in cash at the end of the quarter. And so that 400 million, ish,
Brandon Nozzle
we will not put that to work in the securities portfolio. We will kind of slowly let higher cost, either borrowings or deposits or broker deposits run out. And we'll fund that with the cash from that loan sale. And then so when you're talking about earning assets, you know, the earning asset base for the first quarter kind of spot at the end of the quarter was 19 point around 19.7, around $19.7 million. So if you take that 400 out, you know, sitting in cash, I guess it's sitting in interest bearing deposits, you know, at banks. So that will come out and then you'll start to see, you know, again with the loan growth that we guided to, you know, if that is, again, if that's in that 5 to 7% range, you're talking about a couple hundred, like $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're talking about, you know, maybe 100 million or so increase in earning assets each quarter. Does that make sense? Yeah, yeah. And then just, I guess there's still a bit of a discrepancy on my end of just kind of where that number will land in the second quarter, just with the moving pieces. Can you just maybe help a little more on kind of where aeas land?
Jamie Anderson (Chief Financial Officer)
Yeah. So you're talking around nineteen and a half million.
Brandon Nozzle
Okay. All right, fantastic. Thank you. Thank you. Maybe turning back to the, the margin, just kind of unpacking the, the core NIM execution versus the, the accretion piece. I think you had 10 basis points this quarter of fair value accretion. Just kind of curious, when you kind of look at the path for that, what does that number look like?
Jamie Anderson (Chief Financial Officer)
Yeah, we think that'll be relatively steady at that 10 basis points. You know, obviously it could move around if we get, you know, either a slowdown and, you know, it's all based on the amount of payoff slash prepayments that we get on that portfolio. But if, you know, somewhere around that 10 basis point range in that 4 to, and the dollars would be around that 4 to $5 million of accretion income.
Brandon Nozzle
Okay. Okay, perfect. Last one for me here. Just when you kind of look out at growth expectations for the balance of the year, can you kind of dissect that between, you know, the core commercial bank versus your various specialty businesses?
Archie Brown (President and Chief Executive Officer)
Yeah, this is Archie. So when you, when you say the specialty, are you meaning core versus like specialty, including Summit and Oak street, things like that?
Brandon Nozzle
Yeah. So yeah, when it's essentially, you know, Oak Street, Summit, Agile, those books versus kind of the traditional commercial bank?
Archie Brown (President and Chief Executive Officer)
Yeah, I mean, it's the top of my head, but I'd say it's, it's slightly, slightly tilted towards the core commercial. You know, Agile is going to grow, but they're going to grow. It's just the base is not that huge and they'll, if they grow, I can't recall now, 20, $30 million, Summit will grow, but their amortizations have picked up so their growth rates are just not as strong as they used to be. So specialty is contributing. But I would say we're talking commercial core, commercial consumer is going to be if you said 50 to 60, maybe 65%.
Jamie Anderson (Chief Financial Officer)
Yeah, yeah, Jamie. Yeah, it's about, I would say it's about two thirds, one third and then agile. They have a, the second quarter is their big quarter for growth.
Brandon Nozzle
Yep, yep. Okay, fantastic.
Kate (Conference Operator)
I'll now turn the call back over to Archie Brown for closing remarks.
Archie Brown (President and Chief Executive Officer)
Thank you, Katie. I want to thank everybody for joining us today and following along our progress during the first quarter. We look forward to talking again second quarter and hopefully we'll be sharing even more good news with you. Have a great day. Have a great weekend. Bye now.
Kate (Conference Operator)
Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.
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