FIRST FINANCIAL BANCORP /OH/ (FFBC) stock intrinsic value fair value estimate & owner earnings analysis

First Financial Bancorp is a Cincinnati-based bank holding company with about $22.4 billion of assets, $13.7 billion of loans and $17.6 billion of deposits at June 30, 2026. Beyond ordinary commercial and consumer banking in Ohio, Indiana, Kentucky and Illinois, it owns higher-yielding specialty lenders: Summit Funding (equipment leasing), Agile Premium Finance (acquired February 2024 for $96.9 million), franchise and insurance-related lending, and Bannockburn (foreign-exchange services). It has also just closed two bank purchases: Westfield Bancorp in Northeast Ohio on November 1, 2025 (about $2.1 billion of assets, paid with $260 million of cash and 2.75 million shares) and BankFinancial in the Chicago area on January 1, 2026 (5.98 million shares, about $1.4 billion of assets, with $449 million of its multi-family loans earmarked for sale). Diluted shares are now about 105 million, up from 96 million in 2025. What we measure. We start from the cash the business generates, charge it for stock compensation and for the credit losses a lender must expect (loan-loss provisions are treated as a real, recurring cost rather than added back), and set aside swings in loans held for sale, accrued interest and other balance-sheet timing items. On that basis, owner earnings per share were $2.31 in 2019, $1.74 in 2020 (pandemic reserve build), $2.77 in 2021, $2.62 in 2022, $3.04 in 2023, $3.03 in 2024 and $3.20 in 2025. Intangible amortization and the roughly $22 million of securities losses taken in each of 2024 and 2025 are added back as sunk costs; the wasting core-deposit intangibles from acquisitions are instead reflected by keeping growth modest and by eroding the bear case. For a bank, deposits and borrowings are the raw material of the business, so we value earnings after interest and subtract no debt. Starting point. We use the middle value of 2019 through 2025, a window that contains the pandemic credit shock, the zero-rate years and the higher-rate years: $2.77 per share. That sits below 2025's $3.20, but it is still flattered by 2021, which was helped by an $18 million reserve release; with provisions set to a steady level in every year the middle value would be nearer $2.50, which would put the base case at roughly $45. We do not lift the level on the latest quarters. They do show the acquisitions are roughly neutral per share: second-quarter 2026 earnings were $76.5 million, or $0.73 a diluted share, the same as a year earlier despite about 10% more shares, so we give no credit for cost savings from Westfield or BankFinancial. Base case, $49.38 per share. Owner earnings grow 1.5% a year for five years and 1% a year for the next five, then stay level. Actual growth in 2025 was 5.8% (from $3.03 to $3.20), so the assumed first year sits below it. The growth credited is the steady reinvestment of retained earnings into loans and deposits, held below the 3.7% a year owner earnings per share achieved from 2021 to 2025. We credit little because organic loan growth in 2025 was close to zero (loans excluding Westfield were about flat at $11.8 billion). We also deduct the capital that growth ties up (tangible book of roughly $16.60 per share must grow with the balance sheet), so only what is left over counts as distributable. We left out further acquisitions beyond those already closed, share gains, new products and any margin recovery. About 59% of the base value comes from earnings beyond year ten, which we hold level because the bank earned a profit in every year we can see (2016-2025, including 2020) and nothing we can name and evidence supports either growth or decline beyond that. Bear case, $30.77 per share. Underlying earnings fall to $2.31 a share (the 2019 level, the weakest year in our window other than 2020) with no growth, and a full credit cycle modelled on 2008-2010 begins in year two. Net charge-offs, now 0.25% of loans, rise by an extra 0.75%, 1.55%, 1.65%, 1.05% and 0.45% over years two to six, a peak near 1.9% of loans against more than 2% for the banking industry as a whole in 2009-2010. On $13.7 billion of loans that is about $750 million before tax, or $5.62 per share after tax. Owner earnings bottom at about $0.61 a share in year four and stay positive throughout, so we do not assume a capital raise. After year ten we apply a second, half-size downturn every fifteen years and a 1% a year erosion for ten years as acquired deposit relationships age. Current warning signs are real: nonperforming assets rose from $66.0 million to $102.0 million during 2025, and reserves covered nonaccrual loans 183% against 238% a year earlier. The bear value is above tangible book value because earnings stay positive through the whole downturn and the franchise returns to owner earnings of about 14% of tangible book. Bull case, $62.71 per share. Earnings stay at 2025's $3.20 (supported by first-half 2026 earnings of $1.44 a share) with credit costs near the 25-30 basis points of 2024-2025, then grow 3.5% a year for five years and 2% a year for five more, and stay level thereafter. No synergies or windfalls are included. Margin-of-safety price, $22.00. We are fairly sure of the earnings level: it reconciles to reported cash flow within 0.2% in every year, and owner earnings have been above $2.60 a share in each of the last five years. The worst plausible outcome is a credit cycle concentrated in commercial real estate, franchise, hotel and leasing exposure while goodwill (about $1.1 billion) is 37% of book value, leaving tangible equity of only about $1.75 billion on $22.4 billion of assets. A loss pattern like the bear case would absorb earnings for several years but not capital, since the bank's core capital ratio was 11.32% at year-end 2025. If integration of the two new banks goes badly or credit losses prove much worse than modelled, value could fall well below the bear figure. Over the holding period the dividend pays $1.00 a year (the current $0.25 quarterly rate, about 4.5% on $22), and the base case can distribute roughly $2.55 to $2.95 a share a year in total, with the balance accumulating as capital. A 20% annual return over five years from $22 requires a value near $35, about 12 times the roughly $3 a share of owner earnings the base case reaches by then; from $28 it would require about $50, which leaves no cushion if the credit cycle arrives early. In the bear case, distributions over those five years total about $6.40 a share and the business is still worth about $34 a share at the end of year five. The price assumes a holding period of three to five years.