First Financial Bancorp. (NASDAQ:FFBC) Q3 2023 Earnings Call Transcript

Jamie Anderson: Yes. We do have — it’s about between 15% and 20% of the investment portfolio that is in — that we have in floaters. So that’s obviously helped the securities yield quite a bit over the last year. And in terms of hedging strategy, what really — nothing specifically against the securities book. But overall, we are building in some protection on the downside. And I would call it more on the extreme downside where we are — we want to — we put in place so far around some macro hedges that are around $600 million in total notional amount. But we want to get to about $1.5 billion or so, potentially $2 billion of downside protection. Again, I would call it extreme downside protection where we’re putting in some floors that are in that 2% to 2.50% range just to protect us because — I mean, if you remember, when our margin got — where we got hurt the most was, call it, March of ’20 and forward there when rates went to plummeted and we — our margin went in that 3.20% range.

So what we’re trying to do is build in some protection on that the extreme downside.

Christopher McGratty: Okay. Maybe just one more. The 2 charge-offs in the quarter, the $32 million loan sale, I guess, it was like — it looks like about a 20% loss. What was the sub-asset class within CRE? And then second, the C&I loss, what was the balance of that? I’m just trying to back into like loss rates on the relationships.

Bill Harrod: Yes. The loan sale included loan hotel loan office and loan health care deal. And the commercial credit was a consumer retail company that had as a multilevel marketing that changed their model after COVID when the party circuit kind of went down after having very robust pre-COVID and COVID-iers [ph] and the model couldn’t be changed ultimately.

Christopher McGratty: Okay. And that $6 million, what was the size of the principal, like what kind of loss rate was that on the second one?

Bill Harrod: Yes. I mean it was a total of about $10 million.

Operator: [Operator Instructions] Seeing no further questions, I will now turn the call back to Archie Brown.

Archie Brown: Thank you, Brianna. I want to thank everybody for joining today’s call and following our story. We look forward to talking to you again next quarter. Have a great day.

Operator: This concludes today’s conference call. Thank you for your participation. You may now disconnect.