FFBC

MKT CAP $3.4BP/E 11.5DIV YIELD 3.08%FCF YIELD 22.19%REV TTM —NET INCOME $285.2M +19.5%NET DEBT $176.2M52W 23.27 – 36.18SEC XBRL · TTM TO Invalid Date

How FFBC rewrote its risk factors

10-K ITEM 1A · FY2024 → FY2025

Text kept

33%

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444

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+10,511

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New in FY2025

Risk Factors" of this Annual Report on Form 10-K and (ii) in the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section of First Financial's 2025 Annual Report to Shareholders (included within Exhibit 13 to this Annual Report on Form 10-K and incorporated by reference into Item 7 of this Annual Report on Form 10-K).
Forward-looking statements speak only as of the date on which they are made, and, except as may be required by law, we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made.
All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are qualified in their entirety by the foregoing cautionary statements.
First Financial Bancorp., an Ohio corporation (First Financial or the Company), was formed in 1982.
First Financial is a mid-sized, regional bank holding company headquartered in Cincinnati, Ohio, which has elected to become a financial holding company.
References in this Form 10-K to “we,” “us” or “our” refer, as the context requires, to First Financial and its subsidiaries, collectively or to First Financial as the holding company.
First Financial engages in the business of commercial banking and other banking and banking-related activities through its wholly-owned subsidiary, First Financial Bank (the Bank), which was founded in 1863.
Effective December 30, 2016, the Bank converted its charter to an Ohio state chartered bank from a nationally chartered bank.
The range of banking services provided by First Financial to individuals and businesses includes commercial lending, real estate lending and consumer financing.
Real estate loans are loans secured by a mortgage lien on the real property of the borrower, which may either be residential property (one to four family residential housing units) or commercial property (owner-occupied and/or investor income producing real estate, such as apartments, shopping centers, or office buildings).
Risk of loss related to lending activities is managed by adherence to standard loan policies that establish certain levels of performance prior to the extension of a loan to the borrower.
In addition, First Financial offers deposit products that include interest-bearing and noninterest-bearing accounts, time deposits and cash management services for retail and commercial customers.
A full range of trust and wealth management services is also provided through First Financial’s Wealth Management line of business.
Commercial and industrial loans are made to all types of businesses for a variety of purposes including, but not limited to, inventory, receivables and equipment.
First Financial works with businesses to meet their shorter-term working capital needs while also providing long-term financing for their business plans.
First Financial also offers lease and equipment financing primarily through its wholly-owned subsidiary Summit Funding Group, Inc.
Credit risk for lending activities is managed through standardized loan policies, established and authorized credit limits, centralized portfolio management and the diversification of market area and industries.
The overall strength of the borrower is evaluated through the credit underwriting process and includes a variety of analytical activities, including the review of historical and projected cash flows, financial performance, financial strength of the principals and guarantors and collateral values, where applicable.
Commercial and industrial lending activities also include equipment and leasehold improvement financing for franchisees throughout the U.S., principally in the quick service and casual dining sector.
The underwriting of these loans incorporates basic credit proficiencies combined with knowledge of select franchise concepts to measure the creditworthiness of proposed multi-unit borrowers.
The focus is on a limited number of concepts that we believe have sound economics, lower closure rates, and higher brand awareness within specified local, regional or national markets.
Loan terms for equipment are generally up to 84 months fully amortizing and up to 180 months on real estate-related requests.
First Financial also offers secured commercial financing throughout the U.S. through two wholly-owned subsidiaries of the Bank, Oak Street Funding LLC (Oak Street) and First Franchise Capital Corporation (First Franchise).
Oak Street lends to the insurance industry, registered investment advisors, certified public accountants and indirect auto finance companies, while First Franchise lends to restaurant franchisees.
Together, these niche lending activities are driven by acquisitions, ownership transitions and financing general working capital needs.
The underwriting of Oak Street's loans involves analyses of collateral (through use of Oak Street’s proprietary system) that consists of revenue, which is then continuously monitored by Oak Street throughout the life of the loans.
Commercial real estate loans are secured by a mortgage lien on the real property.
The credit underwriting for both owner-occupied and investor income producing real estate loans includes detailed market analysis, historical and projected cash flow analysis, appropriate equity margins, assessment of lessees and lessors, type of real estate and other analyses.
Market diversification within First Financial’s service area and industry diversification are other means by which First Financial manages the risk.
First Financial does not have a significant exposure to residential builders and developers.
Certain residential real estate loans originated by the Bank conform to secondary market underwriting standards and are sold within a short timeframe to unaffiliated third parties.
The Bank sells these loans with both servicing retained and servicing released, depending on pricing and other market conditions.
The credit underwriting standards adhere to a required level of documentation, verifications, valuation and overall credit performance of the borrower.
The underwriting of these loans includes an evaluation of these and other pertinent factors prior to the extension of credit.
These underwriting standards increase the marketability and address the credit risk associated with the loans.
Consumer loans are primarily loans made to individuals, which may be secured or unsecured.
These types of loans include new and used vehicle loans, second mortgages on residential real estate and unsecured loans.
Risk elements in the consumer loan portfolio are primarily focused on the borrower’s cash flow and credit history, which are key indicators of the ability to repay.
A level of security is provided through liens on automobile titles and second mortgage liens, where applicable.
Consumer loans are generally smaller dollar amounts than other types of lending and are made to a large number of customers, increasing diversification within the portfolio.

and 404 more.

Gone since FY2024

Management’s Discussion and Analysis of Financial Condition and Results of Operations” for certain forward looking statements.) Risks Related to Economic and Market Conditions Weakness in the economy and governmental policies, whether or not adopted in response to economic conditions such as inflation, may adversely affect us.
Economic turmoil in different regions of the world, as well as military conflicts such as those currently ongoing in Ukraine and the Middle East, affect the economy and stock prices in the United States, which can affect our earnings and capital and the ability of our customers to repay loans.
The new Presidential administration has stated its intention to scrutinize the United States’ trade relationships with its economic partners, indicated an interest in renegotiating trade agreements, and stated a willingness to implement tariffs with some of the United States’ trade partners which could lead to trade wars.
These statements by the administration have signaled a change in the United States’ economic policies, and it is not clear which policies, if any, will be implemented and what effect these policies may have on the local, national, and global economy.
If the strength of the United States economy declines, this could result in, among other things, a deterioration of credit quality, altered consumer spending habits or a reduced demand for credit, including a resultant effect on our loan portfolio and allowance for credit losses.
While the Federal Reserve began cutting the target fed funds rate in 2024, there are no assurances that it will continue to cut the target fed funds rate in 2025 and it may remain open to increasing rates further should inflation dynamics remain unfavorable.
This scenario of higher short-term interest rates for a longer period than currently anticipated by market participants (“higher for longer”), along with other factors, could also result in higher delinquencies and greater charge-offs in future periods, which could materially affect our financial condition and results of operations.
Although we have implemented procedures we believe will reduce the potential effects of changes in interest rates on our results of operations, these procedures may not always be successful.
During 2024, the target fed funds rate decreased by 100 basis points.
Because our balance sheet is asset sensitive, these interest rate decreases resulted in a decline in our net income in 2024.
The Presidential Administration’s regulatory agenda could result in substantial impact to our regulatory compliance procedures and operations.
We anticipate that the Presidential administration will seek to implement a regulatory reform agenda that is significantly different than that of the Biden administration, impacting the rulemaking, supervision, examination and enforcement priorities of the federal banking agencies.
While we do not specifically know what these changes will be, we may be required to implement different compliance procedures and modify our policies and activities to comply with changes set forth by the administration.
This may cause us to incur additional costs and expenses, and dedicate additional resources, to achieve compliance with any changes from the Presidential administration, which can impact our financial condition and the results of our operations.
Changes to the economic conditions in these local markets, which may be different from the national economic conditions, may adversely affect our financial condition and the results of our operations.
Declines in the local economic conditions in our market areas could impact: our deposit levels and composition; the demand for our products and services; the strength of our credit quality; the demand for loans; the ability of borrowers to repay their loans; the value of collateral securing loans; the number of foreclosures and workouts; the amount of our allowance for credit losses; and the number of loans that we charge off.
This can lead to a detrimental impact on our financial condition and the results of our operations.
In 2024, we experienced losses in mortgage-backed securities primarily due to a $9.7 million impairment loss on two commercial mortgage backed securities where the underlying collateral consisted of skilled nursing facilities with credit deterioration, which we expect to sell in the near term.
This is especially relevant in light of the ongoing inflationary pressures and potential impact of trade wars and tariffs to increase those inflationary pressures.
Loan defaults and foreclosures are unavoidable in the banking industry, and we try to limit our exposure to this risk by monitoring carefully our extensions of credit.
In 2024, our classified asset balances increased $83.1 million, driven by a $45.0 million asset that was recorded following the mutually agreed upon termination of a foreign exchange trade, as well as the downgrade of three commercial real estate loans, one commercial and industrial loan and one construction loan.
Continued increases in our classified asset balances and/or an increase in loan defaults may also increase our costs associated with servicing these loans, foreclosing on properties and costs of property maintenance on foreclosed properties .
The effects of these disruptions to the secondary market for residential morgage loans, as well as reductions in residential real estate market prices and declining home sales, could affect the value of collateral securing mortgage loans that we hold, income generated from mortgage loan originations and profits on sales of mortgage loans in the secondary market.
Declines in real estate values, home sale volumes, financial stress on borrowers as a result of job losses, interest rate resets on adjustable rate mortgage loans or other factors, either independently or in the aggregate could have further effects on borrowers that could result in higher delinquencies and greater charge-offs in future periods, which would affect our financial condition or results of operations.
A decline in home values or overall economic weakness could also have an impact upon the value of real estate or other assets which we own upon foreclosing a loan and our ability to realize value on such assets.
The information that we use in managing our credit risk may be inaccurate or incomplete, which may result in an increased risk of default and otherwise have an effect on our business, results of operations and financial condition.
Nonetheless, in the near-term, higher interest rates along with elevated costs are expected to weigh on firms’ profit margins.
If such events or circumstances were to occur, it could result in a potential loss of revenue, increase in costs and have an effect on our business, results of operations and financial condition.
Our allowance for credit losses may prove to be insufficient to absorb losses in our loan portfolio.
We maintain an allowance for credit losses that we believe is a reasonable estimate of the expected losses over the expected life of the loan portfolio based on a CECL model.
We believe that our allowance for credit losses is maintained at a level adequate to absorb expected losses over the life of the loans in the loan portfolio as of the corresponding balance sheet date.
Because of the degree of uncertainty and susceptibility of these factors to change, our actual losses may vary from our current estimates.
We adopted the CECL accounting guidance in 2020 and recognized a one-time cumulative effect adjustment to our allowance for credit losses and retained earnings as of January 1, 2020.
Concurrent with the enactment of the CARES Act, federal bank regulatory agencies issued an interim final rule that delayed the estimated impact on regulatory capital resulting from the adoption of CECL.
The interim final rule provided banking organizations that implemented CECL prior to the end of 2020 the option to delay for two years the estimated impact of CECL on regulatory capital relative to regulatory capital determined under the prior incurred loss methodology, followed by a three-year transition period to phase out the aggregate amount of capital benefit provided during the initial two-year delay.
We adopted CECL in the first quarter of 2020, including the regulatory phase-in.
In 2022, we recorded $6.7 million of provision expense as our loan portfolio grew and the overall duration of the portfolio extended due to rising interest rates.
In 2023, we recorded $43.1 million of provision expense as our loan portfolio grew, net charge-offs increased and the overall duration of the portfolio extended due to rising interest rates and slower loan prepayments.
In 2024, we recorded $49.2 million of provision expense as our loan portfolio grew and the overall duration of the portfolio extended due slower loan prepayments.
The loss of one or more of these large clients would adversely affect the revenue derived from Bannockburn. • Market risk: Foreign currency and commodities transactions expose us to market risk, including fluctuations in foreign exchange rates, interest rates, and commodity prices.

and 62 more.

Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2024 ↗, FY2025 ↗). A reworded sentence counts as one dropped and one added, so heavy edits read as low “kept”. Headings and page furniture are stripped; nothing is summarised by a model.

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