CINCINNATI, Jan. 30, 2024 /PRNewswire/ -- First Financial Bank (Nasdaq: FFBC) has entered into a new $2.4 billion, five-year Community Benefits Agreement (CBA) with the National Community Reinvestment Coalition (NCRC) and related partner organizations, establishing goals for lending and investments to low- and moderate-income (LMI) clients and census tracts. The new agreement follows the successful conclusion of First Financial's previous CBA, during which it achieved 192 percent of its $1.75 billion goal i ...

[Part I - FINANCIAL INFORMATION](index=5&type=section&id=Part%20I%20-%20FINANCIAL%20INFORMATION) This section presents First Financial Bancorp's unaudited consolidated financial statements and management's analysis of its financial condition and operations [Financial Statements](index=5&type=section&id=Item%201%20-%20Financial%20Statements) This section presents First Financial Bancorp's unaudited consolidated financial statements, including balance sheets, income statements, and cash flows, for the periods ended September 30, 2023 Consolidated Balance Sheet Highlights (in thousands) | Metric | September 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Total Assets | $17,054,852 | $17,003,316 | | Net Loans and Leases | $10,501,618 | $10,165,994 | | Total Deposits | $12,915,553 | $12,701,177 | | Total Shareholders' Equity | $2,129,509 | $2,041,373 | Consolidated Income Statement Highlights (in thousands, except per share data) | Metric | Q3 2023 | Q3 2022 | Nine Months 2023 | Nine Months 2022 | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $155,455 | $137,892 | $474,005 | $361,247 | | Provision for Credit Losses | $11,673 | $8,284 | $32,877 | $1,683 | | Noninterest Income | $56,628 | $42,534 | $165,429 | $133,606 | | Net Income | $63,061 | $55,705 | $199,131 | $148,526 | | Diluted EPS | $0.66 | $0.59 | $2.09 | $1.57 | Consolidated Cash Flow Highlights - Nine Months Ended Sep 30 (in thousands) | Cash Flow Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $370,800 | $174,206 | | Net Cash used in Investing Activities | ($187,581) | ($411,251) | | Net Cash used in Financing Activities | ($170,385) | $212,567 | | Change in Cash and Due from Banks | $12,834 | ($24,478) | [Note 3: Investments](index=15&type=section&id=NOTE%203%3A%20INVESTMENTS) This note details the company's $3.3 billion investment portfolio, primarily AFS and HTM securities, with significant unrealized losses on AFS due to rising interest rates Investment Securities Summary as of September 30, 2023 (in thousands) | Category | Amortized Cost | Fair Value | | :--- | :--- | :--- | | Available-for-Sale (AFS) | $3,526,096 | $3,044,361 | | Held-to-Maturity (HTM) | $81,236 | $69,845 | - The AFS portfolio had gross unrealized losses of **$482.2 million** as of September 30, 2023, primarily due to market yield fluctuations, with **$468.3 million** on securities held for 12 months or more[39](index=39&type=chunk)[44](index=44&type=chunk) - Management does not intend to sell, nor is it likely to be required to sell, debt securities prior to value recovery, thus no allowance for credit losses (ACL) was recorded for AFS securities[40](index=40&type=chunk) [Note 4: Loans and Leases](index=18&type=section&id=NOTE%204%3A%20LOANS%20AND%20LEASES) This note provides a detailed breakdown of the company's $10.6 billion loan and lease portfolio by category, credit quality, and performance, noting a significant increase in nonperforming loans Loan Portfolio Composition (in thousands) | Loan Category | September 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Commercial & Industrial | $3,420,873 | $3,410,272 | | Commercial Real Estate | $3,992,654 | $4,052,759 | | Residential Real Estate | $1,293,470 | $1,092,265 | | Lease Financing | $399,973 | $236,124 | | Other | $1,540,829 | $1,699,925 | | **Total Loans & Leases** | **$10,646,819** | **$10,298,971** | - Nonaccrual loans increased substantially to **$74.9 million** as of September 30, 2023, compared to **$28.6 million** at December 31, 2022[66](index=66&type=chunk) - Effective January 1, 2023, the company adopted ASU 2022-02, eliminating Troubled Debt Restructurings (TDRs) and establishing a new standard for Financial Difficulty Modifications (FDMs)[60](index=60&type=chunk) [Note 5: Allowance for Credit Losses (ACL)](index=27&type=section&id=NOTE%205%3A%20ALLOWANCE%20FOR%20CREDIT%20LOSSES) This note explains the methodology for calculating the Allowance for Credit Losses (ACL) for both loans and unfunded commitments, noting an increase to $145.2 million due to various factors Allowance for Credit Losses - Loans & Leases (in thousands) | Period | Beginning Balance | Provision | Net Charge-offs | Ending Balance | | :--- | :--- | :--- | :--- | :--- | | **Q3 2023** | $148,646 | $12,907 | ($16,352) | $145,201 | | **YTD 2023** | $132,977 | $34,270 | ($22,046) | $145,201 | - The increase in the ACL for the nine months ended September 30, 2023, was attributed to slower prepayment speeds, changes in economic forecasts, and loan growth[93](index=93&type=chunk) - The ACL on unfunded commitments was **$17.0 million** as of September 30, 2023, a decrease from **$18.4 million** at December 31, 2022, with a provision recapture of **$1.4 million** in the first nine months of 2023[98](index=98&type=chunk) [Note 11: Derivatives](index=38&type=section&id=NOTE%2011%3A%20DERIVATIVES) The company utilizes various derivative instruments to manage risk and serve clients, with a total notional amount over $20 billion, including $600 million in new cash flow hedges in 2023 Notional Amount of Derivatives as of September 30, 2023 (in millions) | Derivative Type | Notional Amount | | :--- | :--- | | Interest Rate Client Derivatives | $2,218 | | Foreign Exchange Contracts | $7,522 | | Cash Flow Hedges (Collars/Floors) | $600 | - In 2023, the company entered into interest rate collars and floors with a notional value of **$600.0 million**, designated as cash flow hedges to mitigate interest rate risk on variable-rate commercial loan pools[144](index=144&type=chunk)[147](index=147&type=chunk) - The company also uses derivatives for mortgage banking, including Interest Rate Lock Commitments (IRLCs) with a notional amount of **$32.3 million** and forward commitments of **$31.3 million** as of September 30, 2023[153](index=153&type=chunk) [Management's Discussion and Analysis (MD&A)](index=52&type=section&id=Item%202%20-%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management provides its perspective on the company's financial condition and results for Q3 and the first nine months of 2023, covering net interest margin, asset quality, and capital ratios Key Performance Metrics | Metric | Q3 2023 | Q2 2023 | Nine Months 2023 | Nine Months 2022 | | :--- | :--- | :--- | :--- | :--- | | Net Income (millions) | $63.1 | $65.7 | $199.1 | $148.5 | | Diluted EPS | $0.66 | $0.69 | $2.09 | $1.57 | | Return on Average Assets | 1.48% | 1.55% | 1.57% | 1.22% | | Net Interest Margin (FTE) | 4.33% | 4.48% | 4.45% | 3.53% | - The company is a **$17.1 billion** financial holding company operating through First Financial Bank, with **130** full-service banking centers as of September 30, 2023[208](index=208&type=chunk) - In Q1 2023, the company acquired the assets of Brady Ware Capital, LLC, an advisory firm, to expand its service offerings in mergers and acquisitions and business succession planning[212](index=212&type=chunk) [Net Interest Income](index=55&type=section&id=NET%20INTEREST%20INCOME) Net interest income decreased to $155.5 million in Q3 2023, with the net interest margin contracting by 15 basis points to 4.33% due to rising deposit costs - Linked-quarter net interest margin (FTE) decreased by **15 basis points** to **4.33%**, as the total cost of interest-bearing deposits rose **48 bps** to **2.44%**, outpacing the increase in interest income[226](index=226&type=chunk)[228](index=228&type=chunk) - Year-to-date net interest income increased by **$112.8 million (31.2%)** compared to the same period in 2022, driven by higher interest rates on loans and investments[231](index=231&type=chunk) - To mitigate interest rate risk, the company entered into interest rate collars and floors designated as cash flow hedges with a total notional value of **$600.0 million**[229](index=229&type=chunk)[230](index=230&type=chunk) [Asset Quality and Allowance for Credit Losses](index=62&type=section&id=ASSET%20QUALITY%20AND%20ALLOWANCE%20FOR%20CREDIT%20LOSSES) Asset quality metrics deteriorated in 2023, with nonaccrual loans significantly increasing to $74.9 million and elevated net charge-offs, leading to an increased ACL - Nonaccrual loans increased by **$46.3 million (161.8%)** from year-end 2022, driven by the downgrade of two large commercial real estate relationships and one large C&I relationship[261](index=261&type=chunk) - Net charge-offs in Q3 2023 were **$16.4 million (0.61% of average loans)**, elevated by a **$6.9 million** loss on a single C&I loan and **$6.1 million** in charge-offs from a **$32 million** loan sale[269](index=269&type=chunk) - The ACL as a percentage of nonaccrual loans decreased sharply to **193.8%** from **464.6%** at year-end 2022, as nonaccrual loan growth outpaced reserve increases[270](index=270&type=chunk) [Capital](index=67&type=section&id=CAPITAL) The company's capital ratios improved and remained well-capitalized as of September 30, 2023, with the Tier 1 capital to risk-weighted assets ratio increasing to 11.94% Consolidated Capital Ratios | Ratio | September 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Common Equity Tier 1 | 11.60% | 10.83% | | Tier 1 Capital | 11.94% | 11.17% | | Total Capital | 13.51% | 13.09% | | Leverage Ratio | 9.59% | 8.89% | - The company was categorized as "**well-capitalized**" under the regulatory framework for prompt corrective action[300](index=300&type=chunk) - No shares were repurchased in 2023 under the **5,000,000** share repurchase plan, which is set to expire in December 2023[303](index=303&type=chunk) [Market Risk](index=70&type=section&id=MARKET%20RISK) The company's primary market risks are interest rate and liquidity risk, maintaining an asset-sensitive position where net interest income is expected to benefit from rising interest rates Interest Rate Sensitivity Analysis (as of Sep 30, 2023) | Rate Shock | NII Change (Year 1) | EVE Change | | :--- | :--- | :--- | | +200 bps | +6.07% | +2.38% | | +100 bps | +3.72% | +1.14% | | -100 bps | -6.50% | -1.63% | - The company's interest rate risk models indicated an **asset-sensitive** position, which is expected to moderate as deposit costs increase[316](index=316&type=chunk) - Liquidity risk management has been enhanced through refining the contingency funding plan, securing additional borrowing capacity, and developing more detailed liquidity monitoring reports[319](index=319&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=75&type=section&id=Item%203%20-%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section incorporates by reference the Market Risk discussion from the MD&A, detailing the company's interest rate and liquidity risk management - The required disclosures for this item are incorporated by reference from the 'Market Risk' section within Item 2, Management's Discussion and Analysis[328](index=328&type=chunk) [Controls and Procedures](index=75&type=section&id=Item%204%20-%20Controls%20and%20Procedures) Management concluded the company's disclosure controls and procedures were effective as of September 30, 2023, with no material changes to internal control over financial reporting - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were **effective** at a reasonable assurance level as of the end of the reporting period[331](index=331&type=chunk) - There were no changes in the company's internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[332](index=332&type=chunk) [Part II - OTHER INFORMATION](index=76&type=section&id=Part%20II%20-%20OTHER%20INFORMATION) This part addresses other required disclosures, including legal proceedings, risk factors, and the use of proceeds from equity sales, noting no material changes from the 2022 Form 10-K [Legal Proceedings](index=76&type=section&id=Item%201%20-%20Legal%20Proceedings) The company states no material changes to the legal proceedings disclosed in its Annual Report on Form 10-K for the year ended December 31, 2022 - There have been no material changes to the legal proceedings previously disclosed in the company's 2022 Form 10-K[334](index=334&type=chunk) [Risk Factors](index=76&type=section&id=Item%201A%20-%20Risk%20Factors) The company reports no material changes to the risk factors previously disclosed in its Annual Report on Form 10-K for the year ended December 31, 2022 - No material changes have occurred regarding the risk factors disclosed in the company's 2022 Form 10-K[335](index=335&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=76&type=section&id=Item%202%20-%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company confirms no common stock repurchases during Q2 2023 under its 2022 Stock Repurchase Plan, which authorizes up to 5,000,000 shares - The company did not purchase any shares under its 2022 Stock Repurchase Plan during the quarter, which authorizes the repurchase of up to **5,000,000** shares and expires on December 31, 2023[336](index=336&type=chunk)

First Financial Bancorp (NASDAQ:FFBC) Q3 2023 Earnings Conference Call October 25, 2023 8:30 AM ET Company Participants Scott Crawley - Corporate Controller Archie Brown - President & Chief Executive Officer Jamie Anderson - Chief Financial Officer & Chief Operating Officer Bill Harrod - Chief Credit Officer Conference Call Participants Daniel Tamayo - Raymond James Terry McEvoy - Stephens Jon Arfstrom - RBC Capital Markets Christopher McGratty - KBW Operator Good morning and welcome to the First Financial ...

Table of Content UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 OR ☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________________ to ____________________ Commission file number 001-34762 FIRST FINANCIAL BANCORP /OH/ (Exact name of registrant as specified in its charter) Ohio ...

PART I - FINANCIAL INFORMATION This section provides the unaudited consolidated financial information, including statements and management's discussion and analysis [Item 1 - Financial Statements](index=5&type=section&id=Item%201%20-%20Financial%20Statements) This section presents the unaudited consolidated financial statements and detailed notes for the quarter ended March 31, 2023 [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets%20-%20March%2031%2C%202023%20%28unaudited%29%20and%20December%2031%2C%202022) This section details the company's financial position, including assets, liabilities, and equity, as of March 31, 2023 Consolidated Balance Sheet Highlights (Dollars in thousands) | Item | March 31, 2023 | December 31, 2022 | | :-------------------------------- | :------------- | :---------------- | | **Assets** | | | | Total assets | $16,933,884 | $17,003,316 | | Net loans and leases | $10,291,794 | $10,165,994 | | Investment securities available-for-sale | $3,384,949 | $3,409,648 | | Goodwill | $1,005,738 | $1,001,507 | | **Liabilities** | | | | Total liabilities | $14,812,388 | $14,961,943 | | Total deposits | $12,674,684 | $12,701,177 | | Total borrowed funds | $1,560,207 | $1,633,828 | | **Shareholders' Equity** | | | | Total shareholders' equity | $2,121,496 | $2,041,373 | | Accumulated other comprehensive income (loss) | $(328,059) | $(358,663) | [Consolidated Statements of Income](index=6&type=section&id=Consolidated%20Statements%20of%20Income%20-%20Three%20Months%20Ended%20March%2031%2C%202023%20and%202022%20%28unaudited%29) This section presents the company's financial performance, including revenues, expenses, and net income, for the quarter Consolidated Statements of Income Highlights (Three Months Ended March 31, Dollars in thousands, except per share data) | Item | 2023 | 2022 | | :----------------------------------- | :----- | :----- | | Total interest income | $208,581 | $113,829 | | Total interest expense | $49,263 | $7,484 | | Net interest income | $159,318 | $106,345 | | Provision for credit losses - loans and leases | $8,644 | $(5,589) | | Total noninterest income | $55,543 | $41,294 | | Total noninterest expenses | $116,693 | $102,805 | | Income before income taxes | $87,689 | $50,649 | | Net income | $70,403 | $41,301 | | Net earnings per common share - basic | $0.75 | $0.44 | | Net earnings per common share - diluted | $0.74 | $0.44 | [Consolidated Statements of Comprehensive Income (Loss)](index=8&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20%28Loss%29%20-%20Three%20Months%20Ended%20March%2031%2C%202023%20and%202022%20%28unaudited%29) This section reports net income and other comprehensive income components, reflecting total changes in equity for the period Consolidated Statements of Comprehensive Income (Loss) Highlights (Three Months Ended March 31, Dollars in thousands) | Item | 2023 | 2022 | | :------------------------------------------ | :----- | :------- | | Net income | $70,403 | $41,301 | | Unrealized gain (loss) on debt securities | $30,485 | $(142,401) | | Other comprehensive income (loss) | $30,604 | $(142,044) | | Comprehensive income (loss) | $101,007 | $(100,743) | [Consolidated Statements of Changes in Shareholders' Equity](index=9&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Shareholders%27%20Equity%20-%20Three%20Months%20Ended%20March%2031%2C%202023%20and%202022%20%28unaudited%29) This section outlines changes in shareholders' equity, including net income, other comprehensive income, and dividends Changes in Shareholders' Equity (Three Months Ended March 31, Dollars in thousands) | Item | March 31, 2023 | March 31, 2022 | | :-------------------------------- | :------------- | :------------- | | Balance at January 1 | $2,041,373 | $2,258,942 | | Net income | $70,403 | $41,301 | | Other comprehensive income (loss) | $30,604 | $(142,044) | | Cash dividends declared | $(21,747) | $(21,596) | | Share-based compensation expense | $4,616 | $3,507 | | Balance at March 31 | $2,121,496 | $2,137,445 | [Consolidated Statements of Cash Flows](index=10&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20-%20Three%20Months%20Ended%20March%2031%2C%202023%20and%202022%20%28unaudited%29) This section details cash inflows and outflows from operating, investing, and financing activities for the period Consolidated Statements of Cash Flows Highlights (Three Months Ended March 31, Dollars in thousands) | Item | 2023 | 2022 | | :-------------------------------------- | :----- | :------- | | Net cash provided by operating activities | $172,206 | $143,815 | | Net cash used in investing activities | $(57,491) | $82,823 | | Net cash used in financing activities | $(122,381) | $(216,241) | | Change in cash and due from banks | $(7,666) | $10,397 | | Cash and due from banks at end of period | $199,835 | $230,428 | | Interest paid | $30,518 | $7,321 | | Income taxes paid, net of refunds | $324 | $170 | [Notes to Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements%20%28unaudited%29) This section provides detailed explanations and disclosures supporting the consolidated financial statements [NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=13&type=section&id=NOTE%201%3A%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines the key accounting principles and methods used in preparing the interim financial statements - The interim financial statements are prepared in accordance with Form 10-Q and Article 10 of Regulation S-X, and may not include all GAAP-required information. They should be read with the 2022 Form 10-K[25](index=25&type=chunk) - Management uses estimates, assumptions, and judgments in preparing financial statements, and actual results may differ materially[26](index=26&type=chunk) [NOTE 2: ACCOUNTING STANDARDS RECENTLY ADOPTED OR ISSUED](index=13&type=section&id=NOTE%202%3A%20ACCOUNTING%20STANDARDS%20RECENTLY%20ADOPTED%20OR%20ISSUED) This note discusses recently adopted or issued accounting standards and their impact on the financial statements - Adopted **ASU 2022-02 (Financial Instruments—Credit Losses)** in **2023**, eliminating TDR guidance and amending vintage disclosures. This resulted in amended disclosures but no material impact on operations[27](index=27&type=chunk) - SEC's SAB No. 121, regarding crypto asset safeguarding, was not impactful as the Company does not safeguard crypto assets[28](index=28&type=chunk) - FASB issued **ASU No. 2023-02 (Investments—Equity Method and Joint Ventures)** in **March 2023**, allowing proportional amortization for qualifying tax equity investments, effective for fiscal years beginning after December 15, 2023. The Company is evaluating its impact[29](index=29&type=chunk)[30](index=30&type=chunk) [NOTE 3: INVESTMENTS](index=14&type=section&id=NOTE%203%3A%20INVESTMENTS) This note provides details on the company's investment securities, including fair values and unrealized gains or losses - No sales of Available-for-Sale (AFS) securities occurred in **Q1 2023**; **$5.0 million** in sales with insignificant gains/losses in **Q1 2022**[31](index=31&type=chunk) Investment Securities Summary (Dollars in thousands) | Category | March 31, 2023 (Fair Value) | December 31, 2022 (Fair Value) | | :----------------------------------- | :-------------------------- | :--------------------------- | | Held-to-maturity (HTM) | $75,762 | $76,485 | | Available-for-sale (AFS) | $3,384,949 | $3,409,648 | | Total | $3,460,711 | $3,486,133 | | AFS Unrealized Loss (Total) | $(380,988) | $(418,604) | | HTM Unrealized Loss (Total) | $(7,480) | $(7,641) | - As of **March 31, 2023**, **856 out of 1,072** investment securities were in an unrealized loss position, primarily due to fluctuations in market yields. No credit loss reserves were recorded for AFS or HTM securities[34](index=34&type=chunk)[35](index=35&type=chunk)[36](index=36&type=chunk)[38](index=38&type=chunk) [NOTE 4: LOANS AND LEASES](index=17&type=section&id=NOTE%204%3A%20LOANS%20AND%20LEASES) This note details the company's loan and lease portfolio, including credit quality and nonperforming assets - First Financial offers diverse commercial (C&I, CRE, construction, lease financing) and consumer (residential, home equity, installment, credit card) loan and lease products, primarily concentrated in **Ohio, Indiana, Kentucky, and Illinois**, with specialized lending platforms extending nationwide[41](index=41&type=chunk)[42](index=42&type=chunk) - Credit quality for commercial loans is monitored using credit grades (Pass, Special Mention, Substandard, Doubtful), while consumer loan credit quality is primarily based on repayment performance, with nonperforming status generally assigned for payments **90+ days past due**[43](index=43&type=chunk)[44](index=44&type=chunk)[45](index=45&type=chunk)[46](index=46&type=chunk)[47](index=47&type=chunk)[48](index=48&type=chunk) Loan Portfolio by Risk Attribute and Origination Date (March 31, 2023, Dollars in thousands) | Loan Category | Total Loans | YTD Gross Chargeoffs | | :-------------------------- | :---------- | :------------------- | | Commercial & industrial | $3,449,289 | $730 | | Lease financing | $273,898 | $13 | | Construction real estate | $525,906 | $0 | | Commercial real estate - investor | $3,102,445 | $0 | | Commercial real estate - owner | $954,182 | $66 | | Residential real estate | $1,145,069 | $0 | | Home equity | $724,672 | $91 | | Installment | $204,372 | $1,524 | | Credit card | $53,552 | $217 | | **Grand Total** | **$10,433,385** | **$2,641** | - Effective **January 1, 2023**, the Company adopted **ASU 2022-02**, eliminating Troubled Debt Restructuring (TDR) accounting and introducing Financial Difficulty Modifications (FDMs), which are excluded from nonperforming loan calculations. FDMs as of **March 31, 2023**, totaled **$904 thousand**, primarily residential real estate, with no subsequent defaults[56](index=56&type=chunk)[57](index=57&type=chunk)[59](index=59&type=chunk)[60](index=60&type=chunk) Nonperforming Loans (Dollars in thousands) | Category | March 31, 2023 (Nonaccrual) | December 31, 2022 (Nonaccrual) | | :------------------------ | :-------------------------- | :--------------------------- | | Commercial & industrial | $13,971 | $8,242 | | Lease financing | $175 | $178 | | Commercial real estate | $5,362 | $5,786 | | Residential real estate | $11,129 | $10,691 | | Home equity | $3,399 | $3,123 | | Installment | $544 | $603 | | Total nonaccrual loans | $34,580 | $28,623 | | Nonaccrual TDRs (Dec 31, 2022) | N/A | $10,000 | [NOTE 5: ALLOWANCE FOR CREDIT LOSSES](index=26&type=section&id=NOTE%205%3A%20ALLOWANCE%20FOR%20CREDIT%20LOSSES) This note explains the methodology and changes in the allowance for credit losses on loans and unfunded commitments - The Allowance for Credit Losses (ACL) is a valuation account for expected credit losses, increased by provision expense and decreased by net charge-offs. It is estimated using historical data, current conditions, and reasonable forecasts, adjusted by a Qualitative Framework[70](index=70&type=chunk)[71](index=71&type=chunk) - ACL is measured collectively by portfolio segment (C&I, Lease financing, Construction real estate, Commercial real estate, Residential real estate, Home equity, Installment, Credit card), with models adjusted for specific economic variables like treasury term spread, market volatility, rental vacancy rates, housing price index, and consumer confidence[72](index=72&type=chunk)[73](index=73&type=chunk)[74](index=74&type=chunk)[75](index=75&type=chunk)[76](index=76&type=chunk)[77](index=77&type=chunk)[78](index=78&type=chunk)[79](index=79&type=chunk)[80](index=80&type=chunk)[81](index=81&type=chunk)[82](index=82&type=chunk)[83](index=83&type=chunk)[84](index=84&type=chunk)[85](index=85&type=chunk)[86](index=86&type=chunk) Allowance for Credit Losses by Loan Category (Three Months Ended March 31, 2023, Dollars in thousands) | Loan Category | Beginning Balance | Provision for Credit Losses | Net Charge-offs | Ending Allowance | | :-------------------- | :---------------- | :-------------------------- | :-------------- | :--------------- | | Commercial & industrial | $42,313 | $4,213 | $(621) | $45,905 | | Lease financing | $3,571 | $391 | $(12) | $3,950 | | Construction real estate | $13,527 | $119 | $0 | $13,646 | | Commercial real estate | $41,106 | $(1,258) | $2,172 | $42,020 | | Residential real estate | $12,684 | $2,786 | $66 | $15,536 | | Home equity | $12,447 | $944 | $(11) | $13,380 | | Installment | $4,945 | $1,218 | $(1,470) | $4,693 | | Credit card | $2,384 | $231 | $(154) | $2,461 | | **Total** | **$132,977** | **$8,644** | **$(30)** | **$141,591** | - The ACL on unfunded commitments increased to **$20.2 million** at **March 31, 2023**, from **$18.4 million** at **December 31, 2022**, with a provision expense of **$1.8 million** for **Q1 2023**, reflecting a slowing of commercial prepayments and longer duration for the portfolio[92](index=92&type=chunk) [NOTE 6: GOODWILL AND OTHER INTANGIBLE ASSETS](index=29&type=section&id=NOTE%206%3A%20GOODWILL%20AND%20OTHER%20INTANGIBLE%20ASSETS) This note details changes in goodwill from business combinations and the amortization of other intangible assets - Goodwill increased by **$4.2 million** in **Q1 2023** due to the acquisition of Brady Ware Capital, an advisory firm specializing in M&A, expanding First Financial's advisory business. This acquisition is subject to refinement until **January 2024**[94](index=94&type=chunk) Goodwill Carrying Amount (Dollars in thousands) | Period | Balance at Beginning of Period | Goodwill from Business Combinations | Balance at End of Period | | :-------------------------- | :----------------------------- | :---------------------------------- | :--------------------- | | Three months ended Mar 31, 2023 | $1,001,507 | $4,231 | $1,005,738 | | Three months ended Mar 31, 2022 | $1,000,749 | $(790) | $999,959 | - Other intangible assets include core deposit intangibles (weighted average remaining life of **5.0 years**), customer lists from Summit and Bannockburn acquisitions (amortized over **12 and 11 years**, respectively), and mortgage servicing rights (MSRs). Amortization expense for other intangibles was **$3.3 million** in **Q1 2023** (**$0.7 million** for MSRs)[97](index=97&type=chunk)[98](index=98&type=chunk)[99](index=99&type=chunk)[100](index=100&type=chunk)[101](index=101&type=chunk) [NOTE 7: LEASES - LESSEE](index=30&type=section&id=NOTE%207%3A%20LEASES%20-%20LESSEE) This note describes the company's operating leases as a lessee, including right-of-use assets and lease liabilities - Most of the Company's leases are operating leases for real estate (branches, ATMs, office space), recognized on the balance sheet as Right-of-Use (ROU) assets and corresponding lease liabilities[103](index=103&type=chunk)[104](index=104&type=chunk) Operating Lease Financials (Dollars in thousands) | Item | March 31, 2023 | December 31, 2022 | | :-------------------------------- | :------------- | :---------------- | | ROU asset | $53,200 | $54,300 | | Lease liability | $63,200 | $64,500 | | Weighted-average remaining lease term | 13.0 years | 13.1 years | | Weighted-average discount rate | 3.30 % | 3.29 % | | Total operating lease cost (Q1 2023) | $2,672 | $2,641 (Q1 2022) | - Future minimum commitments for operating leases total **$79.991 million**, with **$5.746 million** due in the remaining **nine months of 2023**[108](index=108&type=chunk) [NOTE 8: OPERATING LEASES - LESSOR](index=31&type=section&id=NOTE%208%3A%20OPERATING%20LEASES%20-%20LESSOR) This note provides information on the company's operating leases as a lessor, including lease income and assets - First Financial provides financing for equipment through operating leases, which are carried at cost less accumulated depreciation. Operating leases (lessor) were **$154.0 million** at **March 31, 2023**, up from **$91.7 million** at **December 31, 2022**[109](index=109&type=chunk) Operating Lease (Lessor) Financials (Dollars in thousands) | Item | March 31, 2023 | December 31, 2022 | | :-------------------------------- | :------------- | :---------------- | | Operating leases (net) | $154,000 | $91,700 | | Lease income (Q1 2023) | $10,200 | $4,700 (Q1 2022) | | Depreciation expense (Q1 2023) | $7,900 | $3,900 (Q1 2022) | | Total operating lease payments receivable | $98,817 | N/A | - No impairment losses were recognized on operating lease assets for the **three months ended March 31, 2023 or 2022**[110](index=110&type=chunk) [NOTE 9: BORROWINGS](index=32&type=section&id=NOTE%209%3A%20BORROWINGS) This note details the company's short-term and long-term borrowings, including FHLB advances and subordinated notes Short-term Borrowings (Dollars in thousands) | Item | March 31, 2023 | December 31, 2022 | | :------------------------ | :------------- | :---------------- | | FHLB short-term borrowings | $1,089,400 | $1,130,000 | | Other short-term borrowings | $128,160 | $157,156 | | Total short-term borrowings | $1,217,560 | $1,287,156 | - The Company had no federal funds purchased or repurchase agreements at **March 31, 2023 or December 31, 2022**. A **$40.0 million** short-term credit facility with an unaffiliated bank, maturing in **December 2023**, had no outstanding balance at either period end[114](index=114&type=chunk)[115](index=115&type=chunk) Long-term Debt (Dollars in thousands) | Item | March 31, 2023 (Amount) | March 31, 2023 (Average Rate) | December 31, 2022 (Amount) | December 31, 2022 (Average Rate) | | :------------------------------------------------- | :---------------------- | :---------------------------- | :------------------------- | :----------------------------- | | Subordinated notes (net) | $311,918 | 5.52 % | $311,707 | 5.48 % | | Notes issued for property and equipment acquisition | $28,277 | 4.42 % | $32,492 | 4.44 % | | Capital lease liability | $1,677 | 3.83 % | $1,698 | 3.82 % | | Capital loan with municipality | $775 | 0.00 % | $775 | 0.00 % | | **Total long-term debt** | **$342,647** | **5.44 %** | **$346,672** | **5.40 %** | [NOTE 10: ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)](index=33&type=section&id=NOTE%2010%3A%20ACCUMULATED%20OTHER%20COMPREHENSIVE%20INCOME%20%28LOSS%29) This note presents changes in accumulated other comprehensive income, including unrealized gains/losses on securities Changes in Accumulated Other Comprehensive Income (Loss) (Three Months Ended March 31, Dollars in thousands) | Item | March 31, 2023 | March 31, 2022 | | :------------------------------------------ | :------------- | :------------- | | Beginning balance | $(358,663) | $(433) | | Net activity (unrealized gain/loss on debt securities, retirement obligation, foreign currency translation) | $30,604 | $(142,044) | | Ending balance | $(328,059) | $(142,477) | Reclassifications from AOCI into Income (Three Months Ended March 31, Dollars in thousands) | Item | 2023 | 2022 | | :------------------------------------------ | :----- | :----- | | Realized gain (loss) on securities AFS | $519 | $(3) | | Defined benefit pension plan (net) | $(150) | $(325) | | Total reclassifications (before tax) | $369 | $(328) | [NOTE 11: DERIVATIVES](index=35&type=section&id=NOTE%2011%3A%20DERIVATIVES) This note describes the company's use of derivative instruments for risk management and client needs, and their fair values - First Financial uses derivative instruments (interest rate caps, floors, swaps, foreign exchange contracts) for client needs and to manage interest and currency rate risk, not for speculative purposes[123](index=123&type=chunk) Derivative Notional Amounts and Fair Values (Dollars in thousands) | Derivative Type | March 31, 2023 (Notional) | March 31, 2023 (Fair Value) | December 31, 2022 (Notional) | December 31, 2022 (Fair Value) | | :-------------------------------- | :-------------------------- | :-------------------------- | :--------------------------- | :--------------------------- | | Client interest rate derivatives | $2,248,403 | $10,458 (Gain) / $(114,269) (Loss) | $2,206,351 | $5,057 (Gain) / $(147,759) (Loss) | | Foreign exchange contracts | $7,927,466 (Customer) / $7,881,266 (Counterparty) | $99,348 (Gain) / $(77,863) (Loss) | $7,734,395 (Customer) / $7,681,006 (Counterparty) | $111,078 (Gain) / $(93,804) (Loss) | | Credit derivatives | $386,800 | Insignificant | $379,300 | Insignificant | | Mortgage derivatives (IRLCs) | $32,000 | $500 | $12,000 | $4,300 | - Derivative collateral owed by the Company to counterparty banks was **$102.1 million** at **March 31, 2023**, with **$26.1 million** restricted in cash and **$128.2 million** in short-term borrowings[131](index=131&type=chunk) [NOTE 12: COMMITMENTS AND CONTINGENCIES](index=37&type=section&id=NOTE%2012%3A%20COMMITMENTS%20AND%20CONTINGENCIES) This note outlines the company's loan commitments, letters of credit, and potential legal and tax credit obligations - First Financial had **$4.6 billion** in loan commitments outstanding at **March 31, 2023**, up from **$4.4 billion** at **December 31, 2022**, with the majority being variable interest rate commitments[137](index=137&type=chunk) Unfunded Commitments by Loan Type (Dollars in thousands) | Loan Type | March 31, 2023 | December 31, 2022 | | :-------------------------- | :------------- | :---------------- | | Commercial & industrial | $1,868,883 | $1,833,977 | | Construction real estate | $704,719 | $689,015 | | Home equity | $929,440 | $903,459 | | Credit card | $218,579 | $225,864 | | **Total Unfunded Commitment** | **$3,968,309** | **$3,904,732** | - Letters of credit totaled **$32.2 million** at **March 31, 2023**, and risk participation agreements for interest rate swaps had a notional amount of **$386.8 million**[139](index=139&type=chunk)[140](index=140&type=chunk) - Investments in affordable housing and other tax credit projects totaled **$168.674 million** at **March 31, 2023**, with unfunded commitments of **$94.319 million**[143](index=143&type=chunk) - No reserves were related to litigation matters as of **March 31, 2023 or December 31, 2022**, and no legal settlement expenses were accrued or paid in **Q1 2023**[147](index=147&type=chunk)[148](index=148&type=chunk) [NOTE 13: INCOME TAXES](index=39&type=section&id=NOTE%2013%3A%20INCOME%20TAXES) This note details income tax expense, effective tax rates, and unrecognized tax benefits for the reporting period Income Tax Expense and Effective Tax Rate (Three Months Ended March 31, Dollars in thousands) | Item | 2023 | 2022 | | :------------------------ | :----- | :----- | | Income tax expense | $17,286 | $9,348 | | Effective tax rate | 19.7 % | 18.5 % | - The increase in the effective tax rate for **Q1 2023** was primarily due to higher full-year forecasted income for **2023** compared to **2022**[149](index=149&type=chunk) - First Financial had **$1.9 million** of unrecognized tax benefits at **March 31, 2023 and December 31, 2022**, related to state income tax exposures, with no interest or penalties recorded[150](index=150&type=chunk) [NOTE 14: EMPLOYEE BENEFIT PLANS](index=40&type=section&id=NOTE%2014%3A%20EMPLOYEE%20BENEFIT%20PLANS) This note provides information on the company's defined benefit pension plan, including net periodic benefit cost - First Financial sponsors a non-contributory defined benefit pension plan, with assets primarily invested in fixed income and publicly traded equity mutual funds. No cash contributions were made to the plan in **Q1 2023 or 2022**, and none are expected for the remainder of **2023**[152](index=152&type=chunk)[153](index=153&type=chunk) Net Periodic Benefit Cost (Income) (Three Months Ended March 31, Dollars in thousands) | Item | 2023 | 2022 | | :-------------------------- | :----- | :----- | | Service cost | $2,350 | $2,425 | | Interest cost | $1,075 | $625 | | Expected return on assets | $(2,700) | $(2,750) | | Net actuarial loss | $150 | $400 | | Net periodic benefit cost (income) | $875 | $625 | [NOTE 15: REVENUE RECOGNITION](index=40&type=section&id=NOTE%2015%3A%20REVENUE%20RECOGNITION) This note describes the company's revenue recognition policies, particularly for noninterest income sources - Most of the Company's revenues are outside the scope of **ASU 2014-09 (Revenue from Contracts with Customers)**, including income from loans, leases, securities, derivatives, and foreign exchange. Revenues within scope are presented as Noninterest income[155](index=155&type=chunk) - Noninterest income sources include service charges on deposit accounts (transaction-based, account maintenance, overdraft fees), trust and wealth management fees (asset-based, transactional services, brokerage revenue), bankcard income (interchange fees), and other recurring revenues (transaction fees, safe deposit, insurance commissions, merchant referral income, OREO sales)[156](index=156&type=chunk)[157](index=157&type=chunk)[158](index=158&type=chunk)[159](index=159&type=chunk)[160](index=160&type=chunk)[161](index=161&type=chunk)[162](index=162&type=chunk) Gross Interchange Income (Three Months Ended March 31, Dollars in thousands) | Item | 2023 | 2022 | | :-------------------- | :----- | :----- | | Gross interchange income | $7,200 | $6,900 | | Related expenses | $3,600 | $3,600 | [NOTE 16: EARNINGS PER COMMON SHARE](index=41&type=section&id=NOTE%2016%3A%20EARNINGS%20PER%20COMMON%20SHARE) This note details the computation of basic and diluted earnings per common share for the reporting period Earnings Per Common Share Computation (Three Months Ended March 31, Dollars in thousands, except per share data) | Item | 2023 | 2022 | | :------------------------------------------ | :---------- | :---------- | | Net income available to common shareholders | $70,403 | $41,301 | | Weighted average shares outstanding - basic | 93,732,532 | 93,383,932 | | Effect of dilutive securities | 1,227,626 | 879,993 | | Adjusted weighted average shares - diluted | 94,960,158 | 94,263,925 | | Basic EPS | $0.75 | $0.44 | | Diluted EPS | $0.74 | $0.44 | - No antidilutive stock options existed at **March 31, 2023 or March 31, 2022**[163](index=163&type=chunk) [NOTE 17: FAIR VALUE DISCLOSURES](index=42&type=section&id=NOTE%2017%3A%20FAIR%20VALUE%20DISCLOSURES) This note provides fair value measurements for financial instruments, categorized by a three-level hierarchy - First Financial uses a fair value hierarchy (**Level 1, 2, 3**) to prioritize valuation inputs, with **Level 1** for quoted prices in active markets, **Level 2** for observable inputs other than quoted prices, and **Level 3** for unobservable inputs[165](index=165&type=chunk) Financial Instruments Not Measured at Fair Value (March 31, 2023, Dollars in thousands) | Item | Carrying Value | Estimated Fair Value (Total) | Level 1 | Level 2 | Level 3 | | :-------------------------------- | :------------- | :--------------------------- | :------ | :------ | :-------- | | **Financial assets** | | | | | | | Cash and short-term investments | $505,300 | $505,300 | $505,300 | $0 | $0 | | Investment securities held-to-maturity | $83,070 | $75,762 | $0 | $75,762 | $0 | | Loans and leases | $10,291,794 | $9,923,707 | $0 | $0 | $9,923,707 | | **Financial liabilities** | | | | | | | Deposits | $12,674,684 | $12,644,951 | $0 | $12,644,951 | $0 | | Short-term borrowings | $1,217,560 | $1,217,560 | $1,217,560 | $0 | $0 | | Long-term debt | $342,647 | $344,131 | $0 | $344,131 | $0 | Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis (March 31, 2023, Dollars in thousands) | Item | Level 1 | Level 2 | Level 3 | Total | | :-------------------------------- | :------ | :---------- | :-------- | :---------- | | **Assets** | | | | | | Investment securities available-for-sale | $33,421 | $3,316,713 | $34,815 | $3,384,949 | | Loans held for sale | $0 | $9,280 | $0 | $9,280 | | Interest rate derivative contracts | $0 | $124,765 | $0 | $124,765 | | Foreign exchange derivative contracts | $0 | $177,211 | $0 | $177,211 | | **Liabilities** | | | | | | Interest rate derivative contracts | $0 | $124,795 | $0 | $124,795 | | Foreign exchange derivative contracts | $0 | $177,211 | $0 | $177,211 | - The Company elected the fair value option for residential mortgage loans held for sale to offset changes in fair values with derivative financial instruments, reporting a gain of **$0.5 million** for **Q1 2023**[182](index=182&type=chunk)[184](index=184&type=chunk)[185](index=185&type=chunk) [Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations](index=47&type=section&id=Item%202%20-%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on financial condition and results of operations for the quarter ended March 31, 2023 [EXECUTIVE SUMMARY](index=47&type=section&id=EXECUTIVE%20SUMMARY) This section provides a high-level overview of First Financial Bancorp.'s business, operations, and key services - First Financial Bancorp. is a **$16.9 billion** financial holding company operating through First Financial Bank, with **130 banking centers** as of **March 31, 2023**[188](index=188&type=chunk) - The Company provides banking and financial services through **six lines of business**: Commercial, Retail Banking, Mortgage Banking, Wealth Management, Investment Commercial Real Estate, and Commercial Finance[188](index=188&type=chunk) - Wealth Management, operating as Yellow Cardinal Advisory Group, had **$3.3 billion** in assets under management as of **March 31, 2023**[188](index=188&type=chunk) [MARKET STRATEGY](index=47&type=section&id=MARKET%20STRATEGY) This section outlines the company's local market focus, specialized lending, and future growth and acquisition plans - First Financial focuses on a local market strategy to provide superior service and build long-term client relationships in **Ohio, Indiana, Kentucky, and Illinois**[190](index=190&type=chunk) - The Company also has specialized lending platforms extending beyond its geographic footprint for franchise owners, financial services clients, and equipment lease financing[190](index=190&type=chunk) - Future growth and capital investment will concentrate within current markets, with evaluation of additional metropolitan market opportunities and strategic acquisitions for product line extensions or industry verticals[191](index=191&type=chunk) [BUSINESS COMBINATIONS](index=47&type=section&id=BUSINESS%20COMBINATIONS) This section details recent acquisitions, including the purchase of Brady Ware Capital and its impact on goodwill - On **January 3, 2023**, First Financial acquired the assets of Brady Ware Capital, an M&A advisory firm, for approximately **$4.3 million**, consisting of **$3.4 million** in cash and a **$0.9 million** earn-out[192](index=192&type=chunk)[193](index=193&type=chunk) - The acquisition resulted in **$4.2 million** in goodwill, reflecting growth potential and expansion of the Bank's advisory business[194](index=194&type=chunk) [NON-GAAP FINANCIAL MEASURES](index=48&type=section&id=NON-GAAP%20FINANCIAL%20MEASURES) This section explains the use of non-GAAP financial measures for performance insight and peer comparisons - First Financial uses **tax equivalent net interest income, return on average tangible shareholder's equity, and tangible common equity ratio** to provide additional insight and facilitate peer comparisons[195](index=195&type=chunk)[196](index=196&type=chunk)[197](index=197&type=chunk) Non-GAAP Financial Measures (Dollars in thousands) | Item | March 31, 2023 | December 31, 2022 | March 31, 2022 | | :------------------------------------------ | :------------- | :---------------- | :------------- | | Net interest income - tax equivalent | $160,742 | $159,449 | $107,812 | | Net interest margin (FTE) | 4.55 % | 4.47 % | 3.16 % | | Return on average tangible shareholders' equity | 29.02 % | 29.93 % | 14.93 % | | Ending tangible shareholders' equity as % of ending tangible assets | 6.47 % | 5.95 % | 6.95 % | | Tangible book value per share | $10.76 | $9.97 | $10.97 | [OVERVIEW OF OPERATIONS](index=50&type=section&id=OVERVIEW%20OF%20OPERATIONS) This section provides a summary of key financial performance metrics for the company's overall operations Key Financial Performance (Dollars in thousands, except per share data) | Item | March 31, 2023 | December 31, 2022 | March 31, 2022 | | :----------------------------------- | :------------- | :---------------- | :------------- | | Net income | $70,403 | $69,086 | $41,301 | | Net income per common share-diluted | $0.74 | $0.73 | $0.44 | | Return on average assets | 1.69 % | 1.63 % | 1.03 % | | Return on average shareholders' equity | 13.71 % | 13.64 % | 7.53 % | | Total assets (end of period) | $16,933,884 | $17,003,316 | N/A | | Loans and leases (end of period) | $10,433,385 | $10,298,971 | N/A | | Deposits (end of period) | $12,674,684 | $12,701,177 | N/A | | Shareholders' equity (end of period) | $2,121,496 | $2,041,373 | N/A | [NET INTEREST INCOME](index=51&type=section&id=NET%20INTEREST%20INCOME) This section analyzes changes in net interest income and net interest margin, driven by interest rate movements Net Interest Income (Dollars in thousands) | Item | March 31, 2023 | December 31, 2022 | March 31, 2022 | | :-------------------- | :------------- | :---------------- | :------------- | | Net interest income | $159,318 | $157,896 | $106,345 | | Net interest margin (FTE) | 4.55 % | 4.47 % | 3.16 % | | Total interest income | $208,581 | $189,914 | $113,829 | | Total interest expense | $49,263 | $32,018 | $7,484 | - Linked quarter (**Q1 2023 vs. Q4 2022**): Net interest income increased by **$1.4 million (0.9%)**, and net interest margin (FTE) rose by **8 bps to 4.55%**, driven by interest income growth outpacing interest expense due to an asset-sensitive balance sheet repricing faster in a rising rate environment[206](index=206&type=chunk) - Year-to-date (**Q1 2023 vs. Q1 2022**): Net interest income increased by **$53.0 million (49.8%)**, and net interest margin (FTE) increased by **139 bps to 4.55%**, primarily due to higher interest rates[209](index=209&type=chunk) - Interest income increased **$18.7 million (9.8%)** linked quarter, mainly from a **62 bps** increase in loan yields. Interest expense increased **$17.2 million (53.9%)** linked quarter, due to higher rates and increased time deposits[207](index=207&type=chunk)[208](index=208&type=chunk) [RATE/VOLUME ANALYSIS](index=53&type=section&id=RATE%2FVOLUME%20ANALYSIS) This section analyzes the impact of changes in interest rates and volume on net interest income for the period Net Interest Income Variance (Dollars in thousands) | Item | Linked Quarter (Rate) | Linked Quarter (Volume) | Linked Quarter (Total) | Comparable Quarter (Rate) | Comparable Quarter (Volume) | Comparable Quarter (Total) | | :-------------------------- | :-------------------- | :---------------------- | :--------------------- | :------------------------ | :-------------------------- | :------------------------- | | Total earning assets | $19,358 | $(691) | $18,667 | $82,694 | $12,058 | $94,752 | | Total interest-bearing liabilities | $17,372 | $(127) | $17,245 | $32,583 | $9,196 | $41,779 | | Net interest income | $1,986 | $(564) | $1,422 | $50,111 | $2,862 | $52,973 | [NONINTEREST INCOME](index=53&type=section&id=NONINTEREST%20INCOME) This section details the components and changes in noninterest income, including foreign exchange and leasing Noninterest Income (Dollars in thousands) | Item | March 31, 2023 | December 31, 2022 | March 31, 2022 | | :------------------------------------------ | :------------- | :---------------- | :------------- | | Total noninterest income | $55,543 | $56,035 | $41,294 | | Foreign exchange income | $16,898 | $19,592 | $10,151 | | Leasing business income | $13,664 | $11,124 | $6,076 | | Trust and wealth management fees | $6,334 | $5,648 | $6,060 | | Net gain from sales of loans | $2,335 | $2,206 | $3,872 | | Service charges on deposit accounts | $6,514 | $6,406 | $7,729 | - Linked quarter (**Q1 2023 vs. Q4 2022**): Noninterest income slightly decreased by **$0.5 million (0.9%)**, mainly due to declines in foreign exchange income and client derivative fees, partially offset by increases in leasing business income and trust and wealth management fees[214](index=214&type=chunk) - Year-to-date (**Q1 2023 vs. Q1 2022**): Noninterest income increased by **$14.2 million (34.5%)**, driven by higher leasing business income (up **$7.6 million or 124.9%**), foreign exchange income (up **$6.7 million or 66.5%**), and other noninterest income, partially offset by lower gains on loan sales and service charges on deposits[215](index=215&type=chunk)[216](index=216&type=chunk) [NONINTEREST EXPENSE](index=54&type=section&id=NONINTEREST%20EXPENSE) This section outlines the components and changes in noninterest expenses, such as salaries and leasing costs Noninterest Expenses (Dollars in thousands) | Item | March 31, 2023 | December 31, 2022 | March 31, 2022 | | :-------------------------- | :------------- | :---------------- | :------------- | | Total noninterest expenses | $116,693 | $124,442 | $102,805 | | Salaries and employee benefits | $72,254 | $73,621 | $63,947 | | Leasing business expense | $7,938 | $6,061 | $3,869 | | FDIC assessments | $2,826 | $2,173 | $1,459 | | Other | $7,328 | $15,902 | $7,383 | - Linked quarter (**Q1 2023 vs. Q4 2022**): Noninterest expense decreased by **$7.7 million (6.2%)**, primarily due to lower other noninterest expenses (driven by prior period tax credit write-downs and foundation contribution), salaries and employee benefits, and professional services. This was partially offset by higher leasing business expenses and FDIC assessments[217](index=217&type=chunk) - Year-to-date (**Q1 2023 vs. Q1 2022**): Noninterest expenses increased by **$13.9 million (13.5%)**, mainly due to higher leasing business expense (up **$4.1 million or 105.2%**), salaries and benefits (up **$8.3 million or 13.0%**), FDIC assessments, and data processing expenses[218](index=218&type=chunk) [INCOME TAXES](index=54&type=section&id=INCOME%20TAXES) This section details the company's income tax expense and effective tax rate, explaining period-over-period changes Income Tax Expense and Effective Tax Rate | Period | Income Tax Expense (in thousands) | Pre-tax Income (in thousands) | Effective Tax Rate | | :-------------------- | :------------------------------ | :---------------------------- | :----------------- | | Q1 2023 | $17,300 | $87,700 | 19.7% | | Q4 2022 | $10,400 | $79,500 | 13.1% | | Q1 2022 | $9,300 | $50,600 | 18.5% | - The effective tax rate increased in **Q1 2023** compared to **Q4 2022** due to fewer tax credits realized. The increase compared to **Q1 2022** was primarily due to higher full-year forecasted income for **2023**[219](index=219&type=chunk)[220](index=220&type=chunk) [INVESTMENTS](index=55&type=section&id=INVESTMENTS) This section discusses the company's investment portfolio, including AFS and HTM securities and their unrealized losses - First Financial's investment portfolio totaled **$3.6 billion** at **March 31, 2023**, representing **21.3%** of total assets, with Available-for-Sale (AFS) securities at **$3.4 billion** and Held-to-Maturity (HTM) securities at **$83.1 million**[222](index=222&type=chunk) - The effective duration of the investment portfolio decreased to **4.4 years** at **March 31, 2023**, from **4.6 years** at **December 31, 2022**, as long-term rates eased[223](index=223&type=chunk) Unrealized Losses on Debt Securities (Dollars in thousands) | Item | March 31, 2023 | December 31, 2022 | | :------------------------------------------ | :------------- | :---------------- | | Unrealized after-tax loss on AFS debt securities | $(295,400) | $(325,900) | | Net unrealized losses on HTM securities | $(7,300) | $(7,500) | - The Company recorded a **$0.6 million** unrealized gain on equity securities in **Q1 2023**, compared to a **$1.3 million** gain in **Q4 2022** and a **$0.2 million** loss in **Q1 2022**[227](index=227&type=chunk) [LOANS](index=55&type=section&id=LOANS) This section provides an overview of the company's loan portfolio, detailing growth by category and average balances - Period-end loan balances (excluding held for sale) increased by **$134.4 million (1.3%)** to **$10.4 billion** at **March 31, 2023**, from **$10.3 billion** at **December 31, 2022**[228](index=228&type=chunk) Loan Growth by Category (Linked Quarter, Dollars in millions) | Loan Category | Increase (Decrease) | | :-------------------------- | :------------------ | | Residential real estate | $52.8 (4.8%) | | Commercial & industrial | $39.0 (1.1%) | | Lease financing | $37.8 (16.0%) | | Construction loans | $13.9 (2.7%) | | Commercial real estate | $3.9 (0.1%) | | Home equity | $(9.1) (1.2%) | | Installment loans | $(5.5) (2.6%) | - Average loans (excluding held for sale) increased by **$317.3 million (3.2%)** linked quarter, with significant growth in C&I (up **$207.4 million or 6.4%**) and leasing (up **$48.4 million or 23.8%**)[229](index=229&type=chunk) - Year-to-date, average loans increased by **$1.1 billion (12.1%)** from **Q1 2022**, driven by C&I (up **$720.1 million or 26.3%**), finance leases (up **$136.5 million or 118.0%**), and installment loans (up **$80.4 million or 64.0%**)[230](index=230&type=chunk) [COMMITMENTS AND CONTINGENCIES](index=55&type=section&id=COMMITMENTS%20AND%20CONTINGENCIES) This section outlines the company's loan commitments, letters of credit, and potential legal and tax credit obligations - First Financial had **$4.6 billion** in loan commitments outstanding at **March 31, 2023**, with **$4.5 billion** at variable interest rates. Letters of credit totaled **$32.2 million**, and risk participation transactions for interest rate swaps had a notional amount of **$386.8 million**[233](index=233&type=chunk)[234](index=234&type=chunk)[235](index=235&type=chunk) - Unfunded commitments related to tax credit investments were **$94.3 million** at **March 31, 2023**, up from **$84.3 million** at **December 31, 2022**[236](index=236&type=chunk) - No reserves were related to litigation matters as of **March 31, 2023 or December 31, 2022**, and management believes damages from pending litigation are not probable or reasonably estimable[237](index=237&type=chunk) [ASSET QUALITY AND ALLOWANCE FOR CREDIT LOSSES](index=57&type=section&id=ASSET%20QUALITY%20AND%20ALLOWANCE%20FOR%20CREDIT%20LOSSES) This section discusses asset quality trends, nonaccrual loans, and the allowance for credit losses - Nonaccrual loans increased by **$6.0 million (20.8%)** to **$34.6 million (0.33% of total loans)** at **March 31, 2023**, primarily due to the downgrade of two relationships[240](index=240&type=chunk) - Nonperforming assets decreased to **$34.8 million (0.21% of total assets)** at **March 31, 2023**, from **$39.8 million (0.23%)** at **December 31, 2022**[240](index=240&type=chunk) - Classified assets increased to **$159.0 million (94 bps of total assets)** at **March 31, 2023**, from **$128.1 million (75 bps)** at **December 31, 2022**, mainly due to the downgrade of three relationships[241](index=241&type=chunk) - The total Allowance for Credit Losses (ACL), including funded and unfunded reserves, was **$161.8 million** at **March 31, 2023**, resulting in **$10.5 million** in total provision expense for **Q1 2023**[246](index=246&type=chunk) ACL and Credit Quality Ratios | Item | March 31, 2023 | December 31, 2022 | | :------------------------------------------ | :------------- | :---------------- | | ACL on loans and leases | $141,600 | $133,000 | | ACL as % of period-end loans | 1.36 % | 1.29 % | | Net charge-offs (Q1 2023) | $30 | $(192) (Q4 2022) | | ACL as % of nonaccrual loans | 409.5 % | 464.6 % | | ACL as % of nonperforming loans | 409.5 % | 335.9 % | | Provision expense for loans and leases (Q1 2023) | $8,600 | $8,700 (Q4 2022) | | ACL on unfunded commitments | $20,200 | $18,400 | | Provision expense for unfunded commitments (Q1 2023) | $1,800 | $1,300 (Q4 2022) | [DEPOSITS AND FUNDING](index=60&type=section&id=DEPOSITS%20AND%20FUNDING) This section details changes in deposit balances and funding sources, including uninsured deposits and borrowings - Total deposits decreased by **$26.5 million (0.2%)** to **$12.7 billion** at **March 31, 2023**, from **December 31, 2022**[257](index=257&type=chunk) Deposit Changes (Linked Quarter, Dollars in millions) | Deposit Type | Change | | :-------------------------- | :------------------ | | Noninterest bearing deposits | $(305.1) (7.4%) | | Interest bearing demand deposits | $(275.3) (9.1%) | | Savings deposits | $(81.7) (2.1%) | | Time deposits | $635.7 (37.4%) | - Average deposits for **Q1 2023** increased by **$179.8 million (1.4%)** linked quarter, driven by a **$661.5 million** increase in brokered CDs, offsetting declines in noninterest-bearing, interest-bearing demand, and savings deposits[258](index=258&type=chunk) - Uninsured deposit balances were **$4.9 billion (38.6% of total deposits)** at **March 31, 2023**. Excluding public funds and intercompany deposits, adjusted uninsured deposits were **$2.9 billion (22.8% of total deposits)**[260](index=260&type=chunk) - Borrowed funds remained relatively unchanged at **$1.6 billion** at **March 31, 2023**, with short-term borrowings at **$1.2 billion** (primarily FHLB) and long-term debt at **$342.6 million** (including subordinated notes)[262](index=262&type=chunk)[263](index=263&type=chunk)[264](index=264&type=chunk) [LIQUIDITY](index=61&type=section&id=LIQUIDITY) This section describes the company's liquidity management strategies, funding sources, and available collateral - First Financial manages liquidity through deposit growth, loan/investment payments, maturing securities, and access to wholesale funding sources (Fed Funds, Fed discount window, brokered CDs, FHLB borrowings, deposit placement services)[267](index=267&type=chunk)[268](index=268&type=chunk)[261](index=261&type=chunk) - The Company maintains investment grade credit ratings (**BBB+/A** for Senior Unsecured Debt, **BBB/BBB+** for Subordinated Debt) from Kroll Bond Rating Agency, Inc., which impact financing cost and availability[271](index=271&type=chunk) - As of **March 31, 2023**, **$1.6 billion** of AFS securities were unpledged, **$277.9 million** were available to be sold at breakeven, and **$676.3 million** had floating rates. Total cash flows from the investment portfolio are expected to be **$704.4 million** in the next **12 months**[272](index=272&type=chunk)[273](index=273&type=chunk) - Cash and interest-bearing deposits with other banks totaled **$505.3 million** at **March 31, 2023**. The Company had **$3.6 billion (21.2% of total assets)** in unused and available overnight wholesale funding sources[274](index=274&type=chunk) - The Bank paid **$40.0 million** in dividends to First Financial in **Q1 2023**, with **$162.8 million** of retained earnings available for distribution without prior regulatory approval[275](index=275&type=chunk) [CAPITAL](index=62&type=section&id=CAPITAL) This section reviews the company's capital ratios, regulatory compliance, and dividend and share repurchase activities - First Financial's capital ratios increased in **Q1 2023**: Tier 1 capital to **11.34%** (from **11.17%** in **Q4 2022**), Leverage ratio to **9.03%** (from **8.89%**), and Tangible Common Equity ratio to **6.47%** (from **5.95%**), driven by strong earnings[280](index=280&type=chunk) - As of **March 31, 2023**, First Financial met all capital adequacy requirements and was categorized as '**well-capitalized**' under regulatory frameworks, exceeding minimum total regulatory capital by **$411.2 million**[281](index=281&type=chunk) Capital Ratios (March 31, 2023, Dollars in thousands) | Ratio | Actual Capital Amount | Actual Ratio | Minimum Required - Basel III Ratio | | :------------------------------------------ | :-------------------- | :----------- | :------------------------------- | | Common equity Tier 1 capital to risk-weighted assets (Consolidated) | $1,432,332 | 11.00 % | 7.00 % | | Tier 1 capital to risk-weighted assets (Consolidated) | $1,476,734 | 11.34 % | 8.50 % | | Total capital to risk-weighted assets (Consolidated) | $1,778,917 | 13.66 % | 10.50 % | | Leverage ratio (Consolidated) | $1,476,734 | 9.03 % | 4.00 % | - First Financial declared a common stock dividend of **$0.23 per share** for **Q1 2023** and authorized another **$0.23 per share** for **Q2 2023**. No shares were repurchased under the **2022 Stock Repurchase Plan** in **Q1 2023**, leaving all **5,000,000** authorized shares available[284](index=284&type=chunk)[285](index=285&type=chunk) [ENTERPRISE RISK MANAGEMENT](index=64&type=section&id=ENTERPRISE%20RISK%20MANAGEMENT) This section describes the company's comprehensive approach to identifying, assessing, and mitigating various risks - First Financial employs a structured Enterprise Risk Management (ERM) approach to assess, identify, and mitigate various risks, including credit, market (interest rate, liquidity, capital, foreign exchange, financial), operational, compliance, strategic, reputation, information technology, cyber, and legal risks[288](index=288&type=chunk) [CREDIT RISK](index=64&type=section&id=CREDIT%20RISK) This section describes the company's management of credit risk, focusing on underwriting and credit exposure reviews - Credit risk is the potential for loss from a customer's or counterparty's failure to meet financial obligations. First Financial manages this risk through its underwriting process and periodic review of credit exposures, guided by board-approved credit policies[290](index=290&type=chunk) [MARKET RISK](index=65&type=section&id=MARKET%20RISK) This section details the management of market risk, primarily interest rate and liquidity risk, using simulation models - Market risk, primarily interest rate risk and liquidity risk, is managed to achieve consistent growth in net interest income and equity while controlling volatility from market interest rate shifts[291](index=291&type=chunk)[292](index=292&type=chunk) - Interest rate risk is monitored using income simulation models and Economic Value of Equity (EVE) sensitivity analyses, which forecast Net Interest Income (NII) and discount cash flows under various interest rate scenarios, including parallel shifts and yield curve twists[293](index=293&type=chunk)[294](index=294&type=chunk) Estimated Impact on NII and EVE from Immediate Parallel Shifts in Interest Rates (March 31, 2023) | Scenario | NII-Year 1 (% Change) | NII-Year 2 (% Change) | EVE (% Change) | | :--------- | :-------------------- | :-------------------- | :------------- | | -100 bps | (6.30)% | (6.04)% | (2.08)% | | +100 bps | 4.27 % | 3.80 % | 1.60 % | | +200 bps | 7.70 % | 6.83 % | 3.30 % | - The Company's position is **asset-sensitive**, meaning interest-earning assets reprice faster than interest-bearing liabilities, benefiting NII in a rising rate environment. This sensitivity is expected to moderate as deposit costs increase[296](index=296&type=chunk)[297](index=297&type=chunk) - Liquidity risk management focuses on maximizing collateral-based liquidity, diversifying funding sources, and proactively updating contingency funding plans to monitor funding inflows and outflows[299](index=299&type=chunk)[300](index=300&type=chunk) [CRITICAL ACCOUNTING POLICIES](index=66&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES) This section highlights critical accounting policies involving significant estimates, such as ACL, goodwill, and pensions - First Financial's critical accounting policies, which involve significant estimates and assumptions, include accounting for the Allowance for Credit Losses (ACL) - loans and leases, goodwill, pension, and income taxes. No changes were made to these policies in **Q1 2023**[301](index=301&type=chunk) [ACCOUNTING AND REGULATORY MATTERS](index=66&type=section&id=ACCOUNTING%20AND%20REGULATORY%20MATTERS) This section refers to disclosures on new accounting standards and regulatory matters in the financial statements notes - New accounting standards adopted in **2023 and 2022**, as well as those issued but not yet adopted, are discussed in **Note 2** to the Consolidated Financial Statements[302](index=302&type=chunk) [FORWARD-LOOKING STATEMENTS](index=66&type=section&id=FORWARD-LOOKING%20STATEMENTS) This section cautions readers about forward-looking statements, outlining inherent uncertainties and risk factors - The report contains forward-looking statements regarding future operating/financial performance, capital structure, plans, objectives, and strategies, which are subject to inherent uncertainties, risks, and changes in circumstances[303](index=303&type=chunk)[304](index=304&type=chunk) - Important factors that could cause actual results to differ materially include economic, market, liquidity, credit, interest rate, operational, and technological risks; changes in policies, laws, or regulations; mergers and acquisitions; changes in accounting policies; consumer behavior; litigation; and current/future economic conditions[305](index=305&type=chunk) - Readers are cautioned not to place undue reliance on these statements, which speak only as of the report date. First Financial undertakes no obligation to revise or update them[306](index=306&type=chunk) [Item 3 - Quantitative and Qualitative Disclosures about Market Risk](index=70&type=section&id=Item%203%20-%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section incorporates by reference the detailed discussion on market risk from Item 2, Management's Discussion and Analysis - The information regarding quantitative and qualitative disclosures about market risk is incorporated by reference from the '**Market Risk**' section within **Item 2** of this report[308](index=308&type=chunk) [Item 4 - Controls and Procedures](index=70&type=section&id=Item%204%20-%20Controls%20and%20Procedures) This section details management's evaluation of the effectiveness of disclosure controls and procedures and internal control changes [Disclosure Controls and Procedures](index=70&type=section&id=Disclosure%20Controls%20and%20Procedures) This section confirms management's evaluation of the effectiveness of the company's disclosure controls and procedures - Management, including the CEO and CFO, concluded that First Financial's disclosure controls and procedures were **effective at the reasonable assurance level** as of **March 31, 2023**[311](index=311&type=chunk) [Changes in Internal Control over Financial Reporting](index=70&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) This section reports on any material changes in the company's internal control over financial reporting during the period - There were **no changes** in First Financial's internal control over financial reporting during the period that materially affected, or are reasonably likely to materially affect, its internal control over financial reporting[312](index=312&type=chunk) PART II - OTHER INFORMATION This section contains other required information, including legal proceedings, risk factors, and equity sales [Item 1 - Legal Proceedings](index=71&type=section&id=Item%201%20-%20Legal%20Proceedings) This section confirms no material changes to legal proceedings since the 2022 Annual Report on Form 10-K - No material changes to the disclosure on legal proceedings have occurred since the Company's Annual Report on Form 10-K for the year ended **December 31, 2022**[314](index=314&type=chunk) [Item 1A - Risk Factors](index=71&type=section&id=Item%201A%20-%20Risk%20Factors) This section states no material changes to risk factors since the 2022 Annual Report on Form 10-K - No material changes have occurred to the risk factors previously disclosed in the Company's Annual Report on Form 10-K for the year ended **December 31, 2022**[315](index=315&type=chunk) [Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds](index=71&type=section&id=Item%202%20-%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section updates on the stock repurchase plan, confirming no shares were purchased in the first quarter of 2023 - The **2022 Stock Repurchase Plan**, authorizing the purchase of up to **5,000,000 shares** of common stock, became effective **January 1, 2022**, and expires **December 31, 2023**. No shares were purchased under this plan in **Q1 2023**[316](index=316&type=chunk) [Item 6 - Exhibits](index=72&type=section&id=Item%206%20-%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including organizational documents and certifications - The exhibits include Amended Articles of Incorporation, Amended and Restated Regulations, CEO and CFO certifications (**Sarbanes-Oxley Act Sections 302 and 906**), and various Inline XBRL Taxonomy Extension files[318](index=318&type=chunk) [Signatures](index=73&type=section&id=Signatures) This section contains the official signatures of the registrant's authorized officers, certifying the report - The report is signed by **James M. Anderson**, Executive Vice President and Chief Financial Officer, and **Scott T. Crawley**, Senior Vice President and Controller, on **May 5, 2023**[323](index=323&type=chunk)

First Financial Bancorp (NASDAQ:FFBC) Q1 2023 Earnings Conference Call April 21, 2023 8:30 AM ET Company Participants Scott Crawley - Investor Relations Archie Brown - President and Chief Executive Officer Jamie Anderson - Chief Financial Officer Bill Harrod - Chief Credit Officer Conference Call Participants Daniel Tamayo - Raymond James Chris McGratty - KBW Scott Siefers - Piper Sandler Terry McEvoy - Stephens Jon Arfstrom - RBC Capital Markets Operator Hello and welcome to today’s First Financial Bancorp ...

TABLE OF CONTENTS (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES ACT OF 1934 Commission File Number 001-34762 FIRST FINANCIAL BANCORP. (Exact name of registrant as specified in its charter) | Ohio 31-1042001 | | | | --- | --- | --- | | (State of incorporation) (I.R.S. Employer | | | | Identification No.) | | | | 255 East Fifth Street, Suite 8 ...

First Financial Bancorp. (NASDAQ:FFBC) Q4 2022 Earnings Conference Call January 27, 2023 8:30 AM ET Company Participants Scott Crawley - Corporate Controller and Principal Accounting Officer Archie Brown - President and Chief Executive Officer James Anderson - Chief Financial Officer William Harrod - Chief Credit Officer Conference Call Participants Scott Siefers - Piper Sandler & Co. Daniel Tamayo - Raymond James Financial Inc. Terry McEvoy - Stephens Inc. Christopher McGratty - KBW Jon Arfstrom - RBC Capi ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 OR ☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________________ to ____________________ Commission file number 001-34762 | --- | --- | --- | --- | |------------------------------------------------------- ...

First Financial Bancorp. (NASDAQ:FFBC) Q3 2022 Earnings Conference Call October 21, 2022 8:30 AM ET Company Participants Scott T. Crawley - Corporate Controller and Principal Accounting Officer Archie M. Brown - President and CEO James M. Anderson - CFO William R. Harrod - CCO Conference Call Participants Scott Siefers - Piper Sandler Daniel Tamayo - Raymond James Brandon Rud - Stephens, Inc. Christopher McGratty - KBW Operator Hello everyone and welcome to today’s First Financial Bancorp Third Quarter 2022 ...