First Financial Bancorp. Profile
First Financial Bancorp. operates as the bank holding company for First Financial Bank that engages in the business of commercial banking and other banking and banking-related activities.
The range of banking services provided by the company 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). In addition, the company offers deposit products that include interest-bearing and noninterest-bearing accounts, time deposits and cash management services for commercial customers. A full range of trust and wealth management services is also provided through the company'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. The company works with businesses to meet their shorter-term working capital needs while also providing long-term financing for their business plans. The company also offers lease and equipment financing through two wholly-owned subsidiaries of the Bank, First Financial Equipment Finance LLC (First Equipment Finance) and Summit Funding Group, Inc. (Summit).
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 company 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 through two wholly-owned subsidiaries of the bank, Oak Street Funding LLC (Oak Street) and First Franchise Capital Corporation (First Franchise). 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 the company's service area and industry diversification are other means by which First Financial manages the risk.
Certain residential real estate loans originated by the company conform to secondary market underwriting standards and are sold within a short timeframe to unaffiliated third parties. The company 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.
Consumer loans are primarily loans made to individuals. 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.
Home equity lines of credit consist mainly of revolving lines of credit secured by residential real estate. Home equity lines of credit are generally governed by the same lending policies and subject to the same credit risk mitigants as described previously for residential real estate loans.
Bannockburn Global Forex (Bannockburn), a division of the bank, is an industry-leading capital markets firm based in Cincinnati, Ohio, that provides transactional currency payments, foreign exchange hedging and other advisory products to closely held enterprises, financial sponsors and downstream financial institutions across the United States. Their primary focus is on small- and middle-market clients that have a need for tailored foreign exchange solutions. Bannockburn has a nationwide presence with offices in 10 locations throughout the U.S.
Lending Practices
The company remains dedicated to meeting the financial needs of individuals and businesses through its client-focused business model. The loan portfolio consists of a broad range of borrowers primarily located in the Ohio, Indiana and Kentucky markets; however, the commercial finance and leasing lines of business serve a national client base.
The company's loan portfolio consists of commercial loan types, including C&I, lease financing (equipment leasing), construction real estate and commercial real estate, as well as consumer loan types, such as residential real estate, home equity, installment and credit card loans.
Commercial and industrial - C&I loans include revolving lines of credit and term loans to commercial customers for use in normal business operations to finance working capital needs, equipment purchases, leasehold improvements or other projects. C&I loans are generally underwritten individually and secured with the assets of the Company and/or the personal guarantee of the business owners. C&I loans also include ABL, equipment and leasehold improvement financing for franchisees in the quick service and casual dining restaurant sector and commission-based loans to insurance agents and brokers. ABL transactions typically involve larger commercial clients and are secured by specific assets, such as inventory, accounts receivable, machinery and equipment. In the franchise lending space, First Financial focuses on a limited number of restaurant concepts that have sound economics, low closure rates and strong brand awareness within specified local, regional or national markets. Within the insurance lending platform, First Financial serves insurance agents and brokers that are looking to maximize their book-of-business value and grow their agency business. Expected default activity in the C&I portfolio is based on forecasted manufacturing overtime hours and business bankruptcies. Changes in forecasted expectations for these economic variables could result in volatility in the Company's ACL in future periods.
Lease financing - Lease financing consists of lease transactions for the acquisition of both new and used business equipment for commercial clients. Lease products may include tax leases, finance leases, lease lines of credit and interim funding. The credit underwriting for lease transactions includes detailed analysis of the lessee's industry and business model, nature of the equipment, equipment resale values, historical and projected cash flow analysis, secondary sources of repayment and guarantor, in addition to other considerations.
Construction real estate - Real estate construction loans are term loans to individuals, companies or developers used for the construction or development of a commercial or residential property for which repayment will be generated by the sale or permanent financing of the property. Generally, these loans are for construction projects that have been pre-sold, pre-leased or have secured permanent financing, as well as loans to real estate companies with significant equity invested in the project. An independent credit team underwrites construction real estate loans, which are managed by experienced lending officers and monitored through the construction phase by a centralized funding desk that manages loan disbursements.
Commercial real estate - owner and investor - Commercial real estate loans consist of term loans secured by a mortgage lien on real estate properties such as apartment buildings, office and industrial buildings and retail shopping centers. Additionally, the company's franchise lending activities discussed in the Commercial and Industrial section often include the financing of real estate in addition to equipment.
Residential real estate - Residential real estate loans represent loans to consumers for the financing of a residence. These loans generally have a 15 to 30 year term and a fixed interest rate, but may have a shorter term to maturity or an adjustable interest rate. In most cases, these loans are extended to borrowers to finance their primary residence. First Financial sells residential real estate loan originations into the secondary market on both servicing retained and servicing released bases. Residential real estate loans are generally underwritten to secondary market lending standards, utilizing underwriting processes that rely on empirical data to assess credit risk as well as analysis of the borrower's ability to repay their obligations, credit history, the amount of any down payment and the market value or other characteristics of the property. The company also offers a residential mortgage product that features similar borrower credit characteristics but a more streamlined underwriting process than typically required to sell to government-sponsored enterprises and thus is retained on the Consolidated Balance Sheets.
Home equity - Home equity lending includes both term loans and revolving lines of credit secured by a first or second lien on the borrower's residence. Home equity lending underwriting considerations include the borrower's credit history as well as debt-to-income and loan-to-value policy limits.
The home equity ACL model is adjusted for forecasted changes in personal bankruptcies and outstanding consumer credit.
Installment - Installment lending consists of consumer loans not secured by real estate, including loans secured by automobiles and unsecured personal loans.
The installment ACL model is adjusted for forecasted changes in household consumer debt service ratio, outstanding consumer credit and CPI.
Credit card - Credit card lending consists of secured and unsecured revolving lines of credit to consumer and business customers. Credit card lines are generally available for an indefinite period of time as long as the borrower's credit characteristics do not materially or adversely change.
Deposits
The company solicits deposits by offering commercial and consumer clients a wide variety of transaction and savings accounts, including checking, savings, money-market and time deposits of various maturities and rates.
Investment Portfolio
As of December 31, 2023, the company's investment portfolio included U.S. Treasuries; Securities of U.S. government agencies and corporations; mortgage-backed securities-residential; mortgage-backed securities-commercial; collateralized mortgage obligations; obligations of state and other political subdivisions; asset-backed securities; and other securities.
Supervision and Regulation
As a bank holding company that has elected to become a financial holding company, the company is subject to the provisions of the Bank Holding Company Act of 1956, as amended (the BHCA); and is subject to supervision and examination by the Federal Reserve Board.
The bank, as a bank chartered under the laws of the state of Ohio and a member of the Federal Reserve Bank of Cleveland (Federal Reserve Bank), is subject to supervision and examination by the Federal Reserve Board and the Ohio Division of Financial Institutions (ODFI). The bank's deposits are insured up to the legal limits by the Deposit Insurance Fund (DIF), which is administered by the Federal Deposit Insurance Corporation (FDIC); and is subject to the provisions of the Federal Deposit Insurance Act, as amended (FDIA). The bank is also subject to regulations of the Consumer Financial Protection Bureau (CFPB), which was established by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, as amended and has broad powers to adopt and enforce consumer protection regulations.
As a bank with total assets in excess of $10 billion, the bank is primarily examined by the CFPB with respect to consumer protection laws and regulations.
The consumer protection laws applicable to the bank are the Community Reinvestment Act (CRA); Equal Credit Opportunity Act; Truth in Lending Act; Fair Housing Act; Home Mortgage Disclosure Act; Real Estate Settlement Procedures Act; and Privacy provisions of the Gramm-Leach-Bliley Act.
The earnings of banks, and, therefore, the earnings of the company (and its subsidiaries), are affected by the fiscal and monetary policies of the United States government and its agencies, including the Federal Reserve Board. The bank has established policies and procedures that it considers to be in compliance with the requirements of the Uniting and Strengthening of America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001. As an Ohio-chartered bank, the bank is subject to regular examination by the Ohio Division of Financial Institutions (ODFI).
History
First Financial Bancorp. was founded in 1863. The company was incorporated in 1982.
