Business Overview and History

First Financial Bancorp (FFBC) is a formidable player in the banking and financial services industry, boasting a rich history and a steadfast commitment to serving its clients and communities. Headquartered in Cincinnati, Ohio, this regional bank holding company has carved out a niche for itself, leveraging its expertise and adaptability to navigate the ever-evolving financial landscape.

First Financial Bancorp, formed in 1982, has grown to become a respected mid-sized, regional bank holding company. The company's roots can be traced back to 1863, when its subsidiary, First Financial Bank, was founded. In 2016, First Financial Bank converted its charter from a nationally chartered bank to an Ohio state chartered bank, showcasing its ability to adapt to changing regulatory environments. The company has expanded its offerings to include a wide range of banking services for individuals and businesses, such as commercial lending, real estate lending, consumer financing, deposit products, trust and wealth management services, equipment and leasehold improvement financing, and secured commercial financing.

First Financial has demonstrated a strategic approach to growth through acquisitions. In 2017, the company acquired MainSource Financial Group, Inc., significantly expanding its footprint into Indiana, Kentucky, and Illinois. This move not only broadened its geographical presence but also brought additional commercial and consumer banking capabilities, along with specialty lending divisions focused on insurance agencies, registered investment advisors, certified public accountants, energy companies, and restaurant franchises.

Further diversifying its revenue streams and enhancing its commercial banking capabilities, First Financial acquired Bannockburn Global Forex, LLC in 2019. This acquisition brought on board an industry-leading capital markets firm that provides foreign exchange, interest rate, and commodity hedging solutions to businesses across the United States. In 2021, the company continued its strategic expansion by acquiring Summit Funding Group, Inc., a provider of equipment financing.

Throughout its history spanning more than 150 years, First Financial has faced and overcome various challenges common to the banking industry. These include navigating economic downturns, managing credit risk, responding to regulatory changes, and adapting to technological advancements. The company's resilience, strategic focus, and unwavering commitment to serving its customers and communities have been key factors in its ability to grow and evolve over time.

Financial Performance and Ratios

First Financial's financial performance has been consistently strong, with the company reporting net income of $228.83 million in 2024, up from $255.86 million in 2023 and $217.61 million in 2022. The company's return on assets (ROA) stood at 1.47% in 2024, while its return on tangible common equity (ROTCE) reached an impressive 20.0%. These metrics highlight First Financial's ability to generate robust earnings and efficiently deploy its capital.

The company's balance sheet reflects a well-capitalized and liquid position, with a tangible common equity ratio of 7.73% as of December 31, 2024. This solid capital base provides ample flexibility for growth and strategic initiatives. Additionally, First Financial's net interest margin, a key measure of profitability, remained industry-leading at 3.94% in the fourth quarter of 2024, despite the challenging interest rate environment.

In 2024, First Financial reported total revenue of $835.58 million, with net income reaching $228.83 million. The company's operating cash flow for the year was $262.16 million, while free cash flow stood at $241.08 million. For the fourth quarter of 2024, revenue was $224.25 million, with net income of $64.89 million.

Year-over-year growth has been strong, with revenue increasing by 11.4% and earnings per share (EPS) growing by 9.23%. This growth was driven by robust loan growth, double-digit increases in fee income, and continued stability in credit quality. Loan growth exceeded 7% on an annualized basis, while total deposits surged by approximately 16%.

Diversified Business Model and Revenue Streams

One of First Financial's key strengths lies in its diversified business model, which spans commercial banking, retail banking, investment commercial real estate, mortgage banking, commercial finance, and wealth management. This diversification helps mitigate risk and provides a balanced revenue stream, with non-interest income contributing significantly to the company's overall financial performance.

In 2024, First Financial's non-interest income reached a record $241.8 million, representing a 13.4% increase from the previous year. This growth was driven by strong performances in the company's leasing, foreign exchange, and wealth management divisions, showcasing the benefits of its diversified approach.

The company's commercial lending segment, which includes commercial and industrial (C&I) loans, commercial real estate (CRE) loans, and other commercial loans, reported total loans of $7.14 billion as of December 31, 2024, an increase of 6.2% from the prior year. Net interest income from commercial lending was $223.1 million in 2024, up 5.8% compared to 2023. The increase in commercial lending was primarily attributed to growth in C&I loans, which rose 8.4% year-over-year, and CRE loans, which grew 4.7%.

First Financial's consumer lending segment, which includes residential mortgage loans, home equity loans and lines of credit, and other consumer loans, totaled $3.56 billion as of December 31, 2024, up 3.2% from the previous year. Net interest income from consumer lending was $112.4 million in 2024, a 2.9% increase compared to 2023. The growth was primarily driven by a 4.1% increase in residential mortgage loans.

The company's wealth management segment has also shown strong performance, with assets under management (AUM) totaling $3.70 billion as of December 31, 2024, an increase of 5.1% from the prior year. Wealth management fee income was $37.2 million in 2024, up 4.8% compared to 2023.

First Financial's specialty lending businesses, including Bannockburn Global Forex, Agile Premium Finance, and First Franchise Capital Corporation, contributed $54.6 million in net interest income and $32.4 million in noninterest income in 2024, representing 10.6% and 18.6% of the company's total net interest income and noninterest income, respectively.

Geographic Expansion and Market Presence

First Financial has strategically expanded its geographic footprint, with a focus on key Midwest markets. In 2025, the company further solidified its presence by entering the Grand Rapids, Michigan market, building upon its existing operations in Chicago, Evansville, and Cleveland. This measured expansion allows First Financial to leverage its expertise and capitalize on emerging opportunities, while maintaining a strong connection to its core markets.

The company operates 127 full-service banking centers, primarily in the Midwest region, with a focus on the states of Ohio, Indiana, Kentucky, and Illinois. While specific geographic performance breakdowns are not disclosed, First Financial's growth strategy emphasizes expansion in its core Midwest markets.

Asset Quality and Credit Risk Management

Maintaining a robust credit risk management framework is a critical priority for First Financial. The company's non-performing assets to total assets ratio stood at 0.36% as of December 31, 2024, showcasing its ability to effectively manage credit risk and maintain a high-quality loan portfolio. Additionally, the company's allowance for credit losses (ACL) coverage ratio of 1.33% of total loans provides a cushion against potential credit challenges.

Liquidity

First Financial maintains a strong liquidity position to ensure it can meet its financial obligations and capitalize on growth opportunities. The company's liquidity management strategy includes maintaining a diverse funding base, access to various liquidity sources, and a conservative approach to asset-liability management. This approach has enabled First Financial to maintain a robust liquidity profile, supporting its operational needs and strategic initiatives.

As of December 31, 2024, First Financial reported cash and cash equivalents of $904.49 million, providing ample liquidity to support its operations and strategic initiatives. The company's debt-to-equity ratio stood at 0.45x, reflecting a conservative capital structure and financial flexibility.

Outlook and Guidance

Looking ahead, First Financial has provided a positive outlook for 2025. The company expects loan growth to moderate in the low single digits on an annualized basis for the first quarter, with deposit growth slowing as seasonal flows reverse. The net interest margin is expected to remain strong, in the range of 3.85% to 3.90%, while credit costs are anticipated to be modestly lower. The company's fee income is projected to be between $63 million and $65 million, driven by robust performance in its foreign exchange, leasing, and wealth management businesses.

For the first quarter of 2025, First Financial anticipates non-interest expense to be between $128 million and $130 million, excluding leasing business and fee-based incentive expenses. The company expects to maintain its current dividend level and sees continued growth opportunities in its expansion markets of Chicago, Evansville, Cleveland, and the newly entered Grand Rapids, Michigan.

Industry Trends and Competitive Landscape

The banking industry has seen moderate growth in recent years, with a compound annual growth rate (CAGR) of around 3-5% for Midwest regional banks. First Financial has outperformed its peers, growing revenues and earnings at a faster pace. The company's focus on diversification, strategic acquisitions, and expansion into new markets has positioned it well to capitalize on industry trends and maintain its competitive edge.

Conclusion

First Financial Bancorp's enduring success can be attributed to its disciplined approach, diversified business model, and unwavering commitment to serving its clients and communities. As the company navigates the evolving financial landscape, its steady hand and strategic vision position it well to capitalize on future opportunities and continue delivering value to its shareholders. With a strong financial foundation, a diverse range of revenue streams, and a clear growth strategy, First Financial is well-equipped to face the challenges and opportunities that lie ahead in the dynamic banking industry.