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LOANS
 12 Months Ended
Dec. 31, 2021
Loans [Abstract]  
LOANS (excluding covered loans) Loans and Leases
First Financial offers clients a variety of commercial and consumer loan and lease products with various interest rates and payment terms. Commercial loan categories include C&I, CRE, construction real estate and lease financing. Consumer loan categories include residential real estate, home equity, installment and credit card.

Lending activities are primarily concentrated in states where the Bank operates banking centers (Ohio, Indiana, Kentucky and Illinois). First Financial also offers two nationwide lending platforms, one that provides equipment and leasehold improvement financing for franchisees in the quick service and casual dining restaurant sector and another that provides loans that are secured by commissions and cash collateral accounts to insurance agents and brokers.

In accordance with the CARES Act and the 2021 Consolidated Appropriations Act, First Financial participated in offering PPP loans to its customers. These loans provide a direct incentive for small businesses to keep their workers on the payroll and to maintain their operations during the COVID-19 pandemic. PPP loans are eligible to be forgiven provided certain conditions are met. As of December 31, 2021, First Financial had $55.6 million in PPP loans, net of unearned fees of $2.6 million. As of December 31, 2020, First Financial had $594.6 million in PPP loans, net of unearned income of $13.7 million.

Credit quality. To facilitate the monitoring of credit quality for commercial loans, First Financial utilizes the following categories of credit grades:

Pass - Higher quality loans that do not fit any of the other categories described below.

Special Mention - First Financial assigns a special mention rating to loans and leases with potential weaknesses that deserve management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or lease or in First Financial's credit position at some future date.

Substandard - First Financial assigns a substandard rating to loans or leases that are inadequately protected by the current sound financial worth and paying capacity of the borrower or the collateral pledged, if any. Substandard loans and leases have well-defined weaknesses that jeopardize repayment of the debt. Substandard loans and leases are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not addressed.

Doubtful - First Financial assigns a doubtful rating to loans and leases with all of the attributes of a substandard rating with the added characteristic that the weaknesses make collection or liquidation in full highly questionable and improbable, on the basis of currently existing facts, conditions and values. The possibility of loss is extremely high, but because of certain important and reasonably specific pending factors that may work to the advantage and strengthening of the credit quality of the loan or lease, its classification as an estimated loss is deferred until its more exact status may be determined. Pending factors include proposed merger, acquisition or liquidation procedures, capital injection, perfecting liens on additional collateral and refinancing plans.

The credit grades previously described are derived from standard regulatory rating definitions and are assigned upon initial approval of credit to borrowers and updated periodically thereafter.

First Financial considers repayment performance to be the best indicator of credit quality for consumer loans. Consumer loans that have principal and interest payments that are past due by 90 days or more are generally classified as nonperforming. Additionally, consumer loans that have been modified in a TDR are classified as nonperforming.
The following table sets forth the Company's loan portfolio at December 31, 2021 by risk attribute and origination date:
(Dollars in thousands)20212020201920182017PriorTerm TotalRevolvingTotal
Commercial & industrial
Pass$711,198 $442,064 $339,507 $164,273 $119,580 $154,835 $1,931,457 $700,246 $2,631,703 
Special mention389 4,867 5,993 16,057 6,511 4,918 38,735 21,505 60,240 
Substandard2,220 434 2,843 1,224 12,640 1,465 20,826 7,259 28,085 
Doubtful0 0 0 0 0 0 0 0 0 
Total$713,807 $447,365 $348,343 $181,554 $138,731 $161,218 $1,991,018 $729,010 $2,720,028 
Lease financing
Pass$31,697 $21,536 $19,095 $15,494 $6,821 $4,765 $99,408 $0 $99,408 
Special mention010,216000010,216010,216
Substandard000000000
Doubtful000000000
Total$31,697 $31,752 $19,095 $15,494 $6,821 $4,765 $109,624 $0 $109,624 
Construction real estate
Pass$95,991 $200,421 $96,726 $15,886 $317 $12,719 $422,060 $18,299 $440,359 
Special mention0 6,531 0 9,004 0 0 15,535 0 15,535 
Substandard0 0 0 0 0 0 0 0 0 
Doubtful0 0 0 0 0 0 0 0 0 
Total$95,991 $206,952 $96,726 $24,890 $317 $12,719 $437,595 $18,299 $455,894 
Commercial real estate - investor
Pass$537,183 $379,217 $944,915 $367,946 $294,147 $434,641 $2,958,049 $66,579 $3,024,628 
Special mention0 7,479 18,136 18,006 15,566 34,153 93,340 0 93,340 
Substandard1,616 6 21,312 6,628 6,918 307 36,787 0 36,787 
Doubtful0 0 0 0 0 0 0 0 0 
Total$538,799 $386,702 $984,363 $392,580 $316,631 $469,101 $3,088,176 $66,579 $3,154,755 
Commercial real estate - owner
Pass$204,291 $184,564 $121,150 $135,463 $119,489 $259,504 $1,024,461 $7,565 $1,032,026 
Special mention970 2,283 2,262 3,751 1,381 5,512 16,159 0 16,159 
Substandard162 727 6,541 12,513 1,730 1,963 23,636 38 23,674 
Doubtful0 0 0 0 0 0 0 0 0 
Total$205,423 $187,574 $129,953 $151,727 $122,600 $266,979 $1,064,256 $7,603 $1,071,859 
Residential real estate
Performing$258,537 $230,699 $138,239 $64,310 $34,606 $162,924 $889,315 $0 $889,315 
Nonperforming236 970 1,193 598 339 3,418 6,754 0 6,754 
Total$258,773 $231,669 $139,432 $64,908 $34,945 $166,342 $896,069 $0 $896,069 
Home equity
Performing$42,298 $45,638 $14,713 $11,221 $7,603 $30,588 $152,061 $553,245 $705,306 
Nonperforming72 161 44 67 56 234 634 2,459 3,093 
Total$42,370 $45,799 $14,757 $11,288 $7,659 $30,822 $152,695 $555,704 $708,399 
Installment
Performing$58,209 $12,768 $8,213 $5,541 $3,925 $2,201 $90,857 $28,353 $119,210 
Nonperforming6 61 32 9 1 56 165 79 244 
Total$58,215 $12,829 $8,245 $5,550 $3,926 $2,257 $91,022 $28,432 $119,454 
Credit cards
Performing$0 $0 $0 $0 $0 $0 $0 $51,772 $51,772 
Nonperforming0 0 0 0 0 0 0 445 445 
Total$0 $0 $0 $0 $0 $0 $0 $52,217 $52,217 
Grand Total$1,945,075 $1,550,642 $1,740,914 $847,991 $631,630 $1,114,203 $7,830,455 $1,457,844 $9,288,299 
The following table sets forth the Company's loan portfolio at December 31, 2020 by risk attribute and origination date:
(Dollars in thousands)20202019201820172016PriorTerm TotalRevolvingTotal
Commercial & industrial
Pass$1,141,163 $460,210 $296,221 $208,077 $122,686 $138,307 $2,366,664 $502,286 $2,868,950 
Special mention24,668 10,281 18,118 6,893 6,668 6,090 72,718 10,470 83,188 
Substandard6,709 2,370 8,022 26,565 5,124 1,192 49,982 5,389 55,371 
Doubtful0 0 0 0 0 0 0 0 0 
Total$1,172,540 $472,861 $322,361 $241,535 $134,478 $145,589 $2,489,364 $518,145 $3,007,509 
Lease financing
Pass$22,916 $22,397 $12,942 $6,967 $4,802 $2,368 $72,392 $0 $72,392 
Special mention290000002900290 
Substandard50018012003050305 
Doubtful000000000 
Total$23,211 $22,397 $12,942 $7,147 $4,922 $2,368 $72,987 $0 $72,987 
Construction real estate
Pass$96,410 $259,524 $182,625 $23,185 $24,786 $426 $586,956 $19,671 $606,627 
Special mention0 621 18,203 9,984 661 0 29,469 0 29,469 
Substandard0 0 0 0 0 0 0 0 0 
Doubtful0 0 0 0 0 0 0 0 0 
Total$96,410 $260,145 $200,828 $33,169 $25,447 $426 $616,425 $19,671 $636,096 
Commercial real estate - investor
Pass$515,950 $1,011,898 $427,077 $378,536 $286,587 $361,403 $2,981,451 $56,398 $3,037,849 
Special mention0 17,463 15,534 44,426 32,408 43,704 153,535 559 154,094 
Substandard6,198 2,043 22,497 7,067 68 14,724 52,597 0 52,597 
Doubtful0 0 0 0 0 0 0 0 0 
Total$522,148 $1,031,404 $465,108 $430,029 $319,063 $419,831 $3,187,583 $56,957 $3,244,540 
Commercial real estate - owner
Pass$185,692 $162,480 $147,236 $125,275 $128,755 $211,519 $960,957 $36,721 $997,678 
Special mention4,292 11,380 2,891 8,230 3,017 19,384 49,194 59 49,253 
Substandard668 504 7,054 5,496 306 2,321 16,349 38 16,387 
Doubtful0 0 0 0 0 0 0 0 0 
Total$190,652 $174,364 $157,181 $139,001 $132,078 $233,224 $1,026,500 $36,818 $1,063,318 
Residential real estate
Performing$290,277 $241,601 $115,747 $64,220 $60,094 $224,281 $996,220 $0 $996,220 
Nonperforming321 429 673 643 87 4,713 6,866 0 6,866 
Total$290,598 $242,030 $116,420 $64,863 $60,181 $228,994 $1,003,086 $0 $1,003,086 
Home equity
Performing$60,967 $20,200 $17,445 $11,308 $9,744 $41,571 $161,235 $577,609 $738,844 
Nonperforming0 0 0 39 28 138 205 4,050 4,255 
Total$60,967 $20,200 $17,445 $11,347 $9,772 $41,709 $161,440 $581,659 $743,099 
Installment
Performing$21,584 $15,614 $11,041 $8,812 $1,954 $3,185 $62,190 $19,479 $81,669 
Nonperforming15 53 23 35 17 36 179 2 181 
Total$21,599 $15,667 $11,064 $8,847 $1,971 $3,221 $62,369 $19,481 $81,850 
Credit cards
Performing$0 $0 $0 $0 $0 $0 $0 $47,845 $47,845 
Nonperforming0 0 0 0 0 0 0 640 640 
Total$0 $0 $0 $0 $0 $0 $0 $48,485 $48,485 
Grand Total$2,378,125 $2,239,068 $1,303,349 $935,938 $687,912 $1,075,362 $8,619,754 $1,281,216 $9,900,970 

Delinquency. Loans are considered past due or delinquent when the contractual principal or interest due in accordance with the terms of the loan agreement or any portion thereof remains unpaid after the due date of the scheduled payment.
Loan delinquency, including nonaccrual loans, was as follows:
 As of December 31, 2021
(Dollars in thousands)30 – 59
days
past due		60 – 89
days
past due		> 90 days
past due		Total
past
due		CurrentTotal> 90 days
past due
and still
accruing
Loans      
Commercial & industrial$303 $2,006 $2,775 $5,084 $2,714,944 $2,720,028 $0 
Lease financing93 0 0 93 109,531 109,624 0 
Construction real estate0 0 0 0 455,894 455,894 0 
Commercial real estate-investor89 42 6,409 6,540 3,148,215 3,154,755 0 
Commercial real estate-owner56 2,207 637 2,900 1,068,959 1,071,859 0 
Residential real estate4,379 262 2,114 6,755 889,314 896,069 0 
Home equity1,214 692 1,186 3,092 705,307 708,399 0 
Installment162 37 45 244 119,210 119,454 0 
Credit card223 134 137 494 51,723 52,217 137 
Total$6,519 $5,380 $13,303 $25,202 $9,263,097 $9,288,299 $137 
 As of December 31, 2020
(Dollars in thousands)30 - 59
days
past due		60 - 89
days
past due		> 90 days
past due		Total
past
due		CurrentTotal> 90 days
past due and still accruing
Loans      
Commercial & industrial$6,532 $0 $1,861 $8,393 $2,999,116 $3,007,509 $0 
Lease financing0 0 0 0 72,987 72,987 0 
Construction real estate0 0 0 0 636,096 636,096 0 
Commercial real estate-investor136 0 24,422 24,558 3,219,982 3,244,540 0 
Commercial real estate-owner6,480 174 400 7,054 1,056,264 1,063,318 0 
Residential real estate2,809 370 3,687 6,866 996,220 1,003,086 0 
Home equity1,483 835 1,937 4,255 738,844 743,099 0 
Installment94 35 51 180 81,670 81,850 0 
Credit card303 163 174 640 47,845 48,485 169 
Total$17,837 $1,577 $32,532 $51,946 $9,849,024 $9,900,970 $169 

Nonaccrual. Loans are classified as nonaccrual when, in the opinion of management, collection of principal or interest is doubtful or when principal or interest payments are 90 days or more past due. Generally, loans are classified as nonaccrual due to the continued failure to adhere to contractual payment terms by the borrower, coupled with other pertinent factors. When a loan is classified as nonaccrual, the accrual of interest income is discontinued and previously accrued but unpaid interest is reversed. Any payments received while a loan is on nonaccrual status are applied as a reduction to the carrying value of the loan. A loan classified as nonaccrual may return to accrual status if none of the principal and interest is due and unpaid, and the Bank expects repayment of the remaining contractual principal and interest.

Troubled debt restructurings. A loan modification is considered a TDR when the borrower is experiencing financial difficulty and concessions are made by the Company that would not otherwise be considered for a borrower with similar credit characteristics. The most common types of modifications include interest rate reductions, bankruptcies, maturity extensions and modifications to principal amortization, including interest-only structures. Modified terms are dependent upon the financial position and needs of the individual borrower. If the modification agreement is violated, the loan is managed by the Company’s credit administration group for resolution, which may result in foreclosure in the case of real estate. In accordance with the CARES Act, performing loans that demonstrated limited signs of credit deterioration, but were modified to provide borrowers relief during the COVID-19 pandemic were not considered to be TDR as of December 31, 2021 or 2020.

TDRs are generally classified as nonaccrual for a minimum period of six months and may qualify for return to accrual status once they have demonstrated performance with the restructured terms of the loan agreement.
First Financial had 150 TDRs totaling $27.6 million at December 31, 2021, including $11.6 million of loans on accrual status and $16.0 million of loans classified as nonaccrual. First Financial had $0.2 million of commitments outstanding to lend additional funds to borrowers whose loan terms had been modified through TDRs, and the ACL included reserves of $6.3 million related to TDRs as of December 31, 2021. For the year ended December 31, 2021, First Financial charged off $1.7 million for the portion of TDRs determined to be uncollectible. Additionally, as of December 31, 2021, approximately $5.0 million of the accruing TDRs have been performing in accordance with the restructured terms for more than one year.

First Financial had 155 TDRs totaling $21.8 million at December 31, 2020, including $7.1 million of loans on accrual status and $14.7 million of loans classified as nonaccrual. First Financial had $0.3 million of commitments outstanding to lend additional funds to borrowers whose loan terms had been modified through TDRs and the ACL included reserves of $8.8 million related to TDRs as of December 31, 2020. For the year ended December 31, 2020, First Financial charged off $1.7 million for the portion of TDRs determined to be uncollectible. Additionally, as of December 31, 2020, approximately $5.0 million of the accruing TDRs have been performing in accordance with the restructured terms for more than one year.

First Financial had 157 TDRs totaling $30.0 million at December 31, 2019, including $11.4 million of loans on accrual status and $18.5 million of loans classified as nonaccrual. First Financial had $2.5 million of commitments outstanding to lend additional funds to borrowers whose loan terms had been modified through TDRs. Additionally, First Financial charged off $2.6 million for the portion of TDRs determined to be uncollectible for the year ended December 31, 2019.

The following table provides information on loan modifications classified as TDRs during the years ended December 31, 2021, 2020 and 2019:
Years ended December 31,
202120202019
(Dollars in thousands)Number of loansPre-modification loan balancePeriod end balanceNumber of loansPre-modification loan balancePeriod end balanceNumber of loansPre-modification loan balancePeriod end balance
Commercial & industrial7 $9,311 $8,039 8$14,984 $14,984 8$25,009 $25,071 
Construction
real estate		0 0 0 00 0 00 0 
Commercial
real estate		8 16,850 9,807 00 0 93,024 2,932 
Residential
real estate		17 1,585 1,553 241,953 1,847 303,415 3,062 
Home equity2 30 30 11351 349 14395 366 
Installment1 0 0 235 22 241 39 
Total35 $27,776 $19,429 45 $17,323 $17,202 63 $31,884 $31,470 
 
The following table provides information on how TDRs were modified during the years ended December 31, 2021, 2020 and 2019:
Years Ended December 31,
(Dollars in thousands)202120202019
Extended maturities$0 $0 $2,877 
Adjusted interest rates005,284
Combination of rate and maturity changes00 516 
Forbearance7,3284,759 20,320 
Other (1)
12,10112,443 2,473 
Total$19,429 $17,202 $31,470 
(1) Other includes covenant modifications and other concessions or combination of concessions that do not consist of interest rate adjustments, forbearance and maturity extensions.

First Financial considers repayment performance as an indication of the effectiveness of the Company's loan modifications. Borrowers that are 90 days or more past due on any principal or interest payments, or who prematurely terminate a restructured loan agreement without paying off the contractual principal balance, are considered to be in payment default of the terms of the TDR agreement.
For the twelve months ended December 31, 2021 and 2020, there was one TDR with an insignificant balance for which there was a payment default during the period that occurred within twelve months of the loan modification. For the twelve months ended December 31, 2019, there were three TDRs with a balance of $7.0 million for which there was a payment default during the period that occurred within twelve months of the loan modification.

As stated in the CARES Act and subsequently modified by the Consolidated Appropriations Act, loan modifications in response to COVID-19 executed on loans that were not more than 30 days past due as of December 31, 2019 and executed between March 1, 2020, and the earlier of 60 days after the date of termination of the National Emergency or January 1, 2022 are not required to be reported as a TDR.

As of December 31, 2021, the Company's loan portfolio included $16.5 million of active loan modifications made under the guidance of the CARES Act that were not classified as TDR. These modifications were comprised of two commercial loans making interest only payments.

As of December 31, 2020, the Company's loan portfolio included $320.2 million of active loan modifications made under the guidance of the CARES Act that were not classified as TDR. These modifications included $291.5 million of borrowers making interest only payments at year end, and full principal and interest deferrals of $28.7 million. Active modifications as of December 31, 2020 were primarily hotel and franchise loans, which were $186.2 million and $44.3 million respectively as of December 31, 2020, or 58.2% and 13.8% of the total active modifications at December 31, 2020. As of December 31, 2020, the Company's loan portfolio included 90 commercial loans with balances of $312.5 million and 53 consumer loans with balances of $7.7 million that were modified in response to COVID-19 that were not considered TDRs.
Nonperforming loans. Loans classified as nonaccrual and loans modified as TDRs are considered nonperforming. The following table provides information on nonperforming loans as of December 31:
202120202019
(Dollars in thousands)Nonaccrual loans with a related ACLNonaccrual loans with no related ACLTotal nonaccrualNonaccrual loans with a related ACLNonaccrual loans with no related ACLTotal nonaccrualTotal nonaccrual
Nonaccrual loans (1)
  
Commercial & industrial$11,077 $6,285 $17,362 $18,711 $10,519 $29,230 $24,346 
Lease financing0 203 203 0 0 0 223 
Construction real estate0 0 0 0 0 0 0 
Commercial real estate17,716 1,796 19,512 6,957 27,725 34,682 7,295 
Residential real estate0 8,305 8,305 251 11,350 11,601 10,892 
Home equity0 2,922 2,922 0 5,076 5,076 5,242 
Installment0 88 88 0 163 163 167 
Total nonaccrual loans$28,793 $19,599 $48,392 $25,919 $54,833 $80,752 $48,165 
Interest income effect202120202019
Gross amount of interest that would have been recorded under original terms$5,132 $5,892 $5,813 
Interest included in income
Nonaccrual loans1,618 1,636 1,042 
Troubled debt restructurings314 426 801 
Total interest included in income1,932 2,062 1,843 
Net impact on interest income$3,200 $3,830 $3,970 
Commitments outstanding to borrowers with nonaccrual loans$0 $0 $3 
(1) Nonaccrual loans include nonaccrual TDRs of $16.0 million, $14.7 million and $18.5 million as of December 31, 2021, 2020 and 2019, respectively.

First Financial individually reviews all nonperforming loan relationships greater than $250,000 to determine if an individually evaluated allowance is necessary based on the borrower’s overall financial condition, resources and payment record, support
from guarantors and the realizable value of any collateral. Individually evaluated allowances are based on discounted cash flows using the loan's initial effective interest rate or the fair value of the collateral for certain collateral dependent loans.

First Financial's investment in impaired loans was as follows:
Year ended December 31,
 2019
(Dollars in thousands)Average
balance		Interest
income
recognized
Loans with no related allowance recorded
Commercial & industrial$31,846 $926 
Lease financing168 0 
Construction real estate6 0 
Commercial real estate18,757 357 
Residential real estate15,915 307 
Home equity5,893 121 
Installment170 2 
Total72,755 1,713 
Loans with an allowance recorded
Commercial & industrial4,721 87 
Lease financing57 0 
Construction real estate0 0 
Commercial real estate1,339 31 
Residential real estate446 12 
Home equity0 0 
Installment0 0 
Total6,563 130 
Total  
Commercial & industrial36,567 1,013 
Lease financing225 0 
Construction real estate6 0 
Commercial real estate20,096 388 
Residential real estate16,361 319 
Home equity5,893 121 
Installment170 2 
Total$79,318 $1,843 
A loan is considered to be collateral dependent when the borrower is experiencing financial difficulty and the repayment is expected to be provided substantially through the operation or sale of collateral. The following table presents the amortized cost basis of collateral dependent loans by class of loan.
December 31, 2021
Type of Collateral
(Dollar in thousands)Business assetsCommercial real estateEquipmentLandResidential real estateOtherTotal
Class of loan
Commercial & industrial$13,171 $15 $833 $0 $0 $3,343 $17,362 
Leasing00 203 0 0 0 203 
Commercial real estate-investor06,362 0 0 422 0 6,784 
Commercial real estate-owner06,673 5,937 38 80 0 12,728 
Residential real estate00 0 0 8,305 0 8,305 
Home equity00002,922 02,922 
Installment000008888 
Total$13,171 13171000$13,050 $6,973 $38 $11,729 $3,431 $48,392 
December 31, 2020
Type of Collateral
(Dollar in thousands)Business assetsCommercial real estateEquipmentLandResidential real estateOtherTotal
Class of loan
Commercial & industrial$30,961 $6,130 $2,608 $865 $0 $4,892 $45,456 
Commercial real estate-investor020,2126615,537872027,282 
Commercial real estate-owner5,8423,49504234409,723 
Residential real estate000011,601011,601 
Home equity00005,07605,076 
Installment00000163163 
Total$36,803 $29,837 $3,269 $6,444 $17,893 $5,055 $99,301 

Lease financing. First Financial originates both sales-type and direct financing leases, and the Company manages and reviews lease residuals in accordance with its credit policies. Sales-type lease contracts contain the ability to purchase the underlying equipment at lease maturity and profit or loss is recognized at lease commencement.  Direct financing leases are generally three to five years in length and may be extended at maturity, however, early cancellation may result in a fee to the borrower.  For direct financing leases, the net unearned income is deferred and amortized over the life of the lease.  Effective December 31, 2021, First Financial acquired Summit Funding Group, Inc., which is a full-service equipment leasing company. In conjunction with this acquisition, First Financial acquired $42.3 million of financing leases, which were included in Loans and leases on the Consolidated Balance Sheets. For further detail on the acquisition, see Note 23 - Business Combinations.
OREO. OREO is comprised of properties acquired by the Company primarily through the loan foreclosure or repossession process, that result in partial or total satisfaction of problem loans.

Changes in OREO were as follows:
 Years ended December 31,
(Dollars in thousands)202120202019
Balance at beginning of year$1,287 $2,033 $1,401 
Additions
Commercial98 510 415 
Residential0 507 2,033 
Total additions98 1,017 2,448 
Disposals  
Commercial(947)(217)(541)
Residential(331)(1,859)(912)
Total disposals(1,278)(2,076)(1,453)
Valuation adjustments  
Commercial(9)448 (112)
Residential0 (135)(251)
Total valuation adjustments(9)313 (363)
Balance at end of year$98 $1,287 $2,033